text:
    Herbert Lloyd et al. v. Pennsylvania Electric Vehicle Company. (Appeal of Edgar A. Hellman.)
    [Argued December 3d and 4th, 1908.
    Decided March 1st, 1909.]
    The General Corporation act of 1896 (P. L. 1896 p. 277), authorizes the creation of two or more kinds of stock, of such classes, with such designations, preferences and voting powers, or restriction or qualification thereof as shall be stated or expressed in the certificate of incorporation. A corporation organized under that act provided in its certificate for the creation of preferred stock “the holder thereof to receive and the company to pay a fixed yearly dividend of six per cent, before any dividend shall be set apart or paid on the general stock.”'—Held, that upon the winding rip of the corporation the preferred stockholders were entitled only to the preference set forth in the certificate of incorporation and were not to be paid on account of the par value of their shares in preference to the common stockholders.
    On appeal from a decree advised by Vice-Chancellor Learning, whose opinion is reported in 73 N. J. Fq. (3 Buck.) B70.

      Mr. Martin V. Bergen, Jr., and Mr. Gilbert Collins, for the trastees in liquidation.

      Mr. Slverrerd Bepue, for William H. Page, the respondent.

      Mr. Louis Marshall and Mr. Edgar J. Kohler (of the New York bar), Mr. Morris Wolf and Mr. George J. Bergen (on the brief), for the appellants.
   The opinion of the court was delivered by

Swayze, J.

The question involved in this case is the distribution of a surplus remaining in the hands of the trustees in liquidation of the Pennsylvania Electric Vehicle Company after payment of the debts. The controversy is between the preferred stockholders, whose claims will absorb the whole surplus in case they are entitled to a preference in the distribution, and the common stockholders. The vice-chancellor decided in-favor of the preferred stockholders.

The question to be decided is one of contract, and the contract of the preferred and common stockholders inter sese is determined by the provisions of the statute and of the certificate of incorporation. The sections of the statute that are material to the inquiry are sections 8, 18 and 86.

Section 8, as amended in 1898 (P. L. 1898 p. 408), requires that the certificate of incorporation shall set forth the amount of the authorized capital stock, the number of shares into which the same is divided, and the par value of each share, and if there be more than one class of stock created by the certificate of incorporation, a description of the different classes, with the terms on which the respective classes of stock are created.

Section 18 authorizes every corporation organized under the act to create two or more kinds of stock, of such classes, with such designations, preferences and voting powers or restrictions, or qualifications thereof, as shall be stated and expressed in the certificate of incorporation, or in any certificate of amendment thereof. It provides that at no time shall the total amount of the preferred stock issued and outstanding exceed two-thirds of the capital stock paid for in cash or property, and such preferred stock majq if desired, be made subject to redemption at any time after three years from the issue thereof at a price not less than par, and the holders thereof shall be entitled to receive, and the corporation shall be bound to pay thereon, dividends at such rates and on such conditions as shall be stated in the original or amended certificate of incorporation, not exceeding eight per centum. It also provides that in case of insolvency, the debts or other liabilities shall be paid in preference to the preferred stock.

The provision of the certificate of incorporation, as amended, is as follows:

“Forty thousand of said shares are to be preferred stock, the holder thereof to receive, and the company to pay, a fixed yearly dividend of six per cent, before any dividend shall be set apart or paid on the general stock.”

The company was organized in 1899, pursuant to the act of 1896.

Section 86 of the present act is substantially the same as ■section 80 of the act of 1875. Sections 8 and 18 introduced new provisions, in that the former requires that the certificate of incorporation shall contain a description of the different classes, with the terms on which the respective classes of stock are created, in case more than one class of stock is created by the certificate; and the latter, which takes the place of section 25 of the act of 1875, authorizes the creation of more than two kinds of stock, with such designations, preferences and voting powers or restrictions or qualifications thereof as shall be stated and expressed in the certificate of incorporation.

It has been held, and may be regarded as entirely settled, that calling stock “preferred stock” does not of itself determine the rights of the holders, for the extent of the preference is to be determined by the terms of the contract. McGregor v. Home Insurance Co., 33 N. J. Eq. (6 Stew.) 181; Elkins v. Camden and Atlantic Railroad Co., 36 N. J. Eq. (9 Stew.) 233.

It was also said, upon equally good grounds in the McGregor Case, that preferred stock, in the absence of an express stipulation or direction to the contrary, simply gives the holder a right of preference in the division of profits, and not in the distribution of capital. The learned vice-chancellor cited as authority the opinion of Vice-Chancellor Maline in the case of In re Lon don India Rubber Co., L. R. 5 Eq. 519; 37 L. J. Eq. 235, and of Sir George Jessel in Griffith v. Paget, L. R. 6 Ch. Div. 511; 46 L. J. Eq. 493. It was, however, held in the McGregor Case that the terms of section 80 of the act of 1875, now section 86, required that the preferred stockholders should be preferred in the distribution of assets upon insolvency. It is unnecessary to consider whether the opinion of the vice-chancellor in this respect was, as Mr. Cook says (Cook Corp. § 278 note), a mere dictum. We are satisfied that it has been acted upon as a correct statement of the law of the state, and that, if the legislature, in the revision of the Corporation act in 1896, had done no more than re-enact this provision, it would be necessary to hold, that they had adopted the construction which had been put upon the section sixteen years before. This, however, is not the situation presented by the act of 1896, for that act contained the provisions in section 8 and in section 18, that we have quoted. The insertion of those provisions in the act indicates an intent upon the part of the legislature to make some change in the then existing law. We think the change that they intended was to require that all .preferences or special privileges to be conferred upon any class of stock be set forth in the certificate of incorporation. If they did not intend this result, it would have been unnecessary to require, by section 8, that the certificate should set forth the terms on which the respective classes of stock were created, and it was probably because they intended that the stock should not have any other preferences that in section 18, in attempting to define the rights of preferred or special stockholders, they limited the special rights or special restrictions to such preferences and voting powers or restrictions or qualifications thereof “as shall be stated or expressed in the certificate of incorporation.” The power to create preferred stock is granted by section 18, and it is granted upon the terms set forth in that section. To enact that the stock should have such preference as is stated 1 or expressed in the certificate was equivalent to enacting that it 1 should have no other preferences upon the general principle of interpretation that the expression of one thing is the exclusion of another. The very fact that section 18 provided for more than one class of preferred or special stock leads to the same conclusion, for it can hardly be claimed that the rights of more than one kind of preferred stock would be determined by the language of section 86 standing alone. That section is a survival of legislation going back to the early clays of corporations in this state, at a time when only one class of preferred stockholders was . authorized. Such is not now the case. Under the present act it is possible, for example, to issue what are called sometimes “founders’ shares.” Unless the rights of such shares are determined by the certificate of incorporation, they cannot be determined by the provisions of section 86, and the same reasoning is applicable to other classes of shares (aside from the ordinary preferred shares) which are issued by modern corporations. We recognize the necessity of construing the several sections of the act so as to give effect to each and to all the language of each. We think that can well be done. Section 86 is still necessary, notwithstanding the changes made in 1896, in order to cover the case of corporations existing under special charters, or corporations under the general acts prior to 1896. A greater difficulty,/ perhaps, is presented by the provision of section 86, that the surplus funds after payment of creditors, costs, expenses and allow-1 anees and the preferred stockholders, shall be paid to the general \ stockholders proportionally according to their respective shares. It requires no strained construction, however, to hold that this provision as to the payment of preferred stockholders in preference to the general stockholders is a payment to them not of the par value of their stock but of the amount to which they are entitled as a preference by virtue of the contract contained in the certificate of incorporation. Section 86 does not say that the ' preferred stockholders shall be paid the par value of their stock with the unpaid dividends that may have accrued thereon. It requires only that the preferred stock shall be paid in preference to the general stockholders, and that means that they shall be paid so much, and so much onty, as their contract gives them. The amount of the surplus to be paid to the general stockholders is not necessarily the amount that may be left after paying the preferred stockholders the par value of their stock. It may just as well mean the surplus that is left after paying them the amount to which they are entitled by their contract. Nor is any difficulty presented where the terms of the contract entitle the preferred stockholder to a preference in dividends only.' In this case which, as Vice-Chancellor Van Fleet said, and as the authorities show, was the ordinary case in the absence of such a provision as that contained in section 86, the preferred stockholders and the general stockholders would share pro rata in the distribution of assets after the payment of dividends due the preferred stockholders. That such would be the rule is well illustrated by a thoroughly considered case in the English courts which presented the novel situation of a fund upon dissolution of a corporation sufficient to pay not only the debts and the amount invested by the preferred and common stockholders, but to leave a. large surplus for distribution. In that case the preferred stock had been fully paid up to the extent of ten pounds per share. The common stock had been paid for only to the extent of three pounds ten shillings per ten pound share. It was held in the court of first instance and in the court of appeal that after paying to each preferred stockholder ten pounds per share, and to each common stockholder three pounds ten shillings per share, the surplus should be divided among all the stockholders, preferred and common, in proportion to the amount of money actually contributed by each. The common stockholders insisted that the whole of this surplus was profits, and that, as they were entitled to all of the profits after paying the five per cent, to the preferred stockholders, they were entitled to the whole of the fund. The court, however, held that this position was untenable, and that the rule contended for by the common stockholders applied only to annual profits, and not to the large profits arising from the sale of the property of the corporation. In this respect the decree was affirmed by the house of lords, but it was there held that the surplus should be divided among the stockholders in proportion to the number of shares held by each and not in proportion to the amount contributed by each. In re Bridgewater Navigation Co., L. R. 39 Ch. Div. 1; 57 L. J. Ch. Div. 809; 14 App. Cas. 525; 59 L. J. Ch. Div. 122. We see no reason why, if the case is ever presented, the same rule should not be applicable under section 86, and the amount to be paid to the preferred stockholders in such a case would be, first, what they were entitled to under the certificate of organization, and second, their proportional share of the remaining assets. The surplus, after making that payment, would, by the terms of section 86, belong to the general stockholders.

