text:
    In the matter of the estate of Sarah E. Slater, deceased.
    [Submitted June 11th, 1917.
    Determined October 17th, 1917.]
    1. Where on the settlement of. the final account of an executor on exceptions thereto, tine court examined and opened its decree settling an intermediate account of the executor which had been, duly allowed, such act was erroneous.
    2. A loss made by an executor by his employment of attorneys in another state to recover a claim, for which service the attorneys charged an exorbitant fee, should not be charged against the executor where he acted honestly, and made every effort to recover the exorbitant charge. .
    3. Certain charges against the executor imposed by the court on settlement of his final account allowed.
    4. Where the orphans court deemed tlie security for certain loans made by the executor inadequate, no more severe penalty than indemnity against loss should be exacted.
    5. An intermediate account may be opened after it is allowed by the court on allegations of fraud or mistake.

      On ajrpeal from a decree of the orphans court.

      Messrs. Gamson & Yoorhees and Mr. Ulysses G. Styron, proctors for the appellant.

      Mr. Albert S. Woodruff and Mr. Byron M. Seabrook, proctors for the respondents.
   Leaming, Vice-Ordinary.

This is an appeal by an executor from a decree of the orphans court of Atlantic county touching two certain accounts filed by him as executor of the estate of Sarah. E. Slater, deceased. The first account is what is known as an intermediate account, as distinguished from a final account, and was filed by the executor November 6th, 1915, and duly noticed for settlement before the court on December 29th, 1915; on the latter date, no exceptions having been filed, the account was allowed by the court as reported and the court’s decree to that effect signed and entered. The second account was a final account, and was filed July 29th, 1916, and duly reported for settlement before the court on August 30th, 1916. On the last-named date consideration of the final account was continued to September 27th, 1916, by order of the court, and on that date exceptions were filed bjr residuary legatees. These exceptions included objections to both the intormecliatS and final accounts. At the hearing the court entertained the exceptions which were directed to the intermediate account as well as those directed to the final account, and the decree of the court, based upon the testimony then heard, from which decree this appeal is taken, adjudges that in certain matters the executor has been allowed credits in the intermediate account to which he is not entitled, and that in certain other matters he should be charged with obligations with which he is not charged in the intermediate account, and also malees adjudications of like nature touching the final account, and decrees that tire intermediate account be vacated, set aside and for nothing holden as to the matters referred to, and directs that the intermediate and final accounts be restated in conformity with the specific adjudications touching the several matters of charges and credits. The decree further directs that in certain particulars the restated accounts be made more' specific, and also directs that the costs on the exceptions be paid by the executor personally, including a specified counsel fee allowed to exceptants.

It is first contended by appellant that the prior decree of the orphans court allowing the intermediate account is conclusive to the same extent as a decree allowing a final account and, in, consequence, the orphans court was without power to open such intermediate account at a hearing which had been designated pursuant to the statute for the sole purpose of inquiring into the accuracy of the final account. No objections are made by appellant to the orphans court having entertained the exceptions which were filed to the final account; the contention is that at the statutory hearing for the allowance of the final account the orphans court could not entertain exceptions then filed to the intermediate account which had been theretofore allowed by decree. of that court.

Prior to the amendments of the Orphans Court act, which were made by the act of 1905 (P. L. 1905 p. 299), the proceedings of that court touching intermediate accounts of an executor were defined by section 124 of the Orphans Court act of 1898. P. L. 1898 p. 760. No decree allowing the account as stated was authorized, the statute merely directing that the account, in circumstances stated by the statute, should be entered of record and be given prima facie force as against exceptions subsequently filed, unless notice should be given at the time the accounts were passed that they would be excepted to and a memorandum of such notice entered. That section was amended by the 1905 act by excluding from its operation all intermediate accounts except those of guardians. Section 125 of the act of 1898 related to the final accounts of executors, administrators, guardians and trustees and provided for a decree for their allowance as stated. The 1905 amendment to that section made, no change in it except to eliminate the word “final” as to the accounts of executors, administrators and trustees and retain that word as to the accounts of guardians. This amended section clearly authorized and contemplated a decree of the orphans court allowing an intermediate account of an executor, as stated, in the absence of exceptions filed thereto. Section 126 of the act of 1898 related to the hearing- and allowance of “final accounts” of executors, administrators, guardians and trustees when exceptions were filed to such accounts;- the amendment to that section by the act of 1905 merely omitted the word “final” before the word “accounts.”

It seems impossible to escape the conclusion that these amendments of the 1905 act were operative to place intermediate accounts of executors upon precisely the same plane as final accounts and contemplated a like decree touching their allowance in lieu of a mere authorization that they be entered of record. This effect of the amendments embodied in the act of 1905 is clearly stated by Judge Ten Eyck in In re Porter Estate, 34 N. J. L. J. 314, and is stated in like manner in 1 Koch. N. J. Prob. L. 650 et seq.

Section 127 of the act of 1898 relates to the conclusiveness of decrees of the orphans court on the final settlement and allowance of accounts of executors,' administrators, guardians and trustees. This section is as old as the court. Pat. L. p. 59 § 17. With intermediate accounts of executors given the same status as -final accounts touching their examination by the court and controversies as to their correctness and the decree to be entered by the court touching their allowance, it seems to necessarily follow that the provisions of section 127 must be understood to ■he applicable to such intermediate accounts after they shall have been allowed by decree of the court. This view is adopted by ICocher (at. p. 65S-). By section 127 the decree of allowance is declared conclusive upon all parties and operative- to exonerate and forever discharge an executor from all demands of creditors, legatees or others beyond the amount of such settlement, except for assets or moneys which may come to hand after settlement, and “'excepting also in cases where a party applying for a resettlement shall prove some fraud or mistake therein, to the satisfaction of the said orpháns court.” That section appears to do little, if any, more than declare the effect of the decree to be substantially the-same as it would be without such declaration. A general statement of the rule is that the judgment of a court of competent jurisdiction is conclusive upon all persons over whom it has acquired jurisdiction. But that conclusiveness does not prevent such judgment or decree being opened in proper circumstances, and the section of the Orphans Court act last referred to clearly contemplates that this may be done as to a decree of the nature here in question by an application to the orphans court for, that purpose based upon fraud or mistake, to the end that a resettlement may he had. The procedure which appears to have been almost, if not quite, uniformly adopted for that purpose is a petition to the orphans court to open the decree for fraud or mistake therein, and on the presentation of that petition a rule to show cause is issued requiring the executor to show cause why the decree should not be opened and the account resettled. See section 179 of Orphans Court act. By rule 22 of the orphans court, promulgated by the ordinary, pursuant to section 194 of the Orphans Court act, in proceedings for the resettlements of accounts, at least five days’ notice of the intended application shall be given to the executor. An examination of the numerous cases appearing in our reports in which a resettlement of accounts of executors has been sought, will disclose that this procedure by petition and rule to show cause has been practically uniform from an early date. The following cases may be advantageously consulted both as to procedure and the inherent nature of the proceedings: Runkle v. Gale, 7 N. J. Eq. 101; Culver v. Brown, 16 N. J. Eq. 533; Stevenson’s Administrator v. Phillips, Executor, 21 N. J. Law 70; Johnson v. Eicke, 12 N. J. Law 316; 320; Hyer, Administrator, v. Morehouse, 20 N. J. Law 125; Morris’ Case, 65 N. J. Eq. 699. In Koch. N. J. Prob. L. 657 et seq., that practice is adopted. It is operative to bring the executor before the court to answer the charges of fraud or mistake which are made the basis of the application to open the decree.

As has been stated herein, no such proceeding was taken in the case now under consideration. The final account of appellant executor was noticed for settlement pursuant to the statute. On. the day noted, or at an adjourned day, residuary legatees filed exceptions to the final account and included therein exceptions to the. intermediate account which had been theretofore allowed. On those exceptions the orphans court proceeded to a hearing touching the intermediate account and entered a decree directing that that account "be vacated, set aside and for nothing holden” as to.certain items and ordered the account restated so as to include those items in a manner to surcharge the executor. It thus appears that with the executor in court solely for the purpose of -proving his final account pursuant to the requirements of the statute and without having been brought in to answer an application to open the decree allowing Ms intermediate account or an application for the restatement of his intermediate account, the consideration of that account was taken up by the court on exceptions then filed and the decree here complained of was made. This I think was error. The office of exceptions filed at the time final accounts are set for settlement is to contest the accuracy of the accounts then appropriately brought on for settlement. A proceeding to open for fraud or mistake a decree already entered is of an inherently different nature and should, I am convinced,, be based on an application for that purpose, and in such proceeding I think an executor is entitled to be brought before the-court on due notice of the application and of its nature, conformably to the court rule heretofore referred to. In this view it necessarily follows that the decree of the orphans court must be reversed in so far as it affects the intermediate account. This removes from further present consideration the items of the-decree from which this appeal is taken, numbered, respectively, two, three, four and five. If these or other matters-covered by the intermediate accounts are in fact the product of fraud or mistake, there appears to be no obstacle to relief by appropriate proceedings to that end.

It remains to examine the other items brought under review by this appeal.

The assignment of grounds of appeal as to several of the items' in the decree includes the claim that the exceptions filed to the-final account did not include the matters with which the decree charged the executor. It is clearly not error for the orphans court to correct final accounts in matters in which errors are discovered, even though no exceptions are filed, for the court is by statute given the duty to decree the allowance of the accounts only if found correct in all respects (section 185), and where exceptions are filed the statutory duty imposed upon the court is to “correct any mistake or errors that may happen in the account as reported/’ and the court is by the statute also authorized at its own instance to examine an executor, on oath, “touching the truth and fairness of the same, or any part or item thereof.” (Section 126.)

