text:
    Josie Downing Field v. Hugh B. Thistle et al.
    [Filed July 24th, 1899.]
    1. Where a testator held land subject to a mortgage, and the mortgage is •not foreclosed until after the time for presenting claims to the executors has -expired and a decree barring creditors has been taken, the claim may still be maintained, as before foreclosure it is contingent and not presentable to the .executors.
    2. An assumption clause in a deed read: “ This conveyance is made expressly subject to a mortgage encumbrance, * * x together with interest and taxes, x x x all of which are assumed by the party of the second part.” — JHeld, the payment of the principal of the mortgage, as well as the Interest and taxes, was assumed.
    3. A mortgagor conveyed the mortgaged property by a deed containing an .assumption clause. This grantee conveyed it to another and the third to a fourth, each of the deeds containing similar assumption clauses. The mortgagor became hopelessly insolvent, and, after notice of foreclosure suit having been begun, executed a release of the assumption clause to his grantee, who in turn executed a release to his grantee. These releases were executed in pur-suance of an understanding that all the assumption clauses should be released successively. —Held, sufficient to establish fraud in the releases.
    4. When mortgaged property has been'sold several times, each grantee assuming the mortgage, the successive grantors are all proper parties to the foreclosure suit.
    5. After notice of an action brought to foreclose a mortgage, all releases of •the mortgage by the grantors ,to persons who have assumed it upon purchasing .are void, even though the practice does not permit a judgment for deficiency-in the foreclosure suit.
    6. Unpaid taxes on mortgaged property at time of sale under foreclosure suit ■cannot be added to the deficiency, as the purchaser bought subject thereto.
    On bill, &c. Heard on bill, answers, replication and oral j> roofs. '

      Mr. Louis A. Ziegler, for the complainant.

      Mr. W. Bradford Smith, for the defendants Bray and Thistle.

      Mr. Alfred F. Stevens, for the defendant Royle.

      Mr. Charles F. Lighthipe, for the defendant McChesney.
   Emery, V. C.

This is a bill for deficiency filed by the mortgagee against-Thistle, the obligor and mortgagor, and against the successive-grantees of the mortgaged premises, being Royle, Bray and McChesney, in the order named, who have, it is claimed,, assumed.the payment of the mortgage in their respective deeds. The mortgaged property was sold under foreclosure proceedings,, to which the mortgagor and the grantees were parties defendant, and a deficiency of over $900 exists. On the day before the-sale Thistle, the mortgagor, released his grantee, Mrs. Royle, from her covenant of assumption, and she also released her' grantee, Bray, from his covenant to assume made in her deed to-him. The covenant of McChesney, the last grantee, with Bray has not been released, but McChesney has died since the conveyance, and his executors, who are parties as his devisees, claim that the right to recover against them is barred by reason of the-failure of complainant to exhibit his claim under oath within the time limited by the order to bar creditors, upon which a decree barring creditors has been duly made. The sale under-foreclosure was not made, however, until after the expiration of the time limited 'by the order for presenting claims, and this defence of failure to present the claim must therefore be overruled on the authority of Terhune v. White, 7 Stew. Eq. 98 (Chancellor Runyon, 1881), which holds that before foreclosure the claim is contingent and cannot be proved against the estate. The first question in the case is the construction of the clause-of- assumption in the deed from Thistle to the defendant Mrs. Royle, then Mrs. Cross. The covenant is as follows (punetuatim et literatim):

“This conveyance is made expressly subject to a mortgage encumbrance of three thousand dollars, given by the said Hugh B. Thistle .to the said Josie-Downing Smith, dated October (1st., 1886) first, eighteen hundred and; eighty six. Together with interest.and taxes from October first eighteen hundred and eighty six. All of which are assumed by the party of the second< part."

Mrs. Royle claims that by the true construction of this covenant the clause of assumption reaches only the interest and taxes from October 1st, 1886, and not the principal of the mortgage. X think, however, that “all of which” means “every one of which,” and must include every one of the encumbrances previously set out, being the mortgage of $3,000, interest and taxes, .and cannot be restricted to the last two encumbrances. In Wise v. Fuller, 3 Stew. Eq. 257 (1878), Vice-Chancellor Van Fleet (at p. 366) construes a somewhat similar contract in reference to .a like objection.

The assumption of Mrs. Royle extends, therefore, to the payment of the mortgage, and as to form there is no question in reference to the subsequent assumptions by the other grantees. The question on these relates to the effect of th.e releases, which were made before the beginning of this suit, but after decree of foreclosure in a suit to which all parties to the foreclosure were parties, and in which suit they were made parties, as ultimately responsible for any deficiency resulting in the sale.

Complainant (by her amended bill) alleges that at the time of •making the releases, Thistle, the mortgagor, was insolvent, and ■that the releases were made in fraud of her rights as a creditor, ¡after notice of her claim. The defendants Thistle, Royle and Bray, answering separately, deny the fraud charged. Mrs. Royle and Bray deny the assumption of the mortgage by Mrs. Royle, and Bray alleges, in addition, that the clause of assumption in the deed from Mrs. (Cross) Royle to him was inserted by mistake. McChesuey’s executors also set up the insertion 'by mistake in the deed from Cross to Bray, and also that the ¡same clause was inserted by mistake in the deed from Bray to McChesney. If the releases had not been given, the defences ■of alleged mistake set up in these answers could perhaps be considered only on cross-bill. Green v. Stone, 9 Dick. Ch. Rep. 387 (Errors and Appeals, 1896), and cases cited p. 400. But it is claimed that the parties have the right by their releases to reinstate or restore voluntarily the equities which could otherwise have been enforced by suit, and that the question of fact is -whether the consideration of the releases was the bona fide restoration of these equities, or whether the releases were tainted with fraud on a creditor. This claim proceeds of course upon the-theory that the releases could be made by the act of the parties after filing of the bill to foreclosure, in which the releasors were-made parlies, as ultimately liable for the deficiency. On this assumption and considering the evidence, I conclude that the clause of assumption was not inserted by mistake in the deed from Mrs. Cross to Bray, but that it was specially inserted in her deed to Bray with the special object on her part of protecting herself in case she was liable for the mortgage on her own-covenant. This appears by her own evidence, and there being no mutual mistake there could have been no reformation of the deed based on this ground. Green v. Stone, 9 Dick. Ch. Rep. 387, 396. Bray’s defence of mistake therefore fails, whether considered as a substantial equitable defence to an existing covenant of assumption, or as the consideration of a release of such-covenant. No other consideration for the release to Bray than-this alleged mistake was either set up in the pleadings or urged at the hearing. No evidence of mutual mistake in the deed from Bray to McChesney was given. I conclude also upon the-evidence that the releases, whatever their consideration as between the parties, were actually intended to defraud complainant as a creditor of Thistle. Thistle was hopelessly insolvent, judgments-of about $40,000 appearing to have been outstanding for several years, and the releases were all made as part of one transaction by which upon Thistle’s releasing Mrs. Cross, she in turn waste release Bray, and this was the plan actually carried out. These releases were made after the foreclosure suit had commenced and notice received that complainant relied on their liability, and the circumstances of Thistle’s release were such as to-charge Mrs. Royle and Bray with the duty of inquiring into his financial condition and with knowledge of his insolvency. As-guarantors they were proper parties in the foreclosure suit, for •the purpose of attending the account and protecting themselves at the sale. Jarman v. Wiswall, 9 C. E. Gr. 267, 270 (Chancellor Runyon, 1873); Dorsheimer v. Rorback, 8 C. E. Gr. 46, 48 ; S. C. on appeal, 10 C. E. Gr. 516, 519; United Security, &c., Co. v. Vandegrift, 6 Dick. Ch. Rep. 400 (Vice-Chancellor Van Fleet, 1893).

Under the former practice of obtaining a decree for deficiency in the foreclosure suit, no release' after suit brought to collect the deficiency in the foreclosure suit would have been effective. Green v. Stone, 9 Dick. Ch. Rep. 387, 396, 399. And although the decree for deficiency cannot now be obtained in the foreclosure suit, yet the commencement of a suit for foreclosure, to which the defendants assuming the mortgages are properly made parties, as ultimately liable for deficiency, is, in my judgment, such an acceptance of their obligation and action thereon as the mortgagee is entitled to rely on as.fixing his rights to enforce the covenant, and terminates the right to release by the voluntary act of the parties. After the filing of such a bill against the grantees, as having assumed the mortgage, and for the purpose of commencing the enforcement of their ultimate liability by settling finally for that purpose the amount of the debt and of the*deficiency, the mortgagee is entitled to have the equities, which are relied on as a basis for discharging the release, made an issue on the record and decided by the court after hearing the parties interested, and cannot be deprived of this right by the voluntary release between the parties subsequently made. Bring an action to foreclose and claim therein for deficiency is such au adoption of the covenant by the mortgagee as terminates the right to release. 1 Jones Mort. (2d ed.) 764, and cases cited.