Section 18 provides that in case of insolvency, the debts or j other liabilities shall be paid in preference to the preferred stock, j With our present notions of the character of stock, such a provision seems unnecessary, and, unless explained, it might be supposed that it implied that preferred stockholders were to be paid as creditors next after the debts. We think,, however, that there is an explanation of the insertion of this provision in the act of 1815, growing out of the efforts that had been made in other jurisdictions to give preferred stock more the character of a security for money loaned than of an investment in the business, subject to the ordinary hazards. Attempts to give prefered stockholders the status of creditors rather than of shareholders arc referred to in Cook Corp. (3d ed.) 271. Some of these efforts were directed to securing a dividend to the preferred stockholders whether profits vnre made or not; some were directed to securing him by way of mortgage. Taft v. Hartford, Providence and Fishkill Railroad Co., 8 R. I. 310; Lockhart v. Van Alstein, 81 Mich. 76; Chaffee v. Rutland, &c., Railroad Co., 55 Vt. 110; Warren v. King, 108 U. S. 389; Miller v. Ratterman, 47 Ohio St. 141; 21 N. E. Rep. 496. In view of these cases, it is not surprising that the legislature inserted the clause in question in the act of 1815, and has retained it in the act of 1896. The effect of it 1 is to prevent the incorporators from giving the preferred stock- ¡ holders a claim superior to that of creditors by an insertion of a j provision to that effect in the certificate of organization, and inf that respect this clause still serves a useful purpose. I

It is important that investors in a corporation should be able to ascertain their rights by an examination of the certificate, and it was no doubt with that end in view that the legislature made the changes in the act of 1875, which now appear in section 8 and section 18. It is true, as was forcibly argued on • behalf of the respondents, that it can hardly be that all of the rights of preferred stockholders need be set forth in the certificate of organization, but this fact does not require that we should hold that the certificate of organization cannot limit such rights. Manifestly it can, for if <it were not so it would be beyond the power of the incorporators to take away the right to a preference on distribution of assets conferred by section 86. Since the corporators have this power to -limit the rights of preferred stockholders, the question in any particular case is whether they have in fact done so. When they have undertaken, as in this case, to set forth the preference to which preferred stock is entitled, we think that they must set forth that preference fully, and that, so far as they fail to express a preference, the preferred stock can have no other rights than the common stock.

The decree must be reversed, with costs, and the record remitted to the court of chancery for further proceedings therein in conformity with this opinion.

For affirmance—Garrison, Reed, Trenci-iard, Voobhees—4.

For reversal—The Ci-iiee-Justice, Swayze, Parker, Bergen, Minturn, Bogert, Vredenburgi-i, Gray, Dill—9.


source: Caselaw Access Project

author: Thenci-tard, J.

license: Public Domain

text:
    Eugene B. Goodwin, respondent-complainant, v. The Mayor and Common Council of the City of Millville, appellant-defendant.
    [Argued June 29th, 1908.
    Decided December 3d, 1908.]
    In the absence of special equities, the court of chancery has no jurisdiction over assessments made in the course of municipal improvements, and will not interfere by injunction to restrain the collection of such assessments merely because the complaining party, by his own laches, lost his remedy at law.

      On appeal from a decree of the court of chancery advised by Vice-Chancellor Learning.*

      Messrs. French & Richards, for the respondent.

      Mr. Louis H. Miller, for the appellant.
   The opinion of the court was delivered by

Thenci-tard, J.

The defendant, the city of Millville, caused to be made by commissioners an assessment of benefits against the owners of lands fronting on streets where it'had laid its system of sewers.

On June 1st, 1906, the assessment was confirmed by the city council.

Among those thus assessed were Thomas S. Simmons and Eugene B. Goodwin.

Simmons promptly prosecuted a writ of certiorari against the city, and the supreme court, by its judgment of November 19th, Í907, set aside the assessment against the lands of.the prosecutor brought up by the writ, and appointed commissioners to make a new assessment upon his property.

As will appear by the opinion filed in that cause (Simmons v. Mayor, &c., of City of Millville, 75 N. J. Law (46 Vr.) 177), the assessment against Simmons was set aside because certain properties along the line of the sewer were not' assessed for benefits, and since substantially the whole cost of the work, so far as the statute permitted its assessment, was assessed upon certain properties, including the prosecutor’s, to the exclusion of others, the result was necessarily injurious to him. The court also found that under the statute, other properties, not along the line of the sewer, but which were within the territorial zone of benefits, should have been assessed, and that the assessment, for that reason, also, was not made in accordance with the statute.

On December 9th, 1907, the- complainant, Goodwin, who owns property along the line of the same sewer and whose property was assessed under the same assessment as that of Simmons, applied to the supreme court for a writ of certiorari to review the assessment against Ms property. The supreme court denied him the writ upon the ground of laches.

On December 17th, 1907, the complainant filed Ms bill to procure an injunction against the collection of any of the assessments until a proper reassessment is made.

Upon the hearing on bill and affidavits the learned vice-chancellor awarded a preliminary injunction restraining the, defendant, the city of Millville, and its officers, from collecting or accepting payments of any of the assessments "until an assessment shall be made upon the properties liable to assessment, but omitted therefrom, and a reassessment made upon other properties to conform thereto according to law.”

This appeal raises the question of the propriety of such injunction.

The remedy for an irregularity or error in the imposition of taxes or assessments is by a writ of certiorari.

To warrant the interference of a court of equity there must be some peculiar ground of equity jurisdiction. Jersey City v. Lembeck, 31 N. J. Eq. (4 Stew.) 255; Hoboken Land and Improvement Co. v. Hoboken, 31 N. J. Eq. (4 Stew.) 461, 463.

In the present case, the vice-chancellor was of the opinion that the complainant, as a taxpayer, irrespective of the assessment against his property, was entitled to restrain the city from enforcing its illegal assessments, the enforcement of which would operate to burden the city with a charge that the statute requires individual properties to bear.

This equitable relief seems to proceed upon the theory that the complainant’s remedy was not at law. To this we do not agree. In Jersey City v. Lembeck, 31 N. J. Eq. (4 Stew.) 255, it was pointed out that the jurisdiction of the supreme court to review and correct the errors or irregularities -of such assessments is exclusive. It must therefore be presumed that if Goodwin had promptly made application to the supreme court for a writ of certiorari, it would have been granted, and such relief accorded him as was justified by the state of the case. This he neglected to do. He saw fit, with full knowledge of the errors and irregularities of the assessment, and of the entire situation, to speculate as to the form of relief which the supreme court ■woulci, in its discretion, grant in the Simmons Case from the record then before it. In view of the fact that Goodwin delayed applying for a writ of certiorari for more than eighteen months after the confirmation of the assessment by city council, the supreme court was undoubtedly justified in denying him the writ on the ground of laches. Especially is this so in view of the legislative policy declared by P. L. 1907 p. 109, in which it is provided that no writ of certiorari shall thereafter be allowed to review any siich assessment unless application therefor shall be made within sixty days after such assessment shall have been confirmed by a court of competent jurisdiction.

As was said in American Dock and Improvement Co. v. Trustees of Public Schools, 35 N. J. Eq. (8 Stew.) 181, 258, one of the principles which enters into the consideration of the matter presented by this appeal is, that courts interfere with great reluctance with the collection of public revenues. Jersey City v. Lembeck, 31 N. J. Eq. (4 Stew.) 255, is an illustrative precedent. The citjr had laid an assessment on the complainant's lands, which, by the city charter, was an encumbrance; the assessment was invalid; no suit was pending in which the validity of the encumbrance could be tested. The complainant filed a bill under the statute against the city to settle the title to the land and determine the validity of the encumbrance. This court denied relief on the ground that the complainant might have had relief by writ of certiorari, which he had lost by his own laches. To justify resort to a court of equity to stay the collection of public revenues, the party must make a case strictly within the bounds of equity jurisdiction—an injury otherwise not remediable; and he must seek and proseen!c his remedy with promptitude.

In the present case, as we have seen, the complainant had his remedy at law which he lost by his own laches. Tie cannot, therefore, resort to a court of equity on that ground.

Nor can the interference of the court of equity be justified upon the ground of the prevention of a multiplicity of suits as was suggested at the argument. The bill appears to have been filed by the complainant in his own behalf only, and there is no indication that any other person is threatening suit. Moreover, any other taxpayer or landowner affected is presumably in the same position as the complainant with respect to laches, and for that reason would not be entitled to relief.

The decree under review should he reversed, and the complainant’s bill dismissed, with costs.

For affirmance—N one.

