text:
    Hudson Trust and Savings Institution v. Carr-Curran Paper Mills Company, The City of Hoboken et al.
    [Submitted April 29th, 1899.
    Decided May 11th, 1899.
    Plied September 26th, 1899.]
    1. The charter of 1855 gave to the city of Hoboken power to provide for water-supply, to impose assessments for the use thereof and to make such assessments liens on the land so assessed paramount to all other encumbrances, and provided for the sale of the real estate for such assessments and its redemption by the owners. — Held, that the priority of the city’s lien for water-rents over prior mortgages was dependent on assessments against the property using the water, of a certain amount each year, and could not be urged in favor of a lien for water sold by measure, the rate^varying with the amount of water used.
    2. The mortgagee of a paper mill, whose lien was inferior to that of the city of Hoboken for water rents under its charter of 1855, gave notice to the city, when the mortgagor was in arrears for one quarter, to turn the water off. The city did so, but in such a manner that the employes of the mill immediately turned it on again ; and thereafter the city read its meter and charged it for water for several succeeding quarters, which charges remained unpaid. — Held, that the city could not then claim priority for its lien.
    3. The General Waterworks law of 1876, providing for the supply of water in cities, the fixing and collecting of water rents, and prices for water, and a lien upon the real estate for such water rents, and for the shutting off of such water when such rents are due and unpaid, and the sale of the property at public auction, if not paid, without provision for redemption from such sale, does not give such a lien upon the property as will take priority over mortgages previously given.

      4. Portions of machinery assembled together and set up in a special building erected for its reception, which may be removed without trouble and used in any similar mill, may be treated either as a chattel or a fixture, according as the intention of the parties and the justice of the case may require.
    5. The actual delivery of possession of property sold, without receiving the contract price due upon delivery, does not in all cases destroy the right of the vendor to resume possession for failure to make such payment unless he waives his right thereto.
    6. The delivery of machinery upon the premises of the vendee and putting it in place, in order to show its capacity to do 'its work, is not a waiver of the right of the vendor to resume possession upon failure to pay the part of the purchase price due upon delivery, according to contract.
    7. The owner of a mill subject to a mortgage, and mill machinery subject to a chattel mortgage, contracted for certain alterations and additions to such machinery, payment to be made half cash on delivery and the remainder in notes at three months. The changes were made but only part of the contract price paid, although repeated efforts were made to collect the balance. The vendor finally accepted a chattel mortgage for the remainder of the debt.- — • Held, that the lien of the mortgage for the purchase price was paramount to that of the original mortgages, except as to so much of the original machine as constituted a part of the perfected machine.
    The object of the bill is to foreclose two certain mortgages dated April 12th, 1894, both given to secure the same bond, which is conditioned to pay the sum of $15,000 in one year, with interest. One mortgage covers real estate, to wit, a paper-mill plant in the city of Hoboken, and the other personal chattels consisting of machinery, &c., situate therein.
    Two questions (among others) arise upon the pleadings and t he case made.

      First. The city of Hoboken claims a lien upon the premises’ paramount to complainant’s mortgages to the extent of $7,292.37, besides interest, for water furnished by measurement to the CarrCurran Paper Mills Company for use in making paper, between the 1st day of February, 1896, and the 1st day of May, 1898, nine quarters in all, or rather, eight quarters, for the bill for the quarter ending May 1st, 1898, was only $1.35.

      Second. A question arises between the complainant and the defendants Clark & Spencer, as to the priority of complainant’s mortgages over a chattel mortgage given by the Carr-Curran Paper Mills Company to Clark & Spencer on the 1st of December, 1897, to secure the payment of $3,500, and covering certain paper machinery in the mill.

      Mr. J. W. Rufus Besson and Mr. Augustus A. Rich, for the complainant.

      Mr. James F. Minturn, for the city of Hoboken.

      Mr. Henry M. Nutzhorn, for Clark & Spencer.

      Mr. William D. Edwards and Mr. Maximilian T. Rosenberg, for other defendants.
   Pitney, V. C.

I will first consider the right of the city of Hoboken to a lien for water furnished.

The inhabitants of the city of Hoboken were created a city under the act of March 28th, 1855. P. L. of 1855 p. 448. Among the numeration of powers of the common council contained in the fortieth section of the act we find in the fifth paragraph, power

“ to make all necessary arrangements for a full and copious supply of good and ■ wholesome water for public and private use ; to make ordinances for the distribution of the same, and to impose assessments for the use thereof, which assessments shall be binding upon improved and unimproved lots so assessed, and may be collected in the same manner as prescribed in this act for the collection of assessments for grading, paving, curbing, flagging and laying out of public streets,” &c.

By a proviso the amount the common council might pay to any party furnishing water to the city by contract was limited to $20,000 a year.

By section 48 (p. 471) of the same act it is provided as follows:

“That all taxes and assessments which shall hereafter be assessed or made upon any lands, tenements or real estate situate in said city, shall be and remain a lien thereon until paid, notwithstanding any devise, descent, alienation, mortgage or other encumbrance thereof; and that if the full amount of any such tax or assessment shall not be paid and satisfied within the time limited for the payment thereof, it shall and may be lawful for the council to cause such lands, tenements or real estate to.be sold at public auction for the shortest terms for which any person will agree to take the same, and pay such tax or assessment, or the balance thereof remaining unpaid, with the interest thereon, and all costs, charges and expenses, and to execute, under the common seal of the said city, a declaration of such sale,- to be signed by the mayor and city clerk, and to deliver the same to the purchaser; and such purchaser, his executors, administrators or assigns, shall, by virtue thereof, lawfully hold and enjoy the said lands, tenements or real estate, for his and their own proper use, against the owner or owners thereof, and all persons claiming under him or them, until his said term shall be completed and ended; ”

And (p. 472)—

“that the lands, tenements or real estate, so sold, may be redeemed by the owner, mortgagee, occupant or .person interested therein, or by any other person, for and on behalf of the owner, mortgagee or claimant of such lands, tenements or real .estate, at any time within two years after the sale, for either taxes or assessments, or for both, by paying,” &e.; * * * “no mortgagee, whose mortgage shall have been duly recorded before sale for any tax or assessment, shall be affected by such sale, unless six months’ notice in writing shall have been given to him by the purchaser, or those claiming under him, either personally, or if not to be found in the city, then such notice shall be deposited in the post-office of said city, directed to him at his last-known place of residence (or at the post-office nearest thereto), but «othing herein contained shall be so construed so as to impair the lien created by such tax, assessment or sale.”

And by section 52 (p. 475) provision is made for assessing the expense for improvements in opening, grading, curbing, bridging and paving streets,"and for flagging sidewalks, &c., by assessment upon the lands and real estate benefited.

The effect of clauses similar to these, found in the charter of Jersey City, was passed upon by the court of errors and appeals in the case of Vreeland v. Jersey City, 10 Stew. Eq. 574, and it was held that the city had a priority over a mortgage for its ordinary water rates or rents assessed after the mortgage was given. That decision of the court of appeals was tested in the supreme court of the United States by a case made up and carried through our courts without being reported, our courts adopting the opinion to which I have just referfed, and the supreme court of the United States affirmed the ruling just stated. Provident Institution for Savings v. Jersey City, 113 U. S. 506.

If, then, the charges for water in this case were of precisely the same character as those dealt with in Vreeland v. Jersey City, and the lien was claimed under the original charter of Hoboken, and there were no other element in the case, it would seem that the lien of the city would be paramount to the complainant’s mortgages.

But the complainant contends that the present case is distinguishable in two respects at least. The authority in the charter of Hoboken, as we have seen, is

“to impose assessments tor the use thereof [water], which assessments shall he binding upon improved and unimproved lots so assessed, and may be collected in the same manner as prescribed, &c., for the collection of assessments' of grading, paving, &c., and laying out of public streets,” &c.

That provision, it is argued, contemplated the assessment of a certain amount of money each year on a lot, whether improved or not, which assessment was not to be varied according to the amount of water used. There is a further provision in the act of 1855 that the water rate should not exceed the rate charged in YewYork or Jersey City, and the argument is that the whole scheme was inconsistent with the laying of rates varying with the quantity of water consumed. The argument, in short, is that a sale of water by measure has none of the characteristics or qualities of an assessment.

There is no proof in the case as to whether or not the practice of selling water by measure in large quantities to factories, was then in vogue and known to the legislature or the city.

It is further argued that a mortgagee taking a mortgage under the legislature of 1855 might ascertain with reasonable certainty in advance what the amount of the water rates or rents would be, and could provide against them ; and that it was not in the contemplation of the legislature that water should be furnished under a contract at so much per thousand cubic feet and amounting in pried to nearly $1,000 a quarter, which, if not paid, should become a lien upon the lands superior to a prior mortgage. That such was the idea in the minds of the legislature and of the city is further manifested — so it is argued — by the tariff of rates adopted by the city of Hoboken and revised from time to time, in which there is a regular scale and schedule of charges by the year, varying with the size of the lot and building, and number of stories; and there are other annual charges for special uses — greenhouses, hotels, boarding-houses, markets, milk stores, photograph galleries, steam engines, boilers, &c., none of them based upon the actual quantity of water consumed.

