text:
    Globe Ticket Company, appellant, v. International Ticket Company and another, respondents.
    [Argued November 20th, 1918.
    Decided March 3d, 1919.]
    On appeal from a decree of -the court of chancery advised by Vice-Chancellor Lane, who filed the following opinion:
    Suit is brought to obtain an injunction restraining defendants from using, or imparting information with respect to, a device alleged to be the exclusive property of complainant by reason of its being a trade secret.
    It is called a barrel numbering head, and is used for the purpose of successive numbering of coupon tickets. While no new mechanical principle and no new mechanical appliances were used, there was a novel use of familiar principles and appliances which resulted in the perfection of a head which might be used in connection with a rotary press for the continuous successive numbering of tickets. The evidence is that up to the time of the perfection of this device there had not been in existence any apparatus which could be used upon a rotary press for such purpose. The invention permitted an enormous increase in production. It was, admittedly, an improvement upon anything that had gone before. Its use contributed largely to tire successful building up of the business of the Globe Ticket Company. It was used exclusively by the Globe Ticket Company until October, 1913. Ho attempt was ever nrade to patent it, the explanation being given that its owners considered a “padlock better than a patent.” The Globe company, undoubtedly, was adverse to the details of the construction of this device being disclosed to a competitor. It was, however, used on a machine in the open shop where it might be seen by any of the employes or visitors. It was of such construction, however, that a mere casual inspection would not, I think, suffice to impart sufficient information to anyone so that it might be reproduced.
    Certain employes connected with the machine shop were assigned to the duty of cleaning the heads when necessary and of taking them down and repairing them. These men were ordinary mechanics employed at ordinary mechanics wages. There was no definite contract entered into between the company and any of its employes which would forbid the disclosure of the alleged secret, nor is there sufficient evidence to permit me to find that any of the employes were definitely instructed that they were not to disclose any information they might acquire. The defendant Titus was employed by the concern some twenty-three years ago as an apprentice. ' Pie left in March, 1913. ,For some years prior to his leaving he had worked on the barrel head, had taken it apart and reassembled it. While he testifies that he was never instructed that the device was of secret construction, and I find no. evidence upon which I can base a conclusion that he was, yet he and the other mechanics unquestionably knew that the complainant did not desire that the details of the construction should be disclosed. It chose to rest upon its ability to hold its employes in its employ, or upon the chance that none of its employes would have the necessary mechanical ability to reproduce the machine even if they were 'permitted to examine the interior construction.
    In the year 1913 there was considerable dissension in the plant of the complainant. The morale of its officers seems, to have broken down. Employes were leaving right and left. There was in existence, in Providence, Rhode Island, a concern known as the Sun Ticket Company, of which one Manshel was president and general manager. On February 22d, 1913, Titus applied to Manshel for a position with that concern. He represented to Manshel that he had had seventeen years’ experience with the . Globe Ticket Company, and I am forced to conclude that his experience with the barrel numbering device was referred to, for immediately after this employment with the concern on March 10th, 1913, lie started to build such a machine. Manshel denies that at the time he knew that the device was considered by the Globe company as its exclusive propert}g or that he knew that Titus was under obligation not to use, in the interests of the Sun Ticket Company, the information which he had acquired at the Globe^company’s plant. Titus denies that he considered that he was under any obligation to refrain from using information that he had acquired at the plant of the Globe company. In view of the action of the officers of the complainant, which will be hereafter adverted, to, it seems to me that while,Titus and Manshél knew that the Globe company was adverse to this barrel numbering head being used by a competitor, yet they considered that they were under no legal or moral obligation, the nne not to impart and the other not to use, information acquired by Titus while in the employ of complainant. It is significant that when Titus went to Manshel he received no compensation for the information that he had obtained at the plant of the Globe company. On the contrary, he was paid a dollar less a -week wages. If he thought that he had a tremendous secret to disclose it would seem as if he would have bargained for more than mechanics’ wages.
    The machine built under the supervision of Titus was completed in October, 1913.' While it is somewhat different in its construction and operation than the device used by complainant, the basic idea is the same. It is an improvement upon the device of complainant, but not so different in construction and operation as to make it a new device. It is conceded by Titus that if he had not had the information acquired at the Globe company’s plant he would never have thought of what he calls his own device. In this respect this case is within Stone v. Grasselli Chemical Co,, 65 N. J. Eq. 756.

    We come now to the action, or lack of action by complainant, after Titus left, Upon which I think the case depends. Titus made no secret of his intention to leave and become connected with the Sun Ticket Company. The officers of the complainant knew that Titus had the information necessary for him to have to reproduce the barrel numbering head. In 1914, the Sun Ticket Company began printing coupon theatre tickets, and it was apparent to the officers of the complainant that they had been printed upon -a device which performed the same function as the barrel numbering head of complainant.

      It is perfectly apparent from an inspection .of the various strips of tickets that have been put in 'evidence here that it is not difficult to determine whether the strips have been printed upon a flat press or upon some machine by which the figures are put on at different times rather than by one impression. The irregularities which appear upon the tickets printed upon the flat press or band machine as described by Mr. Keen, if there are any, are regular’, whereas the irregularities which appear upon the tickets made by the barrel head device are irregular. It is perfectly clear to me that the complainant well knew in 1914 that Titus had made use of the information which, he had acquired at the complainant's plant, and that the Sun Ticket Company was using that information. In 1914, competition on the part of the Sun Ticket Company increased. Herring admits that ■ the Sun Ticket Company could not have produced the article it did without using a device performing the same functions as the barrel numbering head. The complainant knew that another of its employes possessing information with respect to this device was associated with the Sun Ticket Company. In February and March, 1915, there was brought to the attention of the complainant letters written by Titus to a concern in Chicago offering to build for that concern an apparatus which would contain this barrel numbering head. Competition had steadily increased. In June, 1915, Manshel visited the vice-president and general manager of the complainant with the idea of offering to complainant the plant of the Sun Ticket Company for sale. In that conversation Pope, vice-president and general manager of complainant, charged Manshel with being a business crook, with haying enticed away employes of complainant. Titus must have been referred to specifically, for Keen, the secretary, was sent for to attend the conference to verify a statement made by Pope to Manshel that Titus had offered to sell to the Chicago concern the barrel numbering head device.
    There is no doubt, I think, but that at- this conversation the facts that Titus had given to the Sun Ticket Company information which he had acquired at the Globe Ticket Company plant, and that the Sun Ticket Company was using this information and was numbering tickets with the barrel numbering head device, were referred to. Manshel denied none of the statements of Pope. Indeed, I think it clear that his possession of this information was used by him as a- reason why the complainant should purchase the plant of the Sun Ticket Company. It is not asserted that at the conference any official of the complainant made any claim of exclusive right to the device. The most that Pope claimed was that Manshel had not acted in accordance with .good business ethics. Manshel, unquestionably, left the conference with the idea that Pope considered that be, Manshel, had acted in a way that was unfair, so Ear as business ethics were concerned, but certainly with no idea that Pope or the complainant considered that Titus had violated any legal right of complainant. Indeed, the conversation, so far as Pope is concerned, may be summed up in this that he practically said to Manshel: “You got this information you are using it; 1 cannot stop you but you are a crook for doing it.” After consideration, the offer of the Sun Ticket Company to sell out was declined. While there is no evidence that at the hoard of directors’ meeting there was discussed the fact that the Sun Ticket Company was using this barrel head device there is evidence that almost everything else was discussed. There is evidence that the possession by the Sun Ticket Company of the alleged secret was of the utmost importance and was thought one of the important factors to be considered in the sale, and it is hard to escape the conclusion that there was discussion with respect to this matter. During 1915 and 1916 competition between the Sun Ticket Company and the complainant became more hitter. In February, 1917, the International Ticket Company was formed. That concern was a consolidation of the Sun Ticket Company, the Rockwell Machine Company and the Manshel Machine Company. The assets of the three concerns were conveyed to the International company, and the stock of the International company issued in payment therefor. So far as the Rockwell Machine Company stockholders are concerned, there is no evidence whatever that any of them had anything to do with Manshel, or with the Sun ’Picket Company, or with Titus or had any knowledge that the Sun Ticket Company was using or might be charged with using the secret device of the Globe company. There can be no doubt, but that the ability of the Sun Ticket Company to number tickets by this barrel numbering device entered materially -into the price fixed upon the assets of the Sun Ticket Company. It seems to me that the intervention of the International Ticket Company created a. complete change of conditions. The International Ticket Company used the barrel numbering head device, and complainant' permitted it to. Nothing whatever was done by complainant until August, 1917. It then sent an operative to the plant of the International ’Ticket Company, who obtained employment and made photographs of the device used by the International company. Her report came in in a few weeks, but it was not until the 26th day of December, 1917, that the bill in the present case was filed. From June, 1915, to August, 1917, no additional information came to complainant indicating that the Sun Ticket Company or the International Ticket Company was using this device. Whatever information complainant had it had by June, 1915. Indeed, during the year- 191-1, it had information upon which it might have acted. It certainly had in 1915. I do not believe that the complainant had any intention of endeavoring to prevent either the Sun Ticket Company or the International Ticket Company from using this device until competition became so keen in 1917 that it began to look around for some possible-means of preventing it.
    I think both upon the ground of acquiescence and laches the bill should be dismissed. It is. true that the defences of laches and acquiescence while cognate are not co-relative. Mere delay may constitute laches which will prevent relief, if conditions have changed. Acquiescence implies assent. And it is tiue that action, or lack of action, occurring during- the .commission of a wrong may constitute acquiescence or estoppel which' would not have the same effect’if occurring after the performance of the wrong. De Bussche v. Alt. 8 Ch. Div. 286, 314. In this case, however, the wrong was a continuing wrong. Complainant is entitled to the benefit of its secret device so long only as it preserves its secrecy.
    Tt will have the aid and assistance of the court under certain circumstances in preserving secrecy. Consent to a disclosure or the use by another bars relief. Delay in applying for relief with knowledge of the circumstances may be considered as an element of evidence in determining whether or net there has been acquiescence.
    The distinction between laches and 'conduct evidence which may show acquiescence or election is clearly made in the case of Faulkner v. Wassmer, 77 N. J. Eq. 537, citing Dennis v. Woglom, 44 N. J. Eq. 513, and Clampitt v. Doyle, 73 N. J. Eq. 678.