For reversal—The Chancellor, Garrison, Swayze, Reed, Trenciiard, Parker, Bergen, Yooriiebs, Minturn, Bogert, Yredenburgit, Yroom, Gray, Dill—14.


author: Dill, J.

text:
    George Buchanan et al., respondents, v. Reba Russell Roselle Buchanan, appellant.
    [Argued July 2d, 1908.
    Decided February 9th, 1909.]
    3. The next of kin of a decedent have no standing in a court of law or equity to maintain an action for the recovery of property alleged to belong to the estate of their decedent. Such actions can be brought only by the duly appointed personal representative of the deceased.
    2. The exception to this rule arises whore the personal representative of the deceased, by reason of collusion with the defendant or otherwise, is derelict in the performance of his duty, when, as in the case of a delinquent trustee, the next of kin, like the cestui que trust, may maintain the action, joining the administrator as a party defendant.
    8. Flagler v. Blunt, SB N. J. Eq. (5 Steto.) 518; McCarter, Attorney-General, v. Clavin, 7B N. J. Eq. (g Buell.) 6J¡&, distinguished. Reversing Buchanan v. Buchanan, 73 N. J. Eq. (3 Such.) 5J/Ji.

    On appeal from a decree of tbe court of chancery advised by Yice-Chancellor Learning, whose opinion is reported in 73 N. J. Eq. (3 Buck.) Sli-ff

      Mr. John W. Wescott, for the respondents.

      Messrs. Garrow & Krafi, for the appellant.
   The opinion of the court was delivered by

Dill, J.

This suit was brought in equity by the heirs-at-law and next of kin of Dr. John Buchanan, deceased, to impress a trust ex maleficio upon certain real and personal property in the possession of the defendant, which it was claimed was derived from or purchased with moneys embezzled from the decedent. The complainants allege in their bill that they are the only next of kin of the late Dr. Buchanan; that at his death he owed no bills; that no letters of administration were taken out on his estate; that Dr. Buchanan was the owner of and conducted a large and profitable business in proprietary medicines and in the publication of medical works, and that the defendant, while acting as his clerk or assistant, appropriated to her own use, both before and after his death, the profits of the business together with moneys and other property of the decedent and invested the same in specific real and personal property. The relief prayed for was that the defendant be required to deed to the complainants the real estate in her name; that she pay over to them and account for all moneys and deliver all securities in her possession or under her control, all of which were claimed to belong to the decedent’s estate, and that the complainants should have full discovery and an injunction against the disposition of the property.

The defendant by her answer denied that the business referred to belonged to the deceased, and averred that the business and its earnings and the real and personal property described were all her own and that Dr. Buchanan had no money or property at the time of his death.

The learned vice-chancellor found the essential facts to be as stated in the bill and advised a decree, enjoining the defendant from in anywise disposing of the property in her possession or under her control until the appointment of an administrator, to whom, when appointed, defendant is required to surrender the same.

The decree, in accord with the theory of the bill, was in effect an adjudication, which stripped the defendant of all title to the property in her possession or under her control and directed her to surrender it to an administrator, when appointed.

The defendant appeals from the decree and urges that the complainants, as next of kin, have no standing in equity to recover or to establish a resulting trust as to property of a decedent which is in the actual possession of and claimed by a third person, but that such equitable rights and remedies vest only in the executors or administrators as the duly appointed personal representatives of the decedent.

We think that this position is well taken. Heirs, next of kin and creditors cannot, in their own names, prosecute actions at law or suits in equity to recover the unadministered estate of a decedent or to collect debts or other choses in action due him. Such suits can be maintained only by the qualified personal representatives of the deceased.

Heretofore the precise question involved in this case does not appear to have been fully considered by this court, although the basic principle was recognized and applied by our supreme court in 1813 in Mathis v. Sears, 3 N. J. Law (2 Penn.) 594, and by the court of chancery in 1831 in Shaver v. Shaver, 1 N. J. Eq. (Sax.) 437. In 1889 the court of chancery (Vice-Chancellor Van Fleet) touched upon the doctrine in Hayes v. Hayes, 45 N. J. Eq. (18 Stew.) 461, affirmed by this court as Hayes v. Berdan, 47 N. J. Eq. (2 Dick.) 567.

Chancellor Williamson, in 1857, in Harrison v. Righter, 11 N. J. Eq. (3 Stock.) 389, applied the rule even where the next of kin of a deceased partner sought to call the surviving partner to account, the administrator being a party defendant, and held that in the absence of collusion a suit could not be maintained.

In Mathis v. Sears, supra, the children of Paul Sears, deceased, sued the defendant on the ground that their father during his lifetime had paid the defendant for a piece of land; that the defendant had promised their father a deed, but had failed to perform. The plaintiffs recovered judgment below. The supreme court reversed, saying:

“A child, as such, cannot sue for a debt due to his father; it must be his executor or administrator.”

From the opinion in Shaver v. Shaver, supra, a chancery suit by the next of kin to recover a legacy claimed to be due their ancestor, the following is applicable:

“Next of kin are not personal representatives, and cannot come as such into court representing the ancestor. If they were permitted to do so, it is conceived that much inconvenience would result from it, more, probably, than can well be foreseen. I have examined the books with some care, and have not been able to find a single case or principle to support the present proceeding.”

After referring to and recognizing the right of next of kin to bring executors or administrators to an account, the court adds: “But in this case the complainants seek to get in their hands the moneys of the estate or of the intestate, not from the administrator, but from some third person in whose hands the property happens to be, and to get it, not for the purpose of paying debts, or applying it in a course of administration, but of appropriating it directly to their own use.”

The same principle was recognized in the decision of Vice-Chancellor Van Fleet in Hayes v. Hayes, supra:

“The title to the debt in question, on the probate of the testator’s will, vested in his executrix, together with the right to all remedies given by law for its recovery. All goods and chattels, actions and commodities which were of the testator in right of action or possession, as his own, at the time of his death, pass, on his death, to his executor.”

That the law has been so applied, whether the next of kin sue at law upon debt or for conversion of property belonging to the estate of the deceased, or whether they invoke the aid of a court of equity, may be shown by a brief review of the leading cases in England and the United States.

An early case (1737) is Bickley v. Donington, 2 Eq. Cas. Abr. 253, in which a legatee brought suit against the executor and debtors of the estate of the deceased. Lord-Chancellor Hardwicke dismissed the bill in the following words:

“The bill is totally improper and inconsistent with the principles of law and the rules of this court. * * * The whole

management of the estate belongs to the executor, and the right of it is vested in him, and not to be taken out of him by creditors ■or legatees.”

In 1802 Lord Eldon, in deciding the case of Alsager v. Rowley, 6 Ves. 748, followed the same rule and quoted with approval from the notes of Lord Hardwicke.

Later the court of chancery applied the doctrine strictly in Stainton v. Carron Company, 18 Beav. 146 Legatees filed a bill against the defendant company in which the testator had been shareholder and agent, and against the legal representatives of the estate, for an accounting and settlement of alleged dealings between the testator and the company, and for a decree requiring the company to turn over certain funds to the executors. Sir John Romilly, master of the rolls, sustained a demurrer to the complaint in the following concise language:

“It is obvious that the relief prayed by this bill, if proper to be sought by anyone, ought to be at the instance of the trustees and executors of the testator’s will. * * *

“I think it unnecessary to go in detail through all the cases to be found on this subject. I think that they may be summed up thus: that the persons interested in the estate of the testator, not being the legal personal representatives, will not be allowed to sue persons possessed of assets belonging to the testator, unless it is satisfactorily made out that there exist assets which might be recovered, and which, but for such suit, would probably be lost to the estate.”

In Walker v. Walker (1871), 25 L. T. Rep. 481, a bill was brought by legatees against Margaret Walker and the executors of the will. The complaint alleged that the testator, during his lifetime, had purchased stock of the Bank of Scotland in the name of his sister Margaret; that she held it merely as trustee for the testator, and that it formed part of his estate. Complainants prayed for a declaration accordingly, and for a transfer of the said stock to the executors.

Lord Romilly dismissed the bill on the ground that “the executors were the proper1 persons to sue to recover assets belonging to the testator’s estate.”

In the United States courts Allen v. Simons, 1 Curl. 122 (United States Circuit Court for Rhode Island), is not only parallel to the case at bar but a leading authority. William Simons died intestate leaving personal property consisting of a newspaper plant. The bill alleges that after the death of the intestate, William Simons, Jr., continued to run the business under an apparent title; that he had been merely an agent before his father’s death and that the documents under which he claimed title were invalid. The answer of the heirs of William Simons, Jr., was that he held a valid title to-the properly in Iris own name and not as. trustee.

Judge Curtis, in refusing to allow the bill for account and surrender of the property, adhered to the well-established rule: “Whatever may have been the interest of William Simons, Sr., in this property, his children did not acquire that interest by his decease. The rule of the common law laid down by Lord Coke (Co. Litt. 8a) that a man, by the common.law, cannot be heir to goods or chattels, for haeres clicitur ab haeriditaie, is in force in Rhode Island, and upon the decease of anyone having personal estate, his children do not become its owners. They acquire only that qualified equitable right to distributive shares of what shall remain after payment of the just debts and funeral charges of the deceased, and the expenses of settling his estate, which is conferred upon them by the statute of distributions. This qualified equitable right can only be worked out through a settlement of the estate by an administrator, appointed according to the laws of the state, who alone has the title to personalty cast on him by -those laws, and who alone is competent to sue, either at law or in equity, to reduce the personal property and lights of the intestate to possession.”

