text:
    George S. Duryee, commissioner, &c., complainant, United States Credit System Company, defendant, Jerome Taylor et al., appellants, v. George R. Gray, receiver, &c., respondent.
    [Argued June 22d and 23d, 1899.
    Decided November 20th, 1899.
    Filed November 22d, 1899.]
    1. The receiver of an insolvent corporation may recover its assets withdrawn after it has become insolvent in order to secure some of its directors against a liability incurred for the corporation. A preference of that character cannot stand, although at the time it is given there is no statutory prohibition against it.
    2. Directors of a corporation who have become- its sureties to creditors will, on insolvency, be subrogated to the rights of the creditors.
    3. Certain creditors of a New Jersey corporation brought suit against it in New York. Some of its directors became its sureties in order to relieve its property in that state from attachment. After adjudication of insolvency a part of the property came to the hands of its receiver. Order was duly taken forfeiting the corporation’s charter. The receiver represented to the chancellor that the attorneys who had been defending the New York suit for the corporation would not proceed with the defence in his behalf unless their fees for past services should be paid, but that if such fees should be paid they would attempt to procure a dismissal of the complaint, on the ground of forfeiture of charter, for a specified fee, and if unsuccessful would try the cause for a specified fee. On this representation the receiver was authorized to pay, and did pay, such fees in arrear. Shortly thereafter, on petition of the creditors and on notice to the receiver, the order for forfeiture was modified so as to permit the New York suit to proceed. The creditors laid before the receiver their claim on the same basis as in the New York suit, and he informed them that he had adjusted it for a less sum. The receiver afterwards decided not to defend the New York suit and so notified one of the directors. Judgment was recovered for the full amount of the claim. The directors compromised with the creditors for a sum less than their recovery, but exceeding the receiver’s adjustment of the claim, and took an assignment of the judgment. —Held, (1) that the directors had a lien on so much of the New York property as came to the hands of the receiver; (2) that the directors should be allowed to prove the claim of the judgment creditors on the basis of the compromise and need not relitigate the matter with the receiver; (31 that such relief could be afforded under an answer by way of cross-bill in a suit brought by the receiver to recover assets of the corporation which had been withdrawn after insolvency and had been placed in trust for the indemnity of the directors.
    4. The provision of the General Corporation act, authorizing an appeal to the court of chancery from any determination of the receiver of an insolvent corporation, is not technical. Belief may be.given under an original bill or by way of cross-bill, or in any proceeding by which jurisdiction may be secured. If, after the receiver’s determination, a new element comes into the controversy, it is not necessary to present the same to the receiver before appealing to the court for adjudication.
    On appeal of Jerome Taylor et al. from decree advised by Vice-Chancellor Eeed.
    The cause was heard on bill, answer and stipulation. The following is a chronological statement of the facts:
    1890. The United States Credit System Company, organized under the Mar. .27. General .Corporation act of this state, filed its amended certifi- • cate, stating its object to be to sell and furnish a system of credits and to limit and guarantee wholesale dealers, manufacturers and jobbers against loss arising by reason of bad debts; and that its business, with the principal office in Newark, N. X, would be carried on in all the states and territories of the United States of America and in other countries specified.
    April 9. The company issued to the firm of S. Bawitzer & Co., of New York City, its policy, insuring them against a specified excess of loss through insolvency of purchasers of merchandise sold between April 1st, 1890, and April 1st, 1891.
    1893. Bawitzer & Co., having made a claim, under and within the limit of their policy, for §6,912.26 and interest from November 28th, 1891, which was disputed, began suit thereon in the Supreme Court of the State of New York, and either issued or were about to issue a warrant of attachment against property in that state belonging to the company, exceeding in value the amount of their claim, which process the laws of that state allow against a foreign corporation.
    July 24. Henry Untermeyer and Adolph Hellenberg, two of the fifteen directors of the company, at its request gave bond to Bawitzer & Co. in §12,000, conditioned to pay any recovery in the action, and the attachment was discharged or not executed. The company, however, entered appearance and filed answer in the cause.

      Sept. 25. The board of directors of the company passed a resolution requesting its members to “re-bond” Messrs. Untermeyer and Hellenberg, and on the same day twelve of the other directors, of whom Jerome Taylor was one, gave to those gentlemen their written obligation to bear pro rata with them the payment of any sum they should be called on to pay by reason of said bond in case the corporation should be unable, by reason of insolvency or otherwise, to reimburse them.
    1894. July 81. A report from the company’s books, made to the New Jersey commissioners- of banking and insurance, by examiners appointed by him, showed on July 1st an impairment in value of $85,766.13 in the capital stock of the company, then $288,550.
    Aug. 17. The executive committee of the board of directors of the company adopted the following resolution, viz.: “ Moved that we make a deposit of $6,000 with Jerome Taylor, for him to hold in trust, to cover any liability on the bond given by Messrs. Untermeyer and Hellenberg in the Rawitzer case.” The sum named was paid to Mr. Taylor, who, on August 21st, deposited it with the Fidelity Title and Deposit Company.
    Aug. 20. At a meeting of the board of directors the president reported that the result of an examination of the company’s affairs by such commissioner showed an impairment of capital of about $60,000. - The feasibility of procuring a surrender and cancellation of stock in proportion was discussed, and the executive committee were authorized to consult counsel, and if then they should be satisfied that' it was for the best interests of the company, to make application for a receiver.
    Aug. 21. Mr. Knight, one of the directors and also one of the counsel of the company, notified the deputy commissioner of banking and insurance that the company had that morning stopped issuing policies because of its insolvency, and the next day a new examination was made. The directors and officers of the company then told the deputy commissioner that the company was insolvent, and expressed a wish that a receiver should be appointed as soon as possible, as a great many claims were pressing, and they did not wish to prefer one creditor over another.
    Aug. 22. The examiners reported to the commissioner that further investigation showed that the amount charged for liabilities on claims in process of adjustment was insufficient, and the impairment of capital on July 1st was $195,766.13.
    Aug. 23. The commissioner filed his bill against the company for an adjudication of insolvency and appointment of receiver, and the chancellor made order to show cause thereon, returnable September 4th, and appointed George R. Gray temporary receiver.

      Sept. 4 . The receiver made his sworn report, showing an excess of liabilities over assets of §280,841.25. This included as a liability the sum of §101,299.16 as return-premiums on cancellation of policies and did not include capital stock. On the same day the chancellor adjudged that the company was insolvent and appointed Mr. Gray permanent receiver.
    Sept. 6 . Order was made requiring creditors to present their claims within four months and directing notice of the order to be mailed each creditor.
    Oot. 2. Order was made declaring the company’s charter forfeited and void except for collecting and distributing assets. '
    Nov. 7. The receiver filed petition representing that before his appointment two suits had been begun in New York against the company, one by Douglas L. White for §4,000 and one by S. Bawitzer & Co. for §3,000; that in the latter case, in order to dissolve an attachment, the company gave a bond in §6,000, with a surety, and to secure the surety deposited §6,000 with Jerome Taylor; that the defence of both suits was entrusted to the firm of Bose & Putzel, lawyers, of New York City, in whose hands all papers and documents were placed; that said firm had sent a bill to the company before its insolvency, for §500, retaining fee and for preparation of the cases; that it would be impossible for the receiver to defend the suits successfully without such papers and documents; that Bose & Putzel refused to deliver up the papers and documents or go on with the cases unless their bill of §500 should be paid; that in the receiver’s opinion it would be advisable to have Bose & Putzel continue in charge of the cases, and that they had agreed with the receiver to attempt to have the cases dismissed on account of the forfeiture of the company’s charter, and if they succeeded would make only a further charge of §200, and if unsuccessful and should try the cases they would make only a further charge of §500, which charges, in the opinion of the receiver, were fair and reasonable. The receiver prayed permission to pay Bose & Putzel §500 out of the assets of the company and for such other relief as might be equitable, and on the same day order was made for payment to Bose & Putzel of §500 for their services mentioned in said petition.
    1895. Mar. 8. The receiver reported inter alia that he had mailed on postal cards notice of the order to limit to 1,100 creditors ; that when the company came into his hands he found §75,034 of contested claims, and that legal proceedings had already been commenced in New York City and other places named; that a large majority of those cases had been discontinued and claims filed with him as receiver, but that some of them were yet in court.