If the question depended upon the charter of 1855,1 should, under pressure of these considerations, be inclined to the opinion that a lien for water furnished to the amount and in the manner that appears in this case, was not intended by the legislature to be paramount to mortgages previously imposed.

But the complainant makes a further point, which is that on the 13th of May, 1896, and as soon as it found that the charges for water furnished during the quarter ending at that time were due, and when only $659.95 were in arrear, it served upon the city a notice in writing calling its attention to the arrears of water rent, and requesting the city to cut off the further supply from the mortgaged premises; and that in case of the city’s failure so to do the complainant would deny the priority of its claim for any further water which might be thereafter supplied, and gave the city notice of the mortgages held by complainant. In pursuance of that notice the city turned off the water from the paper mill, but did it in such a manner, and left the apparatus in such a condition, that the paper mill employes immediately turned it on again. This, it seems to me, was tantamount to not turning it off at all. For it was a mere idle ceremony for the city to turn the water off unless it did it in such a manner that it could not be turned on again without the consent of the city authorities. And there is no pretence that the city gave any notice to the complainant that the water was so turned on, but by its agent it duly read the meter of the paper mill company, and on August 1st following, duly charged the company again for water consumed during the previous quarter, and so on until the company stopped business in the month of March, 1898.

How it seems to me that under these circumstances it would be inequitable and unjust for the city to claim this great priority, which will so seriously affect the complainant’s rights.

But, in the second place, the complainant contends that the city is not now entitled to the benefit of the clause in question, found in its original charter, for the following reasons: Under a supplement to its original charter, passed in 1857 (P. L. of 1857 p. 500), it had been supplied with Passaic water from Jersey City, and in the year 1880 wishing to change its source of supply desired to enter into a contract with the Hackensack Water Company to furnish it with water, which would amount to an expenditure of much more than $20,000 a year, and that the latter company, not being satisfied that the city had the power to enter into such a contract, insisted that it should formally and legally accept the benefits of the provisions of the general act of 1876 (P. L. of 1876 p. 366); whereupon the city did, by a vote of its inhabitants, formally accept the provisions of the act of 1876, and has ever since proceeded under it, as appears by the case of Hackensack Water Co. v. Hoboken, 22 Vr. 220.

How the act of 1876 is a complete act in itself, and contains provisions for the collection of water rents and prices for water. It seems for the first to contemplate the selling of water by measure. By the ninth section of that act the municipal authorities are authorized to pass all such ordinances, resolutions and regulations as may be necessary for fixing and collecting the water rents or prices for water. This language — “ water rents or prices ” — is in marked contrast with the word “ assessment,” used in the original charters of Jersey City and Hoboken. The tenth section provides that “ such price or rent so fixed shall be a lien upon said house, tenement, building or lot, until the same shall be paid and satisfied; ” that the municipality shall have authority to require payment in advance for the use or rent of water furnished by said city in or upon any building, place or premises, and in case prompt payment of any water rent or rents shall not be made when the same become due, the water shall be shut off from suoh building, place or premises until such arrears with interest thereon shall be fully paid; and, if the same are not paid after notice, such houses, tenements and lots will be sold at public auction, at a day and place to be specified therein, for the lowest term at which any person will offer to take the same, in consideration of paying the amount of the water rent, with interest thereon due on the same and the expenses of the sale, and, if not paid, then the municipality may cause

“such houses, tenements or lots to be sold at public auction for a term for the purposes and in the manner expressed in said advertisement, and to give a declaration of such sale to the purchaser thereof, under the common seal of the said city, and such purchaser, his executors, administrators or assigns, shall, by virtue thereof and of this act, lawfully hold and enjoy the same for his and their own proper use, against the owner or owners thereof, claiming under him or them, until his term shall be complete and ended; ”

And

“in addition to the remedies above provided, all water rents due, or to become due to the said city, may be collected and recovered in the name of the treasurer of said city in an action of debt,” &c.

No provision is made for the redemption of the premises from such sale, either by the owner or any mortgagee or other person interested therein.

This provision for the enforcement of the lien is in marked contrast with that found in the charters of Hoboken and Jersey City, and also with that found in Paterson v. O’Neill, 5 Stew. Eq. 386, where Judge Dodd, speaking for the court of errors and appeals, distinguished the language in that case from the language of the act under consideration in Hopper v. Malleson, 1 C. E. Gr. 382. In Paterson v. O’Neill the tax was a general one, and the statute required that land should be assessed at its full value without any deduction for mortgages, and that mortgages should not be taxed in the hands of persons holding them, and that in case of a sale the mortgagee or tenant, or any person, might redeem the premises within twelve months from the time of sale.

In the .case of Hopper v. Malleson the act provided that any assessment of taxes made in said county against any person, on account of any real estate of such person or body corporate, shall be and remain a lien on all the lands, tenements, hereditaments or real estate, on account of which said assessment shall be made, with lawful interest, and costs and fees in relation to the assessment and collection thereof, for the space of five years from the time when the taxes became payable; and that th.e land shall be sold and conveyed to such person as will agree to take the same for the shortest term, and pay the tax, interes*, costs, fees and expenses, and that the grantee, by virtue of such sale and conveyance, shall hold and enjoy the said real estate during the term for which he shall have purchased the same, for his own use and benefit, against the owner or owners thereof, and all and every person or persons claiming under her, him or them, until the said term shall be fully completed and ended.

This language is quite similar to that used in the General Waterworks law of 1876 now under consideration.

In Morrow v. Dows, 1 Stew. Eq. 459, the General Tax law was under consideration, and in discussing the question Mr. Justice Wan Syckel (at p. 464) says : “The mere declaration by the lawmaker that taxes shall be a lien upon the land assessed does not of itself manifest a purpose to affect every estate which may be held in such lands, because lands are divisible into many estates, either of which may be sold without impairing the other. The legislative will to that end must be clearly manifested to give such a law any operation beyond the estate of him upon whom the assessment is cast.”

Here there is simply a debt of the paper company, without any of the characteristics of an assessment properly levied upon the land.

The extent of the lien to be acquired must, of course, depend wholly upon the verbiage of the statute ; and I am of the opinion that the only statute to which the city can now appeal to define its lien is that found in the enactment of 1876, and that I think falls short of giving such a lien as will reach beyond the estate of the person who contracts the debt. That the legislature did not contemplate the accumulation of unpaid water rents is manifest from the mandatory character of the provision for the shutting off of the water. After providing that the water rent should be a lien upon the lands it gives power to require payment in advance, and declares

“and in ease prompt payment of any water rent or rents shall not be made when the same become due, the water shall be shut off from such building, place or premises until such arrears, with interest thereon, shall be fully paid.”

Now, the fact that the legislature did not contemplate any great accumulation of water rents may be the reason why it did not deem it necessary to provide for a lien which shall take precedence over mortgages and compel their holders to keep strict watch of the accumulation of water rents.

I have said that I think the city is confined to the remedies provided in the general act of 1876. The reason for that opinion is that the legislature, by the original charter of Hoboken, confined the stringent remedy of a lien which should underlie previous mortgages to assessments such as I have mentioned, and to the extent only of $20,000; and when the city, in order to escape the stringency of this limitation, accepted the provisions of the act of 1876, it must be held to have waived the benefit of the provisions of its original charter in that respect. In short, the legislature has never given the city power to make debts incurred by the owner of the equity of redemption for water sold by meter and in varying quantities a lien on land paramount to a previous mortgage, where the total amount of water rents, as here, is in excess of $20,000.

The next question arises between the complainant and the defendants Clark & Spencer as to the priority of its mortgages over a chattel mortgage given by the Carr-Curran Paper Mills Company to Clark & Spencer on the 1st of December, 1897, to secure the payment of $3,500, covering certain paper machinery in the mill. The facts involved are as follows:

Clark & Spencer are manufacturers of paper machinery at Lee, Massachusetts. In the early part of the year 1897 the paper mills company purchased a second-hand paper machine, and employed Clark & Spencer to install it in their works at Hoboken. For the work of setting up the old machine in the mill Clark & Spencer have been paid. When this machine was put in place it was found to be so defective, both in size and character, as to require large additions and alterations in the way of substitution of parts, before it satisfied the paper company’s wants; and on the 20th of May, 1897, a contract in writing was entered into between the paper company and Clark & Spencer for the addition to the machine in question of seven dryers, 36" x 56J", which are heavy, hollow cylinders that are filled with steam, and revolve in such a way as to dry the pulp and turn it into paper; also the frames, boxes, gears and stands in which they stand and in which they revolve, iron felt-rolls, springs, &c., all complete, for the sum of $1,215, besides freight from Lee, Massachusetts, to be set up and made ready for operation on the grounds of the company at Hoboken, the language in this respect being, “ $607.50 cash ; balance three months’ note; when machinery has been set up at mill and same is in perfect running order, then cash payment to be made.”