    Considering all of the testimony, I find complainant acquiesced in the continued use of this alleged secret device by the Sun Ticket Company and the International Ticket Company. With respect to laches the rule is well settled that 'while under ordinary circumstances a court of equity follows the statute of limitations, yet when extraordinary circumstances intervene the court will disregard the statute and determine the case upon equitable principles. In this case with knowledge, as I have found, of facts sufficient to charge it with knowledge that Titus was disclosing the alleged secret and that the Sun Ticket .Company was using it, and with knowledge imputed to it of the fact that under the law it was necessary to protect its right to preserve the secrecy of the alleged device, complainant failed to act ■ until December, 1917. In the meantime, the building up of a prosperous business by the Sun Ticket Company had been permitted, the International Ticket Company had intervened, purchased the assets of the Sun Ticket Company, into the value of which, undoubtedly, entered the right of the Sun Ticket Company to use this device. Under the circumstances, I think the doctrine of laches applies.
    Ilpon the main issue I have considered the cases of Solomon v. Hertz, 40 N. J. Eq. 400; Stone v. Grasselli Chemical Co., supra; Flechenstein Brothers v. Flechenstein, 66 N. J. Eq. 252; Vulcan Detinning Co. v. American Can Co., 70 N. J. Eq. 588; S. C., 72 N. J. Eq. 387; Pomeroy Ink Co. v. Pomeroy, 77 N. J. Eq. 293; Taylor Iron and Steel Co. v. Nichols, 70 N. J. Eq. 541.

    I will advise a decree dismissing the bill, with costs. Let decree be settled on two days’ notice.

      Mr. J. Edward Ashmead and Mr. Frank Smith (of the Pennsylvania bar) with him, for the appellant.

      Mr. Eugene IF. Leake, for the respondents.
   Per Curiam.

The decree is affirmed, for the reasons given by Vice-Chancellor Lane.

For affirmance — The Chief-Justice, Swayze, Trenciiard, Parker, Bergen, Minturn, Kalisci-i, Heppenheimer, Williams, Gardner — 10.

For reversal — Hone.,


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    Brotherhood of Railroad Trainmen, complainant, v. Anna Mae Van Etten, respondent.
    [Decided May 15th, 1919.]
    Appeal of George A. Case et al.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Lewis, who filed the following opinion:
    I advise a decree in favor of Anna Mae Van Etten. The suit was an interpleader suit, and the fund has been deposited in this court.
    It appears from the evidence that Charles Case, a brother of Anna Mae Van Etten, held a benefit certificate in the Brotherhood of Railroad Trainmen. He was separated from his wife. They had two sons, George A. Case and Willard L. Case, both of whom were of age, and with one of whom the mother resided. Up ,to the 5th of February, 1917, Charles D. Case, the father, lived at Ho. 600 Hewark street, Hoboken, New Jersey, in a rented room which he occupied for upwards of two years before that time. His landlady testified that he was sick and only worked part of the time, and that he wanted to move to his sister’s house where he could get fresh air, hut he said lie would return to her house and would take the downstairs room and look for some lady to take care of him. This witness says that lie was very sick for four months; that during a part of that time he had to sleep on his chair, as he could not lie down in bed. She testified that he ,was a smart, intelligent man, but cranky ; she took care of him when he was sick and cooked his meals every day. Finally, he asked his sister, Mrs. Van Etten, to take him to her home. She was a woman 'in humble circumstances,. keeping a hoarding-house. In the first place, the benefit- certificate had been made payable to his wife; afterwards that arrangement was changed and it was made payable to his two sons; after he went to live with Mrs. Van Etten he had it changed again and made her the beneficiary, after consultation with a lawyer who was called in to advise in the'matter. Mrs. Van Etten wanted the money payable under the benefit certificate paid to the one who should take care of him, but the lawyer advised that ii should he made payable to her, and this was finally agreed upon. Under the policy Mr. Case was entitled to $l,600"in case of total disability, and the same amount in case of his death. He then made application to the brotherhood for the $1,600 on account of total disability, but died 'before that was acted upon. Tlie doctor who attended Mr. Clase during the time he lived with Mrs. Van Etten until his death, on March 31st, 1917, testified that the physical condition of Mr. Case was very had, that he was suffering from endocarditis, and the muscle power of the heart had given out so that it was not doing its work properly ; hut he says that Mr. Case’s mind was perfectly clear.
    Mrs. Case, the widow, says that the reason they separated was that Mr. Case was drinking very heavily, and that they were dispossessed, as they owed upwards of four months’ rent. She says that she consented to have the insurance transferred to- the boys’ names because her husband was always quarreling and fighting with her .and saying he did not want any other man to use up- his money, and so she gave her consent and it was made payable to the sons.
    Willard L. Case, one of the sons, testified that before his father went to the home of Mrs. Yan Etten he told his father that he was perfectly willing that he should have it while he was living. The other brother did not testify.
    The father having died, the sons now attack this transfer to • Mrs. Yan Etten on the ground that it was secured through fraud and undue influence. •
    This is not a case of a man who stripped himself by a deed of all his property. He retained, until the time of his death, six or seven weeks later, the right to change tlie beneficiary at any time.
    I find no evidence of fraud.or undue influence.
    There is a presumption of undue influence where confidential relations exist, such as that of attorney and client, guardian and ward, &c., between parties to a gift inter vivos; probably, also, in case of a gift causa, mortis, but not in the case of a testamentary gift; and I view this matter in the light of a testamentary disposition rather than a gift inter vivos. .It does not appear that free agency was interfered with or restricted, and there being found no undue influence or fraud, Mrs. Yan Etten is entitled to a decree.
    There is nothing to indicate that he was without mental strength, and it was natural for him to make his sister, who had taken him in to care for him for the rest of his clays, his beneficiary. Spark’s Case, 63 N. J. Eq. 242, 248; Gleespin’s Will, 26 N. J. Eq. 523; Trumbull v. Gibbons, 22 N. J. Law 117; White v. Starr, 47 N. J. Eq. 244; Stackhouse v. Horton, 15 N. J. Eq. 202; McCoon v. Allen, 45 N. J. Eq. 708; Gilham’s Will, 64 N. J. Eq. 715; Schuchhardt v. Schuchhardt, 62 N. J. Eq. 710; In re Humphrey’s Will, 26 N. J. Eq. 513; affirmed, 27 N. J. Eq. 567.

      Mr. Harry 1-7. Lange, for the complainant.

      Mr. Hugh B. Reed, 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 Lewis.

For affirmance — Tiie Chief-Justice, Swayze, Trenchard, Parker, Bergen, Mintürn, Kaliscii, Black, White, HepPENHEIMER, WILLIAMS, TAYLOR, GARDNER-13.

