source: Caselaw Access Project

author: Emery, Y. C.

license: Public Domain

text:
    John Leonard et al. v. Charles Bosch et al.
    [Decided November 10th, 1906.]
    1. A clause in a charter party that the vessel was to guarantee insurance at lowest regular rates should not be construed to mean that the vessel itself or the owners should provide insurance for which they were to be paid the regular rates, but that the owners guaranteed that insurance on the cargo by the owners thereof was procurable at the lowest regular rates.
    2. In an action by the owners of a cargo to recover a deposit made by the owners of the vessel in lieu of insurance, evidence held to require a finding that the depositors and the agent of the owner of the cargo both intended that the deposit should be for the owners of the cargo, and was deposited pursuant to the terms of the charter party in execution of the clause that the charterers were not obliged to begin loading before the deposit in guarantee of insurance had been made.
    3. Plaintiffs, being unable to procure insurance on a cargo of scrap iron to be shipped on defendants’ vessel, executed a charter party through B., as their agent, providing that the vessel should guarantee insurance, at lowest regular rates; that the owners should deposit $23,000 in lieu of insurance, and that the charterers were not obliged to begin loading until the deposit was made. B., at the time, was traffic manager of a bridge company, which had a contract to purchase the scrap iron from plaintiffs on delivery at the port of discharge, and certain of the correspondence relating to the deposit which passed between defendants and B., through oversight or mistake, was addressed to him as traffic manager of the bridge company, defendants supposing that the latter was the owner of the cargo.—Held, that such mistake was not in the making, but in the execution, of the contract, and that (he deposit was in fact made for the benefit of plaintiffs, who were the owners of the cargo.
    4. A contract of affreightment commences from the loading of the vessel, from which time each party is bound to the other for the full performance of the contract.
    5. Where a charter party required the owners of the vessel to make a deposit in lieu of insurance, and declared that the charterers were to begin loading on the deposit being made, the charterers, on notice of the deposit, and on loading the vessel, took the risk thereof for the entire voyage, and were entitled to the benefit of the security for such period, or until insurance for their benefit was effected by the owners of the vessel. 7
    Heard on bill, answer, replication and proofs..
    Eight of the defendants, who were also eight of the eleven owners of a vessel on which complainants shipped a cargo, made two deposits (the first of $23,000 and the second of $2,800) with the Camden National Bank, another defendant, and payment of these deposits to complainants John Leonard & Company is sought by their bill. At the time of each deposit the bank signed-a letter stating its object. The first letter, dated at Camden, New Jersejr, November 1st, 1902, relating to the deposit of $23,000, was addressed to “Mr. Charles S. Bslsterling, Traffic Manager American Bridge Co.,” and was as follows:
    “Ti-ie Camden National Bank,
    “Camden, N. J., Nov. 1st, 1902.

      “Mr. Chas. 8. Belsterlmg, Traffic Manager, American Bridge Co., 259 8o.

      Fourth St., Phila.:

    “Dear Sir—The owners of the bark Primas have this day deposited with us the sum of twenty-three thousand (23,000) dollars, to be held by us to indemnify you in the event of the loss of the cargo of old iron loaded by you in the Primus, according to the terms of a certain charter party executed by L. St. Clare, master, and Paul Nobbe, agent for John Leonard & Company, dated October twenty-second, nineteen hundred and two. Liability in no case to exceed twenty-three thousand $23,000 dollars. The above-mentioned indemnity from loss is to be and remain in effect, as protection against loss of said cargo, from the time said bark Primus takes aboard said cargo, or any of said cargo is placed on lighters to be delivered on said bark, until full delivery of cargo at Philadelphia.
    “Yours truly,
    “Francis C. Howell, . Cashier.”

      The second letter, relating to the deposit of the further sum of $2,800, made twenty days later, is addressed to “Mr. Chas. S. Belsterling,” without further description, and was as follows:
    “The Camden National Bank,
    “Camden, N. J., Nov. 21st, 1902. “Mr. Chas. S. Belsterling, 259 So. J¡.th St., Phila., Pa.:

    “Dear Sir—The owners of the bark ‘Primus’ have this day deposited with us the further sum of twenty-eight hundred ($2,800) dollars, making in all twenty-five thousand eight hundred ($25,800) dollars, to be held by us to indemnify you in the event of the loss of the cargo of old iron loaded by you in the ‘Primus,’ according to the terms of a certain charter party executed by L. St. Clare, master, and Paul Nobbe, agent for Leonard & Company, dated October twenty-second, nineteen hundred and two, liability in no case to exceed twenty-five thousand eight hundred ($25,SOO) dollars. The above-mentioned indemnity from loss is to be and remain in effect, as protection against loss of said cargo, from the time said bark ‘Primus’ takes aboard said cargo, or any of said cargo is placed on lighters to be delivered on said bank, until full delivery at Philadelphia, Penn. Yours truly,
    “Francis C. Howell, Cashier.”

    Complainants, who were the charterers, in fact loaded the cargo, and Belsterling, who was at th^ time their agent, as well as the traffic manager of the bridge company, acted, or intended to act, on behalf of the complainants in arranging for the deposit, and not on behalf of the bridge compa^, who now formally disclaim any interest in the deposit.
    On a suit at law brought by the complainants against the bank to recover both amounts as due to them on obligations created by these two letters, it was held by the court of errors and appeals, in Leonard v. Qamden National Bank, 70 N. J. Law (J/.1 Vr.) 660 (1004), that the party indicated by these writings as the beneficiary of the deposit was the American Bridge Company, which .company was not a party plaintiff to the- suit, and at law could not be substituted for the complainants. The circumstance that the second letter was addressed to Belsterling individually, and that in this second letter the bridge company was nowhere expressly named, was not referred to in the opinion as affecting the construction of the writings in regard to the parties indicated by the writings. It may be that the reference in the second letter to the first deposit, and the further statement therein, that both deposits were held as one sum “to indemnify you in the event of the loss of the cargo loaded by you,” was considered as requiring both letters to be construed together as intended on their fact for the benefit of the bridge company. Unless this view was taken, it is difficult to distinguish the case, so far as it relates to the construction of the written instruments, from the cases of Eean'v. Davis, 21 N. J. Law (1 Zdb.) 683 (Court of Errors and Appeals, 18J/.7) and Isham v. Cooper, 56 N. J. Eq. (11 Dick.) 398, 4-10 (Court of Errors and Appeals, 1897), where the written instruments were held to be equivocal on their face and the subject of oral explanatory evidence in a court of law. It was said in the opinion of Mr. Justice Dixon, in Leonard v. Camden National Bank, “that perhaps a court of equity might be persuaded by extrinsic circumstances that the real purpose of the parties was to protect the owners of a certain cargo shipped on a vessel owned by the depositors, whoever they might be, and thus, by reformation of the .writings, secure indemnity to the plaintiffs as such owners.” It was also held that the fund deposited with the bank belonged to the depositors, subject only to the claim of the beneficiary to indemnity, and that the right of the complainants to the fund should not be established in a proceeding to which the depositors were not parties. It was further held that the sole obligation of the bank was to hold the fund until the rights of the claimants were settled inter sese, and then to surrender the fund to the rightful claimants, and that a court of equity could give the appropriate remedy. The complainants’" bill was thereupon filed against the depositors of the money, as well as the three owners of the vessel, and against the bank and the American Bridge Company, being all of the parties who have or may claim any interest in the deposit. The bill alleges the execution of a charter party between the owners of the vessel and the complainants, who were the owners of a cargo to be shipped by the vessel, in which charter party there was an agreement by the owners to deposit the sum of $23,000 with a depositary, in lieu of insurance, and that the deposits in question were made in pursuance of this agreement. This agreement was as follows:

      “Vessel to guarantee insurance at lowest regular rates.' Charterers not obliged to begin loading before deposit of twenty-three thousand dollars ($23,0001 in guarantee of insurance has been made. Vessel responsible for any expenses caused by delay in making said deposit.”
    It is alleged that, in arranging with the owners the details for this deposit, Belsterling, who was the agent for complainants, acted for them; that Belsterling was at the same time also an agent (traffic manager) of the American Bridge Company, and that through oversight or mistake a portion of the correspondence was addressed to “Chas. S. Bersterling, traffic manager American Bridge Company,” and that the contract of deposit was made not for the benefit of American Bridge Company, who had no interest in the deposit, but for the complainants, the owners of the cargo, as the owners of the vessel well knew. It is further alleged that the vessel with its cargo was lost on the voyage, and the deposit is payable to the complainants. The bill prays a reformation or correction of the letter or letters evidencing the contract between complainants and the bank, so as to express the fact that Bersterling was acting as complainants’ agent, and not as agent of the bridge company, that the latter company may be declared to have no interest in the fund, and that the bank may pay it over to complainants, as the vessel with its cargo was worth more than the amount of deposit.
    The bank, denying all knowledge of the circumstances of the shipment, admits holding the deposits on the terms and conditions set out in its letters to Belsterling, but says that at the time of the deposits it was informed that Belsterling was the traffic manager of the American Bridge Company, that it was not informed that he was the agent of the complainants, and did not know that he was acting for them, and that the address of the letter to Belsterling as traffic manager was not through oversight or mistake on its part. It admits, however, that it holds the money as depositary or custodian and is ready to pay it over as directed by the court. The American Bridge Company files an answer and disclaimer under its seal, disclaiming any interest, past or present, in the fund. The depositors of .the fund (being eight of the eleven owners of tlie vessel) deny that it was agreed that the owners of the vessel should cause the deposits of $23,000 to be made in lieu of insurance, and allege that the only agreement made with the complainants was- the charter party set out in the complaint, made between complainants and the owners by their agents; they admit the deposit of $25,800 in the bank “and deny that it was in pursuance of any other arrangement or agreement than that mentioned in the charter party.” They deny that the deposit was arranged with the complainants, or with Belsterling as representing them, and allege that it was arranged with the American Bridge Company, through its traffic manager, Belsterling, without any knowledge or information or understanding that Belsterling in any way represented complainants.
    They further allege that they meant and intended the letters in question to be written to the American Bridge Company, and that the bank in so writing them followed the instructions of the trustee of defendants, acting for them on making the deposit, except that in writing the second letter the instruction to address to Belsterling as traffic manager American Bridge Company was not followed, and it was addressed to him individually.
    While the bill prays for the special relief of reformation of the letters in question, it also prays payment of the deposit to i t, and adds the prayer for general relief.- If, therefore, on the whole case disclosed at the hearing it is entitled to such payment, whether or not the letters be corrected or reformed, such relief will be within the scope of the pleadings.