The sixth item of the decree under review charges the executor with $300. A firm of attorneys, in Baltimore, was employed by the executor to procure funds of testator which were on deposit in a bank of that city. The Baltimore attorneys took the necessary proceedings for that purpose in the Baltimore probate court and remitted the funds, less $500 which they charged for.their services. The executor, believing the charge excessive,- has sought to recover a part of it from the Baltimore attorneys, but without success, owing chiefly to the pecuniary irresponsibility of the Baltimore attorneys. It appears to be conceded that any amount in excess of $200 was an excessive charge by the Baltimore attorneys. The decree of the orphans court has. accordingly refused to allow the executor credit for the $300 excessive charge made by the Baltimore attorneys. As those attorneys deducted their fees and thus rendered the payment by the executor involuntary, this surcharge by the orphans court was necessarily based on the negligence of the executor. That negligence, if it existed, consisted in the want of care on the part of the executor in the selection of the Baltimore attorneys and the failure to contract in advance touching their charges. The evidence clearly discloses a want of such care in the selection of the Baltimore attorneys as is often exercised, and, possibly, as should always be exercised, in like circumstances, for they were strangers to the executor and Ins New Jersey proctor and no inquiry was made Touching their standing. But they were licensed attorneys regularly engaged in the practice of law in Baltimore, and as such were represented to the public as worthy of its confidence; and as practicing attorneys they were necessarily amenable to the courts of Maryland for their professional conduct. There is no evidence of bad faith in their employment, nor was their fee shared or agreed to be shared with, either the executor or his New Jersey proctor. The failure of the executor to make inquiries touching their integrity or responsibility was an honest error of judgment, in so 'far as it was error. Nor is it doubted that an honest effort has since been made by the executor to recover from these attorneys the amount of -their excessive charge. In these circumstances I am' unable to believe that the loss can be properly charged to the executor.

The seventh item of the decree must be affirmed. An examination of the executor’s bank pass-book in which he exclusively deposited the moneys of the estate discloses aggregate deposits of $17,390.76, to which is to be added $288.81, credited by the bank for interest, making in all cash received by the executor to the amount of $17,679.57. But an examination of the accounts of the executor discloses that he has charged himself with $102.95, less than the amount shown by his bank pass-bpok. This is ascertained in the following manner: The inventory of the estate is composed of three classes of items — cash in banks, certain jewelry separately appraised and certain furniture and clothing also separately appraised. These three classes of items aggregated, at appraised values, $18,291.77. In the intermediate account the executor is charged with that amount as the foundation of his settlement, but the jewelry having been sold, and an excess of $61-1.54 over the appraised value having been realized, that amount is added in the account to the debit charge, thus making the total debit $18,906.31. The furniture and clothing were not sold but, with a watch and chain appraised at $50, were turned over to a devisee pursuant to the terms of the will and credited to the executor at their appraised value in the intermediate account. That procedure necessarily made the executor accountable for cash to the amount of the appraisement, $18,291.77, plus the excess over appraisement in the sale of jewelry, $614.54, less furniture and clothing and watch which were turned over to a legatee at appraisement, $1,602.50, or $17,303.81. Thát amount will be found to be the cash debit of the intermediate account. The final account' charged the executor with ¡the balance at the former accounting and added the interest which had been credited to the executor by his bank of deposit. This interest, when the account was stated, was $272.81. This makes the total cash for which the executor was charged by his accounts as stated, $17,575.62, or $102.95 less than his bank pass-book discloses that he in fact received. .Sixteen dollars of the $102.95 was interest which the bank had credited after the final account- had been stated and before the day of settlement and was in no way concealed by the executor; the remaining $86.95 of the amount has not been explained.

The eighth item o_f the decree charges the executor with $36.14. The only error assigned in the petition of appeal touching this charge is that the exceptions which were filed did not specify the error. That objection has already been considered herein. This surcharge is based upon the fact that the executor did not pay an inheritance tax promptly and thereby lost to the estate the benefit of a discount of $36.14. I find no error in the decree in tin's respect. Ample funds were in hand to pay the tax promptly and save the discount; the loss to the estate arose from the neglect of the executor.

The ninth item of the decree charges the executor with $2,350, by reason of certain releases which had been executed by the executor discharging the lien of a. mortgage on certain parts of mortgaged premises. T am convinced that this charge cannot • bo sustained. By the second clause of the will a devise of $10,000 is made in trust for the benefit of Sarah Elizabeth Schermer, a niece of testator, with direction that the $10,-000 be invested b3 the executor and that he pay to the niece the interest and $250 each, three months of the principal. This bequest, with the inheritance tax deducted, amounted to $9,500. That amount the executor loaned to a land company, the stock of which company was owned by the executor’s attorney who was acting as proctor of this estate, and took as security a mortgage for the amount on the lots comprising the tract. This mortgage called for the payment of $250 of the principal each three months.' These quarterly installments were paid by the land company from time to time, together with interest payments due on the mortgage, but not promptly, and were turned over to the devisee. There also appears to have been a parol agreement by which the executor agreed to execute releases of lots from the lien of the mortgage from time to time as such lots were sold, for which releases he was to receive certain specified amounts per lot. A number of these releases were executed by him, but no money was paid to him for the releases. At the agreed rate he would have received the amount' with which the orphans court surcharged his final account. It was the opinion of the orphans court that the value of the land was insufficient to justify a loan of $9,500, and also that no releases of lots should have been executed without payments proportionate to the amount of security released. The opinion of the orphans court that, the loan was inadequately secured may have been based upon personal knowledge of the court touching the value of the land, for the testimony does not disclose inadequacy of ■ value. The impropriety of the proctor borrowing money of the estate should not, I think, be charged to the executor; that the executor made the loan in entire good faith and in the belief that the security was adequate I entertaih no doubt. No loss has been sustained by the estate, nor can it be known that loss will be sustained. With this release money paid by tire executor to his successor in office it will necessarily be credited on the mortgage and such successor will be privileged to collect on the mortgage only the remaining amount due thereon; the benefits will thus fall to the mortgagor and the loss will fall to the executor with no apparent remedy over against anyone; the proctor who borrowed the money will thus be made the recipient of the benefits of the decree. I am impressed that had the orphans court deemed the security afforded by this.mortgage inadequate, no requirement more severe than indemnity against loss should have been exacted. Section 140 of the Orphans Court act appears to contemplate that remedy. The testimony also discloses that the quarterly payments made upon the principal of the mortgage had reduced it approximately $3,000; the payment of the release money, which amounted to less than that sum, appears to have been thought unnecessary for that reason, the purpose having been to provide payments to the devisee of $250 on the principal every three months, together with interest on the unpaid principal, pursuant ' to the requirements of the will. It also appears by the testimony that the property known as the domicile property was sold to a purchaser for $4,000, and released from the.lien of the mortgage by the executor; that release appears to have been included in the surcharge made by the decree. The purchaser paid but $500 in cash for the domicile property and executed a purchase-money mortgage for the remaining $3,500' of the purchase price, and made improvements to the property so purchased to the amount of $700 or $1,000. That purchase-money mortgage was.made to the executor. It follows that that release amounted to no more than a substitution of liens. I think the orphans court also may be said to have fallen into error in imposing upon the executor personal liability for the payment of this release money by a failure to’take into account the circumstance that the item of $9,-500 constituted a testamentary trust. By the provisions of the will the executor was constituted a trustee for the beneficiary as to that amount of the estate; the mortgage here in question was obviously procured by the executor by reason of the testamentary trust and for the benefit of the cestui que-trust named in the will, and wás treated by the executor as a trust security under the will and was accordingly held by the executor in his capacity as trustee. This is manifest by the terms of the mortgage and also by credit sought in the final account of the executor for the amount of that specific security and by the absence of any allowances sought for the money already paid to the cestui que trust. The final account in manner stated thus rendered the executor in his capacity as trustee accountable to his cestui que trust; the exceptions were filed by residuary legatees who were in no way interested in the inadequacy of the security here in question unless the cestui que trust could thereafter enforce-against the corpus of the estate any loss sustained by her by reason of such inadequacy. Had the effect of the allowance of the final account in the manner in which it was stated been, as I think it would have been, to discharge the executor, as executor, as to the amount of the testamentary trust and charge him ,in his capacity as trustee for that amount, I am unable to see that the exceptants- had any interest whatever in the adequacy of the mortgage security so set apart under the trust to meet the remaining obligations of the trust. The executor had in fact invested the exact amount of money covered by the testamentary trust in behalf and for the use of his cestui que- trust and in the specific manner directed by the will; unless the orphans court could, on its own motion, refuse to discharge the executor as executor until it should be found that the securities then held bj the executor in his capacity as trustee were at that time adequate to fully protect the cestui que trust, the surcharge here in question appears to he without legal support. See Lippincott Case, 68 N. J. Eq. 578. This independence of the offices of an executor as an executor and as a trustee is pointed out in Pitney v. Everson, 142 N. J. Eq. 361 (at p. 365). But, in any event, I am convinced that the utmost relief which the court should have awarded, based upon inadequacy of security or impairment of security by reason of the execution of the releases, was indemnity against loss.

The tenth item of the decree should be affirmed, in so far as it requires a restatement of the final account in adequate detail; the allowance of a counsel fee to exceptants and costs against the executor personally should also be affirmed; I am unable to determine that this was an abuse of discretion upon the part of the court.

I will advise a decree in accordance with the views herein expressed. The decree should also provide that it shall not in any way be operative as a bar to any application which may be made in the future to open the intermediate account for fraud or mistake.


source: Caselaw Access Project

author: Backes, Vice-Ordinary.

license: Public Domain

text:
    In the matter of the estate of John Tipper, deceased.
    [Submitted December 17th, 1917.
    Decided January 19th, 1918.]
    1. The court has power to impose terms as a condition to the continuance of the hearing of an appeal from an order of a surrogate admitting a will to probate.
    2. Allowances to litigants in proceedings for the probate of a will may inslude fees of expert witnesses.
    3. Where, as a condition to granting a continuance of hearing, the orphans court required contestant to pay costs and expenses to the amount certified under the hand of the proctor of the estate, its order rtes not an exercise of the discretion of the court in that the court failed to deter- ' mine the propriety and amount .of the charges-.
    On appeal from the orphans court of Bergen county.