For reversed — None.


text:
    New Jersey Title Guarantee and Trust Company, respondent, v. Jersey Co-operative Realty Company et al., appellants.
    [Decided May 9th, 1919.]
    On appeal from a decree of the court of chancery advised by Plon. James P. Pielder, advisory master, who filed the following opinion:
    The defendant Jersey Co-operative Realty Company was Ilia owner of two tracts of land in Union county,- the one known as the El Mora tract, and the other as the Elizabeth Heights tract. Through an agent it applied for and was ganted a loan by complainant on bond and mortgage in the sum of $20,000, which, mortgage was dated June 30th, 1913, and recorded July 5th, 1913. The mortgaged land was part of larger tracts owned by the mortgagor and its predecessors in title and was covered by three mortgages, one held by the Mutual Life Insurance Company on the Elizabeth Heights tract; the second held by the estate of Phebc O. Earl, covering the El Mora tract, and the third held by Myra W. Woodley,-covering both tracts. The complainant apjhied its $20,000 loan to.pay off these three mortgages, the first being canceled of record and the Earl and Woodley mortgages being assigned to complainant. The expenses of the loan, including the assignments, added to the amount of the three mortgages, left a balance of $3,416.80, which was paid to the mortgagor. Certain parts of the tracts covered by the assigned mortgages had been sold by the mortgagor prior to the loan, and the mortgagor specifying lots or plots which it desired excepted from the mortgage lien, they were not included in the new mortgage, and were also, as part of the transaction, released by complainant as assignee' of the two prior mortgages, such, releases being given without consideration. This suit is brought to foreclose the three mortgages.
    The Jersey Co-operative Realty Company was a land coihpany and iiad made maps of both tracts showing streets, blocks and lots thereon. Deeds and contracts had been given and recorded for lots it had sold prior to the execution of complainant’s mortgage, while for others there were unrecorded contracts. When application was made for the $20,000 loan, copies of the maps were furnished the complainant, with a list of the lots which were to be included in the mortgage, and complainant’s title examination was made against the listed lots, and so far as the record disclosed, title to all the lots, mortgaged to complainant was in the mortgagor free and clear of any contract to convey, or other interest or lien in any other person. As a. matter of fact, there were outstanding contracts of which complainant claims it had no notice, but some of the answering defendants contend that complainant ivas actually informed that unrecorded contracts existed, or'that, its rights must be held to he subject thereto, because it knew that the mortgagor’s business was selling lots and it was therefore charged with notice of all sales made by it. After the mortgage was recorded, contracts purporting to antedate the'mortgage and deeds under such contracts were placed on record for lots in the mortgaged tracts.
    The complainant’s mortgage contained a' clause whereby it aa-reed to release lots in either tract on payment of $5 per front foot, but the Earl mortgage contained no release clause, and the Woodley mortgage contained a provision for releases on the basis of an acreage value. From the Earl and Woodley mortgages the complainant, as has been stated, gave releases without consideration for property not included in its third mortgage, and it further released various lots from all three mortgages on the basis of the front foot rate specified in the third mortgage. Some of these releases weie given before and others after the answering defendants’ interest were made matter of record, but again contending that complainant, had actual or constructive notice of their rights, they say that complainant under the Earl mortgage could release only for an adequate consideration, and under the Woodley mortgage for a consideration based on an acreage rate, and that the consideration received was inadequate.
    The determination of the two points raised by the defendants turns upon the question of notice to complainant of their rights. The rulo is that where the party sought to be charged has actual notice that the property is encumbered, or in some way affected hv the rights of others, he is hound with constructive notice of facts which a proper inquiry made by him would disclose. There is no evidence in the case to show that the mortgagor’s officers or agents informed the complainant of specific outstanding contracts affecting the property to he mortgaged. The officers of the complainant who.had to do with the transaction testify they had no such knowledge. The property was vacant,_ and when complainant’s officers inspected it, prior to agreeing to make the loan, there was no evidence of ownership by possession. The president and the agent of the mortgagor submitted to complainant a list of the lots which they proposed to mortgage and a list, of others which were to he excepted from the mortgage, and this was equivalent to a statement that those they proposed io mortgage were free from claims of others, and that those to he excepted were the ones already conveyed or under contract, and the purpose of the releases from the Earl and Woodley mortgages were to free the excepted lots, so that the mortgagor could convey them or assure good title to the holders of deeds. The only evidence in the case which might charge the complainant with notice of the defendants’ claims was given by Mr. Woolley, a title examiner for complainant, who testified that Seaman, the agent who negotiated the loan, told him there might be outstanding contracts and that the complainant had better take assignments of the prior mortgages for its protection against any such. It is not necessary to discuss whether the position Woolley held with his company bound the company’s officers or directors with knowledge of such facts communicated to him, because it does not appear that any knowledge of sufficient definiteness was communicated to him which would put him or his principal on inquiry.
    The complainant had before it the application for the loan made by Shearer, the president of the borrowing company, which was, in effect, a statement that there were no outstanding contracts. I refer to the following questions and answers therein contained:
    “9. Is tlio property encumbered by mortgage, easement, ground rent, mechanic liens, municipal liens, judgments, or ‘by other lien or encumbrance ?’
    “Ans. $4,500; $4,000; $10,000.
    “12. Objections to title known or rumored?
    “Ans. None. Restrictions in deeds by owner.
    “13. Unrecorded deeds, agreements, adverse claims and interests or secret trust, known or rumored to exist?
    “Ans. None.”
    The title examination showed the record clear, and upon all these facts I conclude that-no statement was made to complainant’s officers which should have aroused their suspicions, or required inquiry on their part to ascertain whether there were unrecorded contracts or deeds for any part of the mortgaged premises, and I am of the opinion that its mortgage is a prior lien to the defendants’ claims.
    We come next to consider the effect of complainant’s releases. The releases from the Earl and Woodley mortgages, given at the time of the execution of its $20,000 mortgage, were delivered before the defendants’ interests were made matters of record, and having no notice of such interests, complainant was justified in exacting no consideration therefor. It was part of the agreement for the loan that they should be released, and had complainant canceled the Earl and Woodley mortgages of record, that would have 'been the effect. ’ All other releases were given in accordance with the release clause contained in the $20,000 mortgage. Tinder our decisions, a mortgagor is not charged with notice of subsequent encumbrances, or interests, merely by the recording of instruments evidencing the same, but knowing that the mortgagor was engaged in selling lots and that it would probably sell some of those mortgaged, and having incorporated a release clause for that purpose in its mortgage, the complainant would probably be bound to take notice of the rights of subsequent purchasers, but as its real debt was the $20,000 mortgage, and the two prior mortgages were merely collateral thereto, I am of the opinion that the defendants have no rights as against the releases given for the consideration specified in the $20,000 mortgage.
    The complainant holds a judgment against the owner or owners of the premises in question, and there is no dispute that its execution thereon and levy. on the mortgaged premises were prior to any other execution and levy. After the filing of the bill of complaint a receiver for the owner was appointed by this court, who was by proper proceedings on complainant’s motion made a defendant herein and the bill taken as confessed against him. I think the complainant is entitled to have its judgment made out of the sale of the mortgaged premises, in the proper order of its priority.
    As to the method or manner of selling the mortgaged premises, I am willing to hear the parties further, but I think the property still covered by the complainant’s mortgages should be sold to pay the amount found clue thereon and in satisfaction also of the two mortgages it holds by assignment. Such portion of the two tracts in which the answering defendants have no interest should be sold first, and the El Mora tract should be sold prior to the Elizabeth Heights tract. Each tract should be sold in parcels of two lots each, and if sufficient is not realized to satisfy complainant’s mortgage and judgment, the remaining part of the mortgaged premises should be sold in such order as may be settled by the decree to be entered herein.

      It is suggested on behalf of the answering defendants that the property should be sold free of municipal liens and free of restrictions. I know of no statute authorizing such course with respect to liens, and I can offer no different, or less, or better title sold than the mortgage conveyed. I think the sale should be made by a special master; that he should be authorized to expend, not exceeding $300, to specially advertise the sale, and that after paying the amount due the complainant on its mortgage and judgment, and the amount due the defendant Gilliooley, trustee, on his mortgage, the surplus should be brought into court and the equities of the other defendants ascertained and a proper distribution then ordered.

      Messrs. Collins rfi Corbin, Mr. Clarence D. Meyer and Mr. John D. English, for the respondent.

      Mr. Sidney TV. Elclridge, for the appellants.
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Advisory Master Fielder.

Eor affirmance — Tun Chibe-Justice, Swayze, Trenchard, Parker, Bergen, Minturn, Black, White, IIeppeniieimer, Williams, Taylor — 11.

For reversal — None.


text:
    State of New Jersey, ex rel. Board of Health of the Township of Ocean, respondent, v. Ellsworth White, appellant.
    [Decided May 15th, 1919.]
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Foster, who filed the following opinion:
    The relief sought-in this action is an injunction to restrain a public nuisance which it is claimed defendant is maintaining on his property in Ocean township, in the county of Monmouth, where he has a piggery and a plant for the disposal of garbage collected in the adjoining municipality of Asbury Park.
    The bill is filed under the provisions of the Health act. Comp. Stat. p. 8668.

    On the hearing it was established that defendant is under contract to remove garbage from the city of Asbury Park; that in the performance of his contract he removes the garbage to his farm in Ocean township; this farm contains about sixty acres, the soil being mostly white sand; the farm is some distance from the populous section of the township and is in an isolated section and is on the Logantown highway. Defendant has created a rendering or cooking plant on the farm in which he cooks or steams the garbage and feeds it twice daily to the pigs which he raises. He keeps from four hundred to two thousand pigs at a time and feeds them the garbage in concrete troughs, which he washes daily.
    To many residing in the neighborhood the odors from the cooking and piggery have been very offensive, sickening and nauseating; they could not eat their meals; their food and clothing were saturated with, the odors; /many were obliged to close their windows and were unable to sit on the piazzas of their hpmes, and the plant and piggery were instrumental in breeding great quantities of flies. Other people living in the vicinity did not notice or object to the odors; or if they noticed them, they did not find them unpleasant; some even thought.the odors were agreeable and appetizing; others found the odors caused loss of appetite and had difficulty in digesting food; and in the opinion of the township physician the odors he noticed coming from defendant’s premises would produce nausea to people living within the radius of the odors and that those odors were hazardous to health.
    The neighborhood is said by counsel and some of the witnesses to have been a "smelly place” for j^ears, as nearly all the residents raise hogs under more or. less unsatisfactory conditions, and, in addition, there is near defendant’s farm a slaughterhouse and also a rendering establishment. .It is doubtless true, as defendant claims, that many of the odors charged to his disposal plant and piggery come from other properties, but his cooking apparatus seems to be the only plant of its kind in the vicinity, and it is the only place in the neighborhood to which the complaints about offensive, sour and sickening cooked garbage can apply.
    The board oE health of Ocean township made an official examination of defendant’s premises and found conditions there to be hazardous to the public health. Defendant, as required by the statute, applied for a permit to conduct his garbage disposal plant on his farm, but it was refused him because of unsatisfactory conditions surrounding the plant; and, notwithstanding this refusal, he has been operating his plant against the express orders of the board of health and in violation of ordinances adopted by the board.
    Complainant’s proofs establish the allegations of the bill that defendant is violating provisions of the act relating to municipal corporations (Comp. Stat. pp. 3494-3512) in maintaining a garbage disposal plant in Ocean township without the consent or permit of the proper municipal authorities; and also establish the, fact that the odors from defendant’s plant and piggery arc so offensive and harmful that they may, and are likely to, become hazardous to the public health.