      Messrs. McCarter & English, for the complainants.

      Mr. Donges and Mr. French, for the defendants Bosch and others.

      Mr. Howard M. Cooper, for the defendant Camden National Bank.
   Emery, Y. C.

(after statement of issues).

The questions involved are mainly questions of fact, and to determine precisely the bearing and effect of these letters relating to the deposits upon the rights of the parties, it will be necessary to examine in detail the circumstances under which they were made, including especially the previous writings passing between the parties or their agents, whether executed or not.

[After an examination of the evidence the opinion proceeds]:

Reviewing the entire evidence in the case, the written documents, executed as well as unexecuted, and the oral evidence bearing upon their execution, I reach the conclusion that in arranging for the deposit, Belsterling, on the part of the shippers, and Dr. Donges and Mr. Ferris, on the part of the owners, both intended that the deposit was to be made in pursuance of the terms of the charter party and in execution of the clause contained in the charter party that “the charterers not obliged to begin loading before deposit of $23,000 in guarantee of insurance has been made.” The charter party itself not expressly providing for the precise form of the deposit, or for the execution of any further writing expressing its terms and scope, these terms and the scope of the guarantee were afterwards defined by the mutual agreement of both parties, evidenced by the certificate of deposit signed by the cashier of the bank, after these terms and conditions had been expressly discussed, and, in one particular point, changed after the first draft. It was not intended that any formal or written agreement between the parties themselves as to the deposit or its terms should be executed, but both parties understood the deposit to be the satisfactory execution of the contract relating thereto contained in the charter party, so far as related to the terms or scope of the indemnity. And I further find that both Belsterling, as complainants’ agent, and Dr. Donges and Mr. Ferris, acting on behalf of the owners of the vessel, intended that the deposit should be made in order that the cargo might be loaded on the vessel and become subject to the terms of the charter party for the common benefit of the charterers and the owners of the vessel, and that the cargo was loaded by the agent of complainants at Havana in the belief on the part of both the shippers and the owners’ agents that the same was loaded under the protection of a deposit under the charter party.

I conclude also that in contracting for and arranging the. deposit both Belsterling, and Dr. Donges and Mr. Ferris for the owners, intended the deposit to be made for the benefit of the owners of the cargo, and that Belsterling on his part, throughou t the negotiations, acted, and intended to act, solely as the agent of John Leonard & Company as the owners of the cargo, and that on giving the orders to load the vessel, after receiving the letters of the bank, he supposed that John Leonard & Company, as the loaders of the cargo, were secured by the deposit as made for their benefit as loaders under the charter party. I find also that through mistake, due to oversight, Belsterling, at the time of directing the loading of the vessel, in completion of the owners’ duty under the charter party, did not notice that the letters, by reason of the form of address, indicated, or might be construed to indicate, that the American Bridge Company was the person or party to whom the letters were directed, and for whom they were intended, as the loaders of the cargo, under the terms of the charter party, and that he accepted the letters and directed the loading under this mistake or misapprehension of their character or legal effect.

On the other hand, I find that Dr. Donges and Mr. Ferris also intended to make the deposit to carry out the provisions of the charter party that the terms and conditions of the deposit (as to the extent of the guarantee) were evidenced by the certificate, and that they also intended that the deposit should be made for the benefit of the owners of the cargo as charterers of the vessel. I further find that through some mistake or misapprehension, the cause of which has not been clearly disclosed, the address of the certificate or letter was written in the form adopted. There is no evidence whatever, on either side, of any oral discussion of the question of the ownership of the cargo, as between John Leonard & Company and the bridge company, pending the negotiations for the deposit, or of any reference to the ownership by the bridge company previous to the address on the first letter. In delivering the letters of the bank, or causing them to be delivered, to Belsterling, I think the owners intended an execution of the contract relating to deposits in the charter party, and that their trustee made the deposit for the benefit of the American Bridge Company, as the persons supposed to be the owners of the cargo, and for whom John Leonard & Company, the charterers, acted as agents. I do not think, however, that the evidence will justify the conclusion that the trustee intended to have the letters addressed to Belsterling as the agent of John Leonard & Company, but that the mistake on his part in reference to the letters was that he supposed the bridge company to be the owners of the cargo, and in that capacity to be entitled to the benefit of the deposit which they had agreed to make in order to get the cargo on board.

This being the mistake of fact which arose in reference to the execution of the letters relating to the deposit, the legal question arises as to its effect on the rights of the shippers and the owners of the cargo to the deposit, on the faith of which the cargo was loaded on the vessel by these owners, the complainants. If the letters were written contracts between the owners and the charterers relating to the deposit, the case, as to reformation of the letters, might perhaps come within the application of the rule that although rescission of a written contract may be granted on proof of mistake of one party, reformation of a written contract cannot be made except upon proof of a mutual mistake. Green v. Stone, 54 N. J. Eq. (9 Dick.) 387, 395, &c. (Court of Errors and Appeals, 1896); Herron v. Mullen, 56 N. J. Eq. (11 Dick.) 839 (Court of Errors and Appeals, 1898); Lutjen v. Lutjen, 64 N. J. Eq. (19 Dick.) 773, 778 (Court of Errors and Appeals, 1902). The letters, however, were not, in form, and were not intended by either party to be, written contracts between the parties themselves relating to the deposits, but were, and were intended by both parties to be, acts in execution of the written contract relating to the deposit made by the charter party. Therefore the substantial and real question in the case is whether, notwithstanding the mistake or misapprehension on one side as to the address of the letter, and on the other as to the bridge company’s ownership of the cargo, the complainants have, on the whole evidence, an equitable interest in this deposit as a deposit made to car^ out the contract of the charter party relating to the deposit. As between the bank and the person to whom it was delivered, the certificate of deposit is conclusive evidence of their legal relation, but as between the shippers and the owners, no written agreement relating to the deposit was made or executed, and the letters are only evidence in connection with the other evidence in the case as to the relation which these parties sustain to each other in reference to the deposit. Both parties now prove by oral evidence, outside of the letters, that as between each other they agreed that the terms and extent of the guarantee or indemnity should be as stated in the letter of the bank, and both sides agree in their evidence that the deposit was made in order to procure the loading of the vessel by the owners of the cargo. Therefore the mistakes in the address of both of the letters of the bank were not mistakes in any written contract between the parties, which are to be reformed, but are mistakes made in attempting to carry out a previous written contract by the charter party for a deposit, without which the owners’ vessel would not have been loaded, and on the faith of which its loading was secured. So far as the owners of the vessel and the shippers, by themselves or through their agents, agreed on the terms and conditions defining the extent of the guarantee by the deposit, which terms are evidenced by the letters which both parties agreed on, the deposit so limited must be taken as a further limitation or definition of the contract for guarantee, and to bind both parties as to what in this respect the execution of the charter party requires.

As to the beneficiaries of the deposit, both parties agreed and intended that it should be made in' execution of the charter party, and for the benefit of the owners who were loading the cargo under the charter party. The mistake of the owners of the vessel, or their agent, in directing the letters of the bank relating to the deposit, to be addressed to Belsterling individually, or as traffic manager of the American Bridge Compaq, as the person whom they supposed to be the owners loading under the charter party, and the mistake of the owners’ agent in overlooking this address, prevented, perhaps, an actual concurrence or meeting of the minds of the owners of the vessel and of the cargo, in reference to the person who should be indicated, in the letters of the bank, as the owner, but this failure of the minds of the parties to agree did not annul or render ineffective the contract for the deposit itself, as made in fact for the purpose of carrying out the charter party and for the benefit of the owners loading on the faith of it. The deposit being clearly made, and admitted to be made by the owners of the vessel or on their behalf, to secure the loading of the vessel by the charterers under the charter party, I think the latter are entitled to hold the deposit as so made for their benefit, without regard to any mistake made either by the bank or the owners in addressing the certificate or letters relating to the deposit to another party. The original proposal of Nobbe was that a deposit should be made in the name of John Leonard & Company. Suppose that a deposit had been made, intended to secure the owners, not in the name of John Leonard & Company, but in the name of a third party, who had no interest in the fund, whose name had been given by mistake of the owners of the vessel, and not corrected by the shippers through another mistake, could not Leonard & Company have shown that the fund was intended to carry out the contract with them and for their benefit, and have enjoined the third party from withdrawing the fund?