Flynn v. Flynn, 183 Mass. 365, decided by the supreme court of Massachusetts in 1903, is directly in point.

The plaintiff, widow of David Elynn, brought a bill in equity to recover personal property which, she alleged, had been fraudalentiy conveyed by her husband to. his son, the defendant, with the intention of depriving her of her estate.

Defendant demurred on the ground that there was no cause for equitable relief and that the plaintiff was not the proper party to sue. Judge Knowlton sustained the demurrer and stated his reasons as follows:

“If the property was wrongfully conveyed, as the plaintiff alleges, the executors or administrators, who are the personal representatives of the deceased, are the proper parties to recover it for the benefit of those who are entitled to it. The title to all the personal property of a deceased person vests in his executor or administrator by relation from the time of his death, and no one else can maintain an action for it. Not even the sole heir-at-law, or a legatee, has any title which he can enforce by suit against a third person. But the plaintiff’s rights cannot be enforced by a suit in equity in her own name against those holding her husband’s property.”

The supreme court of errors of Connecticut ruled upon the question in 1803, in Tabor v. Packwood, 1 Day 150:

“The right of action,' * * * if an action can be maintained, does not belong to the defendant in error, as heir-at-law, the only capacity in which he sues, but to the executors or administrators on the estate.”

Likewise in Hunter v. Hallett, 1 Ed. Ch. 388, the court ruled:

“Although a husband holds a bond and mortgage made out in favor of his wife, and receives the interest, yet this is not a reduction into possession. And if she dies, he cannot sue upon it without taking out letters of administration, even though he may be exclusively entitled. * '* * This appears to be a well-established rule and one which cannot be dispensed with even in a court of equity.”

Again, in Jenkins v. Freyer, 4 Paige 47, it was held that one of the next of kin cannot maintain a suit in equity for an account and distribution of the decedent’s estate without first taking out letters of administration, although he is exclusively entitled to the beneficial interest therein.

In Muir v. Trustees, 3 Barb. Ch. 477, the complainants, as next of kin of the deceased, filed a bill in equity against the representatives of deceased persons, who, pursuant to a paper-writing which had been admitted to probate and which appointed them executors, had transferred a large part of the estate of the deceased to the defendant trustees and to the other defendants. The bill alleged that the paper-writing was void and that the deceased died intestate and prayed for an accounting and that the property of the deceased which had been transferred as above stated be turned over to them. Chancellor Walworth dismissed the bill and held that the defendants were “liable to the personal representatives, whenever such shall have been appointed, but not to-the complainants. The proper course for the complainants, in that case, would be to procure the appointment of an administrator, and have a suit instituted in his name, to recover ' the property from any person into whose hands it may have come, and who had converted it to his own use.-”

Further analysis is unnecessary, but other leading cases, which enforce the same rule strictly, are: West v. Howard, 20 Conn. 581; Lawrence v. Wright, 23 Pick. (Mass.) 128; Woodin v. Bagley, 13 Wend. (N. Y.) 453; Caleb v. Hearn, 72 Me. 231; Lee v. Gibbons, 14 Serg. & R. (Pa.) 105; Champollion v. Corbin, 71 N. H. 78; Douglass v. McCarer, 80 Ind. 91; Pond v. Sweetser, 85 Ind. 144; Somervaill v. McDermott, 116 Wis. 504; Palmer v. Palmer, 55 Mich. 203; Davis et al. v. Corwine & McGuire, Executors, 25 Ohio St. 668; McChord v. Fisher's Heirs, 13 B. Mon. (Ky.) 194; Davidson v. Potts, 42 N. C. (7 Ired. Eg.) 272; Leamon v. McCubbin, 82 Ill. 263.

These authorities are conclusive of the case at bar. If the defendant embezzled and misappropriated the property of Dr. Buchanan, investing it in the real estate, bank stock and other property described, she may be liable to- the legally qualified personal representative of Dr. Buchanan, but not to the complainants.

On the same principle that permits a cestui que trust to maintain actions which his trustee should bring when the latter neglects or refuses to bring them, the exception to the rule above stated alises' -when, although there is an administrator, he neglects or refuses to prosecute suits for the recovery of his decedent’s estate. In such ease, the next of kin may sue to recover the property, joining the personal representative as a party defendant.

The complainants contend that the decree may be supported upon the doctrine that the next of kin of a decedent may obtain an injunction and the appointment of a receiver for the purpose of conserving the property of a decedent pending the appointment of an administrator. But in our opinion this principle is inapplicable to the present case. The learned vice-chancellor apparently adopted this theory of the complainants, citing Flagler v. Blunt, 32 N. J. Eg. (5 Stew.) 518; Hansford v. Elliott, 9 Leigh 79. Although these authorities establish the jurisdiction of a court of equity to conserve property of a decedent in the possession of a third person, yet an analysis of the cases cited and many others shows that this equitable jurisdiction has been assumed only where there is danger of loss if the property, presumptively or actually belonging to- the estate, is not protected by an injunction or the appointment of a receiver, pending an application for administration upon the estate, but not to ilnalty adjudicate as to the title.

In Flagler v. Blunt, supra, it clearly appeared in a suit by a creditor of a decedent that the defendant was in possession, through a sale made by himself under a claim of ownership, of the proceeds of all the property of which his uncle died possessed, and was about to remove the same from the jurisdiction.

We fully agree with the decision of Chancellor Runyon when he rules that in such a case a court of equity has power to appoint a receiver to conserve the property, and that "If it had not such power, there would be a failure of justice. The property would be liable to be taken away out of the state, by any designing person, before administration could be obtained, and thus those entitled to the estate be defrauded. It must be within the power of this court to prevent so obvious and gross a wrong.”'

With Hansford v. Elliott, supra, also relied upon by the vice-chancellor, we likewise agree so far as the court there said:

"It would be productive of much inconvenience and injustice-if they” (the legatees or distributees) "could not avail themselves-of their equitable rights to enjoin a sale (as in the present case) or to prevent other irreparable mischief, before an administration of the estate could be obtained, or where an executor or administrator should be indisposed to interfere.”

But further than this we decline to follow this case as an authority, because the judgment apparently affirmed a decree in favor of the complainants for a distribution of the property in question.

The recent case of McCarter, Attorney-General, v. Clavin, 72 N. J. Eq. (2 Buch.) 642, in our court of chancery, is not only consistent with the views herein expressed but well illustrates the precise situation to which the rule of Flagler v. Blunt is applicable. In the Clavin Case the deceased died seized of real estate of value, and the defendant, claiming to be a creditor of the deceased, had obtained letters of administration, but had permitted the property to be sold for taxes. Foreclosure proceedings had been brought and the property was likely to be entirely lost. Moreover, a paper had been offered for probate as the will of the deceased, giving rise to litigation that threatened to be protracted. The state claimed the property by escheat and filed a bill asking that a receiver be appointed to collect the rents and to pay off and discharge the taxes. The prayer was granted, the vice-chancellor holding that:

“Equity would seem to require that a receiver should be appointed to protect the property from loss, and to hold it for the benefit of those to whom it may be finally determined it belongs. * * * The property is in great danger of loss owing to tax sales and threatened foreclosure. It is clear that, in the absence of an heir, in the absence of an executor or of any lawful appointee entitled to hold the property together, it will be lost, and, in any event, the rents and profits will be misapplied.”

Flagler v. Blunt, supra, and like authorities, go no further than to maintain that creditors or next of kin of a decedent may appeal to equitable jurisdiction to conserve a decedent’s property, -which is in danger of loss, pending the appointment of a personal representative or pending the trial of title to such property in a legal proceeding to which the personal representative of the decedent is a party.

But essentially -different is tlie contention that creditors or next of kin may dispense altogether with a personal representatire and proceed, either at law or in equity, to recover, in their own name and for their own use, property alleged to belong to the estate of the decedent, and that in the same proceeding they may have the title adjudicated and a decree entered ousting a third party of title and possession, whether the decree is that such third party shall deliver to an administrator to be appointed or otherwise.

This theory of the law has been rejected by a long line of authorities which follow Lord-Chancellor Hardwicke’s vigorous declaration in 1737 (Bickley v. Donington, supra), that such a proposition is “totally improper and inconsistent with the principles of law.”

It was upon the view of the law condemned by Lord-Chancellor Plardwicke that the bill was framed, the case was tried and a decree was entered finally adjudicating upon the title to the property described therein, by the terms of which defendant was ousted of title and possession of the property standing in her name, leaving her no alternative but to deliver the same to an administrator when appointed. Such decree, as matter of law, cannot be upheld.

The result of this determination as to the law would be to dismiss the bill if the issue of law had been presented by demurrer.

JBut although, for the reasons stated, the bill cannot be maintained in its present form, justice requires that the complainants be permitted to amend its frame so that it seeks for the appointment of a receiver to conserve the property which is the subject of the litigation, until an administrator- of the estate of Dr. Buchanan shall have been appointed and the true ownership of the property determined by judicial decision, provided the proofs which have been submitted raise a presumption that the property is that of that estate. We have therefore examined these proofs for tbe purpose of determining whether such an amendment should be permitted. They are quite fully set out in the opinion below and a full recital of them here is unnecessary. We quite agree with the vice-chancellor that the story told by the defendant of the way in which she came into possession of the property must be rejected as false; and further, that the proofs justify the conclusion that the property was purchased with moneys which came out of the business of Buchanan & Company. But this alone will not support the presumption that this property belongs to the estate of Dr. Buchanan rather than to the defendant.