      A decree will be advised in accordance with the prayer of the bill; but in view of the importance to the city of Asbury Park of this determination' affecting, as it does, the removal and disposal of garbage therefrom; and, also, of the fact that complainant, because of conditions created by the war, has requested .the court to defer the determination of the matter until the present time, the restraint to be advised will not become effective until October 1st next; and should a still later date for it to become effective be considered necessary, I will hear counsel on notice on this feature of the case.

      Mr. Harry Truaac, for the respondent.

      Messrs. Durand, Ivins & Carton, for the appellant.
   Per Curiam.

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

For affirmance — Tiie Chief-Justice, Swayee, Tbekci-iaed, Paeiceb, Bebgey, Miktubk, Kalisch, Black, White, HepPEKITEIMEB, WILLIAMS, TAYLOB, GaBDKEB — 13.

For reversal — Hone.


author: Walker, Chancellor.

text:
    Edwin Robert Walker, Chancellor.
    Frederic W. Stevens, Eugene Stevenson, Edmund B. Leaming, Vivian M. Lewis, John H. Backes, John Grieein, John E. Foster, Merritt Lane, Malcolm G. Buchanan and James F. Fielder, Vice-Chancellors.
    William B. Loudenslager v. John Stafford.
    [Decided January 10th, 1918.]
    1. A purchaser of land within a tract subject to restrictive cove.nants is bound by them when his deed states that the estate granted is “subject to the restrictions now imposed upon said premises.”

      2. Where a defendant is -constructing a wall of Ms hotel building in disregard of a restriction that private dwellings only shall be built upon the premises, and is also constructing another wall of his hotel building in disregard of a restrictive covenant that no portion of any building shall be erected within eight feet of the side dividing line of the lots, and also is constructing a foundation wall within three feet of the rear dividing line of the lots, he will be restrained by injunction from violating the covenants.
    3. A judge may take the testimony of his own senses that a fourteen-story apartment-house or hotel is not a private dwelling.
    On final hearing on pleadings and proofs.

      Messrs. Grey & Archer, for the complainant.

      Mr. James I-I. Hayes, Mr. Ulysses G. Styron and Mr. Clarence L. Cole, for the defendant.
   Walker, Chancellor.

This case was tried and submitted together with that of Pearson v. Stafford, in which an. opinion will be filed contemporaneously with this memorandum. See 88 N. J. Eq. 385.

This case differs from the Peatrson Case in this, that the land here involved, upon which the defendant’s building is proposed to be erected, is not upon the Chelsea Beach Company tract, but upon what is called the Hemsley tract adjoining it, and is subject to certain restrictions differing from those imposed upon the Chelsea Beach tract. The fact is, that the building which the defendant is erecting on his property faces on Brighton avenue and rims through to Stenton Place, the Brighton avenue side having been acquired by mesne conveyances under the Chelsea Beach Company, and that on the Stenton Place side by mesne conveyances under Mr. Hemsley — the Stenton Place side being-lots 126 and 132 on the Hemsley plat, referred to in the opinion in the Pearson Case.

The building commenced by the defendant is to be a-large apartment-house or hotel fourteen stories high, at the corner of Brighton avenue and the boardwalk, having a frontage on Brighton avenue extending back to Stenton Place.

The defendant’s deed, after description of the property contwcd, recites that it is “subject, nevertheless, to the restrictions now imposed upon the said premises.” Although the defendant in this case, as in the Pearson Case, denies that his property is subject to restrictions, this language in his deed put him upon notice, and inquiry would have discovered to him the restrictions on the Hemsley tract, if he did not in fact know them. The defendant in this case is violating those restrictive covenants, in this, that he is constructing the northerly- wall of the building across lot No. 126, in disregard of the restriction that private dwellings only shall be built on the premises, excepting that an owner of adjoining lots is privileged to build not more than one private dwelling under the same roof covering more than one lot;, -but this, of course, means adjoining lots on the Hemsley tract and not lots on that one adjoining lots on the Chelsea. Beach Company tract; and he is also constructing the northerly wall directly along the line between lots 120 and 126 adjoining on the north, in disregard of the covenant that no portion of any building on any lot between Pacific avenue and the ocean boardwalk (within which area lots 120 and 126 are situate) ■shall be erected within eight feet of the side dividing line of the lots, and is also constructing the foundation wall along the northerly line of lot 126 within three feet of the rear dividing line of the lots.

That a fourteen-story high apartment-house or hotel is not a private dwelling goes without saying, and a judge will take it upon the testimony of his own senses that such a building, violates a covenant providing that private dwellings only shall be built upon the given premises.

In Lapres v. Doughty, opinion by Vice-Chancellor Learning, filed November 21st, 1916; affirmed by the court of errors and appeals, for the reasons given by him (see 88 N. J. Eq. 361), neither of which opinions is yet reported, the restrictive covenants on the Hemsley tract were upheld — on a different state of facts and between different parties, to be sure, but the reasoning of that case is applicable to this one.

Complainant is entitled to an injunction to restrain the erection of the defendant’s building, in so far as it violates the restrietive covenants, but not commanding him to remove foundations no higher than the grade of the lots' within the restricted area, as such foundations, in and of themselves, will work no- injury to the complainant by way of depriving him of the benefit of the covenants. The complainant is entitled to costs.


author: Leaming, V. C.

text:
    Andrew F. O’Connell v. John S. W. Holton.
    [Decided May 10th, 1919.]
    Where an adjoining owner observed the construction of improvements in violation of a restrictive covenant, when they were two-thirds completed, but made no protest and instituted no proceedings until after the work had been fully completed, his delay bars his right to a mandatory injunction to compel the removal of the improvements.
    On bill to- enforce a covenant.

      Mr. Clarence L. Cole, for the complainant.

      Messrs. Bourgeois & Coulomb, for the defendant.
   Leaming, V. C.

In this suit complainant seeks the enforcement of a restrictive building covenant which provides that — •

“No building shall at any time be erected within twenty feet of the front property line of any street or avenue.”

This is one of the covenants uniformly contained in the Chelsea Beach Company conveyances, which covenants have heretofore been before this court for enforcement in. repeated cases. Various reported eases touching this specific covenant are reviewed by Chancellor Walker in Pearson v. Stafford, 88 N. J. Eq. 385.

Complainant’s building is on Chelsea avenue.; defendant’s building is on an adjacent lot oceanward thereof. Both residences were located so that the fronts of their main bodies were twenty feet, from the street line, and both had open roof-covered porches extending within the restricted space. This w'as in accordance with what appears to have been the uniform practice in, that locality.

Defendant has since enclosed his porch with glass and finished its interior in a manner to practically make it a living-room of the dwelling. It is that act of which complainant now complains.

Defendant contends that the covenant here in question has been violated to such an extent in that vicinity that it can be no longer enforced; that complainant has, with others, violated the covenant by extending the eaves of his main building over the restricted space; that all open porches extending over the restricted space, including complainant’s porch, are violative of the' covenant; that at least one porch near complainant’s dwelling is enclosed; that many porches in the vicinity are constructed with storerooms below the porch floors and in other respects violative of the covenant; also, that complainant is barred equitable relief by his delay in bringing this suit.

I think it unnecessary to give consideration to, any of the defences save that last named, since it seems apparent that the delay of complainant in informing defendant of Ms objections to the work and his delay in filing his bill must be deemed operative to deny to him the relief now sought.

Defendant began work on the porch improvement early in November, 1918, and at a time when complainant was occupying his cottage. Complainant admittedly observed the work at that time; but whether he then comprehended the real nature of the work is a matter of dispute. But in January following, when complainant visited the property, the work had been about two-thirds completed, and the entire nature and scope of the work was admittedly ascertained by complainant. Complainant then notified a certain improvement association of his objections to the work. That association appears to be an organization, composed of various lot owners, for the purpose of enforcing these restrictive building covenants, and complainant is a member of that association.