Counsel for the owners admitting that the deposit was made to secure the loading of the vessel, contend that this was the sole object of it, and that this having been effected, the terms of the letter (including its address, as being solely for the benefit of the bridge company) must be considered as alone defining its beneficiaries as well as its terms; that John Leonard & Company, being no parties to the letter or the contract created thereby, have no interest in the deposit, and that the only contract between complainants and John Leonard & Company is the contract to make a deposit in guarantee of insurance, which contract is still outstanding and unperformed, and for breach of which contract complainants have still an action at law. But this view overlooks, I think, the real situation as to this deposit and its substantial aspect as intended to be in performance of the charter party. And it overlooks, also, the distinctive character of the contract of -affreightment made by the charter party and the effect of the loading under it. Such contracts commence from the loading of the vessel, and from the time the cargo is delivered to the vessel each party is bound to the other for the full performance of the contract. 3 Kent Com. 208; The Eliza Lines (United States Supreme Court, October Term, 1905), 199 U. S. 132. After loading the master was obliged to perform the voyage, and the charterers, on their part, were bound to allow the cargo to proceed. Therefore the provision that the charterers were to load on deposit, compelled them, on loading, to take the risk of the vessel for the whole voyage, and they must, under the contract, be entitled to the benefit of the deposit as security for the whole voyage or at least until insurance for their benefit was effected by the owners of the vessel. The obligation of the shippers to procure, or attempt to procure, insurance for themselves, expired when the deposit was made, and the owners of the vessel not having themselves subsequently procured or intended insurance on behalf of the shippers, no question arises as to the right of the owners to withdraw the deposit, or of the shippers to be protected by it. The extent to which they were to be protected was fixed by the mutual agreement of the parties on making the deposit, and was expressed in' the letters of the bank. The complainants must be declared to be the beneficiaries of this fund as owners of the cargo loaded on the vessel, and the bridge company not to have any interest in it. The equitable jurisdiction in the case is based, as it seems to me, on the second ground stated in Mr. Justice Dixon’s opinion, viz., that the obligation of the bank created by these letters was to hold the fund for the settlement of the rights of the claimants inter sese, and then to surrender the fund to the rightful claimant, a remedy appropriate only to a court of equity. A reformation of the letters is not, as it seems to me, either required for the purpose of declaring the rights to the fund or appropriate to the relief.

I will advise a decree directing that complainants, as owners and shippers of the cargo, are the persons entitled to be secured by the deposit, and directing payment to them of the value of the cargo, less the rates for insurance. If there is any dispute as to this value on the evidence taken at the hearing, I will settle this question at the settlement of the decree. •


author: Emery, V. C.

text:
    Henry W. Van Wagenen, administrator of John Whitehead, deceased, v. Rose M. L. Bonnot et al.
    [Decided November 22d, 1906.]
    1. Under P. L. 1900 p. 363 § J¡, excluding testimony by a party to an action as to a transaction with a decedent, a party seeking to establish a gift causa, mortis was not competent to testify to the delivery of a package to her by the deceased, but might testify as to what occurred after carrying the package out of the room in which it was claimed delivery was made.
    2. The return of a package containing an alleged gift causa mortis to the donor was a resumption of possession and, ipso facto, a revocation of the gift.
    8. Savings bank-books are proper subjects of gifts causa mortis.

      4. Evidence considered, and held to establish a gift causa mortis.

    Heard on bill, answer, decree of interpleader, statements of claim and proofs. .

      Mr. Edwin G. Adams, for the complainant.

      Mr. Louis Ilood, for the defendant Bonnot.

      Mr. Alfred F. Stevens and ili?\ Frederick F. Guild, for the defendant Guild, substituted administrator of Minnie A. Harrison.
   Emery, V. C.

This is a bill of interpleader filed bjr the administrator of John Whitehead, deceased, who has, under a decree of inter-pleader made in this cause, deposited in court four savings bankbooks, which were in Mr. Whitehead’s possession at the’ time of his death, and came into the possession of complainant as his administrator. Three of the books were savings bank-books issued to Minnie A. Harrison and standing in her name in three different savings banks: Franklin Savings Institution, of Newark, for $4,307.15; Seamen’s Bank for Savings, New York City, $2,173.50, and Greenwich Savings Bank, New York City, for $2,960.57, a total of $9,441.22.

Minnie A. Harrison died intestate on December 16th, 1902, and on December 23d, 1902, Mr. John Whitehead was appointed her administrator. He subsequently had a new deposit-book issued to himself as administrator, for the deposit in the Franklin Savings Institution, and this book also is deposited in court. The defendant Mrs. Bonnot claims that the three deposit-books issued to.Miss Harrison belong to herself, by virtue of a gift or donation causa mortis made to her by Miss Harrison two days before her death, and that shortly after Miss Harrison’s death, and before Mr. Whitehead’s appointment as administrator, she delivered these three books to Mr. Whitehead in his personal capacity as her bailee or attorney. She subsequently brought a suit in replevin for the books against Mr. Whitehead personally, in which suit he set up title to the books in himself as Miss Harrison’s administrator. This suit was pending at the time of Mr. Whitehead’s death, and the defendant Mr. Frederick F. Guild, having been appointed substituted administrator of Miss Harrison, demanded of complainant, Whitehead’s administrator, the possession of the books, whereupon this bill was filed, the suit by Bonnot enjoined, and the defendants, after hearing, directed to interplead.

The three deposit-books issued to Miss Harrison belonged to her, and the question in the ease is whether Mrs. Bonnot has satisfactorily proved a gift or donation of them to her causa mortis. The alleged gift was made to Mrs. Bonnot personally by Miss Harrison during her last illness, about two daj's before her death, and in the presence of one of the daughters of Mrs. Bonnot, a young girl then about sixteen years of age. Under our Evidence act (Rev. 1900, P. L. p. 363 § 4), excluding testimony by any party to the action as to any transaction with the intestate, this daughter’s testimony is the only legal evidence of this transaction between Miss Harrison and Mrs. Bonnot, and it is the only evidence which has been offered for that purpose. On her evidence, the first question fairly raised is whether it sufficiently proves that the books in question were in an unopened parcel or package delivered to Miss Harrison by Mrs. Bonnot as the gift in question. Her account, taken from her whole evidence, direct as well as cross-examination, and the evidence of the other witnesses, so far as it bears on the question of the contents of the parcel, is substantially as follows: Mrs. Bonnot’s house on Orange mountain was a short distance from Miss Harrison’s, and the daughter was at the house of Miss Harrison and in attendance on her from the Friday preceding Miss Harrison’s death on Tuesday, continuously, with the exception perhaps of a few minutes each day and ten or fifteen minutes on Sunday, when she went to her mother’s home on an errand. Mrs. Bonnot herself was at Miss Harrison’s continuously from Saturday morning until eleven or twelve o’clock on Monday morning. Miss Harrison, who was an invalid suffering from consumption, had been failing for two or three weeks, and since this Friday had been confined to her bed. She had lived alone from the June previous without any companion or attendant other than Miss Bonnot. There is some dispute in the evidence as to how much of the time Miss Bonnot was there during the spring and summer previous to the last illness, but this is not material for present purposes. On Saturday morning Mrs. Bonnot came to the house, got tea.for Miss Harrison and gave it to her in bed. This bed was in the kitchen, where Miss Harrison usually slept, it being the warmest and most convenient room in the house. It opened on a porch enclosed by lattice-work and locked, and a window, under .or by the side of which the bed stood, opened on this porch. Before the time of the alleged gift there was a conversation between Miss Harrison and Mrs. Bonnot about Mrs. Bonnot’s affairs, brought on, as the daughter says, by Miss Harrison noticing that her mother seemed worried. Mrs. Bonnot said she was worried about the interest on the mortgage on her house, which she had not been able to pay because of not getting money due to her, and because the persons who held the mortgage were pressing for the principal, $1,000 or $1,500. Miss Harrison then spoke about the trouble she herself had in collecting the interest on one of her mortgages given'by a Mr. Richards, and Mrs. Bonnot requested or suggested to Miss Harrison to transfer this-mortgage to her property, as it was just the amount she wanted. Miss Harrison said she would see about it. The Richards mortgage, as appears from the inventory, was a $1,500 mortgage. After Mrs. Bonnot had been there about two hours, Miss Harrison from her couch called to Miss Bonnot, asking if she was there, and, receiving her reply that she was, said, “I want your mother’s house to be free; I want her to rest.’’ Miss Harrison then turned to Mrs. Bonnot, told her to reach back of her and get a package from beneath her pillow, or to help her get something from beneath her pillow. Mrs. Bonnot reached back beneath the pillows on the bed and handed a package to Miss Harrison. It was a long package, w rapped up in a very soiled cloth. Miss Harrison took it in her hands, felt of it and passed it into Mrs. Bonnot’s hands, and said, “Take this; they are j^ours; you will find they will be valuable to you." The package was not opened. Neither was anything said at the time as to what was in it, nor could the witness tell,, from the shape, form or appearance, what was in it. Mrs. Bonnot took the package, went out on the porch and hung the package on the ear or hinge of the blind of the window opening on the enclosed porch. Miss Bonnot says that it was hung outside on the porch because it was rather filthy and unhealthy. Miss Harrison expectorated a great deal, and it was unhealthy to have it in the room, and Mrs. Bonnot, whose evidence as to what occurred outside of the room is admissible, says that the bundle looked like a bundle of rags, and that she kept it on the back porch with some other rags she had put out while Miss Harrison was sick. She also says she did not know it contained bank-books. After the bundle or package had been hung outside,

“When slie came in, Miss Iianison asked mother where she had put chem, and mother said, ‘I hung them outside near the blinds; they are safe out there.’ Miss Harrison looked through the window to see if they were there, and seemed rather anxious about their being out there, and then mother told her they would be all right there.”