      Mr. Warren Dixon, for the appellant.

      Mr. Adolph L. Engelke, for the respondent.
   Backes, Vice-Ordinary.

The will of John Tipper, deceased, was admitted to probate by the surrogate of Bergen county. Neva M. Harrison, the appellant, administratrix of the widow of the testator, took an appeal to the orphans court and a day for hearing was fixed. On that day the appellant applied for an adjournment on the ground that she then recently was obliged to retain new counsel who had not time to prepare for trial, and also because of the absence of a material witness. The court, deeming the reasons sufficient, ordered a continuance for a week to July 17th, 1917, upon the following terms:

“That the said Neva ¡VI. Harrison, administratrix as aforesaid, appellant, pay on o'r before July 16, 1917, at twelve o’clock noon, to the respondents Alfred T. Taylor and William E. H. Schneider, executors of the last will and testament of, and representing the estate of, John Tipper, deceased, or to their proctor for them, and to the above named respondents, Englewood Hospital Association, -St. Paul’s Church and Englewood Free Public Library, or to their proctor for them, who appeared at the hearing of this appeal on. this day, their respective costs of the day for such appearances at that time, and also pay to the proctor of the said executors representing the said estate of the said John Tipper, deceased, the expenses for the attendance of such expert witness who had been engaged by said estate in this appeal for said hearing, the amount of such expense to be certified to said Warren Dixon, Esq., under the hand of the proctor of said estate;
"And upon the said Neva M. Harrison, administratrix as aforesaid, failing to make all of said payments of said costs and expenses on or before the time hereinbefore stated, it is further ordered that the said appeal of the said Neva M. Harrison, administratrix as aforesaid, shall be dismissed.”

Timely objection was made to the allowance of the expenses for the expert. The taxed bill of costs, amounting to $26.40, and a statement of the expenses of the expert witness, amounting to $107.75, duly certified, were served upon the appellant’s counsel within the time limited -by the order. The amounts were not paid, and for failure to pay, a decree was entered on the adjourned day dismissing the appeal. From both order and decree the appeal is taken, chiefly on the ground that the allowance of the fee of the expert witness was illegal, oppressive and an abuse of discretion. That the court had power to impose terms is well settled. The usual condition is the payment of the taxable costs. 6 R. C. L. 567. Others may be imposed. The cases are collected in the note to 26 Ann. Cas. 306. Sections 196 and 197 of the Orphans Court act (Comp. Stat. p. 3384) authorizes allowances, to either litigant or the estate, of expenses in addition to costs, which expenses in a proper case may include fees of expert witnesses (Sanderson v. Sanderson, 52 N. J. Eq. 243). and if the justice of the case demanded, it was within the discretion of the court below to require payment of the fee as a condition of .the continuance. The allowance rests in a sound discretion, and in its exercise it seems indispensable that the propriety of hiring the expert and the value of his services be judicially determined, otherwise, how could the' court hold that the terms imposed were reasonable? The court examined into and passed upon neither question, but left the first to the judgment of counsel and the amount to be arbitrarily fixed by the party who was to receive it. This is evident from the minutes and appears by the order requiring the payment of such expense as the proctor should certify. The statement made at the time of the motion, that the fee was $100, does not relieve the situation, and besides the certificate of the proctor fixes the expenses at a larger sum. The failure to state in the order of continuance the precise terms, is fatal, and, as the dismissal was based solely upon a non-compliance, the order dismissing must be reversed.

The cause will be remanded for trial, with costs.


author: Foster, Vice-Ordinary.

text:
    In the matter of the final account of the executor of Henry C. Diehl, deceased.
    [Submitted October 19th, 1917.
    Decided November 30th, 1917.]
    . Transfer taxes assessed against a life estate are payable out of the corpus of the estate, not the income.

      Mr. J. Harry Hull and Mr. Joseph G. Levi (of the New York bar), for the appellant.

      Mr. Absalom P. Bachman, for the respondent.
   Foster, Vice-Ordinary.

This appeal is from an order of the orphans court of Essex county, overruling an exception to an item of the executor’s final account in which allowance was asked for the sum of $2,295.44 paid from the income of the estate to the state treasurer for the transfer tax assessed against the life estate of Mary J. Whaley.

In overruling the exception to this item the orphans court held that the tax was properly paid and deducted from income, and should not be paid from or charged to the corpus of the estate.

Under the will of Henry C. Diehl, a resident of Essex county, who died on December 7th, 1915, his estate was left to his executor, in trust for the benefit of Mary J. Whalei^, a cousin, to whom tiie income thereof was to be paid semi-annually, during her life, and upon her death the principal of the estate is to be held in trust for testator’s nephew until he attains the age of forty years, when he is to receive the same absolutely. .

It is admitted that the value of the life estate was properly ascertained and that the correct amount of the tax was assessed and paid.

The question for determination is, therefore, whether the tax on the life 'estate of Mary J. Whaley should be paid from the income or principal of the estate.

This question does not appear to have been decided in this court or in tbe court .of errors and appeals; and counsel and myself have been unable to find any case in which the question has been decided, based upon statutory provisions similar to the provisions of our Transfer Tax act, which is entitled “An act to tax the transfer of property of resident or non-resident decedents, by devise, bequest,” &c. (Comp. Stat. p. 5301), except in the ease of In re Peirce, 39 N. J. L. J. 234., where Judge Salmon, in the Morris county orphans court, held the tax was payable out of corpus. The question seems to have been raised, but was not decided, in Stengel v. Edwards, 98 Atl. Rep. 424.

Section 2 of the act provides that:

“When any persons shall bequeath or devise * * * . any property or interest therein, or income therefrom, to any person *. * * for life * * * and a vested interest in the remainder or corpus of said property to any person * * * , the whole of said property, so transferred as aforesaid, shall be appraised immediately at its clear market value, and after deducting from such appraisement the value of the estate for life * * * shall 'be immediately levied and assessed, and the tax .on tlie remainder * * * shall be levied and assessed immediately, but such tax shall not become due or payable \rntil the time or period arrives when said remainderman * * * shall become entitled to actual possession or enjoyment of such property, and shall then become due and payable immediately.”

Sections 3 and 5 provide in effect that the tax levied and assessed upon a life estate shall be due and payable at the'death of the testator. Section 26 defines the word “transfer” as us'ecl in the act, to mean “the passing of property.” And section .7 directs the executor to deduct or collect the tax therefrom before delivering any legacy or property subject to the tax.

In a normal case a legacy becomes payable in one year after the death of the testator and the right to income in ordinary cases begins at that time. Welsh v. Brown, 43 N. J. Law 37. All income in the meantime falling into the residue. In re Adrian, 101 Atl. Rep. 52; 87 N. J. Eq. 307.

In determining the construction to be placed upon the provisions of the act, under the facts now present, regard must be had not only to the nature of the tax, but also to the apparent reason for its imposition and the means provided to compel its payment.

Our courts have held that the tax imposed under this act is a premium or privilege upon the devolution of property, resting fundamentally upon the sovereign right of a state to withhold, and hence to limit, the right of testamentary disposition or of intestate succession; that it is a legacy or succession tax. Wyckoff v. O’Neil, 72 N. J. Eq. 880; Neilson v. Russell, 76 N. J. Law 655; Parrot v. Rogers, 86 N. J. Eq. 311. From the rate of taxation and-also from the penalties imposed for nonpayment, it is apparent that this tax is imposed as a source of revenue for the state. It is clear from the provisions of section 2. that an estate for life is subject to the tax, and the value of the life estate on which the tax is assessed is determined, under the act, by multiplying the life tenant’s expectancy in years by the estimated annual income; and it is equally clear that on the value of the life estate thus ascertained the tax is to be immediately levied and paid on the death of the testator. The statute does not in express terms state by whom or from what source the payment of this 'tax is to be made, and it is only by keeping in view the nature and object of the tax that we can find a satisfactory answer to the question.

It is reasonable to assume that it was the legislative intent to make this source of state income definite and certain, and that it was not intended that the payment of the tax should be delayed or defeated by any contingency. By section 2 it is directed that “the whole of the property so transferred shall be immediately appraised at its clear market value.’’ This section differs from the New York Transfer act, on which our act is modeled, in that it does not state, as the New York law does, that the tax so imposed shall be payable out of the property transferred. And yet this provision must be read into the act if the taxes-imposed by it on estates for life are to be collected. As stated, the act requires the taxes imposed to be paid at once, and makes the executor personally responsible for the payment of the same. In the absence of a voluntary payment by the life tenant, the only source from which the executor can obtain the funds for payment of such taxes is from the property transferred. In-the case of specific legacies lie is directed, by section 7, to deduct or collect the amount of the tax before he pays or delivers the legacy or property.

By the terms of the will before us, the residue of the estate, at the termination of the period of administration, is to be held by the executor upon the trusts stated, and this residue, or trust fund, is the property transferred under the will. Before the transfer can be effectuated under the statute, the impost on the life estate must be paid by the executor. If the life tenant fail to pay the same, the trust fund and tire income, that may have during the administration accumulated thereon, are the only property from which the executor can deduct or collect the funds required to pay the taxes levied on the estate for life. If the executor cannot resort to the principal of the trust fund to pay such taxes, and should the income that may have accumulated be insufficient for the purpose, the executor in order to pay the tax from income would, in violation of the plain provisions of the will, have to withhold the income from the life tenant until a sufficient sum had accumulated to pay the tax and the penalty of ten per cent, incurred in the meantime for failure to pay the same when due. Should the life tenant die before the accumulated income equaled the amount of the tax, the executor must of necessity resort to the principal for the amount required to make up the deficiency, or the tax must go unpaid. And if part of the estate were in a foreign jurisdiction, the taxes imposed therein must first be paid before the executor can obtain possession of the same or of any income accrued thereon. Senff v. Edwards, 85 N. J. Law 67; Bishop v. Bishop (Conn.), 71 Atl. Rep. 583. i If the income in hand is not sufficient to pay such taxes, and if they cannot be paid from cor/ms, how are they to be paid ? It has been pointed out' that it would be an injustice to require the payment of the tax from income in view of the fact that the tax is based upon the expected duration of the life estate, and should the tax be paid from the first year’s income and the life tenant then die, she would have paid for an expectancy never realized, and for a trans7 fer of property, if it can be so considered, that never had and never could take place. As the will is silent on the subject of the payment of taxes, and as there is no authority in the statute permitting the executor to make payment temporarily from principal and return the same to principal from income in gross or in annual installment, it follows that -if payment cannot lawfully be made from corpus, and for lack of funds it cannot be made from income, then the executor becomes personally liable for the payment of the tax or the state must lose it.