Subsequent to that, and about the 1st of June, a further contract was made for other additions to the machine and .substitution of some of the parts of the old machine, together with shafting and gearing. This contract was for $1,725. No terms of payment are mentioned in it. Later still orders were given for new machinery, until the total was something over $4,000.

The machinery was all delivered, in pieces, of course, which were assembled and the machine put in running order on the 1st of October, 1897. But the payment of half cash for that delivered under the contract of May 20th was not made, nor was any payment made under the contract of June 1st. Clark & Spencer demanded payment and tried to get it, but were unable except to the extent of between $700 and $800, which left their debt $3,500. There never was any waiver of the right to immediate payment upon the part of Clark & Spencer, but on the 1st of December, 1897, they accepted a chattel mortgage from the paper company for $3,500, which was duly recorded on December 11th. The question is whether this chattel mortgage shall, under the circumstances, have precedence over the mortgages of the complainant.

The complainant’s claim under each of its mortgages is in the alternate. Its counsel argued that if this paper machine is to be considered a chattel, then it takes it under the clause covering after-acquired chattels found in its chattel mortgage; if it became a fixture and thereby converted into realty, then it is claimed under its real estate mortgage, and it urges the latter as the more reliable ground.

It seems to me that it matters little whether the complainant’s claim rests upon its real estate or its chattel mortgage. In either case the fundamental question is, did the chattel ever become the property of the paper mill company as against Clark & Spencer? In either ease complainant is met by a strong indisposition manifested at all times by the courts of this as well as of other states, to so construe the law as to permit one man’s property to be taken to pay another man’s debt. The leading authorities in this state are Campbell v. Roddy, 17 Stew. Eq. 244 ; Leatherbury v. Connor, 25 Vr. 172; Palmateer v. Robinson, 31 Vr. 433, and General Electric Co. v. Transit Equipment Co., 12 Rich. Ch. Rep. 450, in dealing with the case of Crocker-Wheeler Co., one of the defendants in that suit.

The machinery in this case is of such a character that it may be treated either as a chattel or ¡is a fixture, according as the intention of the parties and the justice of the case may require. A special building was erected for its reception. The evidence shows that it was a one-story affair, built upon piles, as an addition to or extension of the main factory. It appears that all the machinery was constructed in sections and put in its place, one end in that addition being left open for its reception; but it further appears that if taken apart, as it must be in order to be removed, it can be taken out of the building by the existing openings through the main building by the removal of manufactured paper and other articles to make room for its passage, and that an opening in the side of the new addition can be made at trifling expense to allow of its removal directly without going through the main building. There is nothing special in its character; it was not specially adapted to that particular paper mill; it is of a standard make, fit for use in any paper mill. The plan of building it in sections, fastened to each other by bolts, was the usual one necessarily adopted in all such structures in order to enable it to be moved. So that if, after it was erected and put in place, Clark & Spencer, by the terms of their contract, retained the right to resume possession and carry it away, it was practicable for them to do so without injuring either the machine or the real estate. And the question is whether they did retain that right.

An examination of the authorities discloses the law to be that the question as to whether or not title to a chattel passes under particular circumstances is to be considered in more than one aspect — so that there are cases in which it may be said to pass or not at the vendor’s option — and the vendor may have the right to retain or to resume possession after delivery, while the risk of the title, so far as fire and casual destruction goes, is that of the vendee. And further, the authorities are clear that the actual delivery of possession without receiving the contract price due upon delivery does not in all cases destroy the right of the vendor to resume possession for failure of such payment. His right to resume the possession is not lost by a bare delivery, unless he waives his right' to the payment which is due upon delivery.

In this case the mere delivery upon the premises óf the vendee of the chattel and installing it, in order to show its capacity to do its work, was not.a waiver by the vendors of their right to resume possession if the purchase price was not paid according to contract, because it was part of the contract that the chattel should not only be delivered on the premises of the vendee but should be shown to be capable and fit to do the work required of it.

This, I think, is the result of the great weight of authority when carefully examined. I have found the authorities well collected by Mr. Corbin in his additions to Benjamin on Sales §§ 318, 324 et seq., and the law is summed up by Mr. Justice Depue in Cole v. Berry, 13 Vr. 308 (at p. 310), thus: “ Payment of the contract price is one of the most usual conditions on which the transfer of title depends. It is generally a condition to be performed simultaneously- with delivery. If such be the contract a waiver of the condition may be presumed from an unconditional delivery without exacting payment, and in the absence of explanatory proof the property will vest in the purchaser.”

The present case gives the explanatory proof thus required. It was impossible for Clark & Spencer to deliver the machine except in sections, and it was impossible for them to fulfill their contract except by putting it together on the premises of the vendee. .It was practically impossible to make a delivery and payment simultaneously. The case is in marked contrast with that of a tradesman selling an article of merchandise across a counter and holding on to it with one hand while receiving the pay with the other. The delivery in the case must necessarily precede to a slight degree the payment. Leatherbury v. Connor illustrates this view. There the manufacturers, as here, sold to a corporation a machine — steam engine and boiler — upon terms of receiving upon delivery a note for the price, secured by a chattel mortgage upon the machine. The delivery was duly made, but the mortgage was not executed or delivered. The chancellor, speaking for the court of errors ánd appeals, says of this transaction, the delivery did not make the sale absolute,” and held that the seller had, nevertheless, the right to resume possession, and but for the intervention of the rights of third parties, innocent purchasers for value, of which there are none here, the title of the vendors would have prevailed. The case was disposed of solely upon the failure of the vendors to account at the trial below for their resting quietly for more than a month while the rights of other parties intervened.

In the case in hand, as to the first installments, the contract was half cash and half in a note at three months. As to the last installments, the written contract was silent as to the terms of payment. The presumption would be that it should be cash on delivery, but the parties admitted that the terms were the same — one-half cash and one-half in a note at three months. The proof shows, and it was admitted by counsel, that persistent efforts were made by Clark & Spencer to obtain their pay, and that they finally accepted the chattel mortgage in question.

Under these circumstances it seems to me that the law of the land does not declare that their property shall be taken to advance the interests of the prior mortgage-holder. The language of Mr. Justice Beed, in Campbell v. Roddy, 17 Stew. Eq. 251, is apt.

For these reasons I hold that the right in equity of Clark & Spencer is paramount to that of the complainant, except as to so much of the original machine as constituted a part of the perfected machine as left by Clark & Spencer. No proof was given as to what proportion of the value of the perfected machine is due to the original structure, and what proportion to the parts added by Clark & Spencer. Nor was any proof given as to what, if any, injury will be done to the building by the removal of the machine, if the side should be opened to permit it to be taken out in that way. The proof shows clearly enough, as I have said, that it may be taken out through the original building without any injury.

"With regard to the proportionate interest of the complainant and Clark & Spencer in the machinery, I am of the opinion that if the parties cannot agree upon it, it will be convenient to ascertain it after the machinery has been sold and the proceeds are under the control of the court. An inquiry on that subject can be made pending the sale. I see no occasion to delay the sale until the matter is determined.

Other questions arise among other junior creditors, the decision of which counsel agree shall await the result of the sale under the complainant’s mortgages.


source: Caselaw Access Project

author: Pitney, V. C.

license: Public Domain

text:
    Mary Keeney v. Teresa Henning, George Henning, Christian Handel and Bertha, his wife.
    [Submitted February 27th, 1899.
    Decided March 14th, 1899.
    Filed September 26th, 1899.]
    1. A wife who, after her husband’s death, occupies a portion of decedent’s premises, with the family, and rents the remainder, is not entitled to retain possession of the whole under the right of quarantine.
    2. Where a child, while residing with her mother, earned and delivered to her wages sufficient for her support, the mother cannot escape an accounting to her for rents of the premises of her deceased husband, in which the child had an interest, because she occupied them with her family, and lived from the rents.
    3. Complainant, after reaching her majority, by bill in chancery against her mother, sought a partition of her father’s realty and an accounting for the rents. The mother, as guardian of complainant, claimed that such rents must be accounted for by her as guardian in the orphans court, where she had accounted for a portion of the rents collected. — Held, that as to the rents accruing after the accounting to the orphans court, the chancery court has jurisdiction.
    4. Complainant sought in chancery a partition of her father’s realty and an accounting by her mother for rents, for a portion of which her mother, as guardian, had accounted to the orphans court. Complainant and her mother had occupied for a time a portion of a tenement on the premises. — Held, that defendant must account for the rents of all the premises from the time of the accounting to the orphans court, except for the portion of the time that complainant lived at home, as defendant is entitled to her dower therein, which claim is inconsistent with her holding any part under the right of quarantine.
    5. The right of a parent to the earnings of his or her infant child is subject to the burden of the support of the infant, which burden is not relieved by the fact that the infant has an independent income.
    Bill for partition and account of rents and profits. Heard on bill, answer and proofs.