Miss Harrison, as the witness says, during the afternoon laughed as if she were having a joke to herself. “Now,” she says, “I want you to rest,” after she had given her the package and mother put it outside. No further conversation took place about the package until Sunday morning, up to which time it remained on the porch. On Sunday morning, between nine and eleven, or between eleven and twelve (the witness gives both hours), Miss Harrison directed the bundle to be brought to her. Mrs. Bonnot brought it into the room and handed it to Miss Harrison, who was still in bed. Miss Harrison handed it back to Mrs. Bonnot again, and she said, “Take them; they are yours.” Mrs. Bonnot said, “Where shall I put them; what will I do with them?” Miss Harrison then said, “Take them; put them in your satchel; they are yours.” The parcel was not unwrapped or opened or the wrappings changed on Sunday. Neither was anything said by Miss Harrison at the time of this second delivery about the contents of the parcel. After this second delivery, however, and during the afternoon, Miss Harrison, according to the witness, said “she knew mother could rest now.” And 'the witness also says that when the package was delivered on Sunday, Miss Harrison said, “This will do it.” No further reference was made to this parcel by Miss Harrison during her life. On Sunday morning, previous to this incident, Miss Harrison had been taken with a severe coughing fit, and, as Miss Bonnot thought, had coughed up part of her lung, and she so told Miss Harrison, who then said she knew she was going to die. Mrs. Bonnot, with her daughter, spent the day and night with Miss Harrison, and during the day there was considerable conversation about Miss Harrison’s wishes in regard to Mrs. Bonnot’s daughters and their education, and about one or two other persons whom she wished to be remembered. On Monday morning Mrs. Bonnot and her daughter rose about seven o’clock, and after giving Miss Harrison her breakfast and making her comfortable, a long conversation occurred about Miss Harrison’s wishes in relation to the disposition of her property, and at her direction Mrs. Bonnot wrote down on a slip of paper her wish in regard to it, which was read over to Miss Harrison and read by her and then signed. This paper was to be taken to Mr. Whitehead, and immediately after it was drawn Mrs. Bonnot left Miss Harrison and came to Newark and delivered the paper at Mr. Whitehead's office on Monday afternoon. Arrangements were then made by her that a will was to be drawn, and Mrs. Bonnot was, as she thinks, to meet, at Miss Harrison's on Tuesday afternoon, someone from Mr. - Whitehead's office with the will. This original paper, signed by Miss Harrison, has been lost, but a copy was preserved among Mr. Whitehead's papers, and is as follows:

“December 15th, 1902.
“St. Cloud, West Orange.
“This is my last wish. X wish that Madame Bonnot’s house be cleared of debt and anything- else she wants, books, furniture. She is to pay my lawful debts and whatever she disposes of is all right. Don’t wish my relatives, Mr. Flavel, nor, above all, Miss Davy, to meddle in my affairs. I wish Mr. John Whitehead to do it for Madam Bonnot.
“M. A. Harrison.”

A will was drawn by Mr. Whitehead, dated December 17th, 1902, brit was not executed, as Mr. Payne, the partner of Mr. Whitehead, did not reach Miss Harrison's until after her death, and perhaps not until the afternoon of Wednesday, the day the will was dated.

Mrs. Bonnot did not return to Miss Harrison's until Tuesday afternoon, about four or five o’clock, just after Miss Harrison’s death. As she came near the house she met her daughter, who had stayed there alone from the time of her mother’s departure on Monday until the end, and was then going away ill. Mrs. Bonnot went into the house and was there alone,'or with another daughter, until the body was removed the next day to an undertaker’s. She also remained on at the house from that time until about January 7th. On Thursday, the day of the funeral, she was at the home in Newark of another daughter, and the daughter Ernestine was also at the house. She says that she was in another room, and hearing an exclamation from her mother, went into the room where the latter was. Her mother then showed her the three bank-books. She said she had just opened the package, and it was on her knees. There was the dirty cloth around it, and there was something else wrapped around it—a paper or piece of chamois, or maybe another small cloth'. It was evident that the daughter did not at this 'time see the parcel or package in the original condition in which it was delivered. The exclamation of her mother followed and evidently did not precede the opening of the parcel. The evidence of this witness, therefore, fails to show that the parcel up to this time retained its original form or appearance at the time of the delivery to Mrs. Bonnot. The direct proof that these books were in this parcel at the time of the delivery of the parcel to Mrs. Bonnot by Miss Harrison on Sunday depends entirely, therefore, on the evidence of Mrs. Bonnot herself. The title must be derived from the delivery on Sunday, for the return of the package to Miss Harrison by her direction on Sunday morning was a resumption of possession by her, and, ipso facto, a revocation of the gift of the previous day, so far as delivery under it was concerned. The conversation on Saturday may, however, be important as bearing on the delivery on Sunday. Miss Bonnot’s account of the transaction on Sunday ends with the deposit of the bundle in her mother’s satchel in Miss Harrison’s presence, and from the time of this deposit she does not speak of seeing the bundle or the satchel again before her mother left the house on Monday morning. Mrs. Bonnot says that the bundle staj'ed in that satchel in Miss Harrison’s room until the next morning (Monday). She further says that on Monday morning she brought the bundle to Newark and put the bundle in a room at the house where another of her daughters was living. Whether the bundle was brought to Newark in the satchel is not directly stated, but from the fact that Mrs. Bonnot also says that on the day she opened the bundle (Thursday) she had it in her satchel, and took it from where she had it and opened it, it may fairly be taken as proved by her that on Monday she brought the satchel, with the bundle, to Newark. On opening the bundle on Thursday she does not speak of anyone being present, or of her daughter Ernestine seeing it opened. She says that up to that time there was no change made in the appearance of the bundle from the time she first put it on the back porch on Saturday. She opened the bundle and saw the three books in question, and saj^s that up to that time she did not know what was in the bundle, and had not seen the books. A piece of white paper without writing on it, so far as she noticed, was wrapped up with the books. She threw the soiled rag away, wrapped the bankbooks in wrapping paper and took them to Mr. Whitehead’s office the same day, and there delivered them to Mr. Fleisehel, a clerk in the office, or to Mr.. Payne, Mr. Whitehead himself being absent or engaged. She subsequently,, and about January 11th, 1903, made a formal demand in writing upon Mr. Whitehead for the return of the books, which was refused. The circumstances relating to the draft of the will do not bear directly on the question of the contents of the parcel, but as the only direct proof of the contents is the evidence of Mrs. Bonnot, these circumstances have a bearing as showing her conduct relating to the deceased or her property after the alleged gift. In Cosnahan v. Grice, 15 Moo. P. C. C. 215; 2 Ch. Eq. Dig. 2012, it was said that in this class of cases the whole conduct of the parties at the time must be minutely examined, for, on a question of doubtful right, it is impossible not to take into account the conduct of a party at the time when the right becomes first capable of assertion and not to allow its due influence in raising a presumption in favor of or against the claim. The conduct of the donee in taking other property of the deceased after her death was given weight in this case in determining adversely the question of a donation causa mortis. In the present case I had a strong impression at the hearing that Miss Bonnot’s evidence was not a fabrication, but was truthful and entitled to credit, and I still retain this conviction after a reading and further consideration of her evidence. But considering her testimony as furnishing the clear and satisfactory evidence required in these cases of the delivery of the package to Mrs. Bonnot and the gift to her of its contents, the question remains, What was in this unopened parcel ? And as to this the case depends on the credit to be given to Mrs. Bonnot. The parcel was in her possession, unseen by any other person, apparently from Monday morning until Thursday. She was alone in Miss Harrison’s house, or with another of her daughters, who has not been called as a witness, from Tuesday afternoon or evening until Thursday, and if it had been proved that during this interval there were in Miss Harrison’s house any other securities which could have been added to or substituted for the contents of the bundle, I am inclined to think that under such circumstances a court would scarcely be safe in relying on the evidence of the donee alone for identification of the contents. Miss Harrison had, as appears from the inventory of her estate, other securities—two bonds and mortgages, one of $10,000, one of $1,500, and five bonds, three of the United Electric Company, par value, $2,000 ; two of a street railway company, par value, $2,000, and apparently had no other securities except the savings bank-books. The $1,500 mortgage was in course of foreclosure, and probably in the custody of Mr. Whitehead, her counsel. The location of the other mortgage and the bonds at the time of her death has not been shown, and a substitution by Mrs. Bonnot of the savings bank-book for these, or any one of them, if she would be guilty of this, could not therefore be assumed, especially so, as securities of this character are usually or often left with attorneys or agents, while savings bank-books, being usually available only to the person, are oftener kept in personal control, and if so kept by Miss Harrison, the probability is that all these books would be kept together in one parcel, rather than separately, and the evidence in the case as to Miss Harrison’s business habits and character make it very probable that these bank-books at least were kept about her person as described.

On the case as submitted, therefore, the probabilities as to the contents of this parcel tend to support Mrs. Bonnot’s statement and to negative the conclusion or assumption that during the interval between Monday and Thursday she tampered with the parcel either by adding or exchanging securities. The case is one where these probabilities must be given due weight, and her entire evidence must also be considered. In reference to one important matter bearing on her conduct, she has not been, as it seems to me, candid or unequivocal. This relates to the draft of the will. In the conversation on Sunday and Monday relating to what Miss Harris on wished to be done, and the persons she wished to be remembered, persons were named and her wishes as to these stated, but the names of these persons were not on the written memorandum signed by Miss Harrison. Mrs. Bonnot, on reaching Newark with this paper, was in great haste to get to Mr. Whitehead’s office, as she proves by a Mrs. Wait, to whom she showed the paper before going. She went to Mr. Whitehead’s office, according to her account, but once with the paper, which she left there. She now says that she don’t recall seeing Mr. Whitehead at his office that day; that she won’t say she didn’t see him, but that she don’t recollect, and that she don’t recollect leaving any message with the paper, except that it was something to be given to Mr. Whitehead, and that Miss Harrison wanted her to leave this, and to "tell Mr. Whitehead to attend to this for you for me.” Apparently, from this account, no person in Whitehead’s office had received from Mrs. Bonnot any statement as to the contents of the will to be drawn, except the written memorandum. Nor in all probability had Mr. Whitehead himself, for it appears that Miss Harrison, who seldom came down from the mountain, had not been to Newark for three weeks, and does not seem then to have seen Mr. Whitehead. Mrs. Bonnot herself, as she says, often took the business messages from Miss Harrison to Mr. Whitehead. The will, drawn in Mr. Whitehead’s hand, on being produced, includes all the persons who were spoken of in the conversation of Sunday and Monday, the persons to be remembered being Mrs. Bonnot’s three daughters, Mr. Whitehead and a young man named Lucian Little, none of whom are mentioned in the memorandum. The will includes, besides, a legacy of $400 to a church, which was not spoken of by Miss Harrison at all. The will, after payment of the debts, directs the payment of $1,500 to Mrs. Bonnot (the amount of the mortgage on her house, referred to in the memorandum), and after giving specific legacies of jewelry to Mrs. Bonnot’s daughters, a legacy of $1,000 to Mr. Whitehead (the amount spoken of on Sunday and Monday), $50 to Little and $400 to the church, she directs the appropriation of a sum sufficient to educate the two daughters (Eulalie and Ernestine), anl then gives the entire residue of the estate to Mrs. Bonnot. A careful consideration of the conversation on Sunday and Monday, proved by Ernestine; of the memorandum and the circumstances of its writing, and of the document prepared solely for the purpose of carrying out Miss Harrison’s wish, justifies the conclusion, I think, that the written memorandum was drawn to show what was to be given to Mrs. Bonnot herself, and further, that this memorandum was to authorize Mr. Whitehead to receive from Mrs. Bonnot the directions as to the disposal of Miss Harrison’s properties.