The business was that of Buchanan & Company. The name raises the presumption that it was a partnership business. The only persons engaged in carrying it on were the doctor and the defendant. This raises the presumption that they were the partners. Most of the property was purchased by the defendant during' the doctor’s lifetime. The defendant presumably was entitled to half the earnings. There is nothing to show that her investments exceeded that. But if they did, there is nothing to justify the conclusion that she fraudulently and without the knowledge of her partner abstracted more than her share from the partnership funds. On the contrary, the presumption is that the excess, if anjr, was appropriated by her with the knowledge and approval of the doctor, particularly in view of the relation existing between them.

So, as to all investments made during the life of the doctor, there is no presumption that they were made in fraud of his rights. This includes fourteen shares of stock of the Farmers and Mechanics National Bank of Philadelphia; twenty-one shares of stock of the Kensington National Bank of Philadelphia; sixteen shares of stock of the Manufacturers National Bank of Philadelphia; six shares of stock of the Corn Exchange National Bank of Philadelphia; thirteen shares of stock of the Market Street National Bank of Philadelphia; the proceeds of the sale of the real property in the city of Brooklyn, State of New York, designated as No. 1139 Forty-second street, in said city.

As to investments made from-the proceeds of the sale of the business after his death, the presumption is that, as to one-half of it, the defendant holds such proceeds in trust for the doctor’s estate, for the reason that, as the doctor had a half interest (presumably) in the business, his estate was entitled to half of the proceeds of its sale.

Complainants therefore should be permitted, if they desire, to amend their bill for the purpose of applying for a receiver appointed to take possession of so much of the property as represents the one-half of such proceeds of the business, and hold the same until an administrator of the estate shall be appointed and an opportunity afforded him to litigate the question of the true ownership of this part of the property.

The decree of the court below is accordingly reversed, with costs, and the cause is remanded in order that the complainants may, if by counsel so advised, reframe their bill of complaint in accordance with this opinion and apply for a receiver to take possession of so much of such property as it shall appear are such proceeds of the sale of the business since the death of Dr. Buchanan, and to hold the same pending the appointment of an administrator who may litigate the claim of ownership of this portion of the property.

For affirmance■—None.

For reversal—The Chi ee-J ustice, Garrison, Swayze, Reed, Trenciiard, Parker, Bergen, Voori-iees, Minturn, Bogert, Vrbdenburgi-i, Vroom, Green, Gray, Dill—15.


text:
    Hyman Lowenthal, complainant-respondent, v. Jacob H. Myers, Emma T. Bauer et al., defendants-appellants.
    [Argued December 2d, 1908.
    Decided March 3d, 1909.]
    On the foreclosure of a mortgage the defendant set up in the answer the defence of usury.—Held, that the proofs submitted sustained the defence and that the defendant was entitled to a decree so adjudging.

      On appeal from a decree of tlie court of chancery advised by Yice-Chancellor Learning.
    On appeal of Emma T. Bauer, and cross-appeal of Iiyman Lowenthal.

      Mr. Edmund G. Gashill, Jr., and Messrs. Bourgeois & Sooy, for the complainant-respondent, Lowenthal.

      Mr. John G. Reed, Mr. John Rauffenbari and Mr. TJlysses G. Styron, for the defendant-appellant Bauer.
   The opinion of the court was delivered by

Dill, J.

This case presents cross-appeals from a chancery decree in an action of foreclosure where the defence was usury; the vice-chancellor, while finding that the mortgage was usurious in its inception, declared that he was unable, because of the conflicting testimony, to fix the amount which should be deducted from the face of the mortgage.

The decree directed the payment of the face of the mortgage without interest, less $88.50 paid as interest and $75 paid for an extension of time of an installment due:

Both sides appealed: The complainant because the decree declared the mortgage usurious, the defendant Bauer because the decree did not determine the usurious amount.

Ye agree with the vice-chancellor that the mortgage was usurious in its incéption and that the subsequent payment of $88.50 as interest and the one of $75 to induce the complainant to defer a payment due upon the mortgage should be applied to a reduction of the principal of the mortgage.

As to the amount of the usurious bonus, the testimony of the complainant was squarely in the face of that oE the defendant Bauer.

The vice-chancellor, having an opportunit)’’ to observe the conduct and demeanor of the witnesses while testifying, which is often almost as important as the testimonjr itself, in this wage of oaths, accepted the testimony of Mrs. Barter and rejected that of Lowenthal and his confreres as deliberately false in the interest of Lowenthal.

We hold, as did the vice-chancellor, that the transactions in the names of other parties were in fact LowentbaPs transactions, and that the names of other parties were used by him with a view to the furtherance of his illegal purpose.

Furthermore, LowenthaPs adoption of craft and deceit in this hypothecation of the names of Cantor and others denronstrates that he was covering up transactions which it was apparent even to his mind would not stand the light of full investigation.

Giving due weight to the findings of the vice-chancellor “that the original contract was to pay a bonus for the loan and that the bonus agreed upon was included in the amount of the mortgage,” and that Mrs. Bauer was to be believed, and that Lowenthal, who denied such a bonus contract, was swearing falsely in his own interest, we think it may fairly be considered to have been proved by Mrs. Bauer’s testimony that the bonus was at least $450, no other amount of bonus being at issue under the pleadings, and that Lowenthal deducted that amount from the proceeds of the mortgage.

The suggestion that the bonus of $450, which Mrs. Bauer agreed that Lowenthal deduct, was not in fact deducted by him, is not at all persuasive since it rests upon the unconvincing argument that Lowenthal, whose character as usurer and as a witness the court below had correctly estimated, would make a condition of his loan that such bonus should be deducted and' refrain from deducting it after all.

Upon a fair and consistent consideration of the relative weight of the testimonjr, the retention of the bonus agreed upon was proved.

It should, therefore, have been deducted from the amount due on the mortgage.

The case presents indications of other elements of usury, but, as the testimony of Mrs. Bauer is not definite, it becomes a matter of strong inference rather than a demonstrated fact.

The complainant is entitled to no costs and no allowance,in the court below.

Upon the appeal of the complainant, Lowenthal, there should be an affirmance.

As to the appeal of the defendant Emma T. Bauer, there should be a reversal for the purpose of modification as indicated in this opinion, with costs in this court to the defendant Bauer.

The record is accordingly remitted to the court of chancery for the entry of a decree in accordance herewith.

On appeal of Emma T. Bauer:

For affirmance—None.

For reversal—Tins Chief-Justice, Garrison, Swayze, Eeed, Trenciiard, Parker, Bergen, Voorhees, Minturn, Bogert, Yrbdenburgi-t, Gray, Dill—13.

On cross-appeal of Hyman Lowenthal:

For affirmance—The Chief-Justice, Garrison, Swayze, Eeed, Trenci-iard, Parker, Bergen, Yoori-iees, Minturn, Bogert, Yredenburgii, Gray", Dill—13.

For reversal—None.


author: Dili., J.

text:
    George Howell, complainant-respondent, v. Wesley Stone and Daniel E. Downey, partners, trading as Stone & Downey, defendants-appellants.
    [Argued December 2d, 1908.
    Decided March 1st, 1909.]
    In the case of a bova fids chattel mortgage the statutory affidavit o£ consideration (P. L. 1903 p. 1/87) should be liberally, not technically construed.

      ■■ On appeal from a decree of the court of chancery advised by Vice-Chancellor Howell.

      Mr. Ralph W. Skinner, for the respondent.

      Mr. George 11. Large and Mr. Howard Garrow, for the appellants.
   The opinion of the court was delivered by

Dili., J.

The decree of the court of chancery under review set aside a chattel mortgage in favor of a subsequent judgment of the plaintiff, holding that the statutory affidavit did not, as a matter of law, state “the consideration of said mortgage.” P. L. 1902 p. 187.

The learned vice-chancellor said:

“I wish toesay, in conclusion, that I have reached this view of the case with great disinclination, for the reason that I found no aspect of fraud in the transaction.

“The making of the mortgage was an honest effort to secure an honest indebtedness, and it fails not because of any turpitude imputed to the transaction, but because of the non-compliance with a statutory requirement of considerable teehnicalitjc”

Prior to the decision of this court in American Soda Fountain Co. v. Stolzenbach, 75 N. J. Law. (46 Vr.) 721, the statutory affidavit of consideration of a chattel mortgage had been cons trued by courts below as “a statutory requirement of considerable technicality,” but in that case we squarely rejected that doctrine, holding that in the absence of fraud, instruments so common in the course of commercial transactions by laymen as chattel mortgages should be sustained whenever there is an honest and substantial compliance with the statute.

An affidavit of consideration is not to be tested by the rules of pleading nor treated as a technical requirement. On the eonIrary, it should be the aim of courts, when the mortgage is Iona j'de, to preserve and not to destroy, and, as Sir Matthew Hale mid, the court should be astute to find means to make such instruments effectual, according to the honest intent of the parties. Roe v. Tranmarr, Willes 682.

Applying this rule to the facts before us, we think that the conclusion at which the learned vice-chancellor below arrived, hesitante, was erroneous.