      Mr. Robert S. Hudspeth, for the complainant.

      Mr. Charles L. Corbin, for the defendants Teresa Henning and Christian Handel and wife.

      Mr. John F. Marion, for the defendant George Henning.
   Pitney, V. C.

Complainant is one of the seven children of Ferdinand Henning, deceased, and the defendant Teresa his widow, and by her bill claims a one-seventh interest in and partition of certain real estate of which he died seized and intestate in the month of March, 1877, and an account for the rents and profits from the said Teresa.

At the time of her father’s death the complainant was a little short of twelve years old, having been born in August, 1865. There were at that time two children, Bertha and Henry, older than herself, and three younger, and the defendant George was a posthumous child, who attained his majority pending the suit, and appeared at the hearing by counsel.

All of the children, except George and the complainant, have conveyed their interests in the premises to the defendant Teresa, and she has conveyed them to her son-in-law, the defendant Christian Handel, who admits that he holds them in trust for her. The defendants are the said Teresa, her son George and son-in-law Handel and his wife.

The defendants by their answer admit that the complainant is entitled to an equal undivided one-seventh part of the premises, and that they are so situate that they cannot be divided. The only question is as to the rents and profits, and with regard to those the circumstances are peculiar.

The real estate consists of a lot on the corner of Fourth and Coles streets, in Jersey City, with a frontage of twenty feet on Fourth street and ninety-five feet on Coles street. On it are, and were at the death of the ancestor, two tenements, each of three stories. The corner one, facing on Fourth street, is known as Ho. 63 Fourth street, and in the rear of that is an entirely distinct and separate tenement fronting on Coles street, which is known as Ho. 61 Coles street. Under each is a store. At the time of his death the ancestor was carrying on the business of a cut-meat dealer in the store No. 61 Coles street and living with his family in the two stories above it. The whole of the corner building, No. 63 Fourth street, was rented out to a tenant or tenants.

On March 19th, 1877, shortly after her husband’s death, letters of administration were granted to the defendant Teresa upon the estate of her husband, and she duly administered the same and settled her account on the 9th of March, 1878, showing a balance in her hands of $1,206.01.

She continued to reside with all her children in the small house, No. 61 Coles street, for about three years, and for that period to carry on the cut-meat business in the shop occupied by her husband, with the assistance of her older children, namely, Bertha, the oldest, the wife of the defendant Handel, and a son, Henry, who was about thirteen years old at the death of his father. But the proof' is that she made little or no profit out of the business. She then abandoned it, rented out the meat-shop and with her family moved into the third floor of the corner house known as No. 63 Fourth street, and has continued to live there for a series of years, of late occupying the second floor of that house.

She has received all the rents and profits since her husband’s death. On the 24th of March, 1877, letters of guardianship were issued to her by the orphans court of Hudson county of the person and estate of all her then children, and later on, after the birth of the defendant George, letters of guardianship were also issued to her of his person and estate.

On the 23d of March, 1881, she voluntarily presented to the surrogate an account of her guardianship of the seven children, which was presented by him to the judges of the orphans court on the 4th of June, 1881, and was passed on the 8th of September, 1881. By that account she charges herself with the rents and profits received in money for the premises and credits herself with disbursements, taxes and the payment of the interest and the principal of two mortgages thereon, aggregating .$1,100, and shows a balance in her hands on rent account of $100.52; then, after deducting one-third of that for her right as dowress, she credits her children with a balance of $67.02, which, divided among them all, makes $9.57 for each.

She also accounts in a separate schedule for the children’s two-thirds share, being $804, of the balance of the personal estate found in her hands, and after deducting the charges of the surrogate in the guardianship and her commissions, which latter amount to $135.04, she shows a balance in her hands of $598.46, of which each child’s share is $85.49, which, added to the $9.57, share of the rents above stated, amounts to $95.06.

She then charges each one of her children with their support from March 16th, 1877, to March 16th, 1881, four years, at $125 a year, in all $500, the language of the charge in each case except that of George being, Paid board, clothing and schooling of minor from March 16th, 1877, to March 16th, 1881, four years, at $125 per year, $500.” The same amount precisely is charged to her son George, who was not born till the 6th of June, 1877, and the charge to him reads in this wise, Paid clothing and schooling of minor from June 6th, 1877, to March 6th, 1881, four years, at $125 a year, $500.” In that way she brings each one of her children in debt to her in the sum of $404.92. That account, as we have seen, was passed by the orphans court.

The fact that the guardian had rendered an account of her dealings with the estate of her children, appears not to have been known by the complainant or her counsel when the bill was filed, and that pleading contains no prayer to be relieved from the effect of that decree. It alleges distinctly that said Teresa was not entitled to receive the rents and profits for her own use, and that the same belong to the heirs-at-law, and that she had never made any accounting of the same and prays an accounting.

The same seems to have been the state of'mind of the defendant Teresa when she instructed counsel to draw her answer, for there is no allegation of any guardianship or any accounting in the orphans court of the rents and profits; but, on the contrary, the answer admits the receipt by her of all the rents and profits and asserts that she had the right to retain them, and that she kept up a home for the family in the mansion-house, and expended the whole of the rents and profits of the property in supporting the children, and alleges that the use of the income for the support of the family was lawful and proper, and that the defendant Teresa is not compelled to account for them.

The answer also asserts that the complainant lived-at home and had her support there until she was married in the year 1886; but, in point of fact, she was married in September, 1885, when, as we have seen, she was twenty years old.

The complainant swears that after her father’s deáth she continued to go to school for two or three years, which would bring it to the summer vacation of either 1879 or 1880, the evidence does not distinctly show which; that she remained at. home for a couple of months and then went to work as a saleswoman in a shop, receiving at first, as she swears, $4 a week (her mother swears it was only $2.50 a week at first and for a short time), for several years — five or six — until she was married; that for the first two years she had work for eight months in the summer only; after that she had work the year round, and she swears that the last part of the time she received $6 a week. All of these wages the complainant swears she turned in to her mother, not retaining one cent, and that her mother boarded and clothed her. The mother swears that she never received more than $4 a week from the daughter.

In the meantime her older sister Bertha was living at home and helping with the housekeeping j and her older brother was also working, but boarding at home and turning his wages in to his mother. The same thing occurred with regard to the younger children as they grew up; each one was kept at school until he or she was fourteen years old, and then got employment, and turned the wages in to the mother.

The question is whether the defendant Teresa must account to the complainant for the rents, and, if so, for how much, and for what portion of the premises and for what period.

The defendant’s theory at first was that the widow was entitled to retain the possession of the whole of these premises under her right of quarantine. But this position is manifestly untenable, on the principle of the recent ease of Davis v. Lowden, 11 Dick. Ch. Rep. 126. The husband was in the aptual occupation only of the tenement at No. 61 Coles street, which was a separate tenement from that on the corner of Coles and Fourth streets, the latter being in the occupation of a tenant. And if there could be any doubt about the widow’s liability to account, the fact that she as guardian of her children voluntarily accounted for those rents and profits up to the year 1881, is well-nigh conclusive against her.

In the next place, the defendant contends that there should be no accounting because the family was kept together in the premises and lived upon the rents and profits, and that the complainant had an equal benefit with the other children from that housekeeping. But such an appropriation of the rents and profits would be manifestly unfair to the other members of the family, and especially to the complainant, who was the first to leave home, and for most of the time before that earned her own living by working out and turned her wages in to her mother. The younger children were a burthen to their mother throughout nearly the whole period that elapsed after the death of her husband, while the complainant was a burthen for two or three years only.

The account rendered by the guardian in the orphans court is an illustration of the unfairness of such a settlement. Each child, without regard to the difference in the circumstances of age, cost of maintenance and individual earnings, is charged with precisely the same amount for board and clothing, to wit, $125 a year each. The widow admits that she had no property of her own, and no income except what she got from the rents and profits of the premises, and made little or no profit from her meat shop. She says she supported them out of the rents.

The net result of the accounting is that the widow in substance paid off the mortgage on the property with the proceeds of the balance of the personal property in her hands, supported the family for four years out of the net rents, and then brought her children in debt to her in that period in the sum of $400 each, or $2,800 in all. The result seems well-nigh absurd. It could not have cost her $125 per year each to support them, and she is not entitled to any profit out of their support. Alling v. Alling, 7 Dick. Ch. Rep. 92.