From some source, apparently, Mr. Whitehead did receive directions as to all of the persons who were to be remembered. These directions of Miss Harrison were made in the presence of only Mrs. and Miss Bonnot, and Miss Bonnot was not out of the house until after the death. In view of this coincidence, it is difficult, if not impossible, to resist the conclusion that in some way the provisions in the will, which included the directions of Sunday and Monday, were communicated by Mrs. Bonnot to Mr. Whitehead, and still more difficult to conceive that a devise of the entire residue of the estate would or could have been drawn without a direction from Mrs. Bonnot herself, after the memorandum was delivered. Her present statement that she will not say she didn’t see Mr. Whitehead, but only that she cannot at present recall it, is not, in my judgment, reliable. She could not have forgotten seeing Mr. Whitehead about drawing a will from this paper. After her departure from the house immediately on its receipt, her haste to reach Mr. Whitehead’s office with it, and her appointment for the next afternoon at Miss Harrison’s to meet a person with the will, and with this will drawn as it is, it is not credible that in some way not disclosed by her she communicated with Mr. Whitehead about the will to be drawn from this paper. The doubts thrown on her credibility by her testimony upon this subject, bearing as it does on her conduct in relation to the acquisition by herself, or for her famity, of the bulk of Miss Harrison’s property by will during the time she held the stocks in question, would seriously affect the weight to be given to her evidence as establishing the contents of the bundle if it were shown that after Miss Harrison’s death, and while she had the run of her house, there were other securities in the house. But this has not been shown, and as the delivery of the bundle, containing apparently valuable securities, has been satisfactorily proved by the evidence of another witness, and the'surrounding circumstances indicate that it was not improbable that all of the savings bank-books were in the bundle, I do not feel justified in rejecting her statement that the books were in the bundle merely on the ground that if they were not in the bundle she had the opportunity to put them in after Miss Harrison’s death, and that her equivocation about procuring a will to be drafted in her favor would justify me in concluding that she would tamper with the bundle and then swear falsely about it. The equivocation may be attributed to an endeavor not to disclose all that took place in reference to the draft of the will, rather than a character which would resort to crime in order to get possession of the books. Counsel for the administrator urges strongly that the memorandum itself, referring as it does expressly to the freeing of Mrs. Bonnot’s property from debt, negatives the idea that a gift had been previously made of the books for this object, but I cannot draw this conclusion, or hold it to be sufficient to outweigh the evidence of gift. The memorandum is evidently not a full or complete disposition of her property by Miss Harrison herself, and required a full explanation, which was to be given to Mr. Whitehead, as the proof shows, by Mrs. Bonnot herself. It may have been intended to confirm the gift by will. The point was suggested, rather than insisted on, by counsel that these savings bank-books on their face required an assignment in writing by the depositor in order to transfer the money to another. This assignment relates to an absolute present assignment as between the bank and the depositor, and is only intended to regulate the legal rights of the bank with the depositor. It would operate, in the present case, no farther than to require the use of the name of the administrator for the recovery of the deposit in a legal action. That savings bank-books are proper subjects of donations cwusa, mortis by delivery is settled by the weight of authority in the American courts, and the decisions in our own courts in relation to choses in action are based on reasons which include such books. Corle v. Monkhouse, 50 N. J. Eq. (5 Dick.) 537, 543, &c. (Vice-Chancellor Van Fleet, 1892); Travelers’ Insurance Co. v. Grant, 54 N. J. Eq. (9 Dick.) 208, 212, 218 (Vice-Chancellor Pitney, 1896); Ridden v. Thrall, 125 N. Y. 572, 577 (1891).

I will advise a decree declaring that Mrs. Bonnot is entitled to the boobs in question.


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    Peter Bennett v. Bridget Finnegan et al.
    [Filed December 11th, 1906.]
    1. Limitations do not run against a claim of a husband against his wife during the continuance of the marital relation.
    2. Laches will not be imputed to a husband merely from his failure to prosecute a suit against his wife during the continuance of the marital relation.
    On demurrer on reargument.

      Mr. Adrian Bileer, for the demurrants.

      Mr. James M. Trimble, for the complainant.
   Emery, V. C.

Beargument of the demurrer was directed in this ease upon the defences of statute of limitations and of laches. The conclusions on the former argument are reported in 33 Atl. Rep. 401.

As to the statute of limitations, I must hold it not applicable. This is on the authority of Yeomans v. Petty, 40 N. J. Eq. (13 Stew.) 495, decided by Vice-Chancellor Bird in 1885, and of Alpaugh v. Wilson, 52 N. J. Eq. (7 Dick.) 424, decided by the same vice-chancellor in 1894, and affirmed on appeal, for the reasons given by him. 52 N. J. Eq. (7 Dick.) 589. These cases hold distinctly that, so far as relates to claims by the wife against the husband, the statute is not applicable, and they control this case. They were not called to my attention until after the decision on the former argument. It is urged that none of these eases are cases in which the husband was the claimant, but while this is true, the decisions suggest no distinction in this respect, and tire rule is put upon grounds which reach as well to claims of the husband against the wife. The basis of the rule is the general policy of preventing litigation between husband and wife. See Yeomans v. Petty, 40 N. J. Eq. (13 Stew.) 498. This reason is operative as well in favor of the husband as the wife. As to the application of the general doctrine of laches, independent of the statute, this is to be governed, as it seems to me, by a principle analogous to that of the application of the statute. 'Pryma facie, and in the absence of special equitable circumstances, it is not evidence of laches that either the husband or wife fail to prosecute the other in a court of equity pending the continuance of marital relation. No circumstances appear on this bill which debar the complainant, merely on the ground of lapse of time, from proving, if he can, by competent evidence, that the debt paid by complainant was the wife’s debt. And on the contrary, the allegation in the bill of joint possession of complainant and his wife during their lives, and his sole possession since her death, while such possession was no obstacle to the prosecution of a suit in equity, if the husband chose, would seem prima facie to be an explanation of the delay.' But without deciding as to the effect of this allegation, I overrule the objection of laches, which is made simply on the face of the bill, and I do this upon the ground that no special circumstances appear on the bill which deprive the husband of the benefit of the general rule that the law will not impute laches merely from the failure to prosecute suits pending the continuance of the marital relation.

The demurrer, therefore, must be overruled, with costs, and defendants must answer.


text:
    Felix Saldutti v. Maurice Flynn et al.
    [Decided December 12th, 1906.]
    1. An agreement by a husband to convey free of all encumbrance is not satisfied by a mere conveyance containing a covenant against encumbrance, but the vendee is entitled to a conveyance by the husband and his wife before paying the purchase-money, the existence of the wife’s inchoate right of dower constituting a breach of covenant against encumbrances.
    2. A vendor is in equity a trustee for the vendee from the time of execution of agreement to convey, and failure of the vendee to perform the contract strictly at the time fixed, if the vendor is ready to perform, does not in equity discharge the contract, unless time is of the essence ot the contract or the delay has made specific performance inequitable. Hence a vendor agreeing to convey free of all encumbrance is not released from the contract by the refusal of the vendee to accept a deed in which the vendor’s wife did not join.
    3. Where a vendor agreed to convey free of all encumbrance, but merely tendered a deed in which the wife did not join, grantees in a deed executed and acknowledged by such vendor and his wife, who had notice of such agreement, of the tender of such deed and of the vendee’s refusal to accept, so far as the vendor is concerned, hold the legal title as trustees for the vendee and subject to. the agreement.
    4. Such deed passed the lands to the grantees free of the vendor’s wife’s inchoate right of dower, and a conveyance by such grantees to such vendee would pass a title to him free from such dower right.
    5. Where a vendor and wife sign an agreement to convey lands free of all encumbrance, but the agreement was not acknowledged by-the wife, as required by the statute (P. L. 18i)8 p. 685 § 89), the wife was not bound, and the vendee cannot compel her, to convey her interest, and she is entitled to bargain for the sale of her inchoate right of dower as her own property.
    6. Where a vendor and his wife conveyed the land to certain grantees who had knowledge of the agreement, and of the vendee’s refusal to accept a deed in which the wife did not join, in a suit by the vendee against the vendor and his wife and the grantees for specific performance, the vendee must, as a condition precedent, pay the grantees the value of the wife’s inchoate right of dower.

      7. It appearing in such case that the grantees had not paid the wife the value of her inchoate right of dower, the amount should be paid to her, but on the condition that she release the grantees from any further claim to recovery under the agreement.
    8. In such case, on the refusal of the wife to execute such release, the _ payment should be made to the grantees, leaving the wife to her remedy at law against them.
    9. The vendee, on payment of such value, is entitled to a reduction thereof from the purchase price payable to the vendor, the grantees are entitled to receive the amount paid the vendor on account out of the purchase-money, and, on the execution of a deed by the grantees to the vendee, the vendor is entitled to receive the balance due him.
    On bill for specific performance. Heard on bill, answer, replication and proofs.

      Mr. Alfred F. Skinner, for the complainant.