      1896. Mar. 5. The receiver reported inter alia that three suits, begun before his appointment — one in each of the states of Massachusetts, New York and Michigan — were still pending.
    June 29. The sworn claim of Rawitzer & Co. was presented to the receiver for §6,912.16 and interest from November 28th, 1891.
    Sept. 5. The receiver reported inter alia, “ Of the three eases which were pending before my appointment, in foreign jurisdictions, one pending in Massachusetts has been decided; the other two in New York are still pending. * * * Amount of claims pending in court of New York State and unsettled, §11,534.67.”
    Oct. 23. The receiver sent to Rawitzer & Co.-a letter as follows: “Dear Sirs — I have taken up your claim against the United States Credit System Company, and from the facts presented by you to me, and on examination of your books, I adjust it as follows : [Here are stated various items, aggregrating]......§5,128 99 Interest from December 1st, 1891, to August 23d, 1894, the date of insolvency of the company....... 837 56 I therefore allow your claim for...........................§5,966 55 I have deducted from the Schofield claim the amount you might have realized during the six months succeeding the examination of your certificate. I hold that in such a case* where the insured has been offered a settlement, and refuses it, the company must have the benefit of the offer.”
    1897. Jan. 26. The receiver sent to Jerome Taylor a letter as follows: “Dear Sir — Some days ago I received a letter from Messrs. Rose & Putzel, stating that the Rawitzer case would soon be tried, and asking me if I wished them to defend it for me. I answered, saying that I would not do anything in the matter and didn’t wish them to appear for me. I notify you of this, as I consider it only right that the sureties, who may be liable for any judgment recovered in this case, should know about its condition. My counsel is now preparing a bill to test the right to the §6,000 now on deposit with the Fidelity Title and Deposit Company.”
    Mar. 8. Rawitzer & Co. recovered in their New York action the sum of about §9,600, and shortly afterwards brought suit against the sureties on their bond.
    Mar. 10. The receiver filed the bill in this cause, seeking to recover the §6,000 deposit, as illegally withdrawn from the assets of the company after knowledge of its insolvency, in violation of the duty of the directors.

      Apr. 26. Twelve of the directors contributed §750 each, and therewith compromised the New York judgment for §9,000, and at their request ftawitzer & Co. assigned to Uzal H. McCarter, in trust for them, the judgment, the claim presented to the receiver and whatever interest the firm had in the Taylor deposit.
    June 11. The defendants filed their answer, denying knowledge by the directors, on August 17th, 1894, of the company’s insolvency and denying insolvency in fact and setting up the recovery, payment and assignment above stated and praying subrogation to all rights of Bawitzer & Co. and the sureties, and that the claim presented to the receiver might be amended so as to embrace the amount as recovered in New York.
    The vice-chancellor advised a decree that the trust futid of $6,000 should be paid to the receiver; that the twelve directors who paid Rawitzer & Company should have a lien on so much of the property of the company upon which an attachment issued in New York as came into the hands of the receiver, to be ascertained by a master, and that further equity should be reserved. In support of this decree he filed the following memorandum opinion, viz.: “I am of the opinion that the $6,000 paid to the defendant Taylor in trust, to cover any liabilities of the sureties on the bond given by Messrs. Untermeyer and others cannot be retained by the trustee for that purpose. The condition of the company at the time when the resolution was passed to make such disposition was such as prevented the directors from putting any of its assets in pledge for the special benefit of any director. So far there must be a decree for the complainant, but I am of the opinion that those who paid the claim of the plaintiffs in attachment in New York and who had secured the discharge of the company’s property in New York from the lien of the attachment, are entitled to be subrogated to the position of the plaintiffs in attachment, having the lien upon this property. The value of the property, so covered by the attachment lien and so discharged from the lien as such value was ascertained by the sale of said property by the receiver, belongs to the paying sureties in so far as it is necessary to repay them. This relief is prayed for in the answer, which answer can be, by consent, regarded in this particular as a cross-bill, as I understand the receiver wishes to settle all equities, if possible, in this suit. I am unable to see how the doctrine of subrogation can give the sureties a lien upon sucli property, subject to the lien of the attachment, which was not in existence at the time of the company’s insolvency. The sureties, having paid the attaching creditors, are of course subrogated to the position of those creditors and can prove against the insolvent corporation as such and receive their dividend. But when the question arises, how far the right of the attaching creditors, to which the sureties are subrogated, is good in rem, namely, as a specific lien upon the company’s property, then it is apparent that the property must have existed at the time of the insolvency in specie. A lien could not follow property converted into money by the company previous to its insolvency; nor can it follow the money arising from such conversion; nor can it reach the general assets of the company. I will advise a decree for subrogation to the extent indicated.”
    The parties having agreed that all of the property upon which an attachment issued in New York became a lien that came to the receiver’s hands had been sold for $107.50, the cause was heard on the equity reserved, and decree "was advised that the sum last named should be paid to the twelve directors and that the other relief prayed in the answer should be denied. In support of this decree the vice-chancellor filed the following opinion, viz.: “The language of the former opinion, namely, ‘The sureties, having paid the attaching creditors [the amount due such creditors from the credit system company] are of course subrogated to the position of those creditors,’ &c., leaves open the question how the amount due the attaching creditors is to be determined. As to the liability of the sureties, it was to be determined by a judgment, because this was the term of their obligation. But the question in hand is, how is it to be determined in respect of the receiver? The language used in the former memorandum referred to the payment of such debts as could be proved against the receiver, not proved against the sureties, although it was to be presumed that the same amount could be proved against both, although the respective claims were assertable in different forums. It is entirely clear that, inasmuch as those paying the claim of the attaching creditors stood in the steps of such creditors, the rights of the former can be no greater than of the latter against the receiver. The creditors could only prove against the receiver in this court. They could not draw the settlement of the amount of their claim against the corporation into the courts of New York, so as to bind the receiver. It would have been improper for the receiver to submit the question to the court of New York. He therefore very properly took no notice of the New York action, which was litigated expressly and entirely for the purpose of fixing the liability of the sureties under the condition of the bond which they had given. The sum found due by the judgment in that suit has no force whatever against the receiver and can receive no recognition in this court. The amount of the debt due to the attaching creditors is fixed by the only method which can be recognized at $5,966.55. As they had the right to prove for this sum only, and as the right of the paying sureties stands in the stead of the attaching creditors, I am constrained to the conclusion that the sureties can prove for no more.”

      Mr. James E. Howell, for the appellants.

      Mr. Howard W. Hayes, for the respondent.
   The opinion of the court was delivered by

Collins, J.