In my judgment the action to foreclose, which under our present practice must precede the bill for deficiency, has the same effect if the grantees liable for deficiency are made parties to the bill for the purpose of settling the amount of their liability.

I find, therefore, that as against the complainant the releases are void and the parties are all liable, but in an order which has been affected by the releases. These, although void against complainant, are valid between the parties. Youngs v. Trustees, &c., 4 Stew. Eq. 290, 303 (Errors and Appeals, 1879). The order of liability will be, first, McChesuey’s executors; second, Thistle; third, Mrs. Royle, and fourth, Bray.

The unpaid taxes upon the property at the time of the sale cannot be added to the amount of the deficiency. The land was purchased subject to these taxes which were prior Hens, and it must be assumed that the bid at the sale was made for the property subject to these taxes to be paid by the purchaser.


source: Caselaw Access Project

author: Emery, V. C.

license: Public Domain

text:
    Andrew H. Kellogg v. Frank M. Scott et al.
    [Filed August 7th, 1899.]
    1. Where an employer increased the duties of his bookkeeper and collector, so that he was required to perform the duties of cashier, and as such had control of all the cash of the business, a surety on the employe’s bond as bookkeeper and collector, conditioned for the faithful performance of his duties, and to pay over all moneys received in that capacity, was not liable thereon for an embezzlement, though accomplished by means of fraudulent entries by such employe as bookkeeper, since the extending of such employe’s duties was an increase of the risk and discharged the surety.
    2. Where, in an action on an employe’s bond, complainant’s evidence showed that the surety had been discharged by reason of an increase in the employe’s duties not covered by the bond, defendants were entitled to amend their answer in order to place such defence formally on record.
    On bill to foreclose, &e. Heard on bill, answers, replication and proofs.

      Mr. Leon Abbett, for the complainant.

      Mr. Henry H. Dawson and Mr. John O. H. Pitney, for the defendant American Insurance Company.
   Emery, V. C.

Complainant files a bill to foreclose a mortgage given by Mrs. Fish upon her lands to secure whatever might become due to •complainant under a bond given by defendant Frank M. Seott .and Mrs. Fish, who was his mother, as his surety, upon complainant taking Scott into his employment. The bond, a joint and several bond of principal and surety, dated November 19th, 1892, in the penal sum of $7,000,. contains the following recital .and condition :

“ Whereas, the above bounden Frank M. Scott is about to act as bookkeeper .and collector for the above named Andrew H. Kellogg and by reason thereof, •will have the control of sums of money and be required to perform various .acts. Now the condition of this obligation is that if the above bounden Frank M. Scott shall well and truly account for and pay over and dispose of .all moneys and property of the said Andrew H. Kellogg, which may come into his possession or under his control, and shall well and truly discharge and perform all his duties 'as such bookkeeper and collector, and if the said obligors or either of them shall pay over to the said Andrew H. Kellogg the -.sum and amount of any and all loss, damages, costs and expenses suffered or incurred by the said Andrew H. Kellogg, by reason of the failure of the said Frank M. Scott to pay over and account for all moneys and property, or his failure to discharge and perform all his duties as aforesaid, within ten days after notice is given to the said Rosanna E. Fish, of the sum and amount so •to be paid, then this obligation to be void,” &e.

Scott entered the employment of complainant on November 23d, 1892, continuing until February, 1897. During that time Scott misappropriated bis employer’s moneys to the extent of :about $6,300, and the bill is filed to foreclose the mortgage for their repayment. Mrs. Fish, subsequent to the execution of this mortgage, and in November, 1893, gave a mortgage to the defendant the American Insurance Company, $1,000, for money loaned, and in August, 1895, gave another mortgage for $2,000 ■to the insurance company to take up the first mortgage of $1,000, which was then canceled, and to secure an additional loan. Fifteen hundred dollars is now due on this mortgage, with ■interest from February, 1897.

Mrs. Fish died in July, 1896, testate, having devised the lands -in question to her son, Frank M. Scott, for life, with remainder to his children, the infant defendants, and giving a power of sale to the defendant executors.'

The proofs showed that complainant was engaged in the job .printing business in New York City, the volume of which amounted from $80,000 to $130,000 a year during the time of Scott’s employment. Previous to this employment Scott had been convicted of embezzlement from a previous employer, and after serving part of his term of imprisonment had been pardoned. The complainant knew this and the surety, Scott’s mother, must also be presumed to have known it. From the time of his employment Scott was not only bookkeeper and collector, but also-the cashier of complainant, and the only cashier, and as such had charge of all the cash received in the office, as well as charge of the books and pay-rolls. He continued to be bookkeeper as well as cashier during his whole term of employment. He abstracted money under his control and, to the extent of $5,996, concealed the abstractions by means of false additions or footings in the-cash-book from time to time, by which false footings the cash paid out appeared to be larger than was actually paid, to the extent of his embezzlement. Scott also had charge of making out the pay-rolls for the employes and received the cash for their payment and paid the same. By false footings and other false-entries on 'the pay-rolls, he drew out from time to time more-money than he paid over to the employes, the deficiency from this source amounting to $312.66, as nearly as can now be ascertained on the present proofs.

Upon this state of facts, disclosed by complainant’s evidence,, it is insisted on behalf of the insurance company and the infant defendants, that the misappropriations of money were made by' Scott in his employment as cashier and not as bookkeeper, and that the bond properly construed covers only such defalcations-in Scott’s capacity of bookkeeper. The general words of the-condition provide that “Scott shall well and truly account for and pay over and dispose of all moneys and property of Kellogg, which may come into his possession, or under his control,”’ and are not in terms confined to money received by him as bookkeeper; but it is claimed that, in reference to bonds of sureties-for the faithful performance of the duties of an office or employment, it is a settled general rule of construction that where the-bond contains a recital of the character or scope of the employment, this recital will restrict the general words of the condition-to the service specified, unless it expressly appears that it was not intended to be so restricted. The reason for thus limiting the general terms of the condition by the recital is said to be that the object of the bond being a security on employment, if the parties state in the bond the character or scope of the employment, that will be taken as indicating the limit of the surety’s contract in the absence of any words which show that the parties intended that the recital shall not have this effect. And many cases have been cited in which, on the construction of the agreement itself, the recitals have been so construed to restrict the general words in the condition. The leading case is Arlington v. Merricke, 2 Saund., and the cases are collected in the note (A) (at p. 415, 3). Also in 1 Ch. Cont. (11th Am. ed.) 765; 1 Brandt S. & G. ch. 6 § 166, &c., and National Banking Association v. Conkling, 90 N. Y. 116 (Earl, J., at p. 121). But, in my judgment, the liability of the surety for a breach of the condition of the bond will still remain, even if it be held that the clause of the bond relating to the payment of money does not cover money under Scott’s control as cashier.

The bond secures “ the faithful performance of Scott’s duty as bookkeeper,” and this certainly includes the true entry and footing of the cash-book and pay-rolls, which as bookkeeper he makes up, as well as the duty of not abstracting his employer’s money which would come within his reach in the course of his employment as bookkeeper. Eor his failure to perform this duty of keeping true entries, the bond for securing his faithful services as bookkeeper is forfeited, and inasmuch as he himself took the moneys, whose abstraction, was concealed by the false entries which he made as bookkeeper, the employer, so far as the terms of the bond go, would, I am inclined to think, be entitled to recover substantial damages to the amount of the abstractions, either by the bookkeeper himself in any capacity, or by another, if the abstractions were intentionally concealed from the employer by means of the false entries made by the bookkeeper. Rochester City Bank v. Elwood, 21 N. Y. 88 (1860), and Jephson v. Howkins, 2 Man. & G. *366 (1841), seem to establish the right to recover such substantial damages as the ■result of false entries for the bookkeeper’s own profit. But assuming that the loss in question may be held to be the result ■of the failure of Scott to perform his duties as bookkeeper, the most serious question raised, in reference to the liability of the surety in this bond, arises from the fact that Scott was employed as cashier after the giving of this bond, which recited only his ■employment as bookkeeper and collector. This employment as ■cashier, with control as such over all the money, of the office as well as of the books — for he still continued as bookkeeper — was a material change by the act of the parties (Kellogg and Scott) without knowledge of the surety, in the nature of the duties of the employes, and it was a change that materially altered the •duties of the employment, so as- to affect the peril of the surety. The employment which was in the mind of the surety upon giving the bond and which the obligee was about to make, was that of bookkeeper and collector. These descriptions of the character of employment do not of themselves indicate an employment which would give control of the entire cash of a business like complainant’s, as well as of its books, nor is there any proof in the case that by the employment as bookkeeper and ■collector in complainant’s business, the control of the cash of the business as cashier was supposed by the parties to be included. The general rule is settled that in the case of bonds to secure the performance of the duties of an office or of an employment, where the nature of the employment is so altered, either by thé act of the parties, employer and employe, or of the legislature (in case of public office), that the risk of the surety is materially altered, the bond is avoided, even though it is forfeited by a breach of the duties of the original office or of the original employment, which was the subject of the guaranty. This general rule has not been questioned since the leading cases. Bonar v. MacDonald, 3 H. L. Cas. 226 (1850); Pybus v. Gibb, 6 El. & B. 902 (1856), and these cases were approved and followed in this point in Manufacturers’ Bank v. Dickerson, 12 Vr. 448, 451, &c. (Supreme Court, 1879).