I am unable to adopt the view that the legislature ever intended such construction should be placed upon this provision of the act.

In the amendment to the New York law it is expressly provided that the tax shall be paid out of the property transferred. And the courts of New York have held that under this direction the tax imposed on an estate for life should be paid from corpus and not from income, holding in effect, that the creation or enjoyment of a life estate does not amount to such a transfer of property that there is anything tangible therein from which the tax imposed thereon can be paid or collected. In re Tracy, 179 N. Y. 501; In re Vanderbilt, 172 N. Y. 69; In re Bass, 57 Misc. 531.

All the difficulties pointed out can be avoided by placing a similar construction on the provisions of our act,, and a decree will be advised that the order appealed from be reversed, and that the executor be directed to charge the payment of the tax against corpus and not against income.

In regard to the appeal from the allowance made by the orphans court to counsel for. the executor, the order in this matter should be affirmed, as the orphans court was in a much better position, to determine the nature, extent and value of counsel’s services, in that court, to the executor than this court can be, and a decree will be advised accordingly.


author: Lane, Vice-Ordinary.

text:
    In the matter of the petition of the executors of the estate of George E. Stengel to set off dower to his widow, Hattie Oxley Stengel.
    [Decided September 27th, 1917.]
    On appeal from an admeasurement of dower under 2 Comp. Stat. p. 2050 § 21, the court may where the report of the commissioners is illegal, inequitable and unjust, set aside the report and appoint new commissioners, or may admeasure the dower itself on the testimony taken before the commissioners, or may proceed by any other method known to equity.
    On application to confirm report of commissioners. On exceptions to report.

      Messrs. Lintott, Kahrs & Young (Mr. Thomas J. Lintott), for the executors.

      Messrs. Stallman, Hoover & Peck (Mr. Maximilian M. Stallman), for the widow.
   Lane, Vice-Ordinary.

This is an application to confirm a report made by commissioners to set off dower under the provisions of the Bevision of 1877, page 324. 2 Comp. Stat. p. 2050 § 21. The deceased died leaving lands in two counties, and application, therefore, Was made originally to the ordinary for' the appointment of commissioners. Upon the coming in of the commissioners’ report and motion made to confirm, exceptions were filed. Upon argument being had, the report was sent back to the commissioners in order that they might make a more complete statement of the grounds upon which they had reached the result they did, and also with power, if they saw fit, to change their report. The report now made, while more complete, leads to the same result as the prior report and the present proceeding is upon motion to confirm that report and exceptions thereto.

Some question was raised as to the power ©f the court and the proper practice in the premises. Where the lands lie in one county the commissioners are appointed under section 18 (2 Comp. Stat. p. 2049) by the orphans court, and their report, if approved and confirmed by the court, is entered at large by the surrogate on his records, “and all persons concerned therein shall be concluded by the judgment or decree of the said court, unless the same shall be set aside or reversed.” From the judgment or decree of the orphans court an appeal is given to the ordinary “who shall review the proceedings, judgment or decree complained of, and do therein what shall' be just.”

In dealing with statutory provisions similar to these, the ordinarjq In the Matter of Ann Garrison, 15 N. J. Eq. 395, said: “The design of the legislature in authorizing this mode of proceeding was doubtless to furnish a simple, economical and expeditious mode of'assigning dower without resorting to the more formal and dilatory methods previously in use. The statute was not designed to affect, nor does it purport to affect, the legal rights or interests of the parties in the subject-matter, nor to deprive either party of any. protection against an infringement of those rights. It was doubtless designed to leave the power of the court over the proceedings of the commissioners so broad and unlimited as-to afford to all parties concerned as full protection of their rights as they were entitled to under the subsisting modes of procedure, either at law or equity. The court must have power, under the statute, to administer all the relief, legal or equitable, against an illegal or unjust assignment of dower to which the doweress or the tenant was previously entitled.”

In that case the ordinary set aside the report of the commissioners. There is nothing to show what subsequent proceedings were taken.

It seems to me that the three sections of the statute, 19, 20 and 21 (2 Comp. Stat. p. 2050), must be read together, and that where the lands lie in several counties, the ordinary, upon motion to confirm the report, has the same power that he has upon appeal from the decree of the orphans court, and that power is to “review the proceedings, judgment or decree complained of, and do therein what shall be just.”

It follows, therefore, that where a report is made which appears to the chancellor to be illegal or inequitable or unjust, the report may be set aside, new commissioners may be appointed, or the court may proceed itself to admeasure the dower upon the testimony taken before the commissioners or before the court,, or it may proceed by any other method known to equity, as, for instance, by reference to a special master.

The report of the commissioners setting off the lands by metes and bounds will be set aside and decree will be admeasured by the court upon the testimony already ’taken and without further reference.


author: Gummere, Chief-Justice.

text:
    Kittie L. Smith, respondent, v. William J. Smith, appellant.
    [Decided November 19th, 1917.]
    Under section 19, of our Divorce act, P. L. 1902 p. 507, the court of chancery has power to allow alimony after final decree of divorce has been granted.
    ■ On appeal from an -order of the ’Court of chancery advised by Vice- Chancellor Stevenson.

      Mr. Henry Marelli, for the appellant.

      Mr. Addison Ely, Jr., for the respondent.
   Tlie opinion of the court was delivered by

Gummere, Chief-Justice.

This is an appeal from an order of the court of chancery granting alimony to the respondent, upon her application for the same made subsequent to the entry of a final decree for divorce in an undefended suit brought by her against her husband. Neither in tire decree nisi, nor in the final'decree, was there any provision relating to' the payment of alimony, nor was the right to make future application therefor reserved to the respondent.

The contention of the' appellant is that the court of chancery was without jurisdiction to make the order appealed from, for the reason that by making the final decree divorcing the parties it lost jurisdiction over them, as well as over the subject-matter of the suit, and of all matters incidental thereto; that this is the necessary result of a final decree in a divorce suit, unless the chancellor expressly, reserves some feature of the litigation for future judicial action. .

It is urged that this contention receives support from the decision in Lynde v. Lynde, S4- N. J. Eq. ^77; 8. G. on appeal, 55 N. J. Eq. 591. In that ease it was said by the chancellor that the subject of alimony was dealt with by the legislature as an adjunct of the divorce suit, and that it was at least a question of grave doubt whether, when tire final decree in such a case failed to treat of the question of alimony in any way, it will not be taken to have determined all matters involved in the suit, including the question of alimony. The decree in the cited case was affirmed by this court on the chancellor’s opinion, and the doubt expressed by him as to the effect of the final decree under the conditions stated was, inferentially, reiterated by us. When that ¡Incision was promulgated the provision of the Divorce act regulating the matter was as follows:

‘.‘When a divorce shall be decreed it shall and may be lawful for the court of chancery to take such order touching alimony and maintenance of the wife by the husband as from the circumstances of the parties and the nature of the case shall be reasonable and just.” Gen. Stat. p. 1260 § 19.

The language which created the doubt suggested by the chancellor in the Lynda Case is, of course, the first clause in the section, the implication being that the court should take order touching permanent alimony at the time of making the final decree, either by presently directing or’ refusing to direct its ■payment, or by a specific reservation of the matter.

In 1902 there was a revision of the Divorce act by the legislature, and a material change was then made in the first clause of the nineteenth section, the words “when a divorce shall be decreed” being eliminated, and in their place the following clause substituted, viz., “Pending a suit for divorce or nullity, or after decree of divorce.” P. L. ¶. 507. The insertion of the words ■“after decree of divorce” in the statute is very significant in view of the doubt expressed both by'the court of chancery and this court as to the power of the chancellor to deal with the subject of permanent alimony after final decree, except the matter was reserved in the decree itself. That some purpose was intended by the legislature to be accomplished in thus changing the statute must be conceded. It was not intended to give the chancellor power to deal with the matter after final decree where the right to do so had been expressly reserved in the decree, for that power existed before the change in the statute. The legislative purpose, therefore, must have been to widen the scope of the chancellor’s power in dealing with the subject of permanent alimony after the entry of final decree; in other words, to confer that power upon him even when no reservation of the right to'exercise it was set out in the decree. The statute, in tire respect indicated, has remained unchanged since its enactment in 1902. It expressly confers upon the chancellor the power to make an order for permanent alimony under the conditions which, exist in the present case.

The order, under review will, therefore, be affirmed.

For affirmance- — The Cnm-Justice, Garrison, Swayze, Teenchard, Parker, Bergen, Minturn, Kalisch. Black, White, Heppenheimer, Williams — 12.

For reversal — None.


author: Swayze, J.

text:
    Louis Hubing, executor, appellant, v. Liberty Trust Company, respondent.
    [Argued June 20th, 1917.
    Decided November 12th, 1917.]
    A trust company agreed to assign a mortgage, executed an assignment, and entrusted the papers to a solicitor for delivery and receipt of the consideration. He fraudulently inserted a description of an additional mortgage in a blank space and collected the amount due on both mortgages. — Held, that the case was one of mutual mistake, the trust Company meaning to assign only one mortgage, and the purchaser meaning to acquire two; • that the purchaser was entitled to rescind and that ■the trust company was liable upon rescission to repay the whole amount paid by the purchaser to the solicitor.
    On appeal from a decree advised by Vice-Chancellor Howell.