On the principal subject of this litigation, the result reached by the learned vice-chancellor accords with the opinion read by him for this court when he was one of its members, in the case of Montgomery v. Phillips, 8 Dick. Ch. Rep. 203. It is quite clear that the withdrawal of assets by vote of the executive committee of the board of directors of the United States Credit System Company, in order to create a trust fund to secure some of the directors of the company against an antecedent liability, was 'illegal if the company was insolvent at the time of such withdrawal. Even without statutory prohibition, then non-existent, a preference of that character cannot stand. The appellants challenge the proof of insolvency, but it seems to us ample. The stipulation in the cause is to the effect that the facts set out in the several papers specified, among which are the bill for receiver and accompanying affidavits and the report of the temporary receiver, so far as relevant to the issue, are admitted. In the preface to this opinion are recited facts derived from those and other admittedly-correct documents, that establish insolvency and knowledge of the directors of that condition as early as August 21st, 1894, the date of the deposit of the trust fund. The statement of the bill, evaded by the answer, is that the money was not even paid to Mr. Taylor until that date, although the resolution of the executive committtee was passed on August 17th, but we think that insolvency antedated the resolution. The condition found by the receiver was not the growth of a week. The directors, and especially the executive committee, were bound to know, and must be presumed to have known, the state of affairs. Indeed, it is too plain to admit of discussion that the resolution was passed, because the directors foresaw the speedy termination of the company’s career.

On the subsidiary question of the right of the sureties to a lien on the New York assets, we also agree with the vice-chancellor. Only so much of the property as remained in specie could be followed in the hands of the receiver. The lien on the residue was gone as soon as the property was dispersed in the course of a business conducted under the direction of the sureties themselves. There is more doubt if any lien at all existed. The bill and answer assume an attachment, but the obligation of the sureties recites only an intention to issue a warrant, which it was desired to prevent. The receiver has not appealed, and as the decree is equitable in this regard it will not be disturbed.

.Ou the remaining subject of dispute, the final decree, we think, was wrong. It is settled that unless there is something in statute or decretal order tantamount to dissolution, a pending action against a corporation may regularly proceed, notwithstanding an adjudication of insolvency and the appointment of a receiver to wind up its affairs and distribute its assets among creditors and stockholders, and this is true although the action is in the courts of another state than that of the home jurisdiction; and under the federal constitution the judgment in the action will be conclusive upon every one. Pringle v. Woodworth, 90 N. Y. 502. The order of forfeiture of the charter of the United States Credit System Company worked a dissolution of the company, and it has been held in the United States supreme court that in such a case a pending action abates. Pendleton v. Russell, Receiver, 144 U. S. 640. Therefore, a modification of that order was necessary in order to permit the New York action to proceed, and was very properly made by the chancellor. It would have been unjust to deprive the plaintiffs in that action of the advantage of the bond, that had been given them in lieu of an attachment, and they, of course, could not have availed themselves of that bond if they had not been allowed to proceed to judgment. They were allowed to proceed, and the consequent judgment ought to be given its normal effect. It was said, however, although obiter, by Mr. Justice Field, in Pendleton v. Russell, ubi supra, that a receiver cannot take charge of any proceeding in a foreign jurisdiction by commencing an action or defending an existing action without express authority of the court whose officer he is, so as to bind any property or effects in his hands as receiver. This is too broad, and the cases cited do not support the dictum. Implied authority or ratification will be sufficient to support even affirmative action (Smith, Receiver, v. United Express Co., 135 Ill. 279), and if the doctrine has any application here the chancellor’s order of November 7th, 1894, was ample warrant for the receiver to defend. In Reynolds v. Stockton, 140 U. S. 254, 273, it was well said by Mr. Justice Brewer that whatever matters are, by the courts of primary administration, permitted to be litigated in the courts of another state come within the rule of conclusiveness. The receiver, respondent in this cause, does not dispute the soundness of these views, but he contends that by laying before him, as receiver, their claim against the insolvent corporation, Eawitzer & Company abandoned tbeir New York action and submitted themselves to the exclusive jurisdiction of New Jersey. How the claim came to be presented or received so long after the order to limit creditors had expired is not explained. Probably no notice of the order was sent Eawitzer & Company, an omission significant of the understanding of the receiver so often implied in his various reports to the chancellor that their claim was in litigation and did not need to be presented. Presentation at some time was doubtless thought necessary by the creditor, and, lest there might be a dividend omitting the claim, which might lead to embarrassment, it was thought best not to delay it until after the trial of the action. We agree to the view that presentation was necessary. The order to limit creditors was purely administrative, not required by the statute in force at the time it was made (Gen. Stat. p. 904), and on reasonable excuse would have been opened almost, of course, at any time before distribution. Under the terms of the order, if notice was not mailed Rawitzer & Company their presentation of claim was timely. At all events, its regularity is not questioned. The contention that it worked an abandonment of the New York action has no basis. A like argument was repudiated in a case almost identical with this, by Judge Woods, in the circuit court of the United States for Indiana. Pine Lake Iron Co. v. La Fayette Iron Works (Adams, Intervener), 53 Fed. Rep. 853. The learned judge held in that case that the proving of a claim without any reference to a pending suit in another jurisdiction, of which suit the receiver had knowledge, was no waiver of the suit, and that the judgment afterwards therein recovered was conclusive. It would be most inequitable in this case, in view of the action of the receiver and the orders of the chancellor, to hold these sureties, but not the receiver, bound by the New York judgment. The notice given by the receiver to Mr. Taylor was consistent with a decision on his part that he had no defence to the action. To interpret it now as a notice that he meant to draw the litigation, as far as he was concerned, into New Jersey, is not permissible. He gave notice neither that Eawitzer & Company had laid their claim before him as receiver nor that he had passed upon it. The recovery in New York is simply for the claim as constantly made by Rawitzer & Company, with interest and costs. Interest alone brings the claim above the sum for which the judgment was compromised. The difference between the parties extended only to the Schofield loss, as to which the receiver sought to apply a harsh and doubtful interpretation of the policy. The judgment must be held to be conclusive everywhere and upon everyone.

"We must still consider how to give effect to this judgment. The respondent insists that no other practice can be sanctioned than a judicial determination by the receiver, subject to appeal to the chancellor. A revision of the General Corporation act took effect July 4th, 1896 (P. L. of 1896 p. 277), a few days after the presentation of the claim of Rawitzer & Company, and as it affords more color for the receiver’s insistence than can be found in the former statute, I will consider it as applicable to the claim, doubtful though that construction may be. By section 76 the receiver may examine witnesses and must pass upon and allow or disallow all claims presented or any part thereof, and notify the claimants of his determination. This was a new provision in the law. Previously, the only powers of the receiver were such as might be fairly implied from the section next cited. Section 78 reads as follows:

“Every such insolvent corporation, or any person aggrieved by the proceedings or determination of such receiver in the discharge of his duty, may appeal to the court of chancery, which court shall in a summary way hear and determine the matter complained of and make such order touching the same as shall be equitable and just.”

This language is identical with the first clause of section 82 of the former act, except that there the court is designated as the chancellor. In that section also was contained a grant of chancery jurisdiction and procedure that the revisers have omitted as unnecessary. The appeal given is not technical. The word is used in a broad, general sense. No particular form is prescribed, and there is no reason why the jurisdiction should not be appealed to by any recognized form of chancery procedure. Indeed, in this case affirmative action was needed, for, after the presentation of the claim to the receiver and his action thereon, a new and controlling element arose, namely, the judgment. It was necessary to amend the claim so as to embrace that judgment, and it was proper to invoke, to that end, the direct jurisdiction of the chancellor, and to ask decree of its conclusiveness. That was precisely the course adopted by Judge Woods in the case decided by him above cited. It would be idle formality to take a decree to amend the claim, and then argue before the re-'' ceiver the effect of the judgment, subject to an appeal from his adverse decision to the chancellor and then to this court. The necessity for amendment gave jurisdiction, which, being obtained, ought to be held for all purposes. It was proper furthermore to settle all cognate equities in the suit brought by the receiver. Good practice, indeed, required a pleading by way of cross-bill, but the vice-chancellor rightly considered that as non-essential, ^ and the pleadings of course can be properly moulded.

■A question arises as to the amount to be established as a lawful claim against the company. This is not without difficulty, but it would seem that the directors, standing in the position of sureties ought not, although assignees of the judgment, to be allowed more than the sum actually paid for it, and that is our decision.