The facts in this'case come within the application of this rule. The bond, as I construe it, was given on the promise to the surety to employ Scott as bookkeeper and collector, and his employment subsequent to the execution of this bond, as cashier as well as bookkeeper, did make, as I find upon the facts in the case, a material change in the nature of his employment, by which the risk of the surety was increased or varied to her disadvantage, and the bond must therefore be held void as against-the surety and those who claim under her.

In this case the defence of discharge of the surety by alteration of the contract of employment was not specially set up in the answer of the insurance company or of the infants, the-answers of the latter being formal only, and submitting their interests to the protection of the court. The question;, however,, was first presented by the complainant’s own evidence at the trial, and was fully argued by counsel, and is, in my judgment, the vital question in the case. Counsel may, if they desire, apply to amend the answers in order to put the defence formally on the record. As to the infant defendants, the court usually allows or directs such amendments in either bills or answers-filed on their behalf as may be necessary to protect their interests. Mitf. & T. Pl. & Pr. 419.


text:
    George Henry Allen v. Jonas W. Aylesworth et al.
    [Filed August 31st, 1899.]
    1. The fact that employers, when discharging an employe, gave certain' reasons therefor at the time, does not prevent them from assigning additional reasons in an action for such discharge.
    2. Where an employe who had agreed to work faithfully for his employers’ interest secretly examined their books, to which he had no right of access, such act was a breach of his contract, and his employers, acting in good faith, -were entitled to discharge him.

      3. When an employe wrongfully examined his employers’ books, to which he had no right of access, the fact that such employe’s refusal to obey orders to instruct another in his duties was anticipated, and brought about by his employers to give them an additional reason for his discharge, is not sufficient to show bad faith on their part in discharging him for his misconduct in secretly examining their books.
    4. In settlement of an employe’s interest in a firm, a contract was made by which he agreed, in consideration of a payment of money and a salary for future employment, to continue to work faithfully for his employers’ interest. The contract further provided that his employers should execute a trust of certain securities to be paid to him on the completion of the contract, and that, if he was 'discharged for cause, such securities should be returned to them. — Held, that such employe had no interest in the securities prior to the completion of the contract, and, on being discharged for misconduct before the expiration of the term, he was not entitled to recover them.
    Oil bill, &C.

      Mr. Samuel Kalisch, for the complainant.

      Mr. Elwood O. Harris, for the defendants.
   Emery, V. C.

Allen, the complainant, was in the employ of defendants Aylesworth & Jackson, under a written agreement for his employment for the term of two years and two months from November, 1896, and pursuant to which securities to the value of $1,000, purchased by these defendants, were deposited with a trustee upon the following express trusts and conditions:

“To pay the net income derived from said investments to said George Henry Allen as long as he remains in the employ of said party of the first part.
“To pay over said stock and said balance on moneys to said George Henry Allen upon the production by’him of an order in writing signed by said party of the first part [Aylesworth & Jackson] directing said trustee so to do.
“To pay over said securities to said party of the first part [Aylesworth & Jackson] if said George Henry Allen shall have been discharged for good and sufficient cause by said party of the first part.
“To pay to said George Henry Allen, at the expiration of said term of two years and two months, said securities and sum held in trust, provided he has lived up to the terms of this agreement, both in spirit and letter, and not otherwise.”

The provisions of the agreement as to the terms ” of employment were that complainant agreed with defendants •

" to remain in their employ and to work faithfully for their interest and advantage, following and obeying such instructions as they or either of them may give him from time to time/ ’

and the defendants agreed to pay the specified wages to complainant,

" provided said Allen faithfully performs such work as said party of the first part [Ayleswortli & Jackson] provides for him to do, and obeys such instructions as may be given him by said party of the first part, or either of them, and not otherwise, of which the said party of the first part are to be the sole judges ; the said party of the first part reserve to themselves and their personal representatives, however, the right to discharge said Allen without .assigning any cause therefor at any time, provided that said party of the first part, or their personal representatives, at the time of said discharge of said Allen, and as a condition precedent thereto, shall hand over to him, the said Allen, a paper writing directing Frederick R. Pilch, trustee, to turn over the .trust securities and moneys hereinafter set forth, and in his hands, to said Allen, and to take said Allen’s receipt therefor, which the said trustee shall thereupon do.”

Previous to the making of this agreement for employment, complainant had an interest in the profits of the business carried on, and on signing the agreement $300 was paid in cash by defendants to complainant, and complainant, in consideration of this payment and of the agreement for employment at the stipulated wages, released defendants from all claims to date. The agreement further stated that the purchase of the securities by defendants and their deposit with the trustee, was a further inducement to complainant to remain in their employ and to render them faithful and efficient service.

On May 7th, 1897, defendants discharged complainant from their employ, assigning at the time as the cause of discharge, first, that he had entered the office desk and examined books and papers in their absence and without their knowledge or consent; second, that he refused to obey instructions given him by Jackson, one of the defendants, to instruct another employe in the work about which he (Allen) had been engaged. In the answer and at the hearing defendants rely on additional reasons-for discharge; these being delay in getting to work and directions to employes, at several times, prejudicial to their interests. Such reasons, if sufficient, may be relied on even if not known-at the time. Sm. Mast. & S. *150, 151.

The first charge, that of opening the office desk and examining books or papers of defendants without their knowledge, is satisfactorily made out on the evidence, and such examination is not denied by complainant. He denies that he opened 'the top-of the desk, but says that he opened a drawer of the desk in which the shipping-book was at the noon hour, and his present explanation is that he looked at it because Jackson had told him a day or two before that business was falling off and he must lay off Carpenter, the brother-in-law of Allen, who was assisting' him, and he went to the books in his employers’ absence to find out what they were shipping. The examination was made under circumstances which justify the conclusion that complainant intended to make secret examination of the book, and without observation either of the employers or of any other employe.-Alien’s employment was in the manufacture of the articles, and' in' the course of his duty it does not appear that he had any occasion or right to examine any of the books of defendants, nor does he claim the right to examine the books he did examine.

Without going into the evidence in detail, or examining the-other questions in the cause, my conclusion is that a good and sufficient cause of discharge from their employment existed by reason of this opening of the desk or of one of its drawers, and* the examination of the books therein. This conduct of complainant was, in my judgment, sucha breach of the implied condition of faithful service as entitled the employer to rescind the con-' tract of employment. It was a breach of an employe’s duty that went to the whole consideration of the employment and was of such a character that the employer was not bound to run any risk of its repetition by the retention of the employe. The books- and papers of an employer must, in the conduct of his business, be often necessarily exposed or kept so as to make secret examination possible by a dishonest or inquisitive employe, whose-employment is not connected in any way with the books; and where an employe so far loses his honesty or self-restraint as to examine his employer’s books to which he has no right of access in his employment, this act, in my judgment, gives the employer a right to discharge the employe and terminate the contract of employment, and if the employer in good faith exercises the right to discharge for this reason, it is not for the court to say that the employer must give the employe another trial, or run any risk of the repetition of the offence. Such repetition, if made after notice of the offence to the employer, would occur at his sole risk, and where he acts in good faith the employer is entitled, in my judgment, to decide the question of retention for himself.

The evidence does not, in my opinion, disclose any such want of good faith. The fact that an additional reason for discharge —that of refusal to obey orders — was given, and that a fair question is raised on the evidence as to whether this refusal was not anticipated and brought about by the employers for the purpose of giving them an additional reason for discharge, is not sufficient to show that they did not act in good faith in discharging for the misconduct in secretly examining their books or papers. I hold, therefore, this ground of discharge sufficient, and the complainant, if the terms of the agreement are to control, is not entitled to the securities.

It is urged, however, by complainant’s counsel, that even if, by the strict terms of the agreement, the securities are to be so paid over to defendant, yet the agreement for such payment, in effect, produces a forfeiture of money or securities which belonged to complainant, and that it cannot be enforced in equity, and that the money must be returned to complainant; leaving him to answer to defendants in- damages. But there is no sufficient basis for finding that this money so advanced by defendants, on the faith of this agreement, was complainant’s money, put up by way of forfeiture or penalty. The contract was a special one, including several considerations, viz., the termination of an existing contract between the parties, for an interest in previous profits — the settlement between them without further accounting — payment of $300 by defendants to complainant — the employment of complainant for over two years at good wages and ultimate payment of $1,000 in addition for faithful services, together with a right to this sum at once, on discharge without cause, and the defendants were to deposit this sum or its equivalent with a trustee, at once, and from their own money so far as the contract shows. The contract itself shows that defendants’ supplying the money for the purchase was based upon substantial considerations agreed upon between the parties, other than their owing it to complainant as the result of a settlement on accounting, and complainant’s parol evidence that this -was the source of the money is not sufficient to change the disposition of the money provided by the written contract or to entitle him to claim it as a deposit of his money made by way of security. The contract, in its circumstances and terms, differs from those which are usually designated as fixing “forfeitures” within equitable control, and I have not been referred to any case by counsel which, in my judgment, supports the present contention.