      Mr. Frank E. Bradner, for the appellant.

      Mr. Conover English, for the respondent.
   The opinion of the court was delivered by

Swayze, J.

This litigation grows out of two assignments of mortgage purporting to be made by the Liberty Trust Company to Louis Hubing, executor of Henry Kirchner, each purporting to assign two mortgages. The situation differs somewhat in the two cases. By the first assignment the trust company appears to assign in consideration of $5,500 (1) a mortgage for $2,500 which I shall call the Courier mortgage, and (2) a mortgage for $3,000 which I shall call the 12th street mortgage. By the ■second assignment the trust company appears to assign in consideration of one dollar and other valuable considerations (1) & mortgage for $5,000 reduced to $3,000 which I shall call the Heidel mortgage, and. (2) a mortgage for $3,00Q which I shall call the Wolbert mortgage. The execution of both assignments by the trust company through its proper officers is admitted. The payment by Hubing to Crocker in perfect good iaith of $5,500 and some interest'for the first assignment and $6,000 and some interest for the second assignment is admitted. The trust company says that it meant only to assign the Courier mortgage by the first assignment and the Heidel mortgage by the second assignment; and that it never made the covenants in either assignment. The charge is that one Eoland D. Crocker, a solicitor, fraudulently inserted the description of one mortgage and the covenant in each assignment. According to both parties there is a clear case of mistake. Tire trust company meant to assign only one mortgage by each assignment and did not mean to make any covenants. Hubing meant to acquire two mortgages by each assignment and to have the protection of covenants. Their minds never met. As the mistake was mutual, a rescission must follow if restitution can be made. The only difficulty seems to be that caused by foreclosure pending the litigation, and this is covered by a stipxxlation that the foreclosure proceedings shall not affect anybody’s rights. Hubing is entitled to have at least some of his money back upon transferring his rights under the mortgages to the trust company. The question is how much ought the trust company in equity to restore. As to the amount received on the first assignment, the case is simple. The assignment itself acknowledges the receipt of $5,500. It is suggested that this sum was inserted by Crocker after the assignment had been executed, but it is noticeable that counsel for the defendant did not examine Watson, the former president of the trust company, who had executed the assignment, as to whether the statement of the consideration as $5,500 was in the assignment when it was executed; and after Watson had testified that the description of the 12th street mortgage and the covenant were not in the paper, he testified that to the best of his knowledge and belief everything else was in the paper when he signed it. It may or may not be significant that Crocker, on the date of this assignment, sent the Liberty Trust Company checks for two mortgages, one for <$5,167.17 for a mortgage on Asehenbacli property, North 12th street, and one for $2,576.25 for the Courier mortgage. It is at any rate clear that the trust company must be held to have received at that time the $5,500 which it acknowledges by the assignment that it had received.

The second assignment presents a different question. It is conceded that it was properly executed as an assignment of the Heidel mortgage, and the amount due on the Heidel mortgage prior to the assignment seems from the trust company letter of November 17th, 1913, to have been $5,000. It is at any rate unquestioned that Crocker was authorized to deliver the assignment and receive from the purchaser the amount due thereon. The question is whether the trust company is bound by the receipt of $6,000 for the two mortgages. Crocker had no express authority to receive more than the amount due on the Heidel mortgage. We think, however, that the trust company, by trusting Crocker as its agent with the delivery of the assignment and the receipt of the money, put it in his power to commit the fraud; that the fraud was committed in the execution of his agency; and that the company is responsible to Hubing for the loss he suffered. The case is within the principle of Mick v. Corporation of Royal Exchange, 87 N. J. Law 607, and the language of this court in Corona Kid Co. v. Lichtman, 84 N. J. Law 363.

"Hubing is entitled to recover what he has paid with interest upon transferring to the trust company the property he has received. The decree must be reversed and the record remitted in order that a decree may be entered in accordance with our opinion. The complainant is entitled to costs in both courts.

For affirmance — Parker, Williams — 2.

For reversal — The Chief-Justice, Swayze, Trenchard, Bergen, Minturn, Kalisch, Black, White, Heppenheimer—9.


author: Kalisch, J.

text:
    Jennie R. Morse et al., complainants-respondents, v. Metropolitan Steamship Company, defendant-appellant.
    [Argued June term, 1917.
    Decided November term, 1917.]
    1. Where corporate business was not being conducted in the sole interest of creditors and stockholders, the court of chancery has power at the suit of a stockholder to restrain the corporation from paying its debts or pursuing its business, and to appoint a receiver, under the inherent powers of the court and P. L. 1912, p. 525.

    2. In a suit by minority stockholders to prevent diversion of the assets of the defendant corporation, those creditors whose claims are not yet due may intervene under the provisions of P. L. 1912 p. 525. A person is a creditor within the meaning of that act although the time for payment of his debt has not arrived.
    3. As the provision in P. L. 1912 p. 525, authorizing the appointment of a receiver without notice is unconstitutional, a corporation may assert its invalidity although it was incorporated under the act to which it is an amendment; the presumption being that parties, whether natural or artificial, have entered into a contract with reference to valid laws only.
    4. In a suit by minority stockholders against a corporation, that a receiver was appointed’ without notice to it, is immaterial where the order of appointment was subsequently confirmed after due notice.
    5. In such a proceeding, an order that the receiver was invested with title to all the property of the corporation was erroneous, not being authorized by section 65 of the Corporation act, as amended by P. L. 1912 p. 585, or by section 68 of the Corporation act, which is applicable only to insolvent corporations.
    On appeal from orders, advised bj Vice-Chancellor Lane, for an injunction and the appointment of an equity and statutory receiver; reported in 87 N. J. Eq. 217.

      Mr. Frederic J. Faulks, for the appellant.

      Mr. Owen N. Brown and Mr. Conover English, tor the respondents,
   The opinion of the court was delivered by

Kalisch, J.

The theory, upon which the complainant originally filed a bill in her own behalf, as a stockholder, and all other stockholders who may come in and join with her, in the court of chancery, against the Metropolitan Steamship Company, was fraudulent conduct of its directors against the interests of the corporation. The prayer of the bill was for the removal of the directors and the appointment of a receiver under the equity powers of the court of chancery, &c.

The bill was filed in 1913. Subsequently on March 29tli, 1913, the complainant filed an amended bill. The prayer of relief of this amended bill asked the court of chancery to annul a certain contract made by the appellant company with the Pacific Navigation Company, and to appoint a receiver to take control of the said Metropolitan Steamship Company, and manage and direct its business and to issue injunctions to enforce the receivership.

The cause was brought on for a hearing on January 2d, 1917.

After all the testimony on both sides had been presented, application was made to the court, on behalf of the complainant, to amend the bill, and thereupon on the 15th day of February, 1917,-the court granted the application, and the amended bill was amended in two important particulars, by setting out therein an averment that the business of the appellant company has been and is being conducted at a great loss and greatly prejudicial to the creditors and stockholders, so that its busihess cannot be conducted with safety to the public and advantage of the stockholders, and that if need be a receiver be appointed, under the act entitled “An act concerning corporations” (Revision of 1896), and the acts amendatory thereto.

The act of 1912, chapter 300, page 535, amends the sixty-fifth section of the Corporation act of the revision of 1896, in that the court of chancery is invested with power to grant similar relief to a certain extent, in a case where it appears that the business of a corporation has been and is being conducted at a great loss and greatly prejudicial to the interest of its creditors or stockholders, so that its business cannot be con-, ducted with safety to the public and the advantage to the stockholders, as in a case where the corporation has become insolvent.

Upon the bill as amended and upon the facts as developed on the hearing by the testimony the learned vice-chancellor made six separate orders from each of which the-appellant appeals to this court.

The general grounds upon which the validity of the orders, is attacked is that nothing in the evidence warranted a finding., that the company’s business was being conducted otherwise than in the sole interest of its creditors and stockholders, or in a manner which would not result tp the greatest benefit to them all.

We think there is evidence which amply supports the finding 'of the court below.

Counsel for apjDellant urges that the court below erred in restraining the defendant company from paying its debts or from pursuing through the agency of its directors and stockholders the business for which it was organized, and in appointing a. receiver under the general equity powers of the court.

‘ There were two restraining orders made by the court and an order appointing a receiver under the equity powers of the court.

The court below having found that the transactions of the directors of the defendant company and that the company’s business and financial conditions were such as to bring the defendant company within the operation of section 65 of the Corporation act, by virtue of the same section the court had the power to make the restraining orders, assailed here, as invalid.

The power having been conferred by the legislature upon the court of chancery to grant relief in cases arising under secT tion 65 of the Corporation act, it follows, as a matter of course,, that the inherent power of the court to appoint a receiver for the purpose of pr.eser-ving the property in question and the rights of the parties to the litigation intact, is beyond successful attack.

Counsel for appellant next insists that the order, permitting the intervention of.creditors of the defendant- company whose claims were not cine, in a suit brought by its minority stockholders in a representative capacity, is invalid.

' The answer to this is found in the section itself which permits any creditor or stockholder to commence suit, &c.

A person is no less a creditor because the time-for the payment to him of the debt dire him, from his debtor, has not matured.

The two other orders attacked as invalid relate to the original order appointing a statutory receiver, and a later order confirming it.

For the appellant it is insisted that the order appointing a statutory receiver is invalid because the appointment was made without notice to the defendant company.

In Shaw v. Standard Piano Co., 87 N. J. Eq. 350, this court held: “that the appointment of a receiver without affording the defendant an opportunity to be heard upon the application ivas a tailing of its property without due process of law is manifest when it is- considered that section 68 of the Corporation act provides that all the real and personal property of an insolvent corporation wheresoever situated, all its franchises, rights, privileges and effects, shall, upon the appointment of a receiver, forthwith vest in him, and that the corporation shall he divested of all title thereto.”