The interlocutory decree will be affirmed, and the final decree will be reversed for the purpose of modification, so as to establish a claim upon the assets of the corporation pro rata with the other creditors whose claims have been or shall be established, in favor of Uzal II. McCarter, trustee, for the sum of $9,000, less $107.50 awarded by the decree, and subject to a rebate of interest to August 23d, 1894, the date to which the adjudged insolvency relates. Mayer v. Attorney-General, 5 Stew. Eq. 815.

For reversal — The Chief-Justice, Van Syckel, Dixon, Garrison, Lippincott, Gummere, Ludlow, Collins, Bogert, Hendrickson, Adams, Vredenburgh — 12. •

For affirmance — None.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    Hiram C. Bennett et al., appellants, v. Oscar Keen, receiver of E. F. Beck & Son, respondent.
    [Filed June 19th, 1899.]
    1. The president of a corporation, though the active manager of its affairs cannot encumber its property by a mortgage without the concurrence of its board of directors.
    2. The subsequent ratification of the mortgage by the directors, having been made in contemplation of the insolvency of the corporation, did not give the mortgage validity.
    3. The receiver of the corporation, as the representative of creditors, may urge the objection that such mortgage was not obtained in such a manner as to be binding upon the corporation.
    On appeal from a decree advised by 'Washington B. Williams advisory master, in Howell et al. v. Beck & Son.

      Mr. Robert Carey, for the appellants.

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

The decree appealed from is affirmed, on the grounds stated in the finding of Advisory Master Williams, who filed the following conclusions:

The question in the cause- is upon the validity of the second mortgage, set up in the answer of H. C. Bennett & Company. It was executed by Theodore E. Beck, as president of the defendant corporation, E. F. Beck & Son, to Bennett & Company, to secure upon certain real estate of the corporation its existing indebtedness to them, and such indebtedness as should be owing to them at one year from its date. The corporation consisted of Theodore E. Beck and his three sisters, he and they holding all the stock and constituting the board of directors. The board held no meeting from December, 1894, until September 2d, 1897, hereafter referred to. The entire charge and management of the business of the corporation was left in the hands of the president, and the other directors had no actual knowledge or information concerning the conduct of its affairs. The mortgage was made aud delivered to Bennett & Company on March 19th, 1896, but not recorded, the mortgagees choosing to hold it to be recorded afterwards at their option.

The mortgage declares that it is made and accepted as a collateral security for all moneys due from the corporation, “E. F. Beck & Son,” to H. C. Bennett &.Company, and for all advances and moneys to be made or loaned during the continuance of the mortgage. Its proviso states that if the mortgagor shall pay to the mortgagees the sum of .$15,000 in one year from the date thereof, or such sum not in excess of $15,000 as shall then be found to be due and owing then, &c. At the making of the mortgage about $10,000 were owing to Bennett & Company, represented by several notes. The same credit, and for part of the time a larger credit, was continued after the mortgage was given. At the end of one year from its date $11,500 were owing, represented by six notes then existing, but of this amount which was then owing it appears that only $4,000 were still owing down to and at the time of the insolvency, which was represented by the following renewal notes: Note of August 24th, 1897, at one month, $1,500; note of August 9th, 1897, at one month, $2,500, the rest of the indebtedness which existed at the end of one year from the date of the mortgage having been paid.

This $4,000 of continued indebtedness which existed on and before March 19th, 1897, and $7,000 subsequently incurred, constituted the whole indebtedness at the time of the insolvency.

Passing for the present the question when the insolvency occurred, the next material fact is that on September 2d, 1897, the directors of “ E. F. Beck & Son ” held a meeting and adopted a resolution “approving and confirming” the action of the president in executing and delivering this mortgage.

The mortgage was recorded on the next day.

“E. F. Beck & Son ’was adjudged insolvent in proceedings for that purpose in this court a few days later, viz., September 17th, 1897, and the receiver then appointed claims, by his answer and cross-bill in this suit, that this mortgage is not valid as against him and the creditors at large whom he represents.

It seems to be settled in this state that the president of a business corporation does not derive power to mortgage its lands by implication from the ordinary duties of his office. Leggett v. New Jersey Banking Co., Sax. 547; Stokes v. New Jersey Pottery Co., 17 Vr. 237.

And there is no evidence in this case of any usage that the president of this corporation should exercise such a power as incident to its business.

Hence the previous order of its directors or their subsequent ratification, either implied or express, was necessary to give the mortgage validity. There was no resolution or direction to make this’ mortgage, and no ratification can be implied in this cas» from the fact that the corporation received benefit by the continuance of the credit by Bennett & Company on the strength of the mortgage, because it is shown that the directors knew nothing about it. Knowledge is necessary to acquiescence.

The express ratification by the resolution of September 2d, 1897, can only avail against intervening rights in case the corporation was then competent to make a valid mortgage to Bennett & Company for the purpose for which they claim to hold it. Thomp. Corp. Off. § 5305; Cook v. Tullis, 18 Wall. 332, 338.

The testimony of Mr. Hardin shows that, on September 2d, 1897, Mr. Theodore E. Beck, the president of the corporation, informed him that it was hopelessly insolvent and had actually suspended business on the Saturday previous, and that he wished to secure Bennett & Company for their indebtedness. On the same occasion Mr. Beck informed Mr. Bennett of the insolvency and of his desire to secure Bennett & Company’s claim; and Mr. Hardin advised them that in his judgment this could not at the time be successfully done. Thereupon, under advice of other counsel, the directors’ meeting was held and the resolution ratifying the mortgage passed, and on the next day, September 3d, the mortgage was placed on record. The adjudication of insolvency was made on the 17th of the same month.

It cannot be doubted on this evidence that this ratification was made in contemplation of the insolvency; and if, as has been said, the company could not ratify the mortgage unless it was at the time in a legal position to give a valid mortgage to secure an existing creditor, it follows that the claim of Bennett & Company to a preference by virtue of this mortgage conflicts with the prohibition of section 64 of the Corporation act and cannot be sustained.

That this clause prohibits such preferences is declared in the decisions upon the same provision when it was formerly in force, cited in Wilkinson v. Bauerle, 14 Stew. Eq. 635. A decree should therefore be advised in accordance with the prayer of the receiver’s cross-bill. •

The amount of indebtedness which this mortgage should be deemed to secure at the present time if its validity were sustained, was discussed on the hearing, and it seems to me that reading the two clauses of the mortgage on this subject together and applying the rule of stricter construction against the creditors seeking preference, they should be construed as confining the security to such part of the indebtedness existing on March 19th, 1897 (the end of one year from date of mortgage), as still remained owing at the insolvency. This, as already shown, was $4,000 and interest. But having reached the conclusion that the mortgage is invalid as against the receiver, this question is immaterial at present.

For affirmance — The Chief-Justice, Van Syckel, Dixon, Garrison, Gummere, Collins, Bogert Hendrickson, Adams, Nixon, Vredenburgh — 11.