I conclude that it is a case of enforcement of a written contract in which a court of equity must adhere to the contract the parties have themselves made as to the disposition of the money. The bill will therefore be dismissed.


text:
    Robert S. Johnston v. The Borough of Belmar.
    [Filed August 31st, 1899.]
    1. Under act of 1888, chapter 56 (Gen. Slat. p. 164%), giving boar-ds of health the right to regulate plumbing of buildings and to require plans to be submitted for their approval, where a plan submitted to the board has been approved, either as submitted or with alterations, the owner, if he proceeds with the work, must conform to the plans as approved.

      2. Under act of 1888, -chapter 56 (Gen. Slat. p. 164%), giving boards of health the right to regulate plumbing of buildings and to require plans to be submitted for their approval, where the borough supplies the water for the public, • a board of health has no authority to control directly the turning on of the water for permanent use by private consumers or to cut it off when once so turned on.
    3. Though the control of the public water-supply, and the sole right to turn it on and cut it off, is in the borough council, it has no right to cut off the water-supply from a private consumer on account of his failure to comply with the ordinances of the board of health respecting plumbing, in the absence of any regulation authorizing the cutting off the supply as a penalty for such violation.
    4. Where the issue in a suit to restrain a city from cutting off the water-supply of plaintiff is one of law as to the rights of the parties, and is fully presented on the preliminary application, and no sufficient reason appears for delaying decision on the question until final hearing, a preliminary injunction will be granted.
    On application for preliminary injunction against cutting off water-supply.

      Mr. Samuel A. Patterson, for the complainant.

      Mr. Hoisted H. Wainright, for the defendant.
   Emery, V. C.

The board of health of the borough, under the act of February 22d, 1888, chapter 56 (Gen. Stat. p. 1642), have the right to regulate the plumbing of buildings and to require plans to be submitted for their inspection and approval. Where a plan has been submitted by an owner to the board, and the plan so submitted has been approved, either as submitted or with alterations, the owner, if he proceeds with the work, must conform to the plans as approved. If the owner desires to question either the failure to approve his plans or the conditions as -unreasonable, he must do so by appeal to the courts before proceeding with the work. Otherwise, he is bound in justice, as well as'by the ordinance of the board of health, to follow the plans as approved. Morford v. Board of Health, 32 Vr. 386 (Supreme Court, 1898), p. 390, citing Health Department v. Lalor, 38 Hun 542. The answer does not set up that the owner’s plans-were not approved or that he is not following the plans which were approved originally, but claims the right to cut off the water-supply solely because of the failure of the owner to comply with the ordinances of the board of health in relation to-open plumbing. For violation of the ordinances of the board of health, the owner is, by the statute, made subject to penalties on prosecution of the board of health, but the board of health have no authority under the statute either to control directly the turning on the water for permanent use, or to cut off the water' when once so turned on, by reason of violation of their ordinances. Such control would subject the owner to an additional penalty. The control of the public water-supply and the sole-right to turn it on and to cut it off is in the borough council, and in the absence of any regulation by the borough council itself,that water shall not be turned on until a certificate from the-board of health has been obtained, that the plumbing conforms to their ordinances or plans, or that it shall be cut off after it has been turned on, by reason of failure to-comply with the ordinances of the board of health, the borough council has no right to cut off the water-supply from-an owner by reason of this failure. Its right to cut off the water must'depend upon its own reasonable regulations in this-respect. Morford v. Board of Health, supra; Dayton v. Quigley, 2 Stew. Eq. 77 (Chancellor Runyon, 1878); Coe v. Railway Co., 3 Stew. Eq. (1879); Red Star Steamship Co. v. Jersey City, 16 Vr. (Supreme Court, 1883). Complainant’s-conduct in originally interfering by force with the supply, as shown by defendant’s affidavits, might be ground for refusing a-preliminary injunction, if this forcible connection of the water-supply still continued at the filing of the bill, but the defendant-having now resumed control of the supply, and complainant having now applied to the court for a declaration as to his rights,, while the water is cut off, the existing rights of complainant should be determined without being prejudiced by his former forcible action. Complainant, as a taxpayer and owner of lands-in the borough, is entitled to the common benefit of the water-supply, for which he, in common with other owners, is taxed,, .unless the defendant, who has the control of the supply, shows good cause for depriving him of this common right. In, the .absence of any regulation by defendant authorizing the cutting ■off the supply, as a penalty for violating the ordinances of the board of health relating to the open plumbing, and in the ■absence of any claim that the work as constructed is a nuisance, ■the complainant is entitled to the use of the water. The only •effective method of protecting a right of this character (that of the reasonable enjoyment and comfort of a home for himself, or tenants whom he may desire to obtain) is by the equitable relief •of injunction (Hart v. Leonard, 15 Stew. Eq. 416, 420), and where the issue appears to be one of law, as to the rights of the parties, which is fully presented on the preliminary application, and no sufficient reason appears for delaying decision on the question until final hearing, a preliminary injunction may be granted. Dayton v. Quigley, supra; Coe v. New Jersey Midland Railway Co., supra. An injunction pending the hearing will therefore be granted as to the unoccupied house, upon condition that complainant pay or tender the water rent. No costs ■¡will be allowed on the application.


text:
    Gottfried Krueger v. John L. Armitage.
    [Filed September 2d, 1899.]
    1. In a suit to compel, for false representations, repayment of ¿money paid for stock, brought by the purchaser against one who was treasurer of a mining •corporation, it appeared that complainant purchased of defendant certain •shares of stock and paid therefor partly in cash and gave a mortgage for the balance of the price, at the request of the vendor, to a third party, and that-he was induced to purchase said stock by the false and fraudulent representations of defendant. The mortgagee not being made a party nor the validity of the mortgage questioned— Held, that the remedy at law being adequate, equity would not entertain the bill.
    2. One who, after he has discovered the falsity of representations made by an officer of a corporation which induced him to purchase shares of its capital stock, institutes insolvency proceedings based on his rights as a stockholder, cannot rescind the contract of purchase, but is relegated to an action at law for damages for the fraud.
    3. In an action by complainant against defendant to recover the money paid because of false representations as to the value of the land, whereby he was induced to purchase the shares, that the want of legal corporate existence is not a ground for equitable jurisdiction.
    On bill, &c.

      Mr. Joseph A. Beecher, for the complainant.

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

The defendant in this case has, by his answer, objected to the complainant’s right to relief in a court of equity, praying the benefit of a demurrer, ánd the first question to be settled is whether the complainant, on the case as disclosed by the bill and proofs, presents a demand of a legal rather than an equitable nature. I intimated at the hearing my doubts as to the existence of an equitable basis of suit, and on further consideration these doubts are confirmed.