This court further held that the provision of section 65 of the Corporation act which authorizes the appointment of a statutory receiver without notice is unconstitutional.

The law does not recognize that any necessity, however' great or urgent, can give rise to a legal right extending beyond constitutional limitations.

The argument advanced, by counsel for the respondent, in support of the constitutionality of the provision in section 65 of the act for the appointment of a statutory receiver without notice, with the rights and powers under section 68 of the act is, that, because the defendant was incorporated under that act has only such privileges as the state by the statute gives it, and allowed itself to come into existence under a charter from the state, 'which was expressly subject to the liability that under conditions which come within the purview of the statute, application could be made to the court and a receiver appointed, and which terms the defendant accepted by incorporating under the act, therefore, it is not depriving the defendant of any of its rights or due process of law, since the defendant must be considered to have waived its rights when it accepted the charter under a statute containing these provisions.

The unsoundness of this contention is apparent. Persons, whether natural or artificial, will be presumed to have entered into a contract with reference to the valid laws of the state. Only the provisions of the contract which are legally enforceable will control the parties thereto. The fact that the defendant incorporated under an act which contained an unconstitutional provision cannot render tlm provision enforceable, nor can it confer any power on the court to enforce it.

We think, however, that the objection that the statutory receiver was appointed without notice rests upon unsubstantial grounds.

’The order appointing a statutory receiver was made after the amendment and apparently without notice to the defendant, but it appears that this order was subsequently confirmed after due notice.

The appointment of the receiver, therefore, could be sustained upon the second order, made after notice, provided this were a case in which a statutory receiver could be properly appointed, with the broad powers therein conferred.

It is to be observed that the amended bill, as amended, does not proceed upon the theory that the defendant is insolvent but upon the ground that the defendant’s business has been and is being conducted at a great loss and greatly prejudicial to the interests of its creditors and stockholders, so that its business cannot be conducted with safety to the public and advantage to the stockholders.

The original order, made in this case, appointing a statutory receiver sets up the above grounds as the basis of the appointment and states that no adjudication of insolvency is made.

The order confirming the appointment of the receiver sets up no additional ground.

The original order contains the following:

“And it is further ordered that in accordance with the provisions of the statute all the real and- personal property of said corporation, wheresoever situated and all its franchises, rights, privileges and effects forthwith vest in. the said receiver, -and the said corporation is divested of the title thereto.” ,

It is plain, that this part of the order is not authorized by either section 65 or 68 of the Corporation act. Section 68 of the act provides:

“All the real and personal property of an insolvent corporation, wheresoever situated, and all its franchises, rights, privileges and effects, shall, upon the appointment of a receiver, forthwith vest in him, and the corporation shall be divested of the title thereto.”

It is clear that this section only applies to receivers appointed for corporations adjudged insolvent. Therefore, that part of the order above recited is erroneous.

The appointment of the statutory receiver will be sustained, but modified to the extent of eliminating therefrom that part of the order above quoted.

The various orders appealed from will be affirmed, except that the order appointing the statutory receiver will be affirmed, with the modification above directed.

For affirmance — Ti-ie Chief-Justice, Swayze, Trenchard, Parker, Bergen, Minturn, Kalisci-i, Black, White, Heppeni-ieimbr, Williams- — 11.

For reversal — None.

For modification — The Chief-Justice, Swayze, Trenchard, Parker, Bergen, Minturn, Kalisch, Black, White, Heppenheimer, Williams-11.


text:
    Raymond P. Wortendyke, trustee, &c., complainant-respondent, v. Louis Rayot et al., defendants-appellants.
    [Submitted March term, 1917.
    Decided September 13th, 1917.]
    Where husband, and wife, as tenants by the entirety, conveyed real estate, the conveyance being held valid as to the wife but fraudulent as to the husband, the only interest therein subject to execution against the husband is the interest of the husband as a tenant by the entirety, and not an eqiial undivided half interest.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Griffin, whose opinion is reported in 87 N. J. Eq. 159.

      Mr. Emil Walscheid, for the appellants.

      Mr. Alexander Higgins, for the respondent.
   The opinion of the court was delivered by

Kalisch, J.

The complainant, as trustee in bankruptcy, filed his bill in the court of chancery to set aside conveyances made by Louis Rayot in fraud of his creditors. On this appeal we find that it will be only necessary to concern ourselves with that part of the decree appealed from wherein it is adjudged that the deed of conveyance made by Louis Rayot and Margaret Rayot, his wife, to Barney Hermes, bearing date the 26th day of May, 1913, was, so far as the interest of Louis Rayot is concerned, in fraud of the creditors of the said Louis Rayot, and that such interest as now held by the said Barney Hermes is an equal undivided one-half interest in said lands and premises and that said deed, so far as said equal undivided one-half interest in said lands and premises be and the same is hereby set aside, annulled and for nothing holden as against any execution to be issued under this decree.

It appears that prior to the 26th day of May, 1913, Bayot and his wife were the owners of an estate by the entirety. It also appears that at that time Louis Bayot was indebted to Bingger & Company in about $6,600, and to one Henry in aboht $200, and had no other property.

On the date previously mentioned Bayot and wife convej'ed by deed the property in question to Hermes for an alleged consideration of $12,000, the vendee paying $9,600 in cash and assuming the- payment of mortgages, amounting to $2,400, then existing’ on the premises conveyed to him.

The learned vice-chancellor found on the evidence before him, and we think properly so, that the conveyance made by Louis Bayot to Hernies to be void as to his interest as against the creditors above mentioned, but good as to the wife.

The principal attack made by counsel for appellant upon the decree is that it is erroneous in that it not onty sets aside the fraudulent conveyance, but declares ■ that Hermes took thereunder an estate which prior to that conveyance did not exist, namely, “an equal undivided half interest in said lands.” We think the point is well taken.

Before the conveyance to Hermes, husband and wife held an estate as tenants by the entirety, as modified by the Married Woman’s act. Then Bayot attempted, unsuccessfully, to convey all his interest to Hermes. That interest was essentially a tenancy in common terminable on the death of either Bayot or his wife, with remainder in fee to the survivor. Schulz v. Ziegler, 80 N. J. Eq. 199.

The deed having been declared void as to himself because made in fraud of creditors, his interest remained unaffected, and hence, subject to attack by those creditors.

In that situation it was error for the court to decree that the interest conveyed was an equal undivided one-half interest in the land, because that postulates a tenancy in common, ignoring the fact that Bayot’s interest would be cut off entirely by his death before his wife, or-would ripen into a complete title in fee by her death before his.

The decree should be modified so as to adjudge that the interest of Bayot in the premises, subject to an execution, is the same as if his deed had not been made.

The decree will be modified in accordance with the views herein expressed.

For affirmance — White—1.

For reversal — None.

For modification — The Chief-Justice, Garrison, Swayze, Trenchard, Parker, Bergen, Kalisch, Black, Heppenheimer, Williams, Taylor, Gardner — 12.


author: Black, J. Bergen, J.

text:
    Eleanor P. Shaw, complainant-respondent, v. G. B. Beaumont Company, defendant-appellant.
    [Argued March 9th, 1917.
    Decided October 11th, 1917.]
    1. It is not an inflexible rule that, when the court of chancery, having once acquired jurisdiction for one purpose, it is bound to retain the case for complete relief; whether the court of chancery will do so, so as to include all the points in controversy between the parties, rests somewhat in- the discretion of the chancellor. The rule applied in this case, where the court of chancery, under an agreement had jurisdiction to make an accounting, excluded therefrom items under two former agreements, which were cognizable in a court of law, held proper.
    2. A mortgagee in possession is not entitled to compensation for services rendered for renting the premises, in this case an apartment-house.

      3. Under the terms of an agreement, “to receive for its entire compensation for its services in so doing [i. e., building] a sum equal to ten per cent, of the entire cost of such building,” a corporation is not entitled to receive for its services, in addition to the ten per cent, called for by the terms of the contract, the proportion of the salaries of its officers and office employes, while supervising the construction of the building, nor ten per cent, on the cost of financing the building when the disbursements in connection therewith have been allowed, nor for telephone calls, carfare, postage, stationery — they are office charges of the defendant corporation; nor tools used in the construction of the 'building — they are part of the equipment of a contractor.
    On appeal from a decree of the court of chancery advised by Charles J. Roe, advisory master.

      Mr. William A. Lewis, Mr. Gilbert Collins and Mr. Edward A. Markley, for the appellant.

      Messrs. Hartshorne, Insley & Leake and Mr. William E. Becker, for the respondent.
   The opinion of the court was delivered by

Black, J.

The fundamental question in this case is one of equitable jurisdiction. The litigation grows out of an agreement made between the parties to this suit, on the 26th day of February, 1913. The complainant being seized of lands at the corner of Highland avenue and the boulevard, in Jersey City, New Jersey, entered into an agreement on the above date with the defendant, to erect an apartment-house on a part thereof; under the terms of the agreement the complainant conveyed the lands to the defendant and also gave the defendant certain moneys, the lands to be reconveyed to her on completion of the building and payment thereof, tire cost to be ascertained by an accounting to be made by the defendant. The defendant, having erected and completed the apartment-house on part of the land, sold and mortgaged other parts, in accordance with the terms of the agreement, retained title to the remainder and «collected rents from apartments when rented. The defendant, having failed to render a just, and true account, the complainant exhibited her bill of complaint in the court below and prayed (a) for an accounting; (5) a reconveyance of the lands held by the defendant; (c) a receiver to collect the rents pending the litigation. The case was brought to trial before Advisory Master Charles J. Eoe, resulting in a decree for the complainant and the sum of five thousand five hundred and forty dollars and thirty-five cents ($5,540.35) to be paid by the defendant to the complainant, hence the defendant brings this appeal, alleging seven specifications as grounds of appeal. The first and only one that requires any extended discussion relates to the ruling of the advisory master, which limited the scope of the accounting to the agreement of February 26th, 1913. The appellant urges that the master should have included the transactions between the complainant and the defendant, under two prior written agreements, viz., August 27th and November 22d, 1912. They referred, speaking generally, to the same subject, viz., that of building. They were both abandoned, no work being done under them, except the preparing of plans for a building, under the agreement of August 27th, 1912, and the payment of five hundred and forty dollars ($540) to the appellant. The accounting was a long and laborious one, involving something over one hundred thousand dollars. The record is also voluminous. The clause in the agreement of February 26’th, 1913, providing for the conveyance of the property and the holding of it by the defendant, until it should be paid, is the distinguishing feature between that agreement and the two preceding agreements referred to above. That clause is the sole ground, or the special equity, which gives the court of chancery jurisdiction over this cause. The question, then, is, Did the master err in limiting the scope of- the accounting as above indicated? One other fact is urged, as having some significance, which may be mentioned, that is the parties stipulated before the master authorizing him to consider all the matters in dispute and adjudicate thereon (and waiving a jury trial on any such, matters in the brief), but it may be said, in passing, that such a stipulation imposes no obligation on the court of .chancery to decide those issues. -

It may be conceded that a court of chancery having once aequired jurisdiction of a cause will do all in its power to settle all the rights of all the parties in the matter of any controversy, but this is not an inflexible rule, which the court of chancery is bound to follow in every case that comes before it.