For reversal — None.


text:
    Thomas Coombe’s Executor, complainant and appellant, v. Thomas Carthew, defendant and respondent.
    [Filed June 19th, 1899.]
    Upon the facts shown in this case — Held, that the grantor in the deed referred to wa^ competent to make it on the date of its execution, and that it was not the product of undue influence on the part of the grantee.
    On appeal from a decree advised by Vice-Chancellor Reed, who delivered the following conclusions :
    This bill is filed to vacate a deed made on October 5th, 1897, by the complainant to the defendant.
    . On October 5th, 1897, Thomas Coombe was the owner of a foundry and its machinery, and certain lots of land in the city of Lambertville. On that day he made a deed to Thomas Car-thew for the same, reserving to himself a life interest therein. The named consideration in the deed are services, board, care and $500. The property is subject to a mortgage for $1,200.
    The value of the property unencumbered is from $4,000 to $6,000 for the real estate, and about $1,000 for the machinery. The contention on the part of the complainant is that the conveyance was practically voluntary, and that the grantor was incompetent to execute it, or, if competent, was improperly influenced to do so by Carthew.
    The grantee was a nephew of the grantor. They are both Englishmen by birth. Thomas Coombe, after establishing a foundry business in Lambertville, was accustomed to visit England from time to time, making his home with his relatives while there. Some time, over two years ago, he brought his nephew, who was a patternmaker, with a part of his family, from England to Lambertville, and employed him in his foundry. Soon after the arrival of Thomas Carthew, and the arrival of the rest of his family, iu Lambertville, Carthew began housekeeping in one of two houses in which Thomas Coombe had a life interest. The uncle boarded with Carthew, but neither rent for the house nor board for the uncle was charged.
    At this time Fred Coombe, a brother of Thomas Coombe, was employed in the foundry. Thomas Coombe had given to Fred Coombe a one-quarter interest in two of the lots in which the foundry stood.
    In September, 1895, Fred Coombe and Thomas Carthew took charge of the works as partners.
    On April 30th, 1897, Thomas Coombe filed a bill for partition of this property, which suit was afterwards settled by Thomas Coombe, who bought Fred’s interest for about $1,050, $500 of which were loaned to'Thomas Coombe by Carthew. This settlement occurred in September, 1897. Shortly afterwards, namely, October 5th, 1897, Thomas Coombe and Thomas Carthew visited Senator Large, who had carried through the partition proceedings, at his office in Flemington, and consulted him about putting the property in a shape so that there could be no trouble about it afterwards. Thomas Coombe had made a will, which was in Mr. Albert D. Anderson’s office, a lawyer at Lambert-ville, but on account of a difficulty with his brother Fred, he wanted the property fixed so that there would be no future trouble. Mr. Large advised a deed to Carthew, drawn so that Thomas Coombe could keep control of the property during his life. A deed was drawn, sent to Carthew for Mr. Coombe, and, after its perusal by Coombe, it was sent back to Senator Large, another draft made, which was finally executed at the railroad station, at Lambertville, on October 5th. It is this deed which is now attacked.
    In my judgment, Thomas Coombe was entirely competent to make the deed on October 5th. No doubt he had been, for some time previous to October 5th, a heavy drinker, and occasionally drunk, but the testimony does not convince me that, except on occasions, he was in a mental condition that unfitted him for the transaction of business affairs. He was so sober on •October 5th that no signs of intoxication were observable by Senator Large, Mr. John Massey and others. And previous to that time, during the interviews concerning the execution cf the deed with Senator Large, he had exhibited no conditions of inebriety or of a disturbed or feeble mental condition. He was a man of naturally strong head, upon whom liquor probably made little impression. So far as concerns his competency to execute the deed, I have no doubt whatever; nor have I a doubt that he thoroughly understood its import at the time he signed it. Upon the first ground there is nothing to invalidate the deed.
    The second ground is that the grantor was unduly influenced by Carthew to make the deed. The’deed was not entirely voluntary, as Mr. Coombe had received at least $500; nor did the deed strip the grantor of his interest in the property during his life. It is, of course, obvious that it was in a large degree a gift. He had, however, the right to make it if he was not unduly influenced to do so. Aside from Thomas Coombe’s own testimony and apart from the testimony of John E. Massey and John McNulty, in respect to certain admissions made to them by Carthew, there is no evidence of solicitation on the part of Carthew. These admissions are denied by Carthew, but I have no doubt that he wished to have the deed and perhaps' spoke to Thomas Coombe about it. I do not think, however, that Coombe was aman to be influenced by any dictation as to what he should do with his property. But there are other facts abundantly proved in the case which display a motive for making the deed to Carthew, apart from an illegal influence exerted over him by Carthew.
    This nephew had been a favorite of his uncle for many years. Ten years before — long anterior to any suspicion of Thomas Coombe possessing any habits of inebriety — he had made a will in Carthew’s favor. I have no doubt that he had, time and time again, as Carthew says, told him that he had done this. The deed executed on October 5th accomplishes what this will would have accomplished upon the death of Thomas Coombe. The reason for changing the will to a deed, having the same force, undoubtedly grew out of the differences of Thomas with his brother, Fred. As already remarked, he had given Fred a one-quarter interest in the foundry property, and he was dissatisfied with Fred’s conduct. He said to his barber that he had brought Carthew over to protect him from Fred. Afterwards the partition proceedings were commenced to shut Fred out from the property. He also thought that Fred’s boys set fire to the foundry premises. After Carthew came Thomas Coombe’ and Fred and his boys had a fracas, in which the old man was struck. When he first employed Mr. Large to get Fred’s interest in the property he expressed himself very strongly against Fred and his boys. On the heels of the settlement of this partition matter he visited Mr. Large about fixing the property so that it would be secure. The deed was prepared and signed, as already stated, and on the day it was executed it was fully explained to him by Senator Large, who told him that when it went upon record he could not change it. The power of attorney which accompanied it was also read.
    Some days fifter the deed was signed Thomas Coombe went on a debauch, which ended in an attack of sickness. He then had a quarrel with his nephew, and afterwards this suit was brought.
    It seems to me that the long-existing intention to leave this property to Carthew, together with his expressed desire to put it in a shape free from trouble from any attack of Fred, supplies sufficient motives for the execution of the deed.
    Nor do I think the insistence that Carthew had inspired Coombe with a dislike of Fred, and had fostered the partition suit so as to create the motive for making the deed, is proved. Undoubtedly there was bad feeling between Fred and Carthew, but I do not find in the case that Carthew, by any false accusation against Fred, embittered his uncle’s mind against him in a way that led to, and was intended to lead to, the execution of this deed.
    I am constrained to the conclusion that the bill must be dismissed.

      Mr. Garret D. -W. Vroom, Mr. Walter F. Hayhurst and Mr. 'Charles A. 8/dllman, for the appellant.

      Mr. H. Burdett Herr and Mr. George H. Large, for the respondent.
   Per Curiam.

Decree affirmed, for the reasons given in the court of chancery.

For affirmance — The Chief-Justice, Yan Syckel, Dixon, Garrison, Gummere, Ludlow, Collins, Lippincott, BolOERT, Hendrickson, Adams, Nixon, Yredenburgh- — 13.

For reversal — None.


author: Per Curiam. •

text:
    Mary C. Warn, defendant and appellant, v. William E. Warn, complainant and respondent.
    [Filed November 20th, 1899.]
    The defendant was addicted to immoderate use of liquor, and her adultery resulted from the gratification of that liabit. In the absence of any proof to show that the husband’s conduct towards his wife was induced by a wish or expectation that she should commit the offence charged, the husband will be entitled to a divorce.
    On appeal from a decree advised by Yice-Chancellor Reed, who delivered the following conclusions:
    A divorce is claimed by the husband on the ground of adultery of the wife. I am convinced that the defendant was guilty -of the adulterous acts charged. Her habits of inebriety destroyed her sense of modesty, and the gratification of her taste for liquor was the bribe by which her virtue was successfully assaulted.
    The main defence, however, is that her husband failed to surround her with the protection which his knowledge of her habits should have suggested, and as her adultery seems to have resulted from those habits, that he is not in a position to ask for a divorce.
    The cases invoked in support of this insistence are Hedden v. Hedden, 6 C. E. Gr. 61, and Cane v. Cane, 12 Stew. Eq. 148. These cases involve the application of the well-settled doctrine that, the husband who connives at his wife’s adultery cannot complain of it, but the facts proved in this case do not bring it within the scope of this doctrine. It is undoubtedly true that connivance may consist of a passive assent to the train of circumstances leading to adultery when the complainant could have prevented the wrong or injury of which he complains. The facts, however, necessary to constitute connivance must have a direct and necessary tendency to cause adultery to be committed. Storm v. Storm, 1 Rob. Ece. 99.