The next ground relied upon by the defendant is that there should be no accounting for the rents and profits in this action, because the defendant Teresa was guardian of the complainant, and these rents and profits should be accounted for as guardian ; and Pyatt v. Pyatt, 1 Dick. Ch. Rep. 285, is relied upon for that purpose. But I do not understand that case to sustain theposition. There the widow had kept a home for her children, much as this widow has, and also administered on her husband’s estate, and a balance was found in her hands as administratrix, of which one oi her daughters was entitled to a share of upwards of $400. The mother was also, as here, appointed by the orphans court guardian of her daughter. Many years after the daughter attained her majority she cited her mother in the orphans court, to account as guardian for her distributive share in the estate of her father which came to her mother’s hands as her guardian. The mother there set up the same defence as this mother sets up here. There was in that case no question of rents of real estate, or earnings of a child turned in to the mother, but the mother set up and proved to the satisfaction of the court that she had expended her child’s share of her father’s estate in her support and maintenance, and charged her $3 a week for such support and maintenance, not only during her minority, but for several years after her majority, bringing her in debt over $1,000. The orphans court allowed this account and rendered a decree against the daughter for the balance due the mother, which balance consisted wholly of her board before she became of age. The chancellor, on the appeal, disallowed all of the charges of the mother against the daughter, for reasons set forth by him in 17 Stew. Eq. 491. The court of errors and appeals reversed this decree, and reinstated the decree of the orphans court to the extent that it sustained the charge against the daughter for board after she became of age, sufficient to extinguish the amount of money in the guardian’s hands. It held that the board furnished to the daughter after she became of age was in effect a payment to her of the amount of money which the mother owed her as guardian, and that the orphans court had jurisdiction to determine that the debt of the guardian to the infant had been paid in that manner, but not to go further and find an indebtedness from the ward to the mother.

The difference between that case and this is that there the ward herself appealed to the jurisdiction of the orphans court. It would have been quite competent for her to have brought suit in this court for an accounting of the moneys in the mother’s hands. Here the daughter is rightly in this court for a partition of the premises, and for an account of the rents and profits. The accounting jn the orphans court can only be a bar to the extent to which the guardian has there accounted. The jurisdiction of this court to order an accounting after that time is quite clear.

I am of the opinion that she must account.

The next question is, of what part of the premises should Mrs. Henning be charged with the rent?

Counsel for complainant contends that she should account for the rent of the little meat shop under the dwelling Ho. 61 Coles street during her occupancy of it, because under the doctrine’of Davis v. Lowden, that shop was not a part of the dwelling of her husband.

But I do not find it necessary to decide the question thus raised, because the time she so occupied that meat shop was entirely covered by her voluntary accounting for these rents in the orphans court, and presumably must have received the attention of that court. Besides, the profit of the occupation of that shop is so mingled with the cost of the support of the family during the time that the complainant was an actual charge upon her mother, that it is quite impossible to distinguish and extricate it.

The next question arises out of the effect of her removal from Ho. 61 Coles street, which was the messuage and mansion-house of her husband, to rooms in Ho. 63 Fourth street. The contention of the complainant is that she abandoned her quarantine when she moved out of Ho. 61, and that her subsequent occupation of the rooms in Ho. 63 cannot be attributed to her right of quarantine. This question is, in strict law, probably well taken, but I think that the strict rule upon which it is based should not be fully applied here. The complainant is in a court of equity, and must have her relief upon equitable terms. No dower was ever assigned to the widow, though at the end of the four years’ accounting covered by the orphans court the complainant had attained the age of nearly sixteen years, and was competent to institute proceedings to assign such dower. So far as the occupancy of the premises is concerned, the complainant, before she married, enjoyed equal benefits with each of her brothers and sisters, and it seems to me it would be inequitable for her in this accounting to charge her mother with the rent of the floor that she occupied at No. 63 Fourth street during that period.

The defendant must account for the rents she received from No. 61 Coles street, as well as those from No. 63 Fourth street, except during the period complainant lived at home, for the rooms which she and her children occupied, and that accounting must commence with the 16th of March, 1881.

After the complainant left her mother’s home — September, 1885 — defendant must account for the rent of all the property, for the simple reason that she will be entitled to one-third of it as dowress, and that is inconsistent with her holding any part of it under any supposed right of quarantine.

Taking all the evidence together, I am satisfied that the wages of the complainant which she turned over to her mother after the accounting — March 16th, 1881 — fully compensated her mother for the support and maintenance of the complainant, and that the complainant should not be charged anything for that support and maintenance. The parental right to the earnings of the infant is burthened with the duty to support, which is not relieved by the fact that the infant has an independent income. It would be monstrous to hold that a parent may compel his or her infant child to work for the parent’s benefit, and at the same time charge the infant with its support out of its independent estate. The answer does not claim any benefit from the statute of limitations, and no point of that kind was taken in the argument.

There will be a reference to a master to take the account, and the question of whether or not the defendant is to have credit for the balance found against the complainant by the decree of the orphans court, will be reserved till the coming in of the master’s report.

There will, of course, be an order for sale.*


text:
    North Jersey Street Railway Company v. The Inhabitants of the Township of South Orange.
    [Submitted March 24th, 1899.
    Decided April 14th, 1899.
    Filed September 26th, 1899.]
    1. Though a township ordinance granting powers and franchises to a street railway corporation provides that the township may adjudge a breach of duties and obligations and declare a forfeiture, an order passed pursuant thereto, declaring a forfeiture and decreeing a sale of the corporate property, is judicial in its character, and equity has the same power to intervene and modify the proceeding as it would have to interfere in a proceeding in a court of law.
    2. When a judicial act is in any particular contrary to the principles of equity, the fact that there May be a remedy at law on other grounds is not generally a suflScient reason to prevent equity from interposing its appropriate remedy on grounds not available at law.
    3. Where a street railway corporation has expended large sums of money and exercised due diligence in building and operating its road, so as to comply with an ordinance of permission, but unforeseen circumstances have caused a delay, which has occasioned no pecuniary injury to the township or its inhabitants, equity will interfere to restrain the adoption of an ordinance by the township declaring a forfeiture of the franchise of the corporation because it did not comply with the statute of permission, which provided that cars should be sunning at a certain headway, on a continuous line of double track, within a specified time.
    Order to show cause why an injunction should not issue. Heard on bill and affidavits, and answer and affidavits.

      Mr. Chandler W. Biker and Mr. Halsey M. Barrett, for the complainant.

      Mr. Frank H. Sommer, for the defendant.
   Pitney, V. C.

The object of the bill is to restrain the defendant corporation, the township of South Orange, in the county of Essex, by its township committee, from adopting an ordinance, under consideration by it, declaring forfeited and ended the rights, powers and privileges, and. every of them, of the complainant, the North Jersey Street Railway Company, acquired under a previous ordinance of the defendant, adopted April 3d, 1896, authorizing and empowering the construction, operation and maintenance of a street railway along Springfield avenue, in said township, and providing for the sale of the line of railway previously constructed under said ordinance.

The proposed ordinance recites various matters in which the complainant corporation has, as alleged, failed to fulfill and perform certain conditions contained in the original ordinance granting the privilege of laying and maintaining and operating its railway, and proceeds:

“Inasmuch, therefore, as the said North Jersey Street Railway Company has not complied with the duties and obligations imposed upon them by the said provisions of said ordinance, therefore be it ordained by the township committee of the township of South Orange, in the county of Essex:
“ Sec. 1. That all the rights, powers, privileges, and every of them, of the said North Jersey Street Railway Company, under and by virtue of said 'ordinance entitled ‘An ordinance locating the tracks of the North Jersey Street Railway Company (a corporation incorporated under the laws of the State of New Jersey) on Springfield avenue, within the'township of South Orange, in the county of Essex, and authorizing and empowering the construction, operating and maintenance of the same and granting permission for said company to use electricity as the propelling power of its cars and prescribing the terms and conditions upon which such location of tracks and permission are granted,’ passed April 3d, 1896, be and the same are, for the causes aforesaid, hereby declared to be determined and at an end.
“Sec. 2. That the said line of railway be sold at auction to the highest bidder, under and by virtue of the provisions of said ordinance.”

It is objected in limine, by the defendant, that this ordinance is an act of legislation by the defendant corporation through its township committee, and for that reason this court will not enjoin its adoption.

It may be conceded, for present purposes, that if the proposed ordinance is really and truly legislative in its character this court will not enjoin it.

Chancellor Zabriskie did, indeed, enjoin a somewhat similar ordinance in the case of Paterson and Passaic Horse Railway Co. v. Mayor and Aldermen of the City of Paterson, 9 C. E. Gr. 158, but his action in that case was criticised and not followed by Vice-Chancellor Van Fleet in the case of Cape May and Schellenger’s Landing Railroad Co. v. City of Cape May, 8 Stew. Eq. 419, and he distinguishes the decision in the Paterson Gase on the circumstance that Chancellor Zabriskie rested it upon the ground that the purpose and intention of the municipal authorities of the city of Paterson in passing the ordinance there enjoined, was to immediately tear up the complainant’s tracks, and the learned vice-chancellor found that there was no such intention manifested in the Cape May Case.