The rule to be applied was succinctly stated by Vice-Chancellor Peed, in the case of Stout v. Phœnix Assurance Co. of London, 65 N. J. Eq. 573, in these words: “A court of equity in this state can deal with legal questions onty, as far as their decision is incidental or essential to the determination of some equitable question. Merely because a court of equity has acquired jurisdiction for one purpose, it is not empowered to retain the case for complete relief.” Chief-Justice Beasley, speaking for this court, said: “It is not true, by any means, that when a court of conscience has acquired cognizance for one purpose, it thereby acquires cognizance over the entire controversy for all purposes.” Lodor v. McGovern, 48 N. J. Eq. 279.

The principle is further illustrated in our courts in the cases of Little v. Cooper, 10 N. J. Eq. 273; Red Jacket Tribe v. Hoff, 33 N. J. Eq. 441.

The Subject is discussed, the principle illustrated and applied in many cases and by text-writers, such as 1 Story Eq. Jur. 72; Pom. Eq. 181; 10 R. C. L. 374 123.

The extending' of the jurisdiction of chancery so as to 'include all the points in controversy, rests somewhat in the discretion of the chancellor, especially so where the rights involved grow out of other contracts. In this case tire defendant has an adequate and complete remedy at law, for all the items involved under the two former contracts, including damages for their alleged breach. The court of chancery cannot retain jurisdiction for the purpose of granting a purely legal remedy or to try a claim for unliquidated damages. Trotter v. Heckscher, 40 N. J. Eq. 657; Phillips v. Pullen, 45 N. J. Eq. 157.

The bill of complaint in this suit was filed April 22d, 1915. The present Chancery act (P. L. 1915 p. 184 8), by which a juiy trial shall be deemed to be waived, unless demanded in the pleadings, does not apply to this case. Ibid. 12.

We, therefore, think that the master was right in confining the scope of the accounting to the agreement of February 26th, 1913.

It is next urged that the defendant should not have been regarded as a mortgagee in possession, to the extent of disallowing it any compensation for services rendered to eoifiplainant for renting the apartments under the authorization contained in a letter dated June 24th, 1913, after November 1st, 1913.

It is sufficient to say on this point that the ruling of the master is amply sustained by the authorities: Clark v. Smith, 1 N. J. Eq. 137; Elmer v. Loper, 25 N. J. Eq. 482; Vanderhaise v. Hugues, 13 N. J. Eq. 410; Moore v. Cable, 1 Johns. Ch. 388; 2 Jones Mort. 1114.

The third point is without legal merit, it requires no discussion.

The next three points involve a construction of the clause in the contract, which provides that the defendant is “to receive for its entire compensation for its services in so doing (i. e.. building) a sum equal to ten per cent, of the entire cost of such building and to complete the same by October 1st. 1913,” the entire cost of the building, including the ten per-cent, compensation, shall not exceed forty-two thousand dollars ($42,000). The master allowed the defendant the sum of three thousand four hundred and seventy dollars and fifty cents ($3,470.50), ten per cent, on the'cost of the building, for its services in constructing the building, under this clause in the conti’act.

The appellant now claims that in addition thereto the master should have allowed a proportion of the salaries paid by the defendant to its officers and office employes, to its president, Mr. Beaumont, at the rate of nineteen dollars and twenty cents ($19.20) per day; to its secretary, Mr. Bowan, at- the rate of thirty-five dollars ($35) per week; to its messenger, or office boy, Mr. Stanley, at the rate of eighteen dollars ($18) per week; while supervising or superintending the construction of the buil cling.

Also, it is contended by the appellant that the master should have allowed ten per cent, for services performed, on the cost of financing the apartment-house, amounting to nine hundred dollars ($900). But disbursements in connection with the mortr gage loans and sales of land were allowed by the master; also the appellant claims items for telephone calls, carfare, postage and''stationery; tools, such as ladders, mortar tubs, &c., used in'the construction of the building. Without stating in detail the entire contract under which the appellant claims such items, it is sufficient to say that we think the master properly construed the contract and made a correct application of its terms to the items in controversy in this case, by excluding all these various items above indicated as not being included within the provisions of the contract.

The reasoning of the master is quite satisfactory in the memorandum filed by him in the court below, excluding these various items. The contract provides for no- independent supervision. The defendant cannot charge the complainant with a proportion of the salaries that it pays its officers for supervising or superintending the building. The defendant is the contracting party; it had a right to employ whoever it chose- to superintend the building on its part, the work of the laborers employed by it. So, with the other items enumerated above, such as telephone calls, not allowed by the master, they were office charges of the defendant corporation; they were not costs and expenses of the building. So, the tools used in the construction of tire building, they were a part of the equipment of the contractor — a contractor, when he agrees to build must in the absence of a contrary agreement, furnish all the tools and necessary appliances for the work contracted, to be done.

Objection is also made to an allowance of a counsel fee. of fifteen hundred dollars ($1,500) to the complainant (P. L. 1910 p. 427); permits the allowance of a counsel fee by the chancellor of such amount as shall seem to him reasonable and proper. After examining the record in this case, which is voluminous, involving a large sum of money, we cannot say that a counsel fee of such an amount was either improper or unreasonable.

The decree of the court of chancery is affirmed, with costs..

Bergen, J.

(concurring with modifications).

The complainant by a letter dated June 24th, 19lá, addressed to the defendant authorized it

“To run all apartments, making such arrangements as in your judgment may seem advisable. Also such other .arrangements as may be necessary In connection with the furnishing and running of apartments, such cost as may be incurred thereby to be added to the contract allowance.”

This separate agreement manifestly authorized the defendants to find tenants and to furnish the apartments, the cost of which was made subject to the ten per cent, allowance. The word “cost” must refer-to the furnishings, and expenses of running the apartments. The master allowed the cost of painting, janitor’s wages, coal and gas, nine refrigerators and window shades, but eliminated all cost which arose subsequent to the 1st day of November, 1913, when he said the building was completed and that thereafter the defendant was not entitled to ten per cent, on any furnishings or expenditures upon the ground that the building being completed, the defendant was a mortgagee in possession. If it be granted that the defendant was a mortgagee in possession, it was, nevertheless, entitled to continue its account until the property was turned over and could not be deprived of the benefit of the written contract that it was to be paid ten per cent, upon the cost of the furnishings. It is impossible to tell from this account what proportion of the furnishings'were allowed; none appear in this account except the refrigerators at $197 and the window shades at $178, whereas the total cost of the furnishings was'$1,716.08. These furnishings were not a part of the original contract, and it would make no difference whether they were furnished after the completion of the building or before, they were to be paid for with ^the addition of ten per cent, on their cost, and I do not see upon wliat theory we can take a part of such furnishings and include them in this account and exclude the balance to be a subject of future litigation.

I think that either the subject-matter of this latter contract should lie wholly eliminated with a. statement that it is not to be included in the decree, or the whole amount should be included, and, therefore, the decree should be modified to this extent. I vote to affirm with this modification.

For affirmance — Swayze, Minturn, Kalisoh, Black, White, Heppenheimer, Williams, Taylor — 8.

For reversal — Garrison, Trenchard — 2.

For modification — Bergen, Gardner — 2.


author: Per Curiam.

text:
    The Borough of Belmar et al., complainants-respondents, v. Abraham Levinsohn, defendant-appellant.
    [Submitted July 9th, 1917.
    Decided November 19th, 1917.]
    On appeal from the court of chancery.

      Mr. Edmund Wilson and Messrs. Durand, Ivins & Carton, for the appellant.

      Mr. Harry R. Cooper and Mr. Henry II. Snedeher, for the respondents.
   Per Curiam.

The decree in this cause will be affirmed, for the reasons stated in the per curiam filed in the similar case of Heyniger v. Levinsohn, decided at the present term and published in 88 N. J. Eq. 341.

For affirmance — The Chief-Justice, Garrison, Swayze, Trenchard, Parker, Bergen, Minturn, Kalisch, Black, White, Heppenheimer, Williams — 12.

For reversal — None.


text:
    George H. Heyniger, complainant-respondent, v. Abraham Levinsohn, defendant-appellant.
    [Submitted July 9th, 1917.
    Decided November 19th, 1917.]
    On appeal from a decree advised by Vice-Chancellor Lewis, and reported in 87 N. J. Eq. 171.

      Mr. Edmund Wilson and Messrs. Durand, Ivins & Carton, for the appellant.

      Mr. Harry R. Cooper and Mr. Henry H. Snedeker, for the respondent.
   Per Curiam.

The decree appealed from will be affirmed. The opinion of the vice-chancellor adequately disposes of all the points raised here except one, and to that extent is adopted as the opinion of this court.