    Corrupt intent is the very essence of connivance. It cannot be inferred from the husband’s great inattention to his family. 1 Nels. Div. %'4B1. The gravity of the offence, its infrequency and the general presumption of innocence requires that this defence should be established by direct and conclusive proof. 1 Neis. Eiv. § Ifi9.

    There is nothing in this case to show that the husband’s conduct, whatever it was, was induced by a wish or expectation that his wife should be seduced. There is nothing that he did or that he failed to do which could reasonably impute to him a desire or anticipation that his conduct would prompt her to drift into lewdness. Unless this intention can, under the circumstances, be imputed to him, it is irrelevant to consider whether it was his duty to have acted towards her differently than he did.
    The husband is entitled to a decree for divorce.

      Mr. Aaron E. Johnston, for the appellant.

      Mr. Acton C. Hartshorne, for the respondent.
   Per Curiam. •

Decree affirmed, for the reasons given in the court of chancery.

For affirmance — The Chief-Justice, Depue, Van Syckel, Dixon, Garrison, Lippincott, Gummere, Ludlow, Collins,. Bogert, Hendrickson, Adams, Nixon — 13.

For reversal — None.


text:
    Hiram G. Hallinger, complainant and respondent, v. Walter Zimmerman, defendant and appellant.
    [Filed November 20th, 1899.]
    In the absence of misrepresentation on the part of the complainant in the case stated, specific performance of the agreement was decreed.
    On appeal from a decree advised by Vice-Chancellor Grey, who delivered the following opinion :
    The making of the agreement for the exchange, the tender of performance by the complainant and the refusal of performance by the defendant are substantially undisputed.
    The question in the case turns upon the defence set up by the defendant as his excuse for non-performance, or, as he claims, his rescission of the contract.
    As the parties themselves are, in many respects, in contradiction of each other, the documentary proofs and the testimony of others may more safely be accepted as to the facts touching the disputed matters.
    In his original answer the defendant averred that he entered into the agreement, relying upon the complainant’s' statement that his Burlington property rented for $8 per month; that he had found this statement to be false; that it was out of repair and could not be rented for that sum. Accordingly, he wrote to the complainant, stating, “I based my valuation of the Burlington property exclusively upon the statement which you made me as to the rental paid by the tenant, which statement is incorporated in the agreement,” and in the same letter the defendant declared the contract to be void and demanded the return of 1ns title to papers for the Camden property and his down payment of $50.
    The complainant replied to this, declaring that he upheld the contract and that he was ready to comply with its terms, namely, to turn the Burlington property over to the defendant, “ either rented at $8 per month or vacant,” and notifying him that the property was vacant.
    The defendant afterwards, by leave, filed an amended answer, in which he reframed his answer as to the complainant’s representation touching the rent, averring that the complainant had, while they were negotiating, informed him that “the tenant then in possession of the property in Burlington was paying the sum of $8 per month rent,” but that the tenant was practically a caretaker, and in consideration of the favorable rental the tenant made all the repairs, &c. In his amended answer the defendant alleged, as additional reasons for avoiding the contract, that the complainant had misrepresented the value of the Burlington property and that he had stated the property to be located on the best residence street in Burlington ; that these statements as to the value of the property, its rental value and its location on the best residence street were, to complainant’s knowledge, false, &c.
    The statements as to the value made by one trader to another in the course of their negotiations for an exchange, have always been considered to be mere expressions of opinion, which either party accepts as true at his own risk. Wise v. Fuller, 2 Stew. Eq. 262. In the case before me the parties dealt with each other at arm’s length. Each knew the capacity of the other to paint with -an attractive hue the merits of the property he offered in trade. Neither .had any legal or equitable right to rely on the other’s statements of value as matters of fact, nor, considering all the proofs, .am I led to believe that either did, in truth, base his actiou upon such statements of the other.
    The next ground set up as a false inducement to the making of the contract is that the complainant falsely represented that the property was in fact, at the time of the negotiations, rented at $8 per month.
    The misrepresentation alleged, if made, related to an existing condition of fact which might well be within the knowledge of the complainant and is one upon which the defendant had a right to rely. The burden of proof must be carried by the defendant to show that the false statement was made by the complainant to mislead him into the purchase, and that, accepting it to be true, he was thus cheated into the making of the bargain.
    The defendant testifies that the complainant told him “ positively that the rent was $8 per month and that the tenant, made repairs,” &c.

    The complainant denies this and swears that the negotiations for the exchange were concluded and the bargain made before anything was said touching the rent of the property; that the-defendant "was in the act of dictating the agreement to his typewriter, and he came to the place concerning the' renting of the Burlington property, and then he said to complainant “what it rented for;” that complainant replied, “to the best of my knowledge, $8, but I have an idea it is empty,” The defendant then said, “Well, say it is rented at $8.” “No,” said complainant, “ I won’t sign any such agreement.” The contract was then drawn as above recited. The complainant further explains that he had seen the Burlington property but once, and then he only went upon the first floor; that he had rented it through agents; that the last rental he knew of preceding the negotiations was $8 per month and he had heard of no change; that he did not know whether the property was in fact then rented or not, and so insisted that the agreement be drawn as it now appears, stating that to be “ vacant or subject to tenant rent at $8 per month.”
    It is difficult to understand why the defendant should have accepted an agreement for a conveyance of the property “ vacant or subject,” &c., if he had just been positively told that it was then rented at $8 per mouth, and relied on that fact as a substantial inducement to the bargain. The defendant’s typewriter, who wrote the agreement, testifies that while she was writing it the defendant, who was dictating, broke off and asked the complainant the rent of the Burlington property. She says she cannot remember the exact reply, but that the complainant said “it rented for $8, but he hadn’t heard recently from the agent.” It will be noted that this testimony and the agreement itself corroborate the complainant's narration of the matter and indicate that complainant, in referring to the renting, disclaimed knowledge of the present condition of renting and was speaking of the past. When he spoke he had not heard from his agent so recently that he could tell whether the property was rented or not. The weight of the whole testimony on the point supports the view that the defendant did not base his assent to the bargain upon the fact that the property then rented for $8 per month, as is alleged in his answer, but that this was. a mere incident which arose after the negotiations were concluded, and while the agreement was being reduced to writing, that it was then disclosed that the complainant did not in fact know whether the property was then rented at all; that it had at some previous time been rented at $8, and the complainant-knew of no change, and that the defendant accepted the property, as the agreement on its face shows, whether it was vacant or rented at $8 per month. The proofs show that some two-years before the negotiations the property had been rented at $8 per month.
    The other alleged misrepresentation was that the complainant falsely stated that the property was located on the best residence-street in Burlington. The complainant admits that he told the-defendant that the property was on Union street, which was said to be one of the best residence streets in Burlington. That the-property is on Union street, and that Union street is one of the best residence streets in the town, is not substantially denied. But it also appears that this house and lot are at the westerly end of that street, where, for two squares, the properties are not so good as at other places on the street, and that while there are several quite desirable houses opposite the property in question, the property itself is one of a row which does not appear to be of an attractive character.
    What constitutes a best residence street is, to some extent, a matter of taste and opinion upon which men vary. The evidence, however, is undisputed that the property is in fact on one of the best residence streets in the town. No representation is alleged to have been made as to the character of the particular portion of that street where the property is located. Nor does either the allegation in the answer or the testimony offered show with any sufficient certainty anything relating to the house and lot in question wdiich would justify a rescission or refusal to perform the contract.
    The defendant has not sustained his allegations as to the misrepresentations of the complainant in inducing the making of the contract in question, nor has he shown any sufficient reason why he should not be decreed to perform his agreement according to its terms. He should be decreed to perform his contract.