That association did nothing in the matter until early in March following, when its solicitor by letter apprised defendant that his .work was violative of the covenant and that unless he removed such portions as were violative of the restrictions a bill for an injunction would be filed at once. At about the same time complainant also saw defendant and informed him of his objections to the work. At that time the entire work had been practically completed. The bill herein was filed March 30th following, and seeks a mandatory injunction for the removal of the structure.

It thus appears that, even though when complainant observed the work at or near its inception he may not have been fully apprised of its proposed nature and extent, yet when the work had been about two-thirds completed he became fully acquainted with its exact nature and purpose, and, instead of apprising defendant of his objections to it, contented himself with informing the improvement association of his objections, and that association, which was in every respect solely his agent or representative, permitted defendant to complete the remaining one-third of the work without notifying defendant of existing objections to it, and about a month after the completion of the work the bill for mandatory relief was filed.

The work has been of an expensive nature, and should the relief now sought be granted, defendant will suffer a loss of at least one-third of the construction cost by reason of complainant’s failure to perform a clear duty to have defendant apprised of his objections to it, or to file a bill to interrupt it. Whether defendant would have ceased further work had he been apprised of complainant’s objections to it does not appear1; but, when complainant ascertained the nature and extent of the proposed work and determined to enforce the covenant, it was clearly his duty to promptly apprise defendant of his attitude in the matter, to the end that defendant could be afforded an opportunity to avoid further useless expense; and this is equally so whether or not defendant in fact knew of the existence of this restrictive building covenant. To- compel defendant to remove this structure at the instance of complainant after complainant has, with full knowledge of the nature of tire work, permitted at least one-third of it to be performed without protest to defendant and without application to this court to interrupt it, would, in. my judgment, be unjust to defendant and violative of the recognized principles upon which equitable relief in general, and especially in cases of this class, is based. Smith v. Spencer, 84 N. J. Eq. 389.


text:
    Underwood Cochran and Frederick E. Moore v. John G. Burns.
    [Submitted July 7th, 1919.
    Determined July 9th, 1919.]
    1. Where an instrument professes, or is intended to carry into execution a previous parol or written agreement, but by mistake of the draftsman either as to fact or law, violates the manifest intention of the parties, equity will correct the mistake so as to produce a conformity thereto.
    2. Where an agreement was to convey land subject to the rights of tenants occupying the premises under a lease, and through mutual mistake such reservation was omitted from the deed, the deed will be reformed in that respect.
    3. Although the bill for such reformation is not in the accurate and technical form, it is sufficient if the question of such material mistake is substantially presented so that it cannot be misapprehended.
    4. Tucker v. Madden, 44 Me. 206, and Hunt v. Rousmaniere, 1 Pet. 1, approved and followed.
    On. bill for reformation of deed of conveyance. On hearing on motion to strike out bill.

      Messrs. Bourgeois & GoxClomh, solicitors of defendant, for the motion.

      Messrs. Schimpf, Ilanstein & Butter, solicitors of complainants, opposed.
   Leaming, V. C.

Complainants’ amended bill is for reformation of a deed of conveyance of real estate made by complainants to- defendant. Defendant now moves to strike out the amended bill on the ground “that there are no facts set forth as alleged in said bill which would entitle the complainants to the relief prayed for therein.”

The general rule touching reformation of written instruments, as early stated in,our federal supreme court, cannot be questioned: “Where an instrument is drawn and executed, which professes, or is intended, to carry into execution an agreement, whether in writing or by parol, previously entered into, but which, by mistake of the draftsman, either as to fact or law, does not fulfill, or which violates the manifest intention of the parties to the agreement, equity will correct the mistake, so as to produce a conformity of the instrument to the agreement.” Hunt v. Rousmaniere, 1 Pet. 1, 13. The rule, as there stated, is given express approval in Ex’rs Wintermute v. Ex’rs Snyder, 3 N. J. Eq. 489, 500, and is in substance approved by our coui't of errors and appeals in Freichnecht v. Meyer, 39 N. J. Eq. 551, 560. If complainants’ bill clearly sets forth a situation of that nature it must be sustained.

The bill states as a fact that the premises convej'ed to defendant was subject to lease and was occupied by tenants, all of which defendant knew, and that it was. the intention of complainants and defendant that the conveyance should be made subject to the leasehold and the interests of tenants, and to that end they placed in the written agreement of sale a provision that “all .adjustments, such as water, sewer, interest, rents, taxes, &c., on both properties to be adjusted as of day of settlement.” That a conveyance was subsequently made by complainants to defendant in pursuance of the agreement, but the deed of conveyance so made was a general warranty deed and did not mention leasehold interests of tenants; that complainants’ deed was made and executed without excepting the leasehold interest of tenants through mutual inadvertence and mistake. The prayer is that the deed be reformed to conform to the intention of the parties, as contained in the agreement of sale, and for general relief.

In my judgment, these averments clearly express the essential facts on which reformation may be decreed. If, in fact, the agreement was to convey subject to the rights of the occupying tenants, and the conveyance which was made failed to express that reservation, and the omission of that reservation from the deed of conveyance occurred through mutual inadvertence and mistake of the parties, complainants are clearly entitled to have the deed contain £l reservation of that nature.

It is an approved practice in suits for reformation of instruments to set forth in full in the bill the terms of the contract, if in writing, and also the terms of the instrument which has been executed in fulfillment of the contract, and to also specifically set forth the words sought to be added or expunged. . See article on Reformation, &c., in 18 Encycl. Pl. & Pr. 744 et seq. But I am unable to find this practice defined as a necessity. I think the sound rule is that stated in Tucker v. Madden, 44 Me. 206: “Although a bill for the reformation of a deed is not in the accurate and technical form which is desirable, it is sufficient if the question whether there was a material mistake in the deed is substantially presented so that it cannot be misapprehended.”

I will advise an order denying defendant’s motion.


text:
    Anna G. Pizzini v. William B. Pizzini et al.
    [Submitted July 8th, 1919.
    Determined July 17th, 1919.]
    Where the complainant made her son her attorney in fact, and authorized Mm to sign deeds, endorse checks and receive any and all money due her, and the son forged complainant’s name to an assignment of mortgage, and collected the money clue thereon — Seld, as complainant had made Mm her a'gent, and he was authorized to dispose of the mortgage and receive payment therefor, the assignee acquired at least an equitable title thereto.
    On final hearing on bill to declare assignments of mortgage to be void.

      Messrs. Bolle, Sooy & Gill, for the complainant.

      Mr. Charles C. Bab code, for the defendants Louis GeTstley, William B. Rosskam and Land Title Company, trustees, and John J. White.
   Leaming, V. C.

December 24th, 1913, a mortgage for $5,000 was made to complainant on certain real estate at Atlantic City.

March 17th, 1914, that mortgage and the bond it secured were purchased by the testamentary trustees of Isaac Rosskam, deceased, for the full amount of the mortgage.

December 29th, 1916, defendant John J. White purchased from the testamentary trustees the same bond and mortgage and paid therefor the full amount of the mortgage and accrued interest.

Complainant’s bill seeks a decree declaring void the two assignments of the mortgage, alleging as ground for relief that the assignment of December 24th, 1913, made to the testamentary trustees was a forgery.

It is conceded that both purchases were made in entire good faith and without any knowledge or reason to know or suspect that the assignment purporting to be from complainant to the testamentary trustees was in any way defective.

At final hearing experts of the highest standing disagreed as to whether the name of complainant, which is signed to the questioned assignment, is in fact her signature; but the evidence which has been adduced, other tiran opinions of handwriting experts, strongly indicates the signature was not made by complainant, but was made by her son William, although the facts cannot be said to be wholly free from doubt.

I entertain the view, however, that even though it should be determined that complainant’s name to- the questioned assignment was not in fact written by her, the relief sought by complainant cannot be awarded, for the reason that the purchase price of the mortgage was received by an, agent of complainant, who was duly authorized to receive it; in such circumstances, the purchasers of the mortgage became clothed with the equitable title thereto.

The essential facts touching the purchase of the mortgage by the testamentary trustees may be, briefly stated as follows:

The purchasers of the mortgage were represented in the transaction by the South Jersey Title and Finance Company, and Mr. Ernest A. Lord, as secretary of that company, had entire charge of the transaction for his company. All negotiations touching the sale of the mortgage were with Wm. B. Pizzini, a son of complainant, and were by correspondence with him. March 18th, 1914, he forwarded by letter to the title company the mortgage and the bond it secured, two insurance- policies and the assignment of the mortgage here- in question, which assignment bears date March 17th, 1914, and purports to be signed by complainant and duly acknowledged by her on that day before her said son William as an acknowledging officer; the letter of complainant’s son also contained a request that after deducting the proper charges the title company should mail its check to him for the balance. March 30th, 1914, the title company forwarded by letter to complainant’s son William a cheek for $4,852.TO, the same being the $5,000 purchase price of the mortgage, less settlement charges; that check was made payable to the order of complainant. On the same day the bond and mortgage and policies of insurance were mailed by the title company to the assignees of the mortgage, and the assignment was mailed for record. The cheek of the title company was drawn on the Marine Trust Company and was paid by that company in due course. It bears the following written endorsements: “Pay to the order of Wm. B. Pizzini, Anna G-. Pizzini,” and also thereunder “Pay to the order of American National Bank, for deposit to credit of Wm. B. Pizzini.” It is also claimed on behalf of complainant that her name appearing on the back of that check is not in her handwriting.