I am unable to reconcile the two cases on that distinction. But they may be reconciled if the result of Chancellor Zabriskie’s decision was simply to enjoin the municipal authorities from disturbing the tracks.

But I think that the Cape May Railway Case, and all the numerous authorities cited by the counsel of defendant in support of his position, are clearly distinguishable from the case in hand. Those authorities are aimed at the right of courts of equity to enjoin a municipal body from adopting ordinances legislative and discretionary in their character. In his argument counsel of defendant cited largely from the opinion of Mr. Justice Harlan in the supreme court of the United States, in New Orleans Waterworks Co. v. New Orleans, 164 U. S. 471, where I find that learned judge frequently designated the ordinances which are free from judicial control as being those which are “ legislative in their character.”

Now, all ordinances are not necessarily legislative in their character. They are legislative in their character only when they prescribe a rule of civil conduct, or alter or repeal a previous ordinance of that character. That, in my judgment, is the test of a truly legislative act. Does it prescribe, alter or repeal a rule of civil conduct ?

Now, legislative bodies may pass acts or adopt ordinances which are not legislative in their character, and legislative bodies that are not restrained by constitutional limitations in that respect may pass valid acts which are strictly judicial in their character. The parliament of Great Britain has that power, though it seldom exercises it at this day. Because it has that power it is called a court. The legislature of New Jersey, before the adoption of the constitution of 1844, in some instances exercised judicial powers. If it should to-day declare that a certain class of contracts shall be held and adjudged to be void, that would be a legislative act, because it would prescribe a rule of civil conduct. But if it should enact that a certain contract made on a certain day, between A of the one part and B of the other part, was absolutely void ab initio or had become so by subsequent events, that would not be a legislative act, but a judicial act.

There are other ordinances which are executive in their character rather than either legislative or judicial — such as grants of franchises and the revocation and repeal of such grants. Such, in my judgment, was the character of the ordinances in the Paterson and Cape May cases just referred to.

In the present instance, the proposed ordinance has none of the qualities of a legislative or of a discretionary act. It does not assume or pretend to prescribe a rule of civil conduct or to revoke or repeal a previous grant, but it is wholly and entirely judicial in its character. It ascertains and finds certain facts, which are recited. It then proceeds to declare that, as the result and by the force of those facts, the rights and franchises vested in the complainant corporation by the previous ordinances are at an end, and to decree that its property shall be sold at auction; but it does not say by'whom, or upon what terms, or what notice shall be given, or what shall be done with the proceeds of the sale. Still, notwithstanding what would be considered radical defects in a decree for sale made by a court of equity, it is, after all, a decree for sale.

I conclude, therefore, that it is, in effect, a judicial proceeding and decree.

But it is claimed by the defendant that the right of the township committee to take such proceeding was reserved by the original ordinance granting to the complainant the franchise to maintain and operate its street railway, and that such reservation goes so far as to allow it to be the judge in its own cause.

Now, for present purposes, admitting this to be so, and that “the defendant corporation by its township committee is fully authorized to act judicially upon the subject-matter and to render a decree such as it proposes to render, and to execute that decree, it still follows that a court of equity has the same power to interfere in the conduct of that judicial proceeding as it would if it were conducted in a court of law. And this position is clearly sound, notwithstanding the fact that it may be supposed that the ordinance in question will not stand the test of a writ of certiorari; for it is perfectly well settled that if the action of the judicial jurisdiction is in any particular contrary to the principles of equity to such an extent as to induce a court of equity to intervene and arrest or modify the proceeding, the fact that there may be a remedy at law on other grounds is not generally a sufficient reason to induce a court of equity to withhold its appropriate preventive remedy based on grounds not • available at law.

The first ground urged against the ordinance is that, being judicial in its character, no opportunity for a contest or trial has been given. There has been no judicial examination of the facts, according to the course of the common law, after notice to the complainant, where the witnesses could be produced and examined and the complainant given an opportunity to examine and cross-examine, to produce witnesses on its side, and to be heard either in person or by counsel. It is true that after this ordinance was prepared and introduced, and, I think, after it had passed one reading, notice was given to the complainant that it was being acted upon. But it is urged by the counsel for complainant that this was not sufficient; that there should have been a judicial proceeding as near as might be to the course of the common law. This seems to me to raise a serious question well worthy of the consideration of a court of review, but whether it is within the jurisdiction of a court of equity may be open to question, and I do not find it necessary to consider it at present.

The next point made by the complainant is that there has been no substantial, failure to fulfill the terms of the ordinance, but that the complainant has fulfilled the terms as far as practicable under the circumstances, and that no injury has been suffered by the township or its inhabitants at large by reason of such partial failure as there may have been in the performance; and it contends that, granting a failure, this is a case where equity ought to relieve from the effect of it.

The complainant is the proprietor of divers street railways operating in the city of Newark, and thence to the several suburban towns and cities near thereto. Among others, it has had for several years past a line running to the suburban town or village of South Orange, which is situate in the northern part of the township of South Orange. In 1896 it projected a route running in the same westerly direction, but south of the line just mentioned, along Springfield avenue, which leads to the towns of Springfield and Millburn, and crosses the southern part of the territory of the township of South Orange for a distance of about two miles. That avenue, after leaving the limits of the city of Newark, passes through first the township of Clinton, next the southern part of the township of South Orange, as we have seen, and next the township of Millburn. The road had already been built to the village of Irvington, in the township of Clinton. That village of Irvington had a separate municipal existence of such a character that it was necessary, under the law, for the complainant to get the permission as well of the municipal authorities of that village as of the township of Clinton, before it could reach the township of South Orange. It obtained the permission of the township of Clinton and that of the township of South Orange before it obtained the permission of the village of Irvington. It was fully expected, however, when the South Orange permission was given, that complainant would soon be able to procure the permission of Irvington. It must have been perfectly well understood by the committee of South Orange that until permission to construct the line was obtained from Irving-ton, a continuous line from the portion of the territory of South Orange through which it would pass could not be constructed to Newark. A short break or hiatus of about one mile interposed between the westerly terminus of the road in the village of Irvington and the township line between South Orange and Clinton. The portion of-South Orange through which Springfield avenue passes is sparsely populated and furnishes very little local travel. The whole project was in advance of the real wants and needs of that community or of the towns west of it, and was somewhat experimental in its nature.

A period of time was fixed within which the road should be built and operated. One extension of that period was given, namely, to April, 1897, and the road within the- township of South Orange was built within that time and a connection made with a wire from complainant’s road to South Orange, so that the electrical current could be maintained in that part of Springfield avenue which was in the territorial limits of South Orange without passing through the village of Irvington. Cars were put upon the tracks and they were operated.

In the meantime efforts were made to procure the consent of the village of Irvington, which failed, and the complainant was disappointed in procuring such consent. Still, it operated its road and has continued to operate it ever since the month of April, 1897, but without any connection with the main line in the city of-Newark. Such an operation could, of course, be satisfactory to nobody. The local travel upon the road was small in volume and value and naturally did not increase, because persons desiring to reach Newark were obliged to alight when they reached the limits of the village of Irvington and -walk a considerable distance to reach the western terminus of -the Newark line. At first a stage line was put on and maintained by the complainant to cross the hiatus. This was abandoned because the number of passengers was not compensatory. Finally, after complaint was made to the complainant by the township authorities of South Orange, the stage line was restored.

Then the ordinance of permission required that the cars should be run under a headway of twenty minutes and should be continued up to midnight. This part of the ordinance was not complied with for the reason, as stated by the complainant, that the business of the road did not warrant it.

Then, although a double track was laid, only one track was used, the whole length being only about two miles. The reason for this undoubtedly was that the travel did not warrant the expense of maintaining either the current of electricity over both tracks or of the running of two cars.

The complainant alleges that it made reasonable efforts to procure the consent of the municipal authorities of Irvington, and was unable to do so up to the time of the filing of the bill. At the argument it was stated and admitted that such consent was now obtained.

The principal grounds on which the forfeiture was claimed are — -first, that cars had been run on one track instead of two; second, that the cars had not been run under a headway equal to that required by the ordinance, and third, that the company has not completed the construction of its road from Irvington, thus making a continuous line from the township to the city of Newark.

A careful reading of the original ordinance shows it to be a debatable question whether or not there was any enforceable condition in the ordinance that the road should be built and cars run outside of the limits of the township of South Orange in such manner as to make an unbroken line to the city of Newark.

The same may be said of the alleged condition that cars should be run on both tracks at the same time. I think that is a debatable, question under the original ordinance.