      Mr. George A. Vroom, for the appellant.

      Mr. George JET. Peirce, for the respondent.
   Per Curiam.

Decree affirmed, for the reasons given in the court of chancery.

For affirmance — The Chief-Justice, Depue, Van Syckel, Dixon, Garrison, Lipptncott, Ludlow, Collins, Bogert, Hendrickson, Nixon, Vredenburgh — 12.

For reversal — None.


text:
    Anna Lammertz, defendant and appellant, v. George C. Lammertz, complainant and respondent.
    [Filed November 20th, 1899.]
    Where the wife absented herself from her husband’s home for more than two years, and such absence is not justified by her husband’s conduct towards her, and the wife’s conduct is such that little hope was left of a permanent reconciliation, it will be considered that the desertion is obstinate and divorce will be decreed, though no proof was offered that the husband sought her and ■urged her return.
    On appeal from a decree advised by Vice-Chancellor Reed, who filed the following conclusions :
    I am constrained to advise a decree granting a divorce. It is admitted that the defendant left the habitation of her husband and has remained away more than two years, during which she has made no overture for a return. She can only justify her •absence by proving conduct' by her husband towards her which would put her in a posture to successfully demand maintenance •or in a position to proceed against him by a cross-action for divorce, for if lie, by his cruelty or by his command, drove her from his house, he, and not she, is the deserter. Eor the unhappy differences that attended their marital life, neither was free from fault. He was irritable and masterful and his exactions were nagging, and his unrepressed language in the presence of others, towards her, when in his ugly moods, was mortifying and exasperating. She was high-strung and easily moved to rebellion. She was also not very prudent.
    While there is absolutely nothing in the testimony to cast a blemish on her chastity, yet she knew that his jealousy was directed in a certain direction, and she imprudently gave him, in one instance, a ground for complaint. There is no evidence that "he was physically cruel. It is admitted that after her return from her first absence he never laid his hands upon her.. The testimony, also, of his son, who says that his father never, before the morning when he turned him out of his bed, had ever done towards him even so much as that shows that the father was not a man to resort to physical violence. That his language was petulant and exasperating does not afford an adequate justification for her desertion of her husband’s house.
    Nor does the fact that he left her bed and slept in another room for months before she departed from his house justify her departure. Reid v. Reid, 6 C. E. Gr. 331. The only point upon which there is a color of defence is the conduct of the husband after she left him the second time, in his failure to seek her and urge her to return. But the manner in which she left,, following her prolonged preparation for leaving, left little hope that she would return, "or that if she should return it would be more than a temporary matter. The lady who saw him about a possible reconciliation was not sent by his wife upon this errand, nor did she tell the husband that she was authorized by the wife to act as an intermediary. His wife has at no time expressed her willingness to return. In this posture of affairs I am constrained to the conclusion that her desertion is obstinate and confers upon the husband the right to a divorce.

      Mr. Willard P TToorhees for the appellant.

      Mr. Alan H. Strong, for the respondent.
   Per Curiam.

Decree affirmed, for the reasons given in the court of chancery.

For affirmance — The Chief-Justice, Van Syckel, Garrison, Gummere, Ludlow, Bogert, Hendrickson, Nixon —8.

For reversal — Depue, Dixon, Collins, Lippincott, Adams, V REDENBURGH — 6.


text:
    Frederick W. Gnichtel, receiver, complainant and appellant, v. Edward Jewell et al., defendants and respondents.
    [Filed November 20th, 1899.]
    "Where a deed is sought to be set aside as voluntary and fraudulent against creditors and there is not sufficient evidence of fraud to induce the court to avoid it entirely, but suspicious circumstances as to the adequacy of the consideration and fairness of the transaction, the court will not set aside the conveyance altogether, but permit it to stand as security for the unpaid part of . the money loaned and for the amount to which the defendant is entitled for services.
    On appeal from a decree advised by Vice-Chancellor Eeed, who filed the following conclusions:
    The testimony leaves no doubt in my mind that the intention of Edward Jewell, in making the assignment mentioned, was to baffle and defeat his creditors. My only doubt is whether the assignee participated in such intent. It "certainly looks as if there was a tacit, if not an express, understanding that Jewell was to have the control of this property after the assignment as fully as before, with the possible exception that the assignee was to be paid the amount which she had loaned Edward. But I hesitate to fix a fraud upon Miss Olivier, although the circumstances as to inadequacy of the consideration and the fairness of the transaction are certainly suspicious.
    I will therefore adopt the equitable rule employed bv Chancellor Kent in Boyd & Suydam v. Dunlap, 1 Johns. Ch. 478, which case was approved in Muirhead v. Smith, decided by our court of appeals and reported in 8 Stew. Eq. 312. I will let the assignment stand as security for the .unpaid part of the money loaned and for such amount of services as I think the defendant Olivier is entitled.

      The assignment covers not only the .$3,036.47 but also the life interest of the assignor in the income from the sum of $2,721.42. This sum, invested at five per cent, interest, would realize the sum of $136.07 each year. The assignor was, at the time of the assignment, fifty-nine years old. By the tables of mortality the present value, at five per cent, of an annuity of $1 at the age of fifty-nine years, is $919.89. The value of an annuity of $136.17, at that age, is $1,251.69. Miss Olivier therefore got by the assignment $3.036.07-¡-$1,251.69= $4,287.76.
    The agreement sworn to by Miss Olivier and her sister, that she was to receive $4 a week, was not entered into by Jewell nor, as far as appears, communicated to him. In fact, it does not appear that he ever knew that his sister-in-law was working for wages at all. So, assuming that she was to be paid, she is only entitled to a quantum meruit. This I have concluded to allow her. In fixing this it is to be kept in mind that she either must have been furnished.with money by her sister, to assist in clothing herself during the period of twenty-two years, or she must (as I understand Mr. Jewell to say she did), during that period, engage for short terms in dressmaking. In either case it would diminish the amount she is entitled to recover, for in the first instance she has already received something, and in the other had not rendered services for the full time in the household of the defendant. She is entitled to the amount of the loan, which is $230, less $50 paid, leaving $180 due, with six months’ interest, amounting to $64.80, making a total of $244.80.
    For her services I think $2.50 a week is ample compensation. She claims for twenty-two- years. This amounts to $2,860. Add this to the $244.80, the sum total is - $3,104.80. The difference between the value of what she received by the assignment, namely, $4,287.76, and what she is permitted to recover, is $1,182.96. This sum the receiver is-entitled to receive and apply to the judgments and to the interest thereon, so far as it will go.

      I will advise a decree that if the assignee pay this sum to the receiver within sixty days, with the costs of this suit, the assignment will be permitted to stand, but if not paid within that time the assignment is to be set aside as to the receiver, and he is to collect of the amount due Edward E. Jewell the sum of $1,182.96, with interest on the same sum from the time of entering this order and the costs incurred in the collection of the same, and apply the same to the payment of the judgments, and is also to collect enough in addition to pay the costs of this suit.

      Mr. George O. Vanderbilt, for the appellant.

      Mr. James IS. Hayes, for the respondent.
   Per Curiam.

Decree affirmed, for the reasons given in the court of chancery.

For affirmance — The Chief-Justice, Dixon, Garrison,. Ludlow, Collins, Hendrickson, Adams, Nixon — 8.