As now presented the case is substantially one where the complainant seeks a decree against the defendant solely for the r-epayment by defendant of the amount paid by complainant for the purchase of stock in a mining company. The purchases of stock Avere made by complainant at two different dates — ten shares being purchased on or about December 2d, 1893, for $500, at the rate of $50 per share, and five hundred shares purchased on or about January 20th, 1894, for $24 per share ($12,000), of which $8,000 was paid in cash 'and $4,000 by a mortgage «given by the complainant upon lands OAvned by him, alleged to be worth $12,000. All the payments of cash were made by the complainant’s checks, payable to the company itself, or to defendant as its treasurer, and the complainant upon giving the mortgage was credited with $4,000 as paid to the company in cash. For all of the stock purchased by complainant, certificates were issued directly to him by the company for full-paid non-assessable stock, and these certificates were issued in lieu of equal amounts of full-paid stock surrendered by the defendant to the company for the purpose of its issue, and under agreements made between defendant and the company, at or about the time of its organization, for the- issue of full-paid stock to defendant for property to be purchased, and for the transfer by complainant to the company of a portion of the stock so issued (nine hundred and sixty shares of 1960).for about $50 per share. The directors of the company, at a meeting held January 22d, 1894, at which complainant was present as director, authorized defendant to consummate a sale of five hundred shares for $12,000 in cash. This sale was made to complainant of five hundred shares for $12,000, of which $8,000 was paid by complainant in cash, and the mortgage was credited to complainant as a cash payment of $4,000 on the stock. .The mortgage was given not to the.company or to the defendant, but at the request of defendaut was made to one Smith, who, at the time of the organization, held the title to the mining property, in trust for another company in which he (Smith) and the defendant and others were the stockholders. Smith subsequently (September 21st, 1893) conveyed the property to defendant, who afterwards by deed dated December 18th, 1893, conveyed to the company. This mortgage of $4,000 has not been paid, and Smith is not a party to this suit. Complainant alleges and upon his proofs claims to have established that his purchases of the stock were made from the defendant, and that his investment in the stock and advancement of money for this purpose to the company were procured by the false and fraudulent representations of the defendant as to the title to the mining property and the company’s interest therein, and the fraudulent suppression from complainant of the real ownership thereof and of his (Armitage’s) interest therein, and by defendant’s false representalions as to the quantity and quality of the ores in the mines, especially by the exhibition to him of a report as to the mines and ores, which Armitage knew to be false. The proofs are alleged to sustain these claims, and a decree for repayment of money invested, including the amount of the $4,000 mortgage, is claimed. The case, so far as the right of recovery is based on fraud or false representations, is of the same character as Crater v. Binninger, 4 Vr. 513 [Errors and Appeals, 1869); Smith v. Duffy, 28 Vr. 679 (Errors and Appeals, 1893), where damages were recovered at law, unless the fact that $4,000 of the purchase-money was paid by the execution of a mortgage to Smith at defendant’s request gives a basis for suit in equity. But inasmuch as Smith, the holder of the mortgage, is not a party to the suit, no adjudication as between Smith and complainant, as to the validity of this mortgage in Smith’s hands can be made in the suit, and as between complainant and defendant, the fact that a mortgage, outstanding in the hands of a third party and not yet paid, was part of the consideration paid by reason of the defendant’s fraud or false representations, goes only'to the amount of damages either in a court of equity as well as of law. Complainant, in either court, in order to include the amount of the mortgage as damages against defendant, would be obliged to show that he was liable for its payment in the h'ands of the assignee. So long as it remains outstanding and in the hands of one not a party to the suit, it cannot, as it seems to me, be an element of the case to make the claim based on false representations an equitable claim instead of a legal one. Iii support of the jurisdiction the settled rule is relied on that equity has jurisdiction concurrent with law in cases of fraud, and it is insisted that cases of false representations, inducing purchases or investments in stock, are included within the concurrent jurisdiction. But where, as here, the right relied on is a right recognizable at law and the remedy sought is purely pecuniáry and legal, the jurisdiction in equity, even if it be concurrent with that of courts of law, will not be exercised where the remedy at law is adequate, certain and complete. The settled principles adopted by the American courts are stated in 2 Pom. Eq. Jur. p. 410, 914, &c., and the cases there collected. The doctrine of some of the English cases, where bills in equity have been entertained in cases of fraud in the sales of personal property for the simple recovery of the same damages which might be recovered in an action at law, has not been followed in the American courts, Avhich have regarded the assumption of such jurisdiction as a deprivation of the right of trial by jury, where such trial affords an adequate and complete remedy. The' reason of the jurisdiction assumed by courts of equity in England, was that equity originally took jurisdiction in the absence of any jurisdiction at law. Slim v. Croucher, 1 DeG., F. & J. 518, 527, 528; and see Buzard v. Houston, 119 U. S. 347, 352, for Mr. Justice Gray’s comments on the English doctrine.

In the present case the bill was not filed for discovery in aid of a suit at law and prayed an answer without oath, and the whole case therefore, so far as relates to the question of false representations and damages, is purely one for atrial by jury. In all of the cases in this state to which I have been referred by ■ counsel, where the equitable jurisdiction in cases of fraud in the sale of personal property has been sustained, the necessity of :Some equitable remedy or relief beyond the recovery of the money paid or damages has been disclosed. But where no remedy under a bill in equity is sought,or is proper other than the return of money paid or damages on the purchase of stock ■or other personal property, and the payment of the money was induced by fraud or false representations which are actionable at law, and the assessment of damages may be made as well by a jury as by a- court of equity, the jurisdiction in such cases ■should not be exercised if the objections to the jurisdiction are taken in time. Complainant in the present case, as appears by his bill and proofs, had, not later than August, 1894, knowledge ■ or information sufficient to put him on inquiry as to the frauds and false representations of defendant, set up in the bill as a basis of recovery from defendant of the money paid by complainant to the company. These frauds, if effective for that •.purpose, would also or might have been equally effective as the basis for rescission of the sale, in a suit against the company and Armitage. Such knowledge imposed on him the duty of promptly rescinding the sale, if he elected to rescind instead of affirming the sale, and suing for damages for the fraud. Conlan v. Roemer, 23 Vr. 53, 58 (Supreme Court, 1889). Complainant has failed to take any proceedings to rescind the sale as against the company, and by reason of this failure and by instituting proceedings in insolvency based, so far as appears, on his rights-as a stockholder', he has terminated his right to any relief, on the basis of setting aside the sale of the stock as between him and the company, in a suit against the company alone, or in con.nection with Armitage, and is remitted to his remedy for the-fraud, if any, committed on him by defendant in inducing him to make the purchase of the company. These frauds and misrepresentations alleged support a legal action for fraud to the same extent as they would support an equitable suit; the remedy is the same, and on the case as now presented there are no-.grounds for recovery in equity different from those which would support an action at law.

I must, therefore, in view of the defendant’s objection taken-in his answer, decline to entertain the jurisdiction, so far as-complainant’s case is based upon alleged fraud or misrepresentation of defendant in procuring complainant’s investment in the-stock. Complainant alleges in his bill that the money paid by him to the company for the stock was misappropriated by defendant to his own use, and it was urged at the hearing that' complainant had au equitable claim based on a right to follow this money in defendant’s hands. This claim, however, is not sustained by the proofs. Moreover, the claim to follow his-money, if it existed, is an equity based solely on complainant’s right to rescind a sale, which was in form at least a-sale by the company to complainant, and have back his money against both the company and Armitage, on the theory that the sale was in fact a sale of Armitage’s stock, for which he received complainant’s money through the medium of the company, and such claim could only be enforced by a bill to-rescind the sale against both the company and Armitage, filed promptly after lie had knowledge or v7as put upon inquiry, as to the relations between the company and Armitage, in reference to the issue of the stock which he purchased. He had such knowledge not later than August, 1894, and by the failure to proceed against the company to rescind, and by proceedings against the company subsequently in insolvency as a stockholder, he affirms the sale, so far as the company is concerned, and cannot recover the purchase-money or follów it in Armitage’s hands as his money, in a suit to which neither the company nor its representative is a party.

Another basis of equitable jurisdiction was set up in the bill, it being the claim that the company was never legally organized and never had in law any existence at all, or at least had no existence before October 16th, 1893, at which date the corporation certificate was filed in the office of the secretary of state. The contract between the company and Armitage for the purchase of the mining property was dated July 26th, 1893, the day of the signing of the organization certificate, in which the following day, July 27th, 1893, was named for the commencement of the corporate existence. It is therefore claimed that the contract for the purchase was wholly ineffectual and void as the company had no existence, and that all the acts relating to the purchase which took place prior to the organization must be held to be acts of the individuals only, including defendant, Armitage, the vendor named in the contract. But inasmuch as the company received the deeds from defendant under the contract in December, 1893, or January, 1894, and actually proceeded with its business as a defacto company until wound up by insolvency proceedings instituted in December, 1894, by complainant, who for several months previously was a director and officer of the company, and inasmuch as in the insolvency proceedings all the assets of the company, including the mining property in question, were sold by the receiver for the benefit of the company, it seems clear that the want of legal corporate existence of the company cannot be the basis for any equitable jurisdiction, in a suit of this kind, arising out of the original purchase of the stock, in which only complainant and defendant are parties, and the remedies must reach only the defendant, and in which complainant, if he recover at all, can have only a money decree against defendant. The question of the corporate existence of the company, if it be an element of any relevancy at all in this suit, is only so as a feature of the case showing want of consideration in complainant’s payment or fraudulent suppression by defendant to complainant’s damage. In this aspect, but in no other, as it seems to me, it may be connected with a claim actionable at law for the recovery of the money paid or damages.

I will therefore advise the dismissal of the bill, without prejudice to an action at law. ,


author: Stevens, V. C.

text:
    Henry W. Morehouse et al. v. Frank Kissam et al.
    (Argued May 18th, 1899.
    Decided June 30th, 1899.
    Filed July 8th, 1899.]
    Several judgment creditors of a common debtor may join in a bill to set aside a fraudulent transfer made by their debtor.
    On demurrer.

      Mr. Joseph A. Beecher, for the complainants.

      Mr. Frank E. Bradner, for the defendants.
   Stevens, V. C.

The bill is filed by judgment creditors of the defendant Frank Kissam to set aside as fraudulent a transfer of a stock of goods made by him to his brother and to subject it to the lien of their executions. The judgments are six in number. Two of the executions issuing thereon have been returned unsatisfied. Under the other four, levies have been made upon the property alleged' to have been fraudulently transferred. It is charged that the judgment debtor has no other property than that levied upon.