With regard to all these breaches I am satisfied that the complainant is not chargeable with laches in its efforts to complete its connection and finish the proposed new line of street railway. It has the pecuniary means to do so, and having, in the first place, expended $5,000 in paying the board of freeholders for the privilege of laying its track on Springfield avenue, in South Orange township, which is in a sense the property of the board of freeholders, and, in the next place, large sums in actually laying the road and paving between each side of the tracks and erecting poles and wires, it had every inducement to finish the work as soon as practicable, so as to obtain a revenue upon its investment. It is not stated clearly just what the difficulty was in procuring the consent of the village of Irvington. Neither side has given any specific information on that subject. It is easy to imagine that terms and conditions were imposed by the municipal authorities of that village which the complainant considered too burdensome or that other difficulties of a temporary nature arose. It was stated, either in the affidavits or at the argument, that a change was made in the form of the municipal government pending the negotiations for the right of way. Be that as it may, I think it is fair to infer that the delay was such as alert but prudent business men could not well avoid.

Now, under these circumstances, the question at the hearing will be whether it is equitable and just for the defendant to exercise its power to put an end to the complainant’s rights in Springfield avenue within the limits of its territorial jurisdiction.

Relief against penalties and forfeitures is a favored jurisdiction of a court of equity, and it rests upon the ground that it is contrary to the first principles of justice for one party to exercise a legal right which it holds against another party where the result is to obtain from that party a large sum of money as compensation for injuries which are manifestly much less than the amount exacted. The same principle should apply, as it seems to me, to the destruction of property where such destruction is of little or no benefit to the party having the right of destruction but will be a great injury to the other party. It is not in every case of forfeiture that courts of equity intervene. There is a class of cases comprising mercantile contracts where the exigencies of business and trade require that a party having paid a sum of money on a particular account and agreeing to pay a further sum on a certain day on the same account, and failing to pay such sum, should lose what he has already paid. There is a class of business transactions in the community that could not be conducted to advantage without the enforcement of such forfeitures. But those cases stand upon their own peculiar grounds.

In all cases of forfeiture the purpose and object of the right of forfeiture are always taken into consideration. Here, prior to the intervention of the complainant, there was no railway in Springfield avenue. The complainant proposed to build one. Whatever it did in that way would be an addition to the traveling facilities of the neighborhoods reached by that avenue. So its work was one of construction and not of destruction; of addition, not of substitution. The object of the forfeiture provision was to insure good faith and prompt action on the part of the complainant in prosecuting its work, and if time was of the essence of the contract it was only so in a modified sense. The case differs in that respect from ordinary contracts of sale of real estate where a man agrees to part with property at a certain time and upon certain conditions. ' He is not obliged to vary those conditions either as to time or in any respect. But here, if the condition had been that the road should be finished, connected with the city of Newark and a line of cars run regularly upon a certain headway, on or before a certain day, and the complainant had proceeded with due diligence, but by reason of unforeseen circumstances had been unable to finish it within that time, but had been able to finish and operate it in accordance with the strict terms of the ordinance granting the privilege, say ten days later, I presume no person would contend that such a failure would justify the defendant in exercising the power of forfeiture against the complainant.

Now, the difference between the case so supposed and the one in hand is only one of degree. The complainant has not abandoned its project, but is using diligence to prosecute it, with prospect of success. If it succeeds the object of the forfeiture clause in the original ordinance will be realized. There is here no room for the supposition that any pecuniary injury has been suffered by reason of the delay, either by the township in its corporate capacity or by any of its inhabitants individually. All that anyone could have suffered was the failure to receive the benefits of a street railway as soon as they had hoped to do. The case as now made does not show that the traveling public has not been as well accommodated as could be reasonably expected in the absence of a continuous line to Newark.

Now, under such circumstances, it seems to me now, however may appear at the final hearing and after further consideration and a thorough examination of all the facts, that it would be contz’ary to equity for the defendant to enforce its right of forfeiture, if it exists.

I have examined the authorities cited by the defendant, and I think none of them go far enough to sustain the proposed action of the defendant. The subject is discussed by Professor Pomeroy in section 451 of his treatise. He mentions unavoidable accident, fraud, surprise and innocent ignorance of facts as grounds which induce courts of equity to interfere.

Perhaps the inability of complainant to procure the consent of the Irvington authorities is not precisely included in either of those categories, but it is of the same nature.

The following decided cases show the disposition of the courts: Grigg v. Landis, 6 C. E. Gr. 494 is an instructive case; Mactier v. Osborn, 146 Mass. 399; Noyes v. Anderson, 124 N. Y. 175; Kopper v. Dyer, 59 Vt. 477, contain valuable suggestions and citations of authorities.

I think the injunction should be continued to the hearing, and will so advise.


author: Pitney, Y. C.

text:
    Helen A. Kempson v. St. George Kempson.
    [Submitted April 24th, 1899.
    Decided April 26th, 1899.
    Filed September 26th, 3899.]
    A complaint by a wife alleging that her husband, whose residence was in New Jersey, had gone to North Dakota, and after a pretended residence there for a few months, commenced a suit against her for divorce, presents a case so inequitable as justifies a court of equity in 'the former state in restraining its prosecution.
    On order to show cause why injunction should not issue.

      Mr. Charles C. Hommann, for the complainant.
   Pitney, Y. C.

The complainant, the wife, exhibits' her bill against the defendant, her husband, and by it asks the exercise of the restraining power of the court to enjoin him from further proceeding with a suit which he has commenced against her in one-of the courts of the State of North Dakota for a divorce from the bonds of matrimony on the ground .of misconduct on her part other than that of adultery, viz., cruelty. Suit was commenced by the husband in that court on March 29th, 1899, and service of the complaint and summons was made upon her April 4th, 1899, in this state, where her domicile is, and where, also, that of the husband was up to at least the 23d of December last. The complaint asks for the custody of the children of the marriage.

In his complaint he alleges that he is and has been for three months a resident o.f the State of North Dakota. The allegation of the bill is that this- statement in the Dakota complaint is false, and that the husband is about to practice a fraud upon the court of that state and also upon the complainant, and makes that threatened fraud the basis of her right to relief in this court.

The affidavits annexed to the bill make out a strong prima fade case for the complainant, much stronger than was made for the complainant upon the hearing of the case of Streitwolf v. Streitwolf, 41 Atl. Rep. 876.

The action of the chancellor in that cause before it came on for final hearing is a precedent for the power of the court to intervene in such a case. The chancellor there, at the instance of the wife, granted an injunction against Streitwolf’s further proceeding with his suit in North Dakota, which injunction was disregarded. The difference between that case and this, however, is manifest. There the wife had already brought a suit in this court against her husband for divorce from bed and board-on the ground of his extreme cruelty, and he had answered, setting up the very matters in defence which he subsequently made the foundation of his suit in Dakota.

In the case in hand the complainant’s right to relief rests solely upon the ground that the conduct of her husband while domiciled in New Jersey in going to Dakota and gaining a nominal or pretended residence there for a few monthssand commencing a suit against her there based on such pretended residence is so far inequitable and unjust as to merit the interference of a court of equity.

I am of the opinion, upon the case made by the bill and affidavits, that complainant is entitled to the aid of this court. She is in this predicament — she must either (1) go to the trouble and expense of appearing generally in the Dakota court to resist her husband’s claim, or (2) she must attempt to appear specially for the purpose of contesting the jurisdiction of the court by showing his real domicile to be in New Jersey. Either of these defences involves great labor and expense on her part. The only other course open to her is, in substance, to allow judgment by default to go against her there, and attack the decree when attempted to be enforced in this state. Now, if she adopts the first remedy and appears in that court, it will, by that appearance, have obtained jurisdiction of her person and undoubted jurisdiction of the subject-matter of the suit, and the case then will be brought within the authority of the case of Fairchild v. Fairchild, 8 Dick. Ch. Rep. 678, and the decree of that court will be binding upon her. As to the second course, namely, a special appearance for the purpose of attacking the jurisdiction, it is common knowledge that the courts of Dakota assume jurisdiction of non-resident defendants based on a residence on the part of the plaintiff which falls far short of amounting to an actual domicile. In fact, they are satisfied with a mere temporary residence adopted for the purpose of obtaining a divorce, and without any animus manendi; so that, if she should appear specially, the task of satisfying the court that her husband was not a bona fide domiciled resident of the state would be well-nigh hopeless. If she takes the remaining course, and fails entirely to appear, and allows a decree to go against her, she will be in the situation of a divorced wife, who must bring a suit to set aside the decree of divorce and enforce her rights against her husband, who may avoid a personal service in this jurisdiction. This is a hardship to which it seems to me the husband has no right in equity to subject her.

I held in Felt v. Felt, 12 Dick. Ch. Rep. 101, that the only ground upon which a valid decree of divorce, based upon a service out of the territorial limits of the jurisdiction of the court, could be rested, was that the complaining spouse had an actual bona fide domicile within that jurisdiction. It will be no hardship for the defendant herein to have the question of his actual domicile in Dakota settled by judicial investigation here before he proceeds with his suit there, and it seems to me that the ends of justice will be best attained by such preliminary determination. The rights and interests of the children will also be better protected by such a determination.