The mere circumstance that the son was in possession of the mortgage and negotiated its sale and delivered it with the bond and insurance policies to the purchaser may be assumed to be insufficient to justify payment of the purchase price to him or even to justify the delivery to him of a check for the purchase price payable to complainant’s order, since the son’s possession of the securities, standing alone, would not import either a power to sell or collect; but the evidence further establishes that the son was in fact clothed by complainant with power to sell the mortgage and to collect the purchase price. For some time the son had had entire charge.of his mother’s property and business affairs, and by a formal written power of attorney he was authorized by her to attend to all of her affairs, the powers thus conferred including the power of signing and endorsing checks or negotiable notes and signing deeds and the power, to receive any and all sums of money due to her.

This son was, accordingly, clothed by his mother with power and authority to sell this mortgage and to collect its proceeds of sale. The assignment of the mortgage, which was accepted by the title company, purported to be from complainant and not from her son as her attorney-in-fact, although Mr. Lord, who represented the title company, had been apprised in a former transaction of the existence of a power of attorney held by the son from his mother. The check given for the purchase price was made payable to complainant’s order and not to her son as attomey-in-fact. Accordingly, it may be said that the title company was not dealing with the son as an attorney-in-fact. But the son was, nevertheless, an attomey-in-fact and was clothed by his mother with ample power to sell and deliver the mortgage and to receive the proceeds of sale whether the written assignment of the mortgage should be signed by him as attorney-in-fact or by his mother in person; much more then was he privileged by his mother to become the custodian of a check payable to her order. If, as an authorized custodian of that check, he failed to apply it to his mother’s use, the loss must fall upon her as against the purchaser of the mortgage. I think it immaterial that the trust company did not deal with the son under his power of attorney. It fully appears by the testimony that the son was in fact a lawful custodian of the mortgage; he, in fact, .also enjoyed from his mother power to collect it or to sell it; he agreed to sell it, and in fact sold and delivered it; the purchaser in good faith delivered to the attorney-in-fact a check for the purchase price payable to the mother’s order; if the powers of the attorney-in-fact included the right to receive the check in that form it is clearly immaterial whether the person so delivering the check knew of or relied upon the power of attorney, since the cheek was from the moment of its delivery in the possession of an agent of complainant who had authority to receive it. Complainant’s effort is to repudiate her son’s act in selling the mortgage and receiving the proceeds, not because her son was not clothed by her with the power to sell and collect, but because the purchaser was not at that time fully aware of the fact that the son enjoyed those powers. It follows that if the instrument which was delivered by the attornejr-in-fact as a valid, legal assignment of the mortgage was not effective as such, equitably the assignee must be deemed to have acquired, as against complainant, a title co-extensive with that which the attorney-in-fact had power to confer.

I will advise a decree dismissing the bill.


text:
    Laura M. Dey v. Henrietta C. Moody et al.
    [Submitted September 19th, 1919.
    Determined September 19th, 1919.]
    1. A judgment creditor of a chattel mortgagor with lien perfected on the mortgaged chattel may invoke the jurisdiction of equity to determine the validity of the chattel mortgage; but where the judgment creditor has elected to sell the chattel, subject to the mortgage, and has bought it in, such equitable jurisdiction cannot be invoked to restrain the mortgagee’s action of replevin without any showing that the law courts will not be able to fully determine the rights of the parties.
    2. Where a judgment creditor who bought in a mortgaged chattel on,, execution sale filed a bill in equity attacking the validity of the chattel mortgage which the mortgagee was seeking to enforce in an action to replevy the chattel, the bill will not be dismissed, but will be retained so that in case the. law courts are not able to do justice between the parties, equity may.
    3. Where a judgment creditor sold a mortgaged chattel under execution and bought it in at a necessarily reduced price, it would be inequitable for a court of equity to set aside the mortgage, for that would enable the judgment creditor to retain the property free from any lien at the reduced price at which it was purchased.
    On bill, &c. On bearing on return of order to show cause for injunction.

      Mr. Lloyd G. Biddle, for the complainant.

      Messrs. Wootton, Harcourt & Steelman, for the defendants.
   Leaming, V. C.

I entertain the view that the preliminary restraint sought by complainant must be denied.

As a judgment creditor of defendant chattel mortgagor, with a lien perfected on the mortgaged chattel, complainant was clearly privileged to invoke the equitable, jurisdiction of this court to determine the validity of the chattel mortgage in aid of her judgment lien. But in electing to sell and purchase the chattel under her judgment in disregard of the chattel mortgage complainant discharged her judgment lien on the chattel and acquired the legal title thereto-. There, accordingly, exists at this time no judgment lien on this chattel in aid of which this court may exercise its acknowledged jurisdiction for that purpose; and in the pending action of replevin brought by the chattel mortgagee for the recovery of the possession of the chattel any defect of the mortgage arising from a failure to comply with statutory requirements is open to complainant to the same extent that such defects could have been considered by this court, under a bill filed in aid of the' judgment lien,. In Jersey City Milling Co. v. Blackwell, 58 N. J. Eq. 122, it is pointed out that the jurisdiction of this court has never been extended to- cases of that nature.

There is in the present bill, however, an averment that the chattel mortgage was fraudulently executed to defeat complainant’s claim. That averment is made on information and belief and appears to be based upon the claim that no debt existed to support the mortgage. This court has heretofore entertained jurisdiction of bills filed by purchasers of land under judgment to set aside prior conveyances as fraudulent against the creditor under whom the purchaser claims, basing the relief on the jurisdiction against fraud. If, in the present case, there may exist elements of fraud adequate to afford complainant relief which are not available as a defence to the pending replevin action, it is not clear that this court would not be justified in assuming jurisdiction of the entire controversy; but I am presently unable to discern any wmit of power of the law court to ascertain in the action there pending whether the mortgage was in fact given to secure an existing indebtedness.

In these circumstances I think the proper course is to- retain the bill, and should it be hereafter found that the law court has been unable to entertain any substantial defence which may have been presented at the trial of the pending replevin action application for this suit to proceed to final hearing, and for intermediate relief, may be then made upon that ground.

Defendants herein have made several motions against specific parts of the bill. These motions will be held over pending the result of the replevin action.

It is not to be understood from any suggestions here made that one who has acquired title to either chattels or land at his own execution sale by electing to proceed to sale with knowledge of the existence of a prior outstanding mortgage made by the judgment debtor, instead of invoking equitable relief in aid of Ms judgment lien, can thereafter procure relief in this court against the outstanding mortgage in any case in wliich it, is made to appear that by reason of the execution sale at which the existence of the outstanding claim was made known the purchaser has been enabled to buy at a price representing the value of the property sold, less the amount of the outstanding claim, since the obvious effect of setting aside the mortgage in such circumstances would be to confirm a sale at an inadequate price and enable the purchaser to hold a property for wMch he had paid no adequate consideration to entitle him to claim it as a matter of equity. See Trusdell v. Dowden, 4 N. J. Eq. 396, 399; Scull v. Idler, 79 N. J. Eq. 466; Mississippi and M. R. R. Co. v. Cromwell, 91 U. S. 643. Nor is it to be here understood that in such circumstances any remedy could be afforded by this court through a proffer of the purchaser to surrender the title acquired by such purchaser and permit a resale under the judgment. Since the very foundation of such a bill necessarily rests on a claim of legal title in complainant which he seeks, to have quieted against an alleged outstanding fraudulent claim, the procedure suggested appears to be measurably inconsistent with the fundamental right claimed, even though the power of this court to order a resale should be conceded.

No costs should be taxed herein against either party.


text:
    Sadie R. Davis, petitioner, v. Howard Green, defendant.
    [Submitted September 19th, 1919.
    Determined September 30th, 1919.]
    1. The general rule that where the parties are m pari delicto no affirmative relief will be given to one as against the other is always regarded by courts of equity as without controlling force in all cases- in which public policy is considered as advanced by allowing either party to sue for relief against the transaction.
    2. A petitioner seeking annulment of her marriage to the defendant because at the time of such marriage she was the lawful wife of another man then living, which fact and that their marriage was -consequently void was known to her and to the defendant, would not be denied relief as being in pari delicto, as though the marriage was void without any decree, the decree sought would merely operate to establish for all time the status of the parties, and would be granted in view of public policy, as in its absence the remarriage of the petitioner after the death of her present husband or the remarriage of the defendant might otherwise put in doubt the validity of lawful marriages and the legitimacy of lawful children.
    On petition for annulment of marriage. On hearing on exceptions to report of master.
    Petitioner seeks a decree annulling her marriage to- defendant on the ground that at the time of her marriage to defendant she was the lawful wife of another man.
    No defence has been made. The testimony taken before the special master fully established the fact of petitioner’s ceremonial marriage to defendant, and also the fact of her prior lawful marriage to another, and that her lawful husband- was still alive at the time of her marriage to defendant, and also at the time of the hearing, and that he had not been divorced from petitioner. It was further established that at the time of the marriage of petitioner and defendant both parties well knew that petitioner was the lawful wife of another person and that their marriage was, in consequence, void; that petitioner and defendant cohabited for about one year, during all of which time petitioner knew that her conduct was criminal; that at the end of that time she left defendant because she “felt that it wasn’t right to live in that way.” No child was born of the unlawful marriage.
    The foregoing facts were specifically found by the learned master, but a decree for petitioner was by him denied because of the equitable maxim that relief should not be awarded to one who comes into court with unclean hands.
    Exceptions, have been.filed in behalf of petitioner upon the ground that the facts established by the evidence entitled petitioner to a decree.