The complainants say that they file their bill on behalf of themselves and such other creditors as may come in and contribute to the expenses of the suit. In a case like the present these words are, as Vice-Chancellor Pitney has shown in Iauch v. de Socarras, 11 Dick. Ch. Rep. 525, without significance. I shall treat the bill as one filed for the benefit of complainants-only.

To this bill Daniel Kissam, the alleged fraudulent transferee,, has interposed a demurrer on the ground of misjoinder of complainants. There are other causes of demurrer assigned, but they were not seriously insisted upon and have no substance.

In the case of Lore v. Getsinger, 3 Hal. Ch. 191,205, it was-decided by Chancellor Halsted that judgment creditors might, in the case of a bill like the present, join as complainants. The-authority of this case is questioned on the ground that it appears-to have been reversed on appeal. Lore v. Getsinger, 3 Hal. Ch. 639. The reporter says that he is unable to state on what-point or points the court of appeals differed from the chancellor. The recitals of the decree made in that court show, however,, that the decree of the chancellor was reversed on the merits. The opinion of the chancellor, therefore, on the point under consideration, is not challenged.

The chancellor cites, as authority for his decision in that-case, Bailey v. Burton, 8 Wend. 347, which, in turn, rests upon Brinkerhoff v. Brown, 6 Johns. Ch. 139, in which Chancellor’ Kent uses the following language: “The plaintiffs are judgment creditors at law, seeking the aid of this court to render their judgments and executions available against certain fraudulent acts equally affecting all of them. The question is whether judgment creditors whose rights are established and their liens-fixed at law may not unite in a bill to remove impediments to the remedy created by the fraud of the opposite party. It is an ordinary case in this court for creditors to unite, or for one or more, on behalf of themselves and the rest, to sue the representative of their debtor, in possession of the assets, and to seek an account of the estate. This is done to prevent multiplicity of suits — a very favorite object with this court; and this principle so far controls the other rule, which preserves in some degree an analogy between pleadings in chancery and the simplicity of declarations at common law. There is no sound reason for requiring the judgment creditors to separate in their suits when they have one common object in view, which, in fact, governs the whole case. There is no particular matter in litigation peculiar to each plaintiff; and if they were obliged to sue separately it may be pertinently asked, Gui bono? Their rights are already established, and the subject in dispute may be said to be joint as between the plaintiffs on the one hand and the defendants on the other, charged with a combination to delay, hinder and defraud their creditors. If each judgment creditor was to be obliged to file his separate bill it would be bringing the same question of fraud into repeated discussion, which would exhaust the fund and be productive of all the mischief and oppression attending a multiplicity of suits. It appears to me, therefore, that the judgment creditors, in cases of fraud in the original debtor, have a right to unite in one bill to detect and suppress that fraud and to have the debtor’s fund distributed according to the priority of their respective liens, or ratably, as the case may be, equally as well as they may now, in ordinary practice, unite in one bill against the legal representatives of 'the debtor.”

Chancellor Kent then goes on to show that this conclusion is not contrary to the decided cases. It is based on such solid ground that unless there is something in our own cases or practice opposed to it, it cannot be rejected.

As to the cases since Lore v. Getsinger, so far as they go, they rather countenance than condemn the practice. Thus, in Annin v. Annin, 9 C. E. Gr. 184, and Thompson v. Fisler, 6 Stew. Eq. 480, it is at least indirectly approved by Chancellor Runyon. In' the first case, he held that the objection, if it was an objection, could not be taken advantage of at the hearing. In the other, where the bill had been filed by one judgment creditor, and another, at first brought in as a defendant, had been made a co-complainant during the progress of the suit, he gave the control of that suit to such co-complainant.

The case of Whitney v. Robbins, 3 C. E. Gr. 360, was likewise instituted by complainants having separate judgments and no criticism was made upon it on that account. It is true that it presented the case of a creditor’s bill under the Chancery act (sections 88, 94), but so far as the point here involved is concerned, the situation is the same in the one class of cases as in the other. Under that statute, as I understand it, creditors are not entitled to share in the fruits of the litigation unless they be parties. Chancellor Zabriskie says explicitly: “ The suit in this case is rightly brought by the complainants for themselves alone, and not for themselves and such other creditors as may join therein. The relief given is for the creditor who pursues the statute. No others, either creditors at large or judgment creditors, are entitled to share with him the benefit of the proceeding until he is satisfied.”

I now come to the case of Iauch v. de Socarras, 11 Dick. Ch. Rep. 525. That was the case of a bill filed by a judgment creditor for himself alone. More than a year after the suit had been commenced, M. and B. were, on their own application, without notice, admitted as parties complainant and the motion was to vacate the order admitting them. This motion was granted on the obvious ground that the defendants were first apprised of the presence of the new complainants at the hearing, and that it was their right to be brought into court as to those complainants in the regular way by bill or subpoena, so that they might, if they desired, make answer with respect to the new claim. The vice-chancellor is careful to state that the question thus presented was quite different from that which would have arisen if the complainant and petitioners had originally joined in one bill.

So far, therefore, as authority and practice go, they have been in accordance with Lore v. Getsinger.

It will hardly be urged that the trend of legislation or of the rules of court based thereon is opposed to the course of practice adopted by the complainant in this case. In the law courts-(section 289 of the Practice act) power is given to the court to-consolidate actions between the same plaintiff and defendant where the same or similar matters of controversy are involved. Rules 15 and 94 of the supreme court, relating to the style of actions, permit causes of action to be joined that could not have-been joined before; and rule 132 of the rules of the court of chancery provides that any number of persons severally owning' or possessing distinct tenements injuriously affected by a common nuisance may join in a bill for injunction and relief.

In Iauch v. de Socarras, Vice-Chancellor Pitney refers to the-case of a voluntary conveyance, fraudulent as to existing credit-ops, though good, it may be, as to subsequent creditors. Whether a bill attacking such a conveyance would be sustained where these two classes of creditors were joined as parties complainant,, it is' not necessary to decide. No such question is presented by the present case. The fraud here alleged consists of a single fraudulent act, which it was intended should operate alike and which did in fact operate alike upon all the complainants.

I thiuk the demurrer should be overruled.


text:
    Jeremiah L. Haley v. Fannie Goodheart et al.
    [Filed September 15th, 1899.]
    1. The act (P. L. of 1896 ch. 167, amended by P. L. of 1897 ch. 117) entitled' “An act to compel the determination of claims to estates in remainder in certain cases and to quiet the title to the same” is constitutional.
    2. In a suit to determine complainant’s claim to an estate in remainder in his grandfather’s estate and to quiet title thereto, the question of his legitimacy arose. — Reid, upon the facts established in this case that the relation between-the father and mother of complainant was illicit, and that complainant could' not maintain the suit.

      On final hearing.

      Mr. Marry E. Richards, for the complainant.

      Mr. Waller Collins and Mr. Gilbert Collins, for the defendants.
   Stevens, V. C.

This is a suit brought under the act of 1896 to compel the determination of claims to estates in remainder and to quiet the title to the same. P. L. of 1896 p. 243; P. L. of 1897 p. 211. The act as amended is nearly a copy of the act to quiet titles. Gen. Stat. p. 3486. It provides in substance that when any person claims to be entitled to a vested remainder in lands or personalty and his title is denied or disputed, he may maintain a suit in chancery to settle the title and to clear up all doubts and disputes concerning the same. It did not, as does the act to quiet titles, provide for an issue 'at law on the application of either party. In 1897 this defect was remedied, and counsel on both sides being desirous that any question relating to the jurisdiction should as far as possible be eliminated, it was stipulated that the case should be deemed to have been brought under the act as amended. I think that the act as it- now stands rests substantially upon the same foundation as the act to quiet titles. The latter act confers jurisdiction in cases over which, before its passage, equity did not take jurisdiction. Story Eq. Jur. § 852 ; Pom. Eq. Jur. § 1396. Mr. Justice Depue, in American Dock Co. v. Trustees, 10 Stew. Eq. 272, says: “ It enlarged the jurisdiction of the court of chancery in this respect. It gave a party who is in peaceable possession of lands, where his title is disputed, a right to come into chancery to , settle the title, in advance of a determination of the title at law, where no suit to enforce or test the validity of the title is pending.” The same judge says, in Sheppard v. Nixon, 16 Stew. Eq. 631: “ The foundation of the jurisdiction is the inability of the complainant to obtain relief by an' action at law or the inadequacy of the legal remedy.” “ The purpose of the act,” said Chief-Justice Beasley in Jersey City v. Lembeck 4 Stew. Eq. 255, “is to relieve, not persons who had the power, to test the hostile claim by a direct proceeding in the usual mode, but to aid those persons who had no such opportunity.” See, also, Yard v. Ocean Beach, 4 Dick. Ch. Rep. 306; Southmayd v. City of Elizabeth, 2 Stew. Eq. 203, 650.