Briefly, as to the facts, Dr. T. E. Gurtner and his wife, Selma E. Gurtner, were the owners of a farm in Hunterdon county. The doctor bought from Stone & Downey, the defendants in this action, a quantity of farm implements and other articles, including fertilizers, which were sent to and used on or about the farm. Promissory notes to the amount of the purchases, drawn by the wife to the order of the doctor and endorsed by both, were given to Stone & Downey. These notes were, at maturity, dishonored and Stone & Downey demanded security. Thereupon the doctor and his wife gave a second mortgage on the farm for the amount of the notes, and as further security also executed the chattel mortgage in question for a like amount, reciting in the body of the chattel mortgage that it was collateral to the real estate mortgage.

The affidavit stated that the consideration of the mortgage was

“goods and chattels consisting oil a great variety of goods used on or about the farm of said Selma -It. Gurtner at Pattenbui'g, Hunterdon county, N. J., for which her promissory notes were given and upon which no payments have been made.”

Discussion as to whether the notes of the wife come within the prohibition of the Married Woman’s act is, from our point of view, wide of the mark.

The original purchase price of the goods was unpaid, although the debt had subsequently been put in the form of various notes, nonc'of which had been honored.

The purpose of the parties wras, by this chattel mortgage, to secure this original indebtedness. The statement that the consideration was the goods and chattels used on the farm was the fact, although technically it disregarded the various intermediary forms of written evidence of this debt which the parties had executed; it was likewise true that for the original indebtedness the promissory notes of the wife had been given and that they were unpaid. It was also accurate, as stated in the body of the mortgage, that the chattel mortgage was given as collateral to the real estate mortgage given to secure this same indebtedness.

The statement of the consideration was a summary of the facts rather than a detailed history of the transaction. As was said in Strong v. Gaskill, 59 Atl. Rep. 399, the affidavit stated the consideration with substantial truth and it is immaterial that it is inartificially drawn and not technically precise.

The decree appealed from is therefore reversed, with costs.

B'or affirmance—None.

For reversal—-The Chief-Justice, Garrison, Swayze, Reed, Trenchaed, Parker, Bergen, Voori-iees, Minturn, Bogert, Vredenburgi-i, Gray, Dill—-13.


author: Per Curiam.

text:
    The State Council of the Junior Order of United American Mechanics of this State of New Jersey, respondent, v. Hollywood Council, appellant.
    [Argued November 19th, 1908.
    Decided March 1st, 1909.]
    On appeal from a decree of the court of chancery.

      Mr. Alan II. Strong (with whom was Mr. Fergus A. Dennis), for the respondent.

      Mr. Barton B. Hutchinson and Mr. Robert II. McCarter, for the appellant.
   Per Curiam.

This case differs from the case of State Council v. Enterprise Council, decided this day, only in the fact that Hollywood council is an unincorporated association, and derived its permission to organize from the state council of New Jersey instead of the state council of Pennsylvania. We do not think that these facts distinguish the case in any of its essential features from the case of Enterprise council, and, for the reasons stated in the opinion in that case, the decree in the present case must be reversed, with costs.

For affirmance—None.'

For reversal—The Chancellor, Chiee-Justice, Garrison, Swayze, Reed, Trenchard, Parker, Bergen, Voorhees, Min-turn, Bogert, Vredenburgii, Vroom, Gray, Djll—15.


author: Pee Curiam.

text:
    Florence Boyle, by next friend, complainant-respondent, v. John Boyle, defendant-appellant.
    [Argued November 20th, 1908.
    Decided March 1st, 1909.]
    On appeal from a decree of the former chancellor advised by Vice-Chancellor Howell, whose opinion is reported in '67 Atl. Rep. 690.

      Mr. Spaulding Frazer (with whom were Messrs. Riher •& RzTcer), for the appellant.

      Mr. Thomas S. Henry, for the respondent.
   Pee Curiam.

The decree under review herein will be affirmed, for the reasons expressed in the opinion of Vice-Chancellor Howell.

For affirmance—The Chancellor, Chiee-Justice, Garrison, Swayze, Reed, Trenchard, Parker, Bergen, Vooriiees, Minturn, Bogert, Vredenburgh, Vroom, Gray, Dill—15.

For reversal—None.


text:
    Charles W. Maxwell et al., complainants-respondents, v. Charles J. Leichtman, defendant-appellant.
    [Argued November 20th, 1908.
    Decided November 20th, 1908.]
    On appeal from an order of- the former chancellor advised by Vice-Chancellor Learning, whose opinion is reported in 72 N. J. Fq. (2 Buck.) 780.

      Messrs. Thompson & Gole, for the appellant.

      Mr. Ilarry TVootton, for the respondents.
   Per Curiam.

This is an appeal from an order allowing to the complainants in an interpleader suit their costs and a counsel fee of $50, to be paid out of the fund deposited by the complainants in court.

No sufficient reason being shown why this allowance should not be made, the order under review will be affirmed, with costs.

For affirmance—The Chancellor, Ctiiee-Justice, Garrison, Swayze, Reed, Trenchard, Parker, Bergen, Voorhees, Minturn, Bogert, ATredenburgh, AAroom, Green, Gray, Dill —16.

For reversal—None.


text:
    Samuel Rodman et al., appellants, v. Manganese Steel Company, respondent.
    [Argued November 25th, 1908.
    Decided March 1st, 1909.]
    On appeal from an order of the court of chancery advised by Vice-Chancellor Howell.

      Mr. Winfield S. Angleman, for the appellants.

      Mr. John R, Hardin, for the respondent.
   Per Curiam.

The order is affirmed for the reasons given by Vice-Chancellor Howell.

The suggestion that the decree of insolvency and for an injunction in statutory proceedings against an insolvent corporation is a final decree was not necessary for the decision of the cause. It seems to be in conflict with the opinion expressed for this court by Mr. Justice Van Syckel in Franklin Electric Light Co. v. Fort Wayne Electric Corporation, 58 N. J. Eg. (13 Dick.) 543. Whether the explanation of that opinion contained in Vice-Chancellor Stevenson’s opinion in Pierce v. Old Dominion Copper Mining and Smelting Co., 58 Atl. Rep. 319 (at p. 326), is correct or not is a question we need not now consider.

For affirmance—The Chief-Justice, Garrison, Swayze, Reed, Trenchard, Parker, Bergen, Yoorhees, Minturn, Bogert, Vredenburgi-i, Vroom, Gray, Dill—14.

For reversal—None.


text:
    Sylvan G. Bushey, appellant, v. National State Bank of Camden and Heulings Lippincott, respondents.
    [Argued November 30th, 1908.
    Decided March 1st, 1909.]
    On appeal from a decree of the chancellor, whose opinion is reported in 1% N. J. Eq. (£ Buck.) J/.66.

      Mr. Ralph W. E. Donges, for the appellant.

      Mr. Edward Dudley, for the respondents.
   Per Curiam.

The decree appealed from will- be affirmed, for the reasons stated in the opinion of Chancellor Magie, delivered in the court of chancery.

For affirmmce—The Chief-Justice, Garrison, Swayze, Reed, Trenchard, Parker, Bergen, Yoorhees, Minturn, Bogert, Vredenburgh, Yroom, Gray, Dill—14=.

For reversal—None.


text:
    New York and Eastern Telegraph and Telephone Company, complainant-respondent, v. Great Eastern Telephone Company et al., defendants-appellants.
    [Argued December 1st, 1908.
    Decided March 1st, 1909.]
    On appeal from a decree of the former chancellor advised by Vice-Chancellor Garrison, whose opinion is reported in 74 N. J. Eq. (4 Buck.) 221.

      Mr. J. Merritt Lane, for the appellants.

      Mr. Albert G. Wall, for the respondent.
   Per Curiam.

The only question raised by this appeal relates to fifteen'shares of the capital stock of the New York and Eastern Telegraph and Telephone Company, which fifteen shares were originally issued to James R. Skinner, and were represented by certificates Nos. 6 and 13. Concerning them the views of the learned vice-chancellor are set forth in his opinion beginning at 69 Atl. Rep. 530. As to these shares, it was decreed that their attempted forfeiture or cancellation was void; that the attempted reissue of other shares to one Benn (under whom defendants claim) was void, and that the defendants have no interest in the fifteen shares.

For the reasons expressed in the opinion of the learned vice-chancellor the decree, so far as brought into question by the present appeal, is affirmed, with costs.

For affirmance—The Chancellor, Chiee-Justice, Garrison, Swayze, Reed, Trenohard, Parker, Bergen, Voorhees, Minturn, Bogert, Vredenburgh, Gray—-13.

For reversal—None.


text:
    De Elbert A. Reynolds et al. v. The New York and Eastern Telegraph and Telephone Company.
    [Argued December 1st, 1908.
    Decided March 1st, 1909.]
    On appeal from a decree of the former chancellor advised by Vice-Chancellor Garrison, whose opinion is reported in 1% N. J. Eq. (i)■ Buck.) 2021.

      Mr. J. Merritt Lane, for the appellant.

      Mr. Albert 0. Wall, for the respondent.
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the per curiam, opinion filed at the present term in the case of New York and Eastern Telegraph and Telephone Co. v. Great Eastern Telephone Co. et al.

For affirmance—Ti-ie Chief-Justice, Garrison, Swayze, Reed, Tren chard, Parker, Bergen, Voorhees, Minturn, Bogert, Vredenburgh,’ Gray—12.

For reversal—None.


text:
    Charles A. Wilson, complainant-appellant, v. Roy F. Anthony, defendant-respondent.
    [Submitted December 7th, 1908.
    Decided March 1st, 1909.]
    On appeal from a decree of the former chancellor advised by Vice-Chancellor Howell.