      Mr. D. Truemani Stackhouse, for the petitioner.
   Leaming, V. C.

In Rooney v. Rooney, 54 N. J. Eq. 231, the learned vice-chancellor denied a decree of annulment of a void marriage because of the established equitable maxim that relief would not be granted to a suitor who should come into a court of equity with unclean hands. In that case the husband, who sought the decree of annulment, had fraudulently concealed from his innocent victim the fact that he had a lawful wife; other circumstances of that case also appealed with extraordinary force to the enforcement of the equitable maxim there made the basis of the decree. The present case differs from the Rooney Case, by the circumstance that neither party was guilty of fraudulent concealment from the other, since both parties to the unlawful marriage knew that the wife, petitioner herein, had a husband who was alive at the túne, and both parties knew that their marriage was unlawful by reason of that fact; they were in pari delicto. •

Our Divorce act provides :

“Decrees of nullity of marriage may be rendered in all cases -when — 1. Either of the parties has another wife or husband living at the time of the second or other marriage.” •

Assuming, as I do, 'that the court of chancery' of this state in, the exercise of its statutory jurisdiction.'in eases of'nullity and divorce should give due recognition and force- to- the established principles which are applied in ordinary suits' in equity, I am yet unable to conclude that the petitioner herein should’ be denied a decree.

The equitable maxim that he who comes into.equity must come with clean hands is subject to well-defined limitations. • "While the general rule is that where the parties are in pari delicto no affirmative relief of any kind will be given to one against the other, that rule has' always been regarded by courts of equity as without controlling force in all cases in which public policy is' considered as advanced by allowing either party to sue for relief against the transaction. 2 Pom. Eq. Jur. § 941. That vital public interests are involved in a case of this nature is obvious. The marriage here under consideration is absolutely void without the aid of any judicial decree to that effect; the decree here sought is merely operative to establish for all time the status of the parties, whereas, without such decree lapse of time will render it more difficult, if not impossible, for their status to be ascertained by reason of the loss of evidence. It is in that office of the decree that vital public interests arise, since the remarriage of petitioner after the decease of her present husband or the remarriage of defendant may, in the absence of a decree at this time, expose to doubt the validity of lawful marriages and the legitimacy of lawful children. In Freda v. Bergman, 77 N. J. Eq. 46, Vice-Chancellor Stevenson points out with clearness and force the paramount interests of the public which are involved in a case of this nature. Those public interests appeal to me as of such impelling force that the equitable maxim relied upon- by the learned master must be deemed- inapplicable in the situation here presented. See Szlauzis v. Szlauzis, 255 Ill. 314.

In the English ecclesiastical courts, in suits for decrees of nullity of marriages which the -statute declared absolutely void, it appears to have been uniformly recognized that the efficacy and importance of a judicial declaration of nullity was “to prevent the consequences which might in future take place from death of witnesses, or other occurrences rendering proofs difficult or uncertain” (Shelf. M. & D. *565, tit. “Nullity”), and an examination of the reported eases will disclose that the fundamental reason for awarding decrees of nullity in those courts at the instance of either party was the protection of those public interests, and not because of any inability or hesitancy on the part of those courts to recognize and apply the equitable maxim already referred to in all appropriate cases. Thus, in Watts v. Watts, 3 Phillim. 43, the court says: “It is a duty this "court owes to the public to' declare the situation of the parties.” In Ray v. Sherwood, 1 Curt. 193, 226, 227, it is said: “Either party may bring suit to have his marriage declared null and void. * * * It is on the ground that it is material for their own sakes, and that of the public, that their status should be known.” In Pertreis v. Tondear, 1 Hagg. Cons. 136, 138, it is said: “It may be necessary, for the convenience and happiness of families, and the public likewise, that the real character of these domestic connections should be ascertained and known.” These cited cases were all suits for decrees declaring marriages void for causes which the statute declared operative to render marriages null and void ab initio, such as pre-contract, and the like.

■ But in cases where the marriages were voidable only the same courts appear to have discerned no such public interests, and to have been accordingly free to deny relief to the wrong-doer, since the status of the parties in such circumstances, in the absence of a decree, was regarded as already fixed by their marriage. Thus, in Norton v. Seton, 3 Phillim. 147, the libellant sought a decree of annulment of his marriage because of his own impotency, such marriages being deemed voidable only. The court found as a fact that at the time of his marriage he knew he was impotent. In the reported opinion it is .recognized that the public has an interest that the real status of the parties should be ascertained and declared where the marriage is absolutely void under the Marriage act, but the view is adopted that no such public interest exists in cases of marriages voidable only; relief was, accordingly, denied to libellant because of his own wrong-doing.

I am constrained to advise a decree in accordance with the prayer of the petition.


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    Joseph Euster v. Adolph Mewmeyer.
    [Submitted October 21st, 1919.
    Determined October 24th, 1919.]
    1. Where a tenant annexes to an injunctive bill proof that the agreement between himself and his landlord,' intended to be accurately reduced to writing in the form of a lease, included the privilege to the tenant to sublet a garage, he is entitled to restrain an action of ejectment for breach of tenant’s covenant not to sublet until final hearing of the tenant’s suit for reformation of the lease.
    2. Where the bill to reform the lease was not filed as promptly as it should have been, but the delay occasioned no loss of evidence, and the reasons assigned have persuasive force, injunctive relief should not be denied on account of laches.
    On bill, &c., for injunction. On hearing on order to show cause for injunction pendente lite.

      Mr. I-Tarry G. Kramer (Mr. Louis B. LeDuc), for the complainant.

      Mr. J oseph Beck Tyler, for the defendant.
   Leaming, V. C.

. Complainant is a tenant of defendant under a lease which by its terms entitles complainant to occupy the demised premises until June 20th, 1921, at a specified rental. The lease contains a covenant that the tenant shall not sublet any part of the demised premises, and also a clause bestowing upon the landlord a right of possession in the event of a breach by the tenant of any covenant contained in the lease. The tenant, complainant herein, has sublet a part of the premises for use as a garage, and the landlord, defendant herein, has brought an action of ejectment against complainant based upon the breach of the covenant referred to.

Complainant’s bill seeks a reformation of the lease. The bill is based upon the claim that tire agreement actually made was to the effect that complainant should be privileged to sublet the garage, and that in reducing the agreement to the form of a written lease that exception to tire covenant against subletting was omitted through mistake. 'Restraint of the action at law is now sought until a decree of reformation can be procured at final hearing.

It is clear that if the matters set forth in the bill and verified by the appended affidavits are trae complainant is entitled to the relief sought'. But at the return of an order to show cause affidavits have been filed on behalf of ■ defendant denying that the mistake occurred upon which complainant relies; defendant accordingly invokes the third rule defined in Citizens Coach Co. v. Camden Horse Railroad Co., 29 N. J. Eq. 229, in opposition to restraint pendente lite.

I am convinced that the trial of the pending action of ejectment should be restrained until a final hearing in this suit can be had. The proofs annexed to complainant’s bill, to the effect that the agreement which was actually made, and which was intended to be accurately reduced to writing in the form of a lease, included the privilege of complainant to sublet the garage, are strong and forceful in detail and in corroborating circumstances. The demised property, other than the garage, is occupied'by complainant as his residence and as a store in which he conducts his regular business. To refuse tire restraint now sought would utterly destroy the subject-matter of the controversy, since no adequate defence can be made to the pending action at law unless and until a decree of reformation may be procured, and should restraint be now refused the resulting injury to complainant will be irreparable in its nature; moreover, the possibility of loss to defendant herein by reason of delay in the trial of the pending action in the law court can be prevented by appropriate terms imposed upon complainant as a. condition to the restraint sought.

Defendant also urges that relief should he denied complainant by reason of laches on his part. Complainant’s bill was not filed as promptly as it should have'been; but the delay has occasioned no loss of evidence and the reasons assigned as the cause of delay are not without persuasive force.

I will advise restraint; but on condition that complainant promptly execute a bond, with sureties approved by a special master, conditioned pursuant to rule 206 of this court, and also pay to defendant the costs of the term at which the ejectment suit was noticed, pursuant to the requirements of rule 205. The bond shall be further conditioned that complainant promptly pay any rent that may be now due and all further rent that may fall due under the terms of the lease until the termination of this suit and the termination of the pending action at law. The order for restraint shall further provide that the acceptance of the order by complainant shall be operative as a waiver of any claim on his part that the acceptance of rent by defendant is in any way operative as a waiver of defendant’s claim that the term was ended by the breach of covenant claimed by defendant. Complainant shall also terminate the sublease of the garage at the earliest possible time. The conditions herein imposed on complainant must be complied with'before the action at law is reached for trial.


text:
    Ralph E. Thompson, petitioner, v. Elizabeth Thompson, defendant.
    [Submitted October 20th, 1919.
    Determined October 31st, 1919.]
    Adultery committéd by a wife in Pennsylvania at a time when she and her husband resided in that state, cannot be made the basis of a decree for divorce in this state when neither of the parties had resided in this state for two years next preceding the commencement of the action.