      Mr. Chandler W. Biker, for the defendant Flynn.

      Mr. John Francis Cahill, for the defendant Mrs. Flynn.

      Mr. James M. Trimble, for the defendants Napurano and wife.
   Emery, Y. C.

The bill is filed by a vendee for specific performance of an agreement in writing to convey to complainant, for $4,500, by deed of warranty, free from all encumbrances, a tract of land in Newark. The property belonged to defendant Maurice Ftynn, and the agreement, which was made between Flynn as sole party of the first part and Saldutti as of the second part, was signed and acknowledged by Flynn, and recorded. Before the recording it was also signed by Mrs. Flynn, but was not acknowledged by her. On signing the agreement $25 was paid to Ftynn on account of the purchase, and the mortgage and other liens upon the property were about $2,975, leaving about $1,500 as the balance of the consideration to be paid on the delivery of the deed. When the time arrived for carrying out the contract, Mrs. Fljmn, acting in her own interest and under the advice of her own separate counsel, refused to sign the deed unless she received for herself $500. Mr. Flynn declined to agree to the payment to her of any portion of the $1,500, and offered to sign the deed without her joining on receiving the entire $1,500. The complainant declined to pay the whole $1,500 to Flynn and receive his deed alone. There were two or three meetings between all of the parties and their several counsel, for the purpose of carrying out the contract in a way satisfactory to the three parties interested, but these were unsuccessful. The last meeting was between Flynn and complainant (or his solicitor) only, and at this time Flynn’s offer to deliver his deed and complainant’s refusal to accept were repeated. The next day after this refusal, and, as complainant claims, pending arrangements for another meeting between Flynn and his wife and the complainant, Flynn and wife conveyed the property to the defendants Napurano and wife for a consideration stated in the deed as $5,100. At the time of the conveyance $200 was paid in cash (equally to Mr. and Mrs. Flynn), and contemporaneously a written agreement was made between the parties as to the payment of the balance. This paper recited an agreement to purchase the property for $5,100, the execution of the deed and the payment of $200, leaving $4,900 due; the previous contract of Maurice Flynn with Saldutti,

“which contract is alleged to have been broken by the purchaser, Felix Saldutti, though there may be some question as to the validity of the hereinbefore-mentioned deed, owing to said previous contract,”

and then agreed that in case Saldutti or his assigns should set aside the said deed made to the Napuranos, then Maurice Flynn should repay to the Napuranos the $200, together with one-half of the costs and expenses in defending the deed; and further, that if the deed should be declared valid, or not questioned for a reasonable period, then the Napuranos should pay the balance of the consideration to the Flynns—$500 in cash to Mrs. Flynn for her dower rights, and the balance of $4,400 by assuming the existing mortgage, with interest; $575 in cash, and $1,500 by a mortgage, payable in five years, with interest.

Complainant’s bill was filed against Flynn and wife and Napurano and wife on January 4th, 1906, the day after the delivery of the deed. On the part of all the defendants it was claimed at the hearing that the contract with complainant was terminated by his refusal to accept Flynn’s offer to receive the $1,500 and, on his receiving it, to execute and deliver a deed for the property, executed by him without Mrs. Flynn joining, but with covenants of warranty.

To this claim there are two answers: First. The agreement to convey free of all encumbrance is not satisfied by a mere conveyance containing a covenant against encumbrance, but the vendee is entitled under such contract to a conveyance by the husband and his wife before paying the purchase-money. Young v. Paul, 10 N. J. Eq. (2 Stock.) 401, 405 (Chancellor Williamson) ; affirmed on appeal (Court of Errors and Appeals, 1855). The wife’s inchoate right of dower was an encumbrance, and its existence is a breach of a covenant against encumbrances. Carter v. Denman, 24 N. J. Law (3 Zab.) 260, 272, 273 (Supreme Court, 1852). In the second place, a vendor is in equity a trustee for the vendee from the time of the execution of the agreement. King v. Ruckman, 21 N. J. Eq. (6 C. E. Gr.) 599, 604 (Court of Errors and Appeals, 1870); Houghwout v. Murphy, 22 N. J. Eq. (7 C. E. Gr.) 531, and opinion of Justice Depue, 546, 547 (Court of Errors and Appeals, 1871). The failure of the vendee to perform the contract on his part strictly at the time fixed, if the vendor is ready to perform, does not in equity discharge the contract, unless by the contract itself,' or circumstances proved in the case, time is made or has become of the essence of the contract, or the delay has made specific performance inequitable. This is the radical difference between the equitable and legal rights on failure to perform strictly the terms of such contract. The equitable remedy remains, although •neither party was ready on the contract day, and no action at law would lie in favor of either party. King v. Ruckman, 21 N. J. Eq. (6 C. E. Gr.) 605; Zimmerman v. Brown, 36 Atl. Rep. 675, 677 (Vice-Chancellor Emery, 1897); Freeson v. Bissell, 63 N. Y. 168, 176 (1875). Flynn therefore was not released from the contract by the refusal of the vendee to accept the deed without the wife joining, and the conveyance of Flynn’s rights to the land being made to the Napuranos with actual as well as constructive notice, these" defendants, so far as Flynn himself is concerned, hold the legal title as trustees for complainant, and subject to complainant’s agreement. Houghwout v. Murphy, supra.

The deed to the Napuranos, being executed and acknowledged by both husband and wife, also passed to them the lands free of Mrs. Flynn’s inchoate right of dower, and if they now convey the lands to complainant the complainant will receive from them a title free from the inchoate dower. Complainant could not have compelled Mrs. Flynn to convey her interest, as the agreement, although signed, was not acknowledged under the statute. P. L. 1898 p. 685 § 39, tit. "Conveyances;" Goldstein v. Curtis, 63 N. J. Eq. (18 Dick.) 454 (Vice-Chancellor Pitney, 1902); Ten Eyck v. Saville, 64 N. J. Eq. (4 Dick.) 611 (Vice-Chancellor Stevens, 1903). And Mrs. Flynn, not being bound in any way by the agreement, was entitled to bargain for the sale of her inchoate right of dower as her own property. Ten Eyck v. Saville, supra. By the conveyance to the Napuranos this estate is in fact released and discharged altogether, and their conveyance to complainant would convey the property free from this encumbrance, which they have discharged by a purchase and conveyance from the wife. This encumbrance cannot be reinstated or retained by directing the Napuranos to convey only Flynn’s former estate in the lands, or to convey the lands subject to this dower, for the wife’s inchoate right of dower is an interest, created by operation of law, in lands of which the husband is seized, and it would seenpto be beyond the power of a court to create in a third person an estate of this character, and having its incidents, irrespective of the husband’s seizin. The experiment of creating such an anomalous interest in lands should certainly not be made, but" the equities of the parties should be worked out under the conditions' the parties have themselves created, so far as practicable. Defendant’s counsel, in view of this status of the inchoate dower right," suggests that in order to work out the equities in the ease a reconveyance to Flynn be directed, the result of which would be to reinstate Mrs. Flynn’s inchoate right of dower in the lands. But, on full consideration, I can see no reason why a court of equity, for the purpose of relieving either Mr. or Mrs. Flynn from an embarrassment which has resulted from their own conveyance, should now exercise its powers to restore them to the status which existed before the conveyance. The conveyance, as to Flynn’s interest, was made against equity, and as to Mrs. Flynn’s, was the method she chose for availing herself of a strictly legal right. Her omission to fully protect herself is not, under the circumstances, any basis for an appeal to equity to remedy the omission by restoring the status. This course should not be taken if the complainant’s equity to a conveyance under the agreement can be at all worked out with the title in its present status in a manner that will give defendants all the equities they are entitled to under the conditions they have themselves created. This can be done by taking into account the fact that the Napuranos, by receiving this deed, have in fact discharged the encumbrance of the inchoate right of dower, an encumbrance which was prior to complainant’s right. Having discharged it, they are entitled to be paid for this, just as thej^ would be reimbursed if they had discharged taxes, or any other prior encumbrances. The amount to be paid cannot, however, be fixed by the terms of the agreement. The agreement does not contemplate any further payment to Mrs. Flynn for the dower right unless their deed is held good, and makes no express agreement for further payment if the deed be set aside. The agreement seems to be based on the theory that if the Saldutti contract was held valid against the purchasers, the deed of the latter would be set aside and no title at all would remain in the Napuranos. Therefore it did not provide in express terms for the real status which exists in equity, viz., that the deed is still valid for the purpose of conveying the legal title, but this title is held in trust for the equitable owners. The conveyance having failed to convey complete title to the lands, the purchasers are not bound under the agreement, as I construe it, at all events, and whether they get Flynn’s title or not, to pay Mrs. Flynn $500 for her dower right, but are only obliged to pay this $500 to her as part of the whole consideration of $5,100, and on getting the whole title. But inasmuch as payment to Mrs. Flynn for the convejrance of her interest was clearly contemplated, and the agreement did not provide for any contingency on which tire purchasers should hold the estate without payment, she is entitled, I think, to recover compensation for her interest. The amount to be recovered will not, however, be the price fixed in the agreement, as the deed, so far as the purpose of the payments to her or to Flynn is concerned, has been set aside, and the right of recovery would be for the reasonable value of her interest. This might be recoverable at law on the common counts. 2 Ch. Pl. *39. Complainant, therefore, as a condition for the conveyance by the Napuranos, free from this inchoate dower right conveyed or released to them, and for the value of which they are or may be liable, must pay this value, to be settled by the court. This amount must, however, be paid to Mrs. Flynn, as the Napuranos have not paid her for it, but on the condition that she release the Napuranos from any further claim to recovery under the agreement. If she declines to do this, the payment must be made to the Napuranos, leaving her to her remedy at law against them.