      Mr. Frank E. Bradner, for the appellant.

      Mr. Thomas L. Raymond, for the respondent.
   Per Curiam.

Vice-Chancellor Howell having denied an application for preliminary injunction in this case (Wilson v. Anthony, 72 N. J. Eq. (2 Buch.) 836), the defendant demurred to the bill, and, upon hearing, the demurrer was sustained and the bill dismissed. From the decree dismissing the bill the present appeal is taken.

The decree of dismissal should be affirmed, for the reasons expressed by Vice-Chancellor Howell in denying the application for injunction.

For affirmance—The Chancellor, Chief-Justice, Garrison, Swayze, Reed, Trenchard, Parker, Bergen, Voorhees, Minturn, Bogert, Yredenburgh, Vroom, Gray, Dill—15.

For reversal—None.


text:
    In the matter of the application of the Borough of Woodbine for the protection of grade crossings.
    [Submitted December 8th, 1908.
    Decided March 1st, 1909.]
    On' appeal from an order of the court of chancery advised by Vice-Chancellor Learning.

      Messrs. Bourgeois & Sooy, for the appellants, the West Jersey and Seashore Railroad Company.

      Mr. Maximilian T. Rosenberg, for the respondent, the borough of Woodbine.
   Per Curiam.

The. borough of Woodbine filed its petition in the court of chancery prajdng that an order or decree be made requiring the West Jersey and Seashore Railroad Company to protect certain highway crossings within the limits of the borough by safety-gates or a flagman. The petition was filed under the thirty-sixth section of the Revised Railroad act of 1903 (P. L. 1903 p. 664), which authorizes the court of chancery, on the application of any municipality of the state, to ascertain in a summary way, when one or more of the streets of the municipality arc crossed at grade by a railroad, whether the crossings should be protected either by the erection of gates or the stationing of a flagman at the crossing by the railroad company or by some other reasonable provision for the .safety of the public.* The case was heard before Vice-Chancellor Learning, and his consideration of the proofs led him to the conclusion that the public travel over the crossings at Washington, Adams, Jefferson, Madison and Lincoln avenues was sufficiently heavy to require that those crossings should be protected by the railroad company, and he thereupon advised an order that the company should afford such protection by installing a system of electric bells there.

From the order made in accordance with this advice the present appeal is taken, and the ground of appeal is that no protection of the kind ordered, or of any other kind, is required at the crossings named.

We have examined the evidence taken before the vice-chancellor, and agree with him that the facts proved justify a finding that some protection of these crossings is reasonably necessary. The character of the protection advised by him seems to be the least expensive method which can be installed, which will adequately safeguard the public, and no contention is made thkt some other method of protecting the crossings should have been directed.

The order appealed from will be affirmed.

For affirmance—The Chibe-Justice, Garrison, Swayze, Reed, Trenchard, Parker, Bergen, Voori-iees, Minturn, Bo-GERT, VREDENBURGH, GRAY, DlLL—13.

For reversal—None.


text:
    United States Independent Telephone Company, appellant, v. James M. E. O’Grady et al., respondents.
    [Argued July 29th, 1908.
    Decided March 1st, 1909.]

      Mr. Richard V. Lindahury, for the appellant.

      Mr. John R. Hardin, for the respondents.
   AITirmed March 1st, 1909.

For affirmance-—-The Chief-Justice, Garrison, Swayze, Reed, Trenohard, Parker, Bergen, Yoorhees, Minturn, Bo-GERT, YREDENBURGHj YROOM, GRAY, DlLL-14.

For reversal—None.


text:
    James H. Haslett, appellant, v. James B. Nixon, respondent.
    [Argued December 2d, 1908.
    Decided March 1st, 1909.]

      Mr. Martin V. Bergen, Jr., for the appellant.

      Mr. Horace F. Nixon, for the respondent.
   Affirmed March 1st, 1909.

For affirmance—Garrison, Swayze, Reed, Trenci-iard, Parker, Bergen, Yoorhees, Minturn, Bogert, Yredenburgi-i, Gray, Dill—12.

For reversal—None.


text:
    John Jacob Astor, Warren Delano, Jr., and Franklin B. Lord, executors of Laura Astor Delano et al., appellants, v. State of New Jersey, respondent.
    [Submitted December 8th, 1908.
    Decided March 1st, 1909.]
    On appeal from a decree of the prerogative court.

      Messrs. Griggs & Harding, for the appellants.

      Mr. Robert H. McCarter, attorney-general, for the respondent.
   Reversed March 1st, 1909.

For affirmance—None.

For reversal—The Ciiiee-Justice, Garrison, Swayze, Reed, Trenohard, Parker, Bergen, Voorhees, Minturn, Bogert, Vredenburgh, Vroom, Gray, Dill—14.


author: Emery, Y. C. (after statement).

text:
    Harold H. Baker et al. v. Joseph W. Baker.
    [Decided April 1st, 1909.]
    1. Where the original purchase price of land was made by contributions of complainants, and the title was taken in the name of one of them, there was as between the latter and the other contributors a resulting trust.

      2. A resulting trust as between a grantee and third persons arising by implication of law is not within the statute of frauds.
    3. Complainants purchased certain land, the title to which they caused lo be conveyed to one of their number, who thereafter conveyed the land to his mother, who took with notice of the original resulting trust.—Held, (hat parol evidence was admissible to show the original trust, and1 that it existed against the mother, as to all the children but the grantor.
    4. As between a grantor and' grantee, parol evidence establishing a resulting ItuM' in favor of the grantor is inadmissible as contradicting 1he deed.
    D. Where a son- holding title to certain land in trust for himself and his brothers and sisters conveyed the land to his mother by an absolute deed, such deed passed the son’s equitable interest to the mother discharged of tile trust, so that, on the mother’s death, her husband was entitled to curtesy therein.
    6. Whore a deed conveying property is absolute on its face, parol evidence is inadmissible either in favor of or against the grantor or grantee or any persons claiming under either of them to establish an express trust, in the absence of fraud or mistake.
    7. Where a conveyance by father to son to assist in supporting the family was a pure gift so far as the other members of the family were concerned, there was no resulting trust in favor of any of them so as (o give them any interest in (he- property on a conveyance by the son to his mother.
    Heard on bill, answer, replication and proofs.
    Complainants are the heirs-at-law of Matilda Baker and the children of Matilda Baker and her husband, Joseph W. Baker, the defendant. The object of the bill is to establish that a farm in Springfield township, Essex count]1, and a bouse and lot in Orange, to both of which tracts the mother held the legal title when she died intestate, were held in trust for the complainants, and'to enjoin defendant from setting up a legal title as tenant by the curtesy in either of the tracts. An account of rents received by the defendant is also sought. The Springfield farm was originally conveyed by James R. Pitcher and wife to the complainant Benjamin S. Baker, by deed dated April 1st, 1895. The deed was on its face an absolute deed] but complainants claim that the purchase-money of the farm was paid by all of the children and that the farm was held by Benjamin in trust for all. The farm was worked by the children together to support themselves and their mother, the father not living with them, and after the purchase they built a dwelling on the farm, in which they lived, and made other improvements, costing - altogether about $4,000. In April, 1901, and after this expenditure, the title to this farm was, by arrangement between Benjamin and the other children, conveyed to the mother; Benjamin contemplated marriage and the deed was made in order to avoid supposed complications or difficulties on this score. This deed was also absolute on its face, but complainants claim that the legal title was conveyed to their mother to hold for them, upon the same trusts upon which Benjamin previously held it. The mother, before her death, signed a deed to Claudius, another son, conveying the farm to him absolutely, but her husband refused to join in the deed. This deed also- was absolute in form,, but it is claimed that the same trust was to be continued by Claudius as holder of the legal title. The defendant denies the existence of the trusts set up by complainants, and claims that he paid a portion—$358—of the purchase-money of the farm, and the question in reference to the farm is whether the complainants have established a resulting trust arising out of the payment of the purchase-money and still existing for their common benefit.
    The Orange property originally belonged to the defendant, and in April, 1906, while he was living separate from his family, and not contributing to their support, he conveyed this house and lot to his son Benjamin, by a deed absolute on its face. Complainants allege that this was conveyed to Benjamin in trust to manage it and pay over the rents for the use of the mother and her children, and that it was the intention that Benjamin should be a trustee for his mother and the children. Defendant by his answer denies the existence of any trust, or that the property was conveyed on the trusts or with the understanding alleged, and says that the conveyance was a gift, and on the consideration of love and affection for Benjamin. In his evidence on this point, however, defendant states that the conveyance was made for the purpose of helping his family, who were burdened with carrying the large purchase-money mortgages on the farm. This tract was conveyed by Benjamin to the mother at the same time the farm was conveyed to her, and under the same circumstances. The conveyances were-by separate deeds. These deeds from Benjamin to his mother were made without any knowledge on the part of the father, or any communication with him. He had not then been living with his family for some years, nor had they heard from him or about him for over two years. The question relating to this Orange property is whether any trust for the benefit of the children, as set up in the bill, and which is now acknowledged by Benjamin, lias been so established by the proofs as to control the terms of the absolute deed, so far as affects the defendant claiming under it as tenant by the curtesy.

      Mr. Samuel J. MacDonald, for the complainants.