I will advise an order that an injunction do issue pending this suit.


author: Emery, V. C.

text:
    Louis Pronick v. Spirits Distributing Company.
    [Filed February 17th, 1899.]
    1. Corporations are authorized by statute to issue common and preferred stock, which provides that the holders of the latter shall be entitled to receive a fixed yearlyAividend, to be expressed in the certificate. Pursuant to its certificate of incorporation, which authorized it to issue preferred stock entitled to a certain dividend, if earned, without reservation of any right of the stockholders to modify such provisions, a corporation issued certificates of preferred stock, entitling the holders to the dividends named in the certificate of incorporation without reservation. — Held, that the certificate of incorporation constituted a contract between the stockholders, and the certificate of shares a contract between the stockholders and the company, entitling the holder to the dividend named in the certificate, which could not be reduced without his consent. '"
    2. The statute authorizing a corporation, with the assent of a majority in interest of its stockholders, to amend its certificate of incorporation as of date of the recording and filing of the original, does not authorize a corporation to reduce the rate of dividend expressed in a preferred stock certificate, where the company reserved no power either in its certificate of incorporation or the certificate of stock to change such rate, since such alteration would impair the obligation of the contract with the stockholder.
    3. Where a corporation made an agreement with another by which the former was to reduce the dividends payable on its preferred stock, and the latter was to pay such reduced dividend direct to the stockholders, the alteration of the certificate of incorporation of the former so as to provide for such reduced dividend will be enjoined at the instance of a non-assenting holder of preferred stock, since his legal remedy would be inadequate.
    Ou bill for injunction. Heard on bill and affidavits and answering affidavits.

      Mr. Richard V. Lindabury, Mr. James E. Howell and Mr. - Curtis (of the New York bar), for application.

      Mr. William H. Corbin, Mr. Wichersham (of the New York, bar), and Mr. Hogan (of the Chicago bar), contra.

   Emery, V. C.

The complainant is the holder of preferred stock in the defendant company, and seeks to enjoin the alteration of the organization certificate of the company, under which his stock was issued. The alteration is proposed to be made at a meeting of the stockholders specially called for the purpose, and it has already been consented to by the holders of more than two-thirds of all the stock issued by the company, common as well as preferred, the consenting stockholders having deposited their stock with a trustee who is authorized to represent them at the meeting and amend the certificate. The amendment proposed is the reduction of the rates of dividend now fixed in the certificates of stock held by complainant from seven per cent, to six on the first preferred stock, and from six per cent, to two on the second preferred. The seven per cent, dividend on the first preferred stock has always been paid hitherto, but no dividend has yet been paid on the second preferred. The preferred stock of complainant was issued under the law then in force, the statute of May 9th, 1889 (P. L. of 1889 p. 412; Gen. Stat. p. 951 pl. 212), which authorized companies to create and issue certificates of two kinds of stock, general and preferred, which preferred stock might be made subject to redemption at par at a fixed time to be expressed in the certificate. The statute further provides that the holders of such preferred stock shall be entitled to receive and the said company shall be bound to pay thereon a fixed yearly .dividend to be expressed-in the certificate, not exceeding eight per cent, per annum, * * * before any dividend shall be set apart or payable on the common stock.” And it was further declared that unless otherwise provided in the organization certificate, the preferred stock should not be created or certificates therefor issued except by authority to the board of directors, given by a two-thirds vote of the stockholders at a meeting called for the purpose.

In the present case the original certificate of incorporation authorized the creation and issuing of two classes of preferred stock, the first preferred providing for seven per cent, cumulative dividends and the second preferred, six per cent, non-eumulative dividends, with an ultimate participation in further dividends along with the common stock. In reference to the point now in question, the organization certificate declared that the holders of the first preferred stock

“shall be entitled to a cumulative dividend in each year, of an amount equal to seven per cent, upon the amount actually paid in on said stock, payable from profits, if earned, and which shares, both as to dividends and as to the •distributive share of the assets of the dissolution or winding up of the company, shall have preference over the common stock and over any other stock at any time issued,”

and also declared that

■“ the holders of the second preferred stock shall be entitled to a non-cumuiative dividend not to exceed six per cent, in any year, payable from profits after the payment of all accumulated dividends on the first preferred stock .and before the payment of any^dividend on the common stock.”

There is no express reservation in the certificate of any right in the stockholders to altei’, amend or modify these provisions. ■Certificates,for this preferred stock (first and second) were issued pursuant to these provisions of the organization certificate, and the certificates of stock, which were signed by the company and delivered to the stockholders themselves, contain the same provision as to the rights of the holders of the preferred stock as is contained in the.organization certificate, and they do not contain any reservation of right in the company to alter, amend or modify the amount of dividends payable. It will be observed, therefore, that the statutes in force when this company was organized and these certificates were issued expressly provided for an organization certificate authorizing the issuing of certificates of preferred stock, and also for the insertion in the stock certificate to be issued by the company under this authority, of ■the time for redemption (if any were fixed) and of the fixed yearly dividend. As to the rights of the preferred stockholders and the company upon such certificates so authorized and issued, the statute then provided that “ the holders of such preferred .stock shall be entitled to receive, and the-company shall be bound to pay thereon, the fixed yearly dividend expressed in the certificate,” &c.

By this method of providing for the issue of preferred stock there is a contract not only between the stockholders themselves, under the organization certificate, but a contract in addition between the stockholder and the company, created by the certificate itself, as to all those matters, which the statute directs to be expressly determined by the certificate. When this contract is so issued under the statute -and contains the provisions as to rate of dividend, which the statute expressly authorizes the holder to receive and obliges the company to pay, a direct obligation or contract between the stockholder and the company, as to the rate of dividend, is created which cannot be altered without his consent unless, the right to do so has been expressly reserved.

The company was organized January 4th, 1896, and the statute then in force, act March 21st, 1893 (P. L. of 1893 p. 444 § 6; Gen. Stat. p. 964), authorized corporations, with the assent of a majority in interest of the stockholders, to “amend its original certificate,” and provided that “such amended certificate shall take the place of the original certificate of incorporation and shall be deemed to have been recorded and filed on the date of the recording and filing of the original certificate.”

These provisions as to amendments are, under our decisions, to be regarded as incorporated into the original certificates of corporations subsequently organized, and are relied on by the company as authorizing the amendments now proposed, jin my judgment these general powers of amendment of the certificate, which originally fixed the relation between the stockholders inter sese, do> not confer the power of altering the previous contract of the company itself with the stockholders, as to the rate of dividend which was created by a stock certificate, or contract of the company, which was required by the statute to express this rate of dividend, and which reserved no power in the company to change. Such alteration would impair the obligation of the contract created by the stock certificate issued under the company’s charter.

I express no opinion upon the question whether there is power under our statutes to amend an original certificate which provides only for common stock, by creating an issue of preferred stock under a statute subsequent to the organization. On this point the decisions which have been cited in the argument show that courts differ. But I have not been referred to any case which supports the doctrine that an alteration such as is now proposed of the rate of dividends on preferred stock issued under statutes similar to ours can be made without the stockholders’ consent. The company, therefore, should be enjoined until final hearing from making the alteration, unless the complainant’s rights, under his stock certificate, can be protected otherwise. Black v. Canal Co., 9 C. E. Gr. 455 (Errors and Appeals, 1873)) Zabriskie v. Railroad Go., 3 C. E. Gr. 178 (Zabriskie, Chancellor, 1867); Elkins v. Railroad Co., 9 Stew. Eq. 5 (Runyon, Chancellor, 1882). At the argument of the motion it did not seem clear to me that a suit at law for the dividend to which the stock certificate entitled him on the first preferred stock when a dividend was declared by the company would not give all the relief to which complainant was entitled. This might be the situation if the case showed that the defendant company in future would declare and distribute dividends directly among its stockholders. But upon examining the change proposed to be made in relation to the dividend, and the mode in which it is to be practically carried out, it appears by the contract under which the stock is deposited for the purpose of securing the amendment of the certificate that the reduced dividend to be paid on the stock is not a dividend to be paid by the Standard Distilling and Distributing Company to the defendant company for the purpose of distributing among its shareholders, but is practically a plan for the payment of the dividend expressed in the certificate by the Standard company directly to the stockholders of the defendant company under the obligation of its guarantee. This seems to be the true intent and practical effect of the contract and proceedings for amendment, so far as they are now disclosed by the affidavits, and this situation entitles the complainant, pending the hearing, to the preservation of the present status of his stock by a preliminary injunction. The preliminary injunction should also restrain any abrogation or modification of the contract between the defendant company and the Spirits Manufacturing Company set-out in the bill, the consideration of which abrogation or modification is either wholly or in part the amendment of the certificate-which is now enjoined. Such restraint is also necessary under the circumstances of this case to preserve the status of complainant’s rights under his certificate until the hearing. The power to modify or rescind the contract, which either the company, its directors or stockholders may have the right to exercise, upon other considerations and for other purposes, is not now a subject for consideration.