For reversal — Depue, Gummere, Bogert, Vredenburgh —4.


text:
    Josephine A. Van Patten, defendant and appellant, v. William G. Campbell, complainant and respondent.
    [Filed May 22d, 1899.]
    Upon the proofs shown in this case — Held, that the title of J. A. Van P. to the lands in question, acquired by her through Mrs. Gibby, was vested in her as a trustee for the devisees of Peter Campbell, deceased, and that the conveyances by P. C. in his lifetime to J. A. Van P. and S. J. G. were not made in fraud of creditors, and that J. A. Van P. now holds the lands conveyed to her either by P. C. or by Mrs. Gibby, not conveyed away to bona fide purchasers, in trust as aforesaid, and that to carry out the purposes of this suit the will of P. C. should be probated.
    Oa appeal from a decree advised by Vice-Chancellor Reed, who delivered the following conclusions :
    Peter Campbell died January 24th, 1890, aged ninety years, leaving six children, one of whom was William G. Campbell, the complainant, and another was Josephine A. Van Patten, the defendant. He made his will in 1877. He left his homestead to his widow for life, and after her death to the children of his children. He directed that' the residue of his property, real and personal, should be sold and that the executors should hold the proceeds to the use of his children, one-sixth part to each, during their lives, and the remainder to the children of each. He appointed his wife, Sarah Jane, and his friend Jolm'W. Campbell, his executors. The will was never proved.
    It appears that on September 24th, 1878, the testator made a deed to the defendant, Josephine A. Van Patten, for the expressed consideration of $20,000, of all his property, of blocks B and C on a map of the property of Peter Campbell, in the city of Newark, adjoining the proposed park of the city. There was excepted out of block C seven lots, Nos. 32 to 38 inclusive.
    It appears that on February 27th, 1879, the testator made a deed to one Samuel J. Gibby, of Lowell, Massachusetts, for the expressed consideration of $8,500, of nine tracts of land.
    On September 27th, 1880, Josephine A. Van Patten executed a deed of the land conveyed to her by her father back to him.
    On January 20th, 1880, Samuel J. Gibby, to whom a conveyance had been made, also executed a deed, conveying back to the testator the said property. These deeds were never recorded. Exactly what became of them after their execution does not appear. The deed of Mrs. Van Patten to the testator was brought with other papers to Mr. Olds in September, 1887, and the back deed from Gibby to the testator was left in Mr. Olds’ office by Judge Gibby, a cousin of Samuel J. Gibby, in February, 1888.
    In 1887 the taxes upon the property were unpaid, bills of the testator were outstanding and he was desirous of getting a loan upon his property. For that purpose he consulted Mr. Olds, an attorney. After many consultations, at some of which Mrs. Van Patten was present, it was agreed that the title to all the property — both that which had been conveyed to Gibby and that which had been conveyed to Mrs. Van Patten — should be put in Mrs. Van Patten. For some reason the two back deeds were disregarded. The object aimed at them was to get the record title in the name of some one other than the testator. In pursuance of this purpose it was proposed to get a new deed from the Gibbys. Samuel J. Gibby was dead but had left a will in which he had devised his property to his widow. She •consented to make a deed of the property conveyed to her husband by testator. Josephine A. Van Patten and Mr. Olds went ■to Lowell, Massachusetts, where Mrs. Gibby resided, and they, with Mr. Greenlaugh, the attorney of Mrs. Gibby, had a voluntary deed executed by Mrs. Gibby. At the time of its execution Mr. Greenlaugh drew a receipt, which was signed by Mrs. Van Patten, In this receipt she acknowledged that tlie conveyance was made to her simply to put the'title in the parties really entitled, and that Josephine A. Van Patten was to hold the same in trust for the said parties. Mr. Olds took and still retains possession of this deed, which he had recorded.
    After the execution of this deed a mortgage was made by ■Josephine A. Van Patten upon all the property to one Mr. Van Ness for a loan of $6,000, of which $6,000 about $4,400 were retained by the counsel of Mi’. Van Ness to pay back taxes and •clear off encumbrances, and $1,413.60 were paid by Mr. Van Ness in cash. The expenses and commissions were deducted from this last sum, leaving $793.30, which were deposited in the bank to be used for the support of the testator and in paying taxes and making repairs. This money, by an arrangement to which Mrs. Van Patten was a party, was deposited in the names of James, William and Josephine, three of the testator’s children, and also in the name of Mr. Olds, the counsel, and thereafter was drawn upon by their joint checks.
    Some time after the death of the testator Josephine A. Van Patten set up the claim that the property was hers and that she. did not hold it as trustee, and refused to acknowledge-any right of any ot these other children in the same.
    The purpose of this bill is to establish a trust in favor of the devisees of Peter Campbell and to have an accounting from Mrs. Van Patten of the amounts of moneys received by her from certain portions of the property of which she has disposed.
    It is too obvious for any extended discussion that the conveyance made to Josephine A. Van Patten by the testator was made, not as an advancement, nor as a remuneration for services, nor for any valuable consideration. It was made to be held for the-use of the grantor. The deed to Samuel J. Gibby, the manner in which the property was used, the execution of the back deeds, the conveyance of the Gibby property to Josephine A. Van Patten, her acknowledgment that she held it in trust, and the subsequent mortgage to Mr. Van Néss, and the manner in which the money loaned upon this mortgage was treated, demonstrate the fact that Mrs. ‘Van Patten understood distinctly that her title to the property was that of a trustee.
    The testimony in respect to the execution of the deed of Mr, Gibby and of Mrs. Van Patten back to the testator renders it probable that the legal title was vested in the testator by those deeds. If those deeds were delivered to the testator there would be no need for the intervention of this court to declare the existence of a trust. Inasmuch, however, as this is not clear, and as Mrs. Van Patten sets up a colorable claim to the property as its legal owner, therefore, for the purpose of quieting the title, I think the court should declare that whatever interest Mrs. Van Patten got from the testator, directly or indirectly through Mrs. Gibby, is held in trust for the devisees of the testator.
    Further, I do not think that it is proved that the deeds made-by Peter Campbell to Mr. Gibby and Mrs. Van Patten were-made for the purpose of defrauding his creditors. This purpose-may be suspected, but in my judgment it is not proved. I will advise a decree declaring that Mrs. Van Patten holds all the land conveyed to her, either by Peter Campbell or by Mrs. Gibby, which she has not conveyed to bona fide purchasers, in trust for the devisees of Peter Campbell; that site be decreed to make a deed or deeds for all such lands to a trustee to be appointed to carry out the provisions of the will.
    Inasmuch as the functions of the executors under the will are so interwoven with their duties as trustees, I think it will be better that the will should be probated, and the same party appointed by the orphans court as administrator cum testamento annexo and trustee. An accounting, of course, will be decreed, to ascertain what has been retained by Josephine A. Van Patten from the property sold by her. I am unable, now to fix the details of the decree, but will do so after the trustee is appointed, upon a regular notice and hearing of their respective counsel.

      Mr. Charles T. Glen, for the appellant.

      Mr. Franklin M. Olds, for the respondent.
   Per Curiam.

Decree affirmed, for the reasons given in the court of chancery.

For affirmance — The Chief-Justice, Depue, Gummere, Ludlow, Collins, Hendrickson, Adams, Nixon — 8.

For reversal — Vredenburgh—1.


text:
    Henry Van Arsdale et al., defendants and appellants, v. Congregational Home Missionary Society, complainant and respondent.
    [Filed November 20th, 1899.]
    ' On appeal from a decree advised by Vice-Chancellor Emery, whose opinion is reported in 13 Dick Ch. Rejo. £93.

      Mr. Cortlandt Parker, Jr., for the appellants.

      Mr. Arthur Denman, for the respondent.
   Per Curiam.

Decree affirmed, for the reasons given in the court of chancery.

For affirmance — The Chief-Justice,’Depue, Van Syckel, Dixon, Garrison, Lippincott, Gummere, Ludlow, Collins, Bogert, Hendrickson, Adams, Nixon, Vredenburgi-i — 14.

For reversal — None.