These authoritative cases show that it is within the competence of the legislature to confer upon the court of chancery jurisdiction to determine legal questions, in cases so circumstanced that no relief can be given by action at law, at least, and this is as far as it is necessary for me to go in the present case, where it is provided that, on application of either party, an issue at law shall be directed. For if the legislature has the power to thus provide in one class of cases, it must have power to so provide in other classes of cases similarly situated — cases in which there is a similar inability to obtain relief in an action of law. The class of cases provided for in the act of 1896 is characterized by this inability and the case in hand is a strong illustration of its utility. I think that the authorities which sustain the constitutionality of the act to quiet titles are authorities in favor of the constitutionality of the present enactment. I therefore proceed to an examination of the case on its merits.

Complainant’s mother is Mary Lavinia Vreeland. She was born August 22d, 1850, and it is claimed that Jeremiah married her in August or September, 1866. The claimant was born March 21st, 1871, about three years and a half before Jeremiah’s death. There is no doubt whatever that between 1866 and 1873 Jeremiah and Lavinia cohabited to some extent, and the question is whether this cohabitation was matrimonial or illicit. I have a strong conviction that it was illicit, notwithstanding the direct evidence of Lavinia to the contrary.

For the sake of clearness, I will consider, first, the life and character of Jeremiah and Lavinia before the alleged marriage; second, the story of the marriage; third, the life of the parties and their conduct from that time on to Jeremiah’s death; and fourth, the conduct of Lavinia after that time.

And, first, as to their life and character before the alleged marriage in 1866. Jeremiah, or Jerry, as he is called in the evidence, was the son of a fruit dealer, who lived in Essex street, Jersey City, and who had accumulated a considerable fortune. After he left school he appears to have been allowed to live in idleness — whether on account of his health or because of misjudged affection does not clearly appear. It does, however, appear very clearly that the son soon became dissipated. He was a frequenter of saloons and disreputable resorts, and was occasionally found in a condition of intoxication. His comrades were of the same character. One of the witnesses characterizes him as a gentlemanly loafer. In 1866 he was twenty-five years old.

Lavinia Vreeland was the daughter of Nicholas D. Vreeland, a man of respectable family, but of no property. In 1866 she lived with her father and mother in what was then known as Bergen, now a part of Jersey City. Nicholas had three daughters — Kate, Jennie and complainant’s mother. The decided weight of the.evidgnce is that in the year 1866, or about that time, Lavinia and Jennie were regarded by the police.authorities as somewhat fast. There does not seem to be any doubt but that Lavinia occasionally: visited the plumber shop of O’Connor & Pierson, a place resorted to by loose women, and that Pierson enjoyed an unenviable reputation for consorting' with them. It is proper to say, however, tliat there is no-other proof of Lavinia’s misconduct at this period than that which I have referred to. She does not appear to have attended school or to have had any occupation. In the early part of 1866 she was engaged to a respectable young :man by the name of Smith. While so engaged, Pierson brought Jerry to her house, when called there, it is said, to do some-plumbing work, and introduced him to her. Jerry seems to-have been attracted by her beauty, and thereafter visited her frequently, and on several occasions took her out riding in his - father’s carriage. This was so displeasing to Smith that he-broke off the engagement. In 1866 she was sixteen years old.

Second. Lavinia gives the following account of their marriage, which, she says, occurred either in August or September, 1866, and just after her sixteenth birthday:

“Well he came up and wanted to take me out riding and lie asked my' father and mother if they would allow me to go, and they passed the remark, ‘if he would bring me back as he took me away,’ and he said ‘Yes.’ Well we drove to Paterson, and when we were going there he said Baby I am going to get married; you and I are going to get married. But I had no idea we-were going to get married at the time. It was in the afternoon (when we left home). It was toward dusk when we arrived in Paterson. My husband stopped at the hotel and went in and got a drink, I presume. I didn’t get out of the carriage, and he asked the gentleman there if he knew where there was a clergyman. We called at his house — to the — well I suppose it was the minister. He knocked at the door; the young lady was in the house. 'He asked if the gentleman of the house was in and she told us to walk in the parlor. Then the gentleman came in and my husband told him that we-wanted to get married. He told us to stand up. * * * He asked me if I was willing to take that man as my husband. I said yes, and he asked him if he was willing to take me as his wife and he said yes.”

She then says that after leaving the minister’s house they went to a hotel in Paterson and stayed there one or two days, and that they then drove back to her mother’s. That when she-reached her mother’s house

“my husband told me — I says to my liusband, ‘I will get killed when I go in,’ and he says, ‘ No you won’t; I will see that is all right,’ ’ but he said, ‘ You had better go in the house.’ I said, ‘No I won’t.’ My sister was there and she said, ‘You will get it when you come in the house,’ and Jerry said, ‘No you won’t; this is my wife.”

She then testifies that her husband went into the house, but that she did ^not get out of the carriage; that her mother cape •out and “ she says to me, ‘ Lavinia, as you have made your bed, you will lie.’ My husband said, 11 will take care of her as long as she lives.’ ”

This story, so far as it relates to what occurred at the' house, as corroborated by Jennie Winters, Lavinia’s sister, except that Mrs. Winters says that they were gone for a few days instead of •a day or two. Although then only fourteen years old, she too, after a period of over thirty years, remembers the very peculiar words attributed by her to her father, “ Jerry, bring her back as you took her.”

On cross-examination Lavinia could not remember who the ■driver of the carriage was, although on all previous occasions •she remembered that it had been “Larry,” Jerry’s father’s coachman. She could not remember the name of the hotel or .anything about it, except that it was “ a kind of an old-fashioned place” — an expression by which she.also characterized the minister’s house. She never saw the marriage certificate; she could not tell what the minister’s name was or to what denomination he belonged. It does not appear from her statement that when the minister was told by Jerry she' was seventeen it elicited any remark or caused the minister to hesitate, although the statute then forbade the marriage of females under eighteen without the parent’s or guardian’s certificate. Nix. Dig. (ed. 1861) 501. Although after Jerry’s death, and probably before, she was poor and destitute, and it was of vital importance to herself and her son that she should have some evidence of the marriage, she has never taken the trouble to go to Paterson to identify the hotel or to ascertain the name of the minister or to look into the record of marriages in the clerk’s office. ■ ,

Her statement of what her fáther said to Jerry as they were about to drive off is worthy of remark. “ They [her parents} passed the remark,” she say's, “ if he would bring me back as he took me away.” If Mr. Vreeland, presumably a respectable man, knew Jerry as he was, he would hardly have permitted his daughter, inclined to be fast, to go off with him. If he did not — if he only knew him as the son of the prosperous fruit-dealer, and this is Lavinia’s view — then it is'difficult to believe ■that he would have insulted him and his own daughter, in his presence, with the implication that Jerry might, if permitted to take her out riding, ruin her. But it is just such a remark as Lavinia and her sister Jennie — both of them somewhat lax in their view of the marriage relationship — would be likely to put in his mouth to add color to their story.

There was not the slightest necessity for this runaway match. If Lavinia Vreeland was the pretty,a modest girl which it is said she was at this period, there was every reason why Jerry’s father and mother should have looked with favor upon a marriage which might have sobered him. That the parents of Lavinia would not have been likely to oppose it appears from the circumstance that they allowed Jerry to visit her and even to drive with her, and from Lavinia’s own testimony that they had no objection to it.

This, however, is mere criticism of evidence which the court would not, probably, be at liberty to disregard if there was no further proof of its falsity. But other circumstances appear which seem to me to be absolutely inconsistent with the idea of marriage. It is, indeed, more than probable that their connection did begin by Jerry’s taking Lavinia from her home for several days, and upon some such foundation it is probable that the story of the marriage has been built up. If Jerry, without having married her, brought her back after an absence of one or more days, there would be some point to the remark said to have been made by.her mother, “Lavinia, as you have made your bed, you will lie.”