      On petition for divorce. On hearing on exceptions to master’s report.

      Mr. 'Charles V. D. Jolino, for the petitioner-exceptant.
   Leaming, V. C.

The single inquiry here presented is whether adultery committed by a wife in Pennsylvania at a time when she and her husband resided in that state can be made the basis of a decree of divorce in this state when neither of the parties had resided in this state for two years next preceding the commencement of the action.

Both parties now reside in this state and personal service of process has been made in this state on the wife.

Section 6 of our Divorce act (2 Comp. Stat. p. 2030) provides as follows:

“For purposes of divorce, either absolute or from bed and board, jurisdiction may be acquired by personal service of process upon the defendant within this state, under the following conditions: (a) When,
at the time the cause of action arose, either party'was a bona fide resident of this state, and has continued So to be down to the time of the commencement of the action, except that no action for absolute divorce shall be commenced for any cause other than adultery, unless one of the parties has been for the two years next preceding the commencement of the action a bona fide resident of this state, (b) When, since the cause of action arose, either party has become, and for at least two years next preceding the commencement of the action has continued to be, a bona fide resident of this state; provided the cause of action alleged was recognized in the jurisdiction in which such party resided at the time the cause of action arose, as a ground for the same relief asked for in the action in this state.”

The meauing of this section seems unmistakable.

Subdivision (a) of the section is by its terms limited to cases in which one of the parties was a bona) fide resident of this state at the time the cause of action arose; accordingly, the provisions of that subdivision cannot be applied to the case now under consideration, since neither of the parties were residents of this state when the adultery was committed.

Subdivision (5) specifically applies to all cases where, since the cause of action arose, either party has become a resident of this state. In such circumstances two years’ bona, fide residence in this state next preceding the commencement of the action is required to confer-jurisdiction. The instance case is of that nature and is accordingly controlled by the provisions of subdivisión fib).

The contention adverse to the conclusions above stated is based upon the use made of the words “other than adultery,” in subdivision (a); the argument is, that those words, as used, wholly remove cases of adultery from the operation of the two j’ears’ residence- provisions. That argument is only partially sound. Had petitioner been a resident of this state when his wife committed adultery in Pennsylvania, and continued to reside in this state until the commencement of his action, his case would have fallen within the provisions of subdivision (ai) and two years’ residence would not have been required, since adultery is excluded from the operation of the concluding provisions of that subdivision.

I will advise a decree dismissing the petition.


text:
    Camden, Atlantic and Ventnor Land Company v. Joel Mason and Margaret W. Baker.
    [Submitted October 20th, 1919.
    Determined October 31st, 1919.]
    Where a mortgagor to secure advances for the erection of buildings, and also the mortgagee, were culpably negligent in erecting the buildings on a lot owned by the mortgagor’s step-daughter, the mortgagee cannot maintain a bill to enforce an equitable lien against the step-daughter’s lot for the amount it was enhanced in value by reason of money supplied by him for construction of the buildings.
    On final hearing on bill to- establish an equitable lien.

      Mr. John S. Westcotf (Mr. Ulysses C. Styron), for the complainant.

      Messrs. Thompson & Smathers, for the defendant Joel Mason.

      Mr. William M. Clevenger, for the defendant Margaret W. Baker.
   Leaming, V. C.

Defendant Mason owned certain unimproved building lots in Ventnor, and, desiring to erect residence buildings on them, to the end that the lots, so improved, could be more readily sold, executed a mortgage on the lots to complainant to secure advances of money which complainant agreed to make to Mason from time to time as the buildings reached certain successive stages of completion. By mistake one of the buildings was erected on a lot which was not included in the mortgage and which was in fact owned by defendant Baker. Complainant’s bill seeks to establish and enforce an equitable, lien against that lot for the amount that the lot has been enhanced in value by reason of the money supplied by complainant for the construction of that building.

The evidence discloses that the building was erected on the lot owned by defendant Baker without her knowledge or consent and at a time when she was absent and had n0‘ knowledge or means of knowledge that the building was being erected.

The power of this court to enforce a lien or charge of the nature here sought under the circumstances stated, at the instance of the person making the improvements or supplying the money therefor, may well be doubted.

I think that no authority can be found prior to the case of Bright v. Boyd, 1 Story 478, in which a court of equity assumed the right to enforce a lien of this nature except in two specific classes of eases. The first class comprised cases in which the owner of the lot had stood b)r and suffered the improvements to be made, or had in some other way, directly or indirectly, contributed to the occurrence of the mistake; the operation of the ordinary principles of equitable estoppel afforded grounds for imposing liability in that class of cases. See Sumner v. Seaton, 47 N. J. Eq. 103. The other class of cases comprised instances where the owner of the lot was the actor seeking, equitable relief touching his lot from one who had innocently made improvements upon it; in that class of cases liability could be imposed by the operation of the equitable maxim requiring equity from one who seeks equity. Bright v. Boyd, supra, was decided by Mr. Justice Story in 1841. Seven years prior to that decision the learned justice had, in his work on Equity Jurisprudence, recognized the specific limitations of power already stated. 2 Story Eq. Jur. § 1238. Though in Bright v. Boyd, as reported in 1 Story 478, it was doubted by the learned justice whether relief could be awarded except in the circumstances above referred to, in the final decision of the case two years later those doubts were resolved against the limitations, theretofore defined. Bright v. Boyd, 2 Story 607. In Bright v. Boyd the relief sought appealed with great strength to a sense of common justice. The real estate of a testator had been sold by an administrator with the will annexed to pay debts of the testator and had been purchased at its full value, and the purchaser .had made extensive improvements in good faith; it was afterwards ascertained that the sale was void because of neglect of the administrator to comply with certain ¡statutory requirements; the devisee, who had in no wuy “stood by” or consented to or encouraged the improvements or contributed to the mistake, sued in ejectment and recovered a judgment for possession; the purchaser then filed his bill in equity’to- compel the devisee to pay for the value of the improvements beforq being permitted to take possession under his judgment in ejectment. The decree awarded that relief. The relief there awarded was declared to be in conformity to doctrines of the civil law, but, was admittedly granted without common law precedent. Militating against the exercise of such power by the court! is tire obvious circumstance that its exercise necessarily includes the power to impose upon an innocent owner who had no knowledge that improvements were being made the burden of paying for improvements -which were in no sense of a public nature and which may have been wholly contrary to the uses to which he desired to devote the property. I do not find that courts of equity have since been inclined to extend their powers beyond the limitations already referred to. Professor Pomeroy, in his work on Equity Jurisprudence. written forty years after Bright v. Boyd, declares the limitations to- the power to afford relief to be those herein first stated. 3 Pom. Eq. Jur. § 1241 and note. See also 2 Story Eq. Jur. (13th ed.) § 799b; Ibid. § 1237 and note. The power to revive the lien of encumbrances or debts which have been discharged through mistake rests upon essentially different principles and can in no- way occasion hardship- upon the property owner.

In McKelway v. Armour, 10 N. J. Eq. 115, a lien was enforced at the instance of the person innocently making improvements on the land of another in the absence of fraud upon the part of the lot owner; but in that case the lot owner saw the improvements progressing from day to day, and while he did not realize that they were being made on his lot had at least equal opportunity with the complainant to know the boundary lines of the lots; and in the reported opinion in that case the learned chancellor says: “The fact of Armour’s [the lot ownei'] standing by and participating in the mistake is an important feature in the case.”

But I think it unnecessary to- determine herein how far the principles of Bright v. Boyd, supra, may be applied in this jurisdiction.

Defendant Mason, who erected the building, and complainant, who supplied some of the money to Mason for that purpose;, were both negligent in an extreme degree, and the sole cause of the present unfortunate situation is to be found in their mutual culpable negligence. Complainant’s mortgage was on specific lots owned by Mason; advances were to be made by complainant as the- buildings on those lots reached successive stages of comp-le-tion, and it was complainant’s dutjr under its agreement to observe the progress of construction; the public records fully apprised complainant of the location of those lots and reasonable care would have disclosed that the building here the subject of controversy was not on any of the mortgaged lots. Such negligeuce should, I think, impel this court to deny the extraordinary relief here sought against the consequences of complainant’s negligence. See Dillett v. Kemble, 25 N. J. Eq. 66; Cook v. Bodine, 30 N. J. Eq. 470.

Complainant urges that the fact that defendant Baker had at a prior time arranged with defendant Mason, her step-father, for the latter to erect for her a building on her lot, to the end that it could be more readily sold, should be considered as a circumstance contributing to complainant’s right to relief. I am unable to adopt that view. The building was erected on the Baker lot in the belief that it was a lot owned by Mason, and the tentative arrangement that existed between Miss Baker and Mr. Mason, touching a building on her lot, had no relation to or influence upon the occurrences here involved.

I will advise a decree dismissing the hill.