The next question is whether the complainant is entitled to compensation from Flynn for this payment. Complainant’s counsel suggests indemnity by a retention of a portion of the fund in court, but as the inchoate right of dower is in fact gone, and the conveyance from the Napuranos would be free of any estate in dower, there is no estate or encumbrance to be indemnified against. By reason of this fact the case does not come within the application of the decisions relied on by counsel for Flynn as establishing the rule that on the refusal of the wife to join in the conveyance the husband cannot, on a bill for specific performance, be required to make compensation or .give indemnity unless the wife’s refusal has been at his instance or by collusion. This question arose in these cases only because the wife’s interest was still outstanding at the time of the conveyance directed by the court, and the purchaser received title subject to the wife’s inchoate dower. Complainant has a right to compensation in this case, arising from the fact that, as Flynn has not the legal title, and does not make the conveyance, it will not be possible to decree that he make a conveyance of his title with warranty, as required by the contract, and thus give complainant a remedy at law. If Flynn still held the title, and the wife, without any collusion with him, had refused to join in the deed, the only conveyance the court could direct would be n conveyance with warranty, which would léave complainant to his remedy at law for breach of the covenant against encumbrances. Such conveyance would not give complainant the entire estate for which he contracted, but it would give all of the estate over which the court had control, and carry out the contract, so far as practicable. But as Flynn malees no conveyance, this remedy at law cannot be given or reserved, and the status on the entire case is that complainant, being obliged to make compensation to the Napuranos for the removal of an encumbrance which Flynn was bound to remove in order to carry out the contract, can have no'reimbursement or recovery for this payment unless it be made in this suit, and by a deduction out of the purchase-money coming to Flynn. The court, under these circumstances, should do complete justice between the complainant and Flynn in this action, and to do this complainant must be allowed a deduction for the amount payable to the Napuranos or Mrs. Flynn. The Napuranos, having paid to Flynn $200 on account of the purchase-money,' are also entitled to receive that sum out of the purchase. This 'right is independent of the agreement for repayment: And Flynn, having received no more than this amount, is entitled to receive the balance upon the deed being made to the complainant by 'the Napuranos. At the hearing some question was raised as to complainant’s assignment of part of his interest in the contract, and releases of these interests or consent to the conveyance to complainant should be given if required. This matter may be raised at the settlement of the decree, and also the matters 'of interest and accounts for rents.


author: Stevens, Y. C.

text:
    Allen L. Ramsey v. Perth Amboy Shipbuilding and Engineering Company.
    [Decided December 15th, 1906.]
    1. A written contract with the United States government, providing for payment “at such times and in such amounts as the officer in charge of the work might elect,” cannot be varied by parol evidence that government officers stated, when attention was called to such provision just before signing, that payments could be. expected every thirty days.
    2. Where a contractor fails to fulfill his contract, it is the duty of the other party to make reasonable exertions to mitigate his loss.
    8. Evidence of a claim for damages for breach of contract filed with a receiver considered, and held not to show that the claimant could have done anything to mitigate the loss.
    4. The burden of proving that damages for breach of contract could have been mitigated rests on the party guilty of the breach.
    5. The provision in a shipbuilding contract giving the party contracting for the ships power to complete the work in the event of failure by the other party is not compulsory.
    On appeal from the determination of a receiver.

      Mr. John B. Vreeland and Mr. Harrison P. Lindabury, for the United States of America.

      Mr. Adrian Lyon and Mr. Frank P. McDermott, for the receiver.
   Stevens, Y. C.

This is an appeal from the disallowance by the receiver of the shipbuilding company of a claim presented by the United States.

The claim is one for damages for breach of a contract by the shipbuilding company to construct two vessels for the price of $105,000. After twenty per cent, of the work of construction had been done in the case of one of the vessels, and twelve and a half per cent, in the case of the other, the company failed. The government readvertised. The lowest bid for two similar boats was $154,670, and these boats were built at that price. The damages demanded are the difference between this sum and the sum for which the shipbuilding company agreed to build.

The first contention is that the company was disabled from performing because the government did not make those payments on account to which it was entitled.

The contract provided for “payment to be made at such times and in such amounts as the officer in charge of the work might elect.” The effort was to vary this contract by evidence to the effect that government officers stated, when attention was called to this clause, just before signing, that payments could be expected about every thirty days. No payments, in fact, were made. The statement, if proved, is obviously at variance with the terms of the writing, and for that reason inadmissible. Naumberg v. Young, 44 N. J. Law (15 Vr.) 331; Hallenbeck v. Chapman, 72 N. J. Law (43 Vr.) 202. It is none the less so because it is put in as evidence of custom.

It is secondly contended that the United States took too much time to approve the plans for portions of the work from time to time submitted, and so prevented the work from being done. These plans were prepared by the shipbuilding company as the work progressed and submitted to the quartermaster’s department in New York. They were frequently returned with modifications and corrections. The company prepared new plans and blue-prints with these modifications and corrections embodied in them. They were again submitted to the quartermaster’s department, and, if satisfactory to it, sent to the American Bureau of Shipping, for approval by that bureau, the specifications so providing. After examination by this latter body they were returned to the quartermaster’s department, which returned them to the shipbuilding company. This took time. Mr. Master, the receiver’s witness, said on his direct examination that the plans were very much delayed, but his cross-examination, taken in connection with the written correspondence and with the evidence of Mr. Scott, tends to show that the government acted with reasonable diligence.

It is perfectly evident, on the testimony of Mr. Master himself, that the price at which it was agreed t'o build was too low, and that it would have been impossible for the company, with the force of men at its disposal, to have completed the vessels within the time specified.

I can find nothing in the evidence going to show that the failure to perform the contract was due to delay in the quartermaster’s office.

The point upon which receiver’s counsel principally relied was that it was the duty of the government to have mitigated the loss—to have taken the partially-constructed boats and completed them.

It is said in Benj. Sales (4th Am. ed.) 1327 that

“in every case the buyer, to entitle him to recover the full amount'of damages, must have acted throughout as a reasonable man of business, and done all in his power to mitigate the loss.”

The supreme court of the United States (Wicker v. Hoppock, 73 U. S. 94, and Warren v. Stoddart, 105 U. S. 224) lays down the rule as follows: “Where a party is entitled to the benefit of a contract, and can save himself from a loss arising from a breach of it at a trifling expense or with reasonable exertions, it is his duty to do it, and he can charge the delinquents with such damages only as with reasonable endeavors and expense he could not prevent.”

The rule applies as well to cases of contract as to cases of tort (Sedgw. Dam. 205), and may be variously illustrated. If A breaks down B’s fence, and B does not repair till months after-wards, in consequence of which cattle get in and destroy the next year’s crop, B cannot sue for- the loss of the crop, but only for the cost of repairing the fence. Loker v. Damon, 17 Pick. 284. If a servant be wrongfully discharged, it is incumbent upon him1 to seek other similar employment, and the amount earned, or that might, with reasonable effort, have been earned, will go in reduction of his damages. Larkin v. Hecksher, 51 N. J. Law (22 Vr.) 135. If A and B enter into a contract, by the terms of which A is to give B possession of certain machines, which B is to sell for A on commission, and these machines are taken out of B’s possession by C, who also tenders to B the right to sell them in a way equally remunerative to himself, B cannot recover from A the amount of commissions so agreed upon. Beymer v. McBride, 37 Iowa 114. If a common carrier agrees to transport A’s oats within a certain time and fails to do so, and- the oats become mouldy in the hands of A’s agent after that time, when he might have preserved them from injury by stirring, A cannot recover for the depreciation in the value of the oats, attributable to the failure to bestow necessary care. Hamilton v. McPherson, 28 N. Y. 72. If A agrees to make boilers for B, and after the work has been commenced, B notifies A that he rescinds the contract, it is A’s duty, as soon as practicable, to stop the work. He cannot thereafter go on to the injury of B. Dillon v. Anderson, 43 N. Y. 231. In all these cases it was held that the plaintiff was bound “to mitigate the loss by acting as an ordinary man of business would have acted.” The law, for wise reasons, to quote the words of Justice Seldon, in Hamilton v. McPherson, “imposes upon a party subjected to injury the active duty of making reasonable exertions to render the injury as light as possible.”

But the rule requires such exertions only as are reasonable. This is illustrated by two cases in the supreme court—The Baltimore, 8 Wall. 377, and The Falcon, 19 Wall. 75. In the former case' a schooner was sunk in a collision with the steamer Baltimore in water so shoal that the masts projected eighteen feet above the surface. It was found that the vessel could have been easily raised and repaired, and it was held that the owner could not recover damages as for a total loss. In the latter case the vessel sank in five fathoms of water, and it was found that she could hot have been raised and repaired without a large expenditure of time and money. It was held that the steamer Falcon was liable for her full value. In the case of The Havilah, 50 Fed. Rep. 331, the court refused to allow as damages the cost of raising and repairing a sunken vessel so far as that cost exceeded the value of the boat at the time of the collision.

In the light of these adjudications, let us look at the facts of the present case. The two vessels were to cost $105,000. The lowest bid which the government could obtain on readvertising was $154,670. The receiver’s witness, Master, says that the' vessels which the shipbuilding company agreed to construct would, when completed, have been worth $85,000 apiece, or $170,000, and that the bid of $154,670 was low. He says, moreover, that the amount of work done upon the two vessels at the time the company failed was fairly represented in money by the sum of $40,000. It will thus be seen that even had the government been in a position to have gone on and completed these boats they would, in all probability, have cost not less than $114,000, and the government would still have had a claim of $9,000 against the receiver, while the receiver, who now has the incomplete vessels, would have had no further interest in them or claim respecting them. But it is not likely that the government could have finished the boats for $114,000. The photographs show that they were far from being in a condition to be launched. Their bare ribs were not even, to any considerable extent, plated. It is .not shown that the government had any facilities for taking up the work where it had been left off. It had at that point no tools, no machinery, no force of men, no organization. It is not shown by the receiver that any other yard would have undertaken the work of completion at a price that would have been advantageous to him. No one can read the evidence without coming to the conclusion that it would probably have cost the government considerably more than $114,000 to have finished the vessels, or to have procured a contractor to finish them. The burden of proving that the damages sustained could have been mitigated rests upon the party guilty of the breach of contract. Hamilton v. McPherson, 28 N. Y. 72; Howard v. Daly, 61 N. Y. 362. The receiver has not shown affirmatively that effort and expenditure by the United States in the direction suggested by him would have resulted in any substantial benefit to the trust which he represents.