Third. We now come to the life led by Jerry and Lavinia after Lavinia -left her home. They went, first, to the Girard House, in New York City, where they stayed for a week or two; then to a saloon on Bleeker street, where, on one occasion, she was seen by one of the witnesses to be performing the duties of a bar-maid; then, after a short time, to Bedford street. In Bedford street, in the spring of 1887, she gave birth to a child, prematurely born. Then she went for a short time to her mother’s, in Jersey City; then to Bloomfield street, Hoboken'; then to 163 Grand street, Jersey City; then to a saloon in Hudson street, Hoboken; then to Grove street, Jersey City.; then to Horatio street, New York, where she was living when Jerry died. There were other places to which she also went for short periods, but the above are the principal ones. She says that during all this time, except when Jerry was traveling on account of his health, they lived together in the open and avowed relation of husband and wife. To review the, evidence in detail upon this part of the case would be both tedious and unnecessary. One thing clearly appears from the testimony, and that is, that, during the entire period from August, 1866, to September, 1873, Jerry lived at his mother’s home in Essex street, Jersey City, and no one of his mother’s family or relations now living had the slightest suspicion that he was married or even that Lavinia was his mistress. Many respectable witnesses testify that while, at times, he did not return at night, he generally slept and took his meals at home. That he did spend a part of his time with Lavinia, and that he did, for a considerable part of the period named, support her is beyond question. The witnesses who testify in a general way that Jerry openly lived with Lavinia as her husband were casual visitors. No shopkeepers are produced, and, although Lavinia boarded or lodged with many different persons, only one of them is called, viz., Mary Taylor, her aunt. The evidence of this witness is particularly significant. She says that Lavinia boarded with her from May, 1870, to February, 1871, four weeks before complainant was born. She says, further, that Jerry didn’t board with her, but that he roomed with Lavinia; that he paid for her $6 a week, which included her meals and room and his occupation of it; that he didn’t come there every day; that he was like a flea jumping around, and that “he came three qr four times a week — maybe oftener when he felt like it.” In another place she says,- Some weeks he came every day and sometimes once a week; some weeks only two or three times a week.” Taking all the evidence together, it is reasonably certain that Jerry slept sometimes at his mother’s house and sometimes with Lavinia, and that he generally took his meals at his mother’s. I do not think that, on this state of the proofs, the complainant shows a connection apparently matrimonial.

Counsel for the defendant laid great stress upon the evidence of those witnesses who testified that Jerry introduced Lavinia as his wife. Eleven witnesses so stated. Some of them testify to an introduction in a saloon, others to an introduction at a firemen’s or other ball. Now, the value of such evidence depends upon the words used, the tone or manner of the speaker and the circumstances under which they were spoken. After a lapse of thirty years, it is difficult to believe that, in the case of a mere casual introduction, any witness could be sure that the expression was, for instance, My wife, Mrs. Haley.” Again, in order to obtain admittance to a ball or gathering not openly disreputable, Jerry would have been obliged to throw over his relationship an appearance of respectability. It is even conceivable that he might have called Lavinia Mrs. Haley, for the purpose, as the witness Loweree intimated, of keeping others at a distance. To the evidence of one or two of these witnesses, notably to that of William H. Smith, to whom Lavinia was engaged, most of these criticisms are not fairly applicable. But assuming that Jerry made the statement to Smith, in the form in which Smith now remembers it, it is quite possible, considering his character, that he might have done so with a view of misleading one whom he might still have feared as a possible rival. On the whole the evidence is entitled to some consideration, but in view of the great lapse of time and of the circumstances under which most of the declarations were made, it is not entitled to the same degree of consideration that might otherwise be given to it.

The evidence of David Hunt, one of Jerry’s companions, is very significant. He testifies that he saw Lavinia in the saloon in Bleecker street in 1868 (an error, probably, in date); that she was around the bar-room; that she talked with the men and drank beer with them and passed beer around the counter. It is hardly supposable that Jerry would have allowed a wife thus to act. Hunt also testifies that on another occasion, while she was living in Hoboken, he and Jerry had been out together and Jerry invited him “to go and put up with Pig” (the name, he says, by which she was sometimes called); that they went to her room; that Jerry and she slept in the bed together, and that he slept on a lounge in the same room ; that in the morning he sent her down stairs, and while she was gone he told witness to jump into her bed, which he did, and then, he continues, “ when she came up she got in bed where I was, and I began to laugh and set him a laughing, so then she got out and changed places back again.” There is nothing in the evidence which indicates that Jerry had then sunk so low that he would have acted thus to one for whom he entertained any respect, and the evidence is all the stronger for the reason that these occurrences took place in the earlier years of their connection. I see no reason for doubting these statements, more particularly as Lavinia herself has not seen fit to contradict them.

It is hard to reconcile her many removals from one house to .another; the meagre provision made for her support; her perfect apparent contentment with her questionable position with any rational theory of marriage. She was partial to balls, parties .and boating excursions. She says she knew Jerry’s father to be a man of large means. I cannot conceive how, with such •tastes and with such knowledge of Jerry’s ability to give her a much greater degree of comfort and a much higher social position, she did not at least ask him to do so, and yet she says she ■did not. Even if she had not desired it for her own sake, she would have desired it for her boy’s. Her conduct, in this regard, was more in keeping with the position of mistress than of wife.

She says, in her evidence, that they tried to keep the marriage quiet; that “she didn’t go round to any of Haley’s people after .she had him;” that “she didn’t ask Jerry to take her to his family,” and that she don’t know why she didn’t. And yet, on> the other hand, she says that her parents were very willing to have her marry Haley, and knew of her marriage within a day or two after it occurred. She even asserts that Jerry went to-his father’s place of business and introduced her to him as his wife — an assertion which, in view of her cross-examination and the inherent improbability of her story, cannot be credited. She likewise says that the marriage was known to some now deceased members of the Haley family whom she names, but she-admits that this knowledge was confined to the “ boys ” — that is, to Jerry’s wild associates. His mother says, and Jerry knew, that nothing Avould have have been more acceptable than his marriage to a respectable girl. Now, it is true that marriages-are sometimes kept secret, even for years, but there is usually some motive for it. Here there was absolutely none.

Another striking circumstance in this case is the absence of correspondence between the parties when Jerry was traveling" for his health. In 1870, if not before, lie was attacked by consumption, a disease of which, three years later, he died. In May of that year he went to Europe and remained away till August. He subsequently went to California, and in the fall of 1872 to Florida, where he remained about six months. After his return from Florida, Lavinia admits that she never saw him.. He died in September, 1873. While on these trips she never wrote to him, and she says that he never wrote to her, except on one occasion, when in Europe in 1870, and then not directly but through George Haley. He was a man of some education,, and his failure to write is inexplicable. She does not pretend that they ever quarreled or became estranged, and she does not offer the least explanation of his neglect in this particular. One-would have imagined that he would at least have inquired after the boy who bore his name. According to the evidence, he was-not a cold, unfeeling profligate. He was kind and affectionate— attentive to his mother and liked by his family.

There is another patent and admitted fact in the case. For a year prior to Jerry’s death there was absolutely no communication between the parties. Now, that is very strange. It looks-as if the connection between the parties might have terminated. Jerry was in an advanced stage of consumption. He had frequent hemorrhages. Then, if ever, he needed the loving care of a faithful wife. Lavinia knew that he was sick. There was nothing, if her story be true, to have kept them apart. Why did he not call her to him? Why did she not go of her own accord? Why did she not accompany him to Florida, instead of a comparative stranger? Why, on his return from Florida, when she found that he did not visit her, did she not try to see him and offer to nurse him ? Why did she not seek to get some recognition for her boy? Such indifference on the part of a wife would only have been possible if he had maltreated her or cast her off, but of this there is no pretense.

The undertaker testifies that he saw Lavinia and her sister Jennie watching the funeral from the corner of the street. He knew the girls and identifies them as having been pointed out to him by the witness Loweree who also testifies to having seen them. Notwithstanding their denials, I cannot doubt this statement. •

Jerry died intestate. Although he might, under the power conferred by his father’s will, have appointed the whole or any part of his father’s estate to the use of Lavinia and her child, lie did not do so. On his death-bed, he said his only regret was to leave his mother alone in the world. He made no allusion to them.

One would have supposed that even if the complainant had been born out of wedlock he would have remembered him in some way — made, directly or indirectly, some provision for his support. His neglect in this regard gives rise to a suspicion, in view of the evidence on this subject, that he may have come to doubt whether the child was his own.

Fourth. Lavinia’s conduct, on the theory that she was Jerry’s wife, was even more inexplicable after his death than before. To what extent, if at all, he supported her during the year preceding his death does not appear. It is certain that at his death she and her child were left destitute. Her good name and the future of her child, no less than her pressing pecuniary need; would have impelled her, one would have supposed, to then come forward and prove, as she might easily have done if her story be true, her claim to be his lawful wife and her son’s claim to be his legitimate heir. By her own confession she did nothing. On the contrary, after Jerry’s death — how long after does not appear — she went to live at West Farms with a man by the name of Schofield; she says as his housekeeper. The •evidence shows that she remained with him several years, and while there and afterwards went by the name of Mrs. Schofield, though not married to him. In December, 1887, she was delivered of a child by Dr. Beeker, at Schofield’s house. This child, she testified, as if to make matters worse, was not Schofield’s.

The first claim which complainant put forward was made about the year 1891, when he was about twenty years old. On that occasion he went to the house of Mrs. Haley and asked to see her, and said he was her grandson. On being told, as he says, that there was no such person living there, he went away and did not return. He says that he also wrote to her a year before he went there. Mrs. Haley denies having received any letter from him. The first step taken to vindicate his claim in the courts was in a proceeding in the orphans court in 1895. It failed on a ground not involving the merits of his case.

On the whole, it appears to me that it is far more probable that the relation between Jerry and Lavinia was illicit than that it was matrimonial, and I shall therefore advise a dismissal of the bill.