      Mr. William A. Calhoun, for the defendant (Mr. Horace Stetson, solicitor).
   Emery, Y. C. (after statement).

On the proofs I conclude- first, that the original purchase of the Springfield farm from Mr. Pitcher was made by the contributions of all of the children to the purchase-money, and that although the title was taken in the name of Benjamin Baker, one of the children, there was, as between Benjamin and his brothers and sisters, a resulting trust, arising from this original contribution of the purchase-money. Such resulting trust as between the grantee and third person, arises by implication and operation of law, and is expressly excepted from the operation of the statute requiring written evidence of a trust. Gen. Stat. p. 1603 § 3; Johnson v. Dougherty (Chancellor Green, 1867), 18 N. J. Eq. (3 C. E. Gr.) 406; Cutler v. Tuttle (Court of Errors and Appeals, 1868), 19 N. J. Eq. (4 C. E. Gr.) 549, 558. The contributions by the children to the purchase-money are not to be considered as advances or gifts to the child selected to hold the legal title. The eases cited by defendant’s counsel to show that written evidence is required to establish, as between the grantor and the grantee, an express trust contrary to the terms of the deed, either in favor of the grantor or not arising by operation of law, have no application to this branch of the case, ancl so far as the original deed from Pitcher and wife to Benjamin Baker is concerned.

On the evidence I conclude that the claim of defendant, that he advanced part of the purchase-money, is unfounded, and that the payment was made by the children from their own money, without any contribution from defendant.

Second. As to the Springfield farm, I further find that after this original purchase by the children and before the conveyance by Benjamin to his mother in 1901, the children, recognizing this purchase of the farm for the common benefit and support of the family, including the mother, but not the father, worked the farm, carrying on the dairy and other business, and made improvements, including a house for the family to live in, contributing for this purpose about $4,000, and that all these contributions to this purpose were made in the belief that the farm was held in trust for them all, and I further find that the mother, who was supported by all the children, so understood the situation.

Third. As to this farm, I further find that the conveyance of the farm by Benjamin to his mother in 1901 was not made or intended as a gift to the mother by the children of their interest in the farm, but was intended (for reasons which all the children and the mother acquiesced in) to continue in the mother the legal title which had been in Benjamin, and for the same purpose.

So far as relates to the children other than Benjamin (the grantor in the deed to Mrs. Baker), the resulting trust, created by implication of law at the time of the original deed, still continued in their favor as against the mother, who, at the time of receiving her deed, had notice of the original resulting trust. And parol evidence is admissible to show that the resulting trust for the children existed at the time of this conveyance to the mother and that it was not terminated by the deed. This resulting trust, arising by implication of law at the time of this second deed, is excluded from the operation of the statute of frauds, equally with the first deed. Such admission of parol evidence of resulting trust, under the proviso in the statute, does .not, however, operate in favor of Benjamin, the grantor in the deed, as against his grantee.

As between a grantor and grantee, parol evidence establishing in the grantee a resulting trust in favor of the grantor himself cannot, under the statute, be admitted to contradict the deed. Lovett v. Taylor (Vice-Chancellor Pitney, 1896), 54 N. J. Eq. (9 Dick.) 311, and cases cited at p. 319. Benjamin’s share or interest in the lands, as being one of the parties entitled to the benefit of a resulting trust, as contributing to the purchase-money, cannot be established by parol in contradiction of this deed. It could not have been introduced for this purpose against his mother, the grantee, during her lifetime, had she objected, nor is it now effective against the defendant, claiming as tenant by the curtesy since her death.

Benjamin’s equitable interest in this farm at the time of this conveyance passed to the mother bjr the effect of the deed and the statute with the conveyance of his legal title. The curtesy of the husband in the Springfield farm is to be restricted so as to operate on the equitable title of Benjamin which was conveyed to his mother with his legal title, and does not extend to the equitable title of the other children, which remained in them notwithstanding the conveyance to the mother by Benjamin, their trustee.

Four Hi. Subsequent to this conveyance by Benjamin to his mother in 1901, the children remaining on the farm (and not including Benjamin) continued the operation of the farm and dairy, contributing the proceeds to the common support and benefit of the family, and also from the proceeds of their farm paid off $1,500 of the mortgage (or mortgages) of $4,000, representing the balance of the purchase-money. This payinent was made by them as the real equitable owners of the farm, discharging burdens upon the common property, and in the belief that, ultimatefy, after the death of the mother, the benefit of the entire payment would enure to them. They are therefore entitled, as against Benjamin and the defendant claiming the conveyance by him, to contribution toward these payments on the mortgage, and Benjamin’s share conveyed to the mother is subject to such contribution.

Fifth. The defendant’s title as tenant by the curtesy in the Springfield farm will be declared to extend only to such undivided share thereof as was equitably vested in Benjamin at the time of the deed to his mother in 1901, and to be subject to contribution for the payments subsequently made on the mortgage. The legal title of defendant as tenant by the curtesy will be declared not to extend to the equitable title of the other children in the land, and an injunction will be advised against asserting such title. The form of decree will be settled, and, if necessary after further hearing, as to the extent of Benjamin’s equitable title at the time of the conveyance to his mother.

Sixth. 1 dispose of this branch of the case without considering or deciding the question raised as to the effect of the deed signed by the mother conveying the property to the son Claudius (but not signed by the husband) as being on her part written evidence of the trust now claimed. Having reached the conclusion that, in favor of all the children, except Benjamin, her grantor, the parol proof of the transaction is such as to show a trust in their favor, arising by implication of law, the question is not important. As to- Benjamin’s interest at the time of the deed, the statute operates not only against him, but in favor of his grantee and those claiming his share under her, and this subsequent admission'not being in such legal form as to convey her estate, cannot have the effect, so far as the grantor alone is concerned, of changing the effect given by law to the deed itself.

Seventh. As to the Orange property, conveyed by defendant to his son Benjamin in 1896, and conveyed by Benjamin to his mother in 1901, the situation of the parties in reference to the admissibility of parol evidence to contradict the deeds and control the regular devolution of the legal title, including defendant’s curtesy, is altogether different. This property owned by the father was conveyed absolutely to Benjamin. The purpose of it was to assist in the support of the family, and the conveyance was made-to Benjamin as the oldest son and the person selected. But in the face of the absolute terms of the deed neither in favor of nor against the grantor or grantee or any persons claiming under either of them, could an express trust be established by parol in the absence of fraud or mistake, and no resulting trust in favor of any of the children has been established. There was, as appears by evidence on both sides, a letter written by the father previous to the conveyance and relating to it, and this letter, up to two months before the hearing, was in the possession of the complainants. They have, however, failed to produce it on the hearing, not being now able to find it. There is a dispute as to the contents of the letter on the important point now in issue, whether the conveyance was only to be for the benefit of the family and that the property would be returned to him whenever he wished. The father says that it was. The letter, if produced, might have been sufficient under the statute to establish a trust to control the deed, but in the absence of the letter, the evidence, as to its contents, is not satisfactory for that purpose. It is unfortunate for complainánts that they have lost this letter, and the case as to this property must be disposed of on the question whether the evidence as to this transaction shows any trust in the complainants, arising by operation of law, either upon the first conveyance by the father to Benjamin or at the time of the subsequent conveyance by Benjamin to the mother. The first conveyance being a pure gift, so far as complainants are concerned, there was no resulting trust in favor of any of them, neither was there any mistake or fraud in making this conveyance to Benjamin. Had the latter afterwards refused to use the property for the common benefit of the famity, relief of some kind might possibly have been given on the ground of fraud, but no such question arose during the tenure of either Benjamin or bis mother. Nor was the father a party to or aware at the time of the conveyance by Benjamin to his mother. The conveyance made by Benjamin with the approval of the other children and of the mother may have been and probably was under a mistaken view as to its possible effect, in case of the mother’s death, but the father was not in anywise responsible for or connected with this mistake. The sole question is, therefore, whether the circumstances proved shows that at the time of this conveyance to the mother, there was, as to this property, a trust in favor of the other children, existing by operation of law and continued after the conveyance, because the mother had notice of such trust. The original transaction of the conveyance from the father to Benjamin was itself an equivocal one, and as a family affair consistent either with the absolute conveyance by the father to Benjamin, or with the father’s reservation of some future interest in it after the death of his wife. It appears that at the time of the conveyance, it constituted his entire property, and the intention to then convey it without any reservation should be very clearly made out, in order to divest him now of the estate for his life, devolving on him by law after the death of his wife, and as the result of an act determined on by the defendants themselves, with which he had nothing to do. This voluntary conveyance to the mother after the father had conveyed to Benjamin, followed by the loss or failure to produce tile father’s letter relating to the deed, inclines me to give defendant the benefit of any doubt as to the existence of a trust. And on this aspect of the case it is not irrelevant to notice that although the mother, after she was stricken with her fatal illness, executed a deed for the Springfield farm to her son Claudius, for the purpose of continuing the benefit of the property to the family, no deed was signed by her for the Orange property.

As to this property, therefore, the relief sought by the bill, an injunction against setting up title by the curtesy will be denied, but inasmuch as it appears by the evidence that a mortgage on this property for $350 has been paid off by the defendant from the proceeds of the farm, and has been canceled of record, lhis refusal will be without prejudice to any claim to reestablish the lien of this mortgage for his reimbursement, and I will hear counsel as to whether such relief can be given on this bill, or by amendment thereto.