The suggestion that article-5 of the contract, which gives the United States power to complete the work, is compulsory, is completely met by Bernz v. Marcus Sayre Co., 52 N. J. Eq. (7 Dick.) 275, lately decided by the court of errors and appeals.


author: Stevenson, V. C.

text:
    Chauncey H. Strickland v. National Salt Company.
    [Decided October 19th, 1906.]
    1. A corporation, authorized to issue stock oC the par value of $250 in payment of property or corporate stock, must, to make lawful the issue of stock in consideration of acquiring the stock of another corporation, and to supply a sufficient consideration for a promise to pay an additional sum for such stock, make a bona fide appraisal of the actual cash value of the stock acquired at a sum not less than the par value of the stock issued, together with the additional sum agreed to be paid.
    2. An intentional disregard of the statutory rule, involving an intentional overvaluation of property acquired by a corporation, is a form of fraud prohibited by the statute, and the issuing of stock without making any appraisal of the value of the thing purchased thereby is unlawful.
    3. A domestic corporation was authorized to issue stock of the par value of $250 in payment of property of that value, including shares of corporate stock. The corporation agreed to pay $250 in its own stock for each share of a foreign corporation, and agreed to pay, in addition, $106.25 in ten semi-annual installments.—Held, that if each share of stock of the foreign corporation was worth $356.25, the semi-annual installments would be ordinary debts, the equivalent of which had gone into the treasury of the domestic corporation, and would not be dividends.
    4. A domestic corporation agreed to pay $250 in its own stock for each share it acquired of the stock of an Ohio corporation, and, in addition, it agreed to pay $106.25 for each share. The domestic corporation brought suit in the courts of Ohio against the foreign corporation and a trust company, acting on behalf of the certificate-holders, to set aside the agreements.—Held, that a decree of the Ohio court canceling the agreements was binding on the trust company, and was res judieata in a proceeding by it to establish a claim against the domestic corporation for the amount which it had agreed to pay for the stock.
    On appeal from the adjudication of the receivers disallowing the claim of the American Trust Company, Limited, amounting to $725,156.40, with interest thereon.

      Mr. Joseph H. Adams and Mr. Charles E. Hendrickson, Jr., for the appellants.

      Mr. Charles W. Fuller and Messrs. William B. Putney and TIenry B. Twombly (of New York), for the receivers.
   Stevenson, V. C.

My conclusion is that the adjudication of the receivers should be affirmed.

1. The question might be raised whether there ever was any lawful consideration for the contract of the National Salt Company to make these cash payments to the certificate-holders on whose behalf the trust company presents its claim. The New Jersey company, the National Salt Company, bought the shares of stock of the United Salt Company, the Ohio corporation, from these certificate-holders, and undertook to pay the consideration partly by an issue of its own stock and partly with cash, which was agreed to be paid in installments during a period of five years. It is unnecessary to set forth the details of the transaction or exhibit the parts which the National Salt Company, the United Salt Company, the American Trust Company and the stockholders of the United Salt Company, who became certificate-holders, took therein. These details appear to be quite fully set forth in the report of the decision of the federal circuit court of appeals hereinafter cited.

Eor present purposes the fact to be kept in view is that the National Salt Company paid for the stock of the Ohio company which it bought, in part at least, by an original issue of its own stock. Under the certificate of incorporation of the National Salt Company and the laws of New Jersey, this company could lawfully issue stock of the par value of $250 in payment for property of that value in cash, including shares of stock such as that of the United Salt Company. In this instance this company agreed to pay, and did pay, $250 in its own stock for each share it acquired of the stock of the United Salt Company of the par value of $100, and it also agreed to pay, and undertook to bind itself legally to pay, in addition, the sum of $106.25. In order to make the issue of stock lawful and supply a sufficient consideration for the promise to pay the $106.25, the directors of the National Salt Company must have made a bona fide appraisal of the actual cash value of the stock of the United Salt Company at a sum not less than $356.25 per share. Whether the appraisal would support the stock issue and the agreement to pay the $106.25 if the value found was less than the above-mentioned sum ($356.25) by the discount on the installments I do not stop to consider. The question of fact suggested is whether, applying the rule laid down by the court of errors and appeals in Donald v. American Smelting Co., 62 N. J. Eq. (17 Dick.) 729, the inference must be drawn from the testimony in this case that the directors of the National Salt Company were guilty of fraud in this transaction. Intentional disregard of the statutory rule involving an intentional overvaluation of the property purchased, of course, is one form of the fraud prohibited by the' statute. Issuing stock without any valuation at all—without making any appraisal or ascertainment of value of the thing bought—must, I think, likewise be condemned.

In this case there seems to be room to argue that, after placing the burden of proof upon the objectors to this claim, the evidence leads to the conclusion that there was no appraisal of the value of the stock of the United Salt .Company at the sum of $356.25 per share, or that sum less the discount on the deferred payments, or at $250 in cash, or any other sum of money whatsoever. Of course, a valuation of the acquired property in stock of the purchasing company, or an agreement made in entire good faith providing an equitable basis for the exchange of stock, is not a compliance with the statutory rule. The directors of the purchasing company are bound to honestly determine the value of the property which they acquire in money. The value in money so ascertained is the measure of the amount of stock at par which may be issued therefor.

It may be argued that, for all that appears in this case, all the parties to this transaction went into it knowing well that each share of stock of the United Salt Company was fully paid for, or more than paid for, by the two and one-half shares of stock of the National Salt Company for which it was exchanged. The result might be that the agreement on the part of the National Salt Company to pay $106.25, in addition to giving two and one-half shares of its stock, should be held to be without consideration. See Volney v. Nixon, 68 N. J. Eq. (2 Robb.) 605 (1904).

Another view also might be that a full consideration should be accorded to the promise to pay the $106.25 if the share of stock of the United Salt Company acquired was worth that much money, while any deficiency in the value of the acquired share to make up the total of $356.25 would be collectible by a call on the two and one-half shares of stock of the National Salt Company.

I shall not consider any of the legal questions which arise in case the proposition of fact should be established that there was no bona fide appraisal of the stock of the United Salt Company at the value in money of $356.25 per share, and that all the parties to this transaction were so informed. It is this fundamental proposition of fact which remains undetermined, so far as this case is concerned.

2. It is also unnecessary to discuss or determine the question whether the agreement to pay the $106.25 in cásh in ten semiannual installments through a period of five years was in fact an attempt to guarantee the payment of dividends for that period of time upon the new stock issued by the National Salt Company. In an action brought by a certificate-holder against the company the United States circuit court of appeals, second circuit, decided this question upon the evidence then before the court adversely to the certificate-holder. National Salt Co. v. Ingraham, 122 Fed. Rep. 40 (1903). The same court, when the same case was brought before it again, held that its prior decision was erroneous, and ruled the other way. Ingraham v. National Salt Co., 130 Fed. Rep. 676 (1904).

If the evidence shows, as a matter of fact, that each share of stock of the United Salt .Company was worth $356.25, then the semi-annual installments would not be dividends paid out of the profits, but would be ordinary debts, the equivalent of which had gone into the treasury of the company, and thus constituted the fund, or the origin of the fund, from which such debts may be paid. If for every $106.25 which the National Salt Company agreed to pay out it had received an exact equivalent, or an' equivalent less the discount' on the installments, there are certainly strong grounds for arguing that the engagement is not a contract to guarantee dividends. On the other hand, if the directors of the National Salt Company in good faith appraised each share of stock of the United Salt Company at $356.25, it certainly is a singular coincidence that such value exactly sustained the new issue of stock and exactly supplied the equivalent of the guaranteed dividends which, according to the terms of the original deal, the stockholders of the United Salt Company' were to have. Of course, the transaction is not to be condemned as unlawful because it accomplished the same object which might be accomplished, or formerly was attempted to be accomplished, by an unlawful means. Pierce v. Old Dominion, &c., Co., 67 N. J. Eq. (1 Robb.) 399; see pp. 422, 423. This whole question whether the agreement under consideration was an agreement to pay for property or an agreement to guarantee dividends is purely one of fact, and I think is essentially connected with the question of fact above referred to relating to the bona fide valuation of the stock of the United Salt Company. '

3. I have left the questions of fact and of law above indicated undecided because it seems to me beyond all question that the appellant, the American Trust Company, and its successors are bound by the decree of the Ohio court, which has been put in evidence in this case. In an action in the court of common pleas in Cuyhahoga county, Ohio, which went to a decree after this appeal was taken, all the agreements upon which the appellant’s claim is based were declared void and set aside. The National Salt Company was the complainant in this action, and the United Salt Company and this appellant, the American Trust Company, and large numbers of the certificate-holders were defendants. The decree provided for the cancellation of all the agreements which the parties had made-and the exchanging back of the certificates of stock of the two salt companies. It is not suggested that this decree has even been appealed from by anybody. It stands in full force to-day, and no way has been suggested by which its force and effect as a bar to the appellant’s claim can be evaded. The decision of the receivers in disallowing the appellant’s claim will therefore be affirmed, upon the ground that the invalidity of the claim is res adjudicata.

Whether airy of the certificate-holders not parties to the suit in the Ohio court have valid claims which they are severally entitled to prove as debts before these receivers is a question which is not presented for consideration. It is the claim of the American Trust Company, acting on behalf of all the certificate-holders under the instruments which have been set aside as illegal and void, that the receivers have properly disallowed. See National Salt Co. v. Ingraham, IIS Fed. Rep. 306 (1906).