The remaining point is based on a construction by appellant’s counsel of section 7 of the charter of the Ocean Beach Association (P. L. 1873 pp. 1089, 1091), which we consider untenable. The section reads as follows:

“That for the purpose of restricting nuisances and of compelling a uniform system of improvements of said settlement the said company are hereby authorized and 'invested with power to incorporate into any deed of conveyance made by them, whether in fee-simple or otherwise, a clause or condition forbidding the sale upon the premises so conveyed by said company, of any spirituous or intoxicating liquors, and to require any grantee of said company to make and maintain such style and character of improvement on said lots .so conveyed or on the streets fronting thereon, as to the said company may seem most expedient for securing a uniform system of development and improvement throughout the said settlement * *

The point made is that if the corporation desired to require ■buildings on lots sold to be placed a certain minimum distance back from the street line, it could so require only by the insertion of an appropriate special clause in its deeds, and not by what it actually undertook to do, viz., pass a general resolution or by-law containing such restriction and inserting a covenant in the deeds merely binding the grantee in general terms to abide by the by-laws.

The construction contended for by appellant would be justified if the act gave power to incorporate a condition forbidding the sale of intoxicating liquor and a condition requiring grantees to make and maintain such style of improvement, &c.; but the act does not so read. The clause “and to require,” &e., is referable •to “authorized and invested with power.” The other meaning would do violence to the grammar. Construing the act as we do, the point is without substance.

For affirmance — The Chief-Justice, Garrison, Swayze, Trenchard, Parker, Bergen, Minturn, Kalisch, Black, White, Heppenheimer, Williams — 12.

For reversal — None.


text:
    Henry Clayton Povey, executor of the last will and testament of John Boyle, deceased, Elizabeth B. Gordon and Alice Deroussen, complainants-respondents, v. Matthew J. Ready, Jane A. Taggart and Edwin D. Kenyon, defendants-appellants.
    [Argued June 22d, 1917.
    Decided November 19th, 1917.]
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Foster and reported in 87 N. J. Eq. 19.9.

      Mr. Arthur Hams, Mr. William L. Brunyate and Mr. Ralph Lum, for the complainants.

      Mr. Thomas S. Henry, for the defendant Matthew J. Ready.

      Mr. William Greenfield, for the defendant Jane A. Taggart.

      Mr. Edwin O. Caffrey and Mr. Alfred E. Skinner, for the defendant Edwin ID. Kenyon.
   Per Curiam.

The decree in this ease requires a modification, subject to which it will be affirmed, for the reasons given by Vice-Chancellor Foster. So much of the decree as adjudges that the judgment entered in favor of the defendant Ready against John Boyle is, and was; from the time of its entry, null and void and of no force and effect in law, is not within the power of the court of chancery to decree. Sands v. Ruddick, 87 N. J. Eq. 620. The decree should be modified so as to restrain Ready and his assignee from -enforcing the judgment against any property adjudged by the decree to have been acquired by the defendants, or either of them, from John Boyle in his lifetime, or from his estate, by means of the judgment.

With this modification the decree will be affirmed.

For affirmance — The Chief-Justice, Parker, Bergen, Minturn, Kaltsch, Black, White, Heppenheimer, Williams—9.

For reversal — None.

For modification — The Chief-Justice, Parker, Bergen, Minturn, Kalisch, Black, White, Heppenheimer, Williams — 9.


text:
    Raymond R. Wortendyke, trustee, &c., complainant-appellant, v. Louis Rayot et al., defendants-respondents.
    [Decided September 13th, 1917.]

      Mr. Alexander J. Higgins, for the appellant.

      Mr. J. Emil Walscheid, for the respondents.
   Per Curiam.

The decree appealed from will he affirmed, for the reasons given by Vice-Chancellor Griffin in the opinion filed in the court below, and reported in 87 N. J. Eq. 159.

For affirmance — The Chief-Justice, Garrison, Swayze, Trenchard, Parker, Beroten, Kalisch, Black, White, Heppenheimer, Williams, Taylor, Gardner — 13.

For reversal — None.


text:
    Charles P. Koch, appellant, v. Commonwealth Insurance Company of New York, respondent.
    [Decided October 11th, 1917.]
    On appeal from a decree of the court of c-hancery advised by Vice-Chancellor Learning, and reported in 87 N. J. Eq. 90.

      Mr. Joseph Beck Tyler, for tbe appellant.

      Mr. Howard L. Miller, for the respondent. •
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Learning.

For affirmance — The Chief-Justice, Swayze; Trenchard, Parker, Bergen, Heppenheimer, Williams, Taylor, Gardner — 9.

For reversal — Kalisch, Black, White — 3.


text:
    John L. Baker, respondent, v. Margaret Baker, appellant.
    [Submitted July 13th, 1917.
    Decided November 19th, 1917.]
    On appeal from a decree of the eonrt of chancery advisecLby Vice-Chancellor Backes,

      Mr. James Mercer Davis, for the appellant.

      Messrs. Runyon & Autenreith, for the Respondent.
   Per Curiam.

This appeal is taken from a decree nisi made by the eonrt of chancery in favor of the petitioner below, granting' a divorce on the ground of desertion.

The original petition was filed June 8th, 1915,' and the hearing was on the pleadings as they stood, which were petition, answer and cross-petition. The cross-petitioner charged the petitioner with being a resident of the State of New Jersey.

After the court had rendered its opinion, to the effect that a decree for the petitioner would be made and the cross-petition dismissed, the defendant came into court on a rehearing on which the defendant desired to make proof that the petitioner was not a resident of the State of New Jersey. After this hearing, which was solely on the question of residence, the court again decided'that the petitioner was entitled to his decree, as the proofs showed him to be a resident, and, consequently, the decree nisi was entered.

The petition of appeal presents only the question of residence, as to which we concur in the conclusions reached by the learned vice-chancellor.

The decree of the court below is affirmed.

For affirmance — The Chief-Justice, Garrison, Swayze, Parker, Bergen, Minturn, Kalisch, Black, White, Heppenheimer, Williams — 11.

For reversal — None.


text:
    Russell A. Flint et al., appellants, v. Myron E. Flint et al., respondents.
    [Decided October 11th, 1917.]
    On appeal from an order of the court of chancery advised by Vice-Chancellor Lane and reported in 87 N. Y. Eq. 560.

      Messrs. Burnett, Cornish & Sorg, for the appellants.

      Messrs. Colby, Whiting & Moore, for the respondents.
   Per Curiam.

The order appealed from will be affirmed, for the reasons stated in the opinion filed in the court helow by AUce-Chancellor Jjane.

For affirmance — The Chief-Justice, Swayze, Parker, Bergen, Minturn, Kalisch, Black, White, Heppenheimer, Williams,. Gardner — 11.

. Por reversal — -None.


text:
    Angenette K. Lawshe, complainant-respondent, v. Trenton Banking Company, defendant-appellant.
    [Argued June 21st, 1917.
    Decided November 19th, 1917.]
    On appeal from a decree advised by A7ice-Chancellor Learning and reported in 87 N. J. Fq. 56.

      Messrs. Geraghty & Weelans, for the complainant-respondent.

      Mr. Frank S. Katzenbach, Jr., for the defendant-appellant.
   Per Curiam.

AYe are satisfied that the evidence does not justify the conclusion that Mrs. Lawshe executed the assignment of mortgage under any coercion of ber husband or because her will was under his domination. The situation was that she had loaned money, half of which she had but recently received from her husband, to the Trent Tile Company, in which her husband was largely interested, and by his receipts from which the family profited, by which also- they were largely supported. ' She had as security a mortgage given by the Trent Tile Company to her, but executed without formal authority from the board of directors. The company needed money. The board of directors authorized the. execution of the mortgage involved in this suit, and on the same day she assigned the mortgage to the bank as security for the indebtedness of the tile company. We are persuaded that the mortgage and the assignment were contemporaneous because they were a part of an arrangement by which the tile company was to secure Mrs. Lawshe by a valid mortgage and obtain, thereby further credit at the bank. Whether it secured as much by way of additional advances as Mr. Lawshe expected, or even as much as the bank may have promised, is unimportant. Mr. Lawshe had told his wife what was the truth, that it would be to the advantage of the tile company. He seems to have had in mind that thereby time would be secured until the company’s indebtedness could be funded and perhaps further help secured through the proposed $35,000 mortgage. Mrs. Lawshe understood that the assignment would probably be to her and her husband’s advantage through the aid offered to the tile company. She knew what she was going to do, expected the coming of the officer to take her acknowledgment; told the nurse she had to attend to a little business; that she was very tired, but perhaps had better go, and asked the nurse to help her to the library. The nurse did so, and left her alone; the nurse says she thought that was perfectly proper. Mrs. Lawshe had been ill with a cold and some fever; but she was convalescent, and on the day in question had not had an opiate. These facts suffice to show that the assignment is not successfully impeached. It is unnecessary, therefore, to consider the question whether the bank is in the position of a bona fide purchaser for value, and if so, to what extent. It can safely rest on its legal rights; it is not disputed that the mortgage was pledged as collateral for the Eambow paper as well as for the new advances of the bank. The decree must be reversed and the record remitted in order that a new decree may be entered in accordance with onr opinion.

The defendant is entitled to costs in both courts.

For affirmance — Black—1.

For reversal — The Chief-Justice, Swayze, Trenchard, Parker, Bergen, Kalisch, White, Williams, Heppenheimer — 9.


text:
    Provident Institution for Saving in Jersey City, complainant, v. Benjamin C. Mead, executor, &c., defendant.
    [Decided October 11th, 1917.]
    Appeal of the Sisters of the Poor of St. Francis.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Stevenson, whose opinion is reported in 87 N. J. Eq. 424.

      Messrs. Treacy & Milton, for the complainant.

      Mr. Orlando H. Dey, for the defendant.
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Stevenson.

For affirmance — The Chief-Justice, Swayze, Trenchard, Parker, Bergen, Kalisch, Black, White, Heprenheimer, Williams, Taylor — 11.

For reversal — None.