text:
    Robert H. McCarter, attorney-general, v. Lehigh Valley Railroad Company et al.
    [Decided February 21st, 1911.]
    1. A grant by the legislature by P. L. 1867 p. B51 to a corporation incorporated under act December 31st, 1824, creating a canal corporation, of a basin adjacent to the terminus of its canal in the Hudson river, is not within P. L. 1869 p. 1017 authorizing riparian commissioners to grant lands under water to grantees having prior legislative grants, and thereby curing defective grants.
    2. A conveyance by riparian commissioners under P. L. 1869 p. 1017 providing that a conveyance shall not merely pass the title to the land described but the right of the grantee to exclude to the exterior bulkhead line the tidewater by filling in or otherwise improving the same and to appropriate the land to exclusive private use, acquires a personal right to appropriate the land granted to any use he may see proper.
    3. A general affirmative statute does not repeal' a prior particular one unless there is such an irreconcilable inconsistency between them as indicates an intention to repeal.
    4. P. L. 1871 p. 444, authorizing a canal corporation created by act December 31st, 1824, to lease its canal or any part thereof with appurtenances and franchises either “perpetually” or for such shorter time as may be agreed on between the parties, merely authorizes the corporation to lease its property for a term not exceeding the period fixed for its existence, the word “perpetually” not giving the corporation any property or franchise that it did not previously have.
    5. The state is not presumed to have parted with any of its property in the absence of conclusive proof of an intention to do so, and any ambiguity operates against the grantee and in favor of the public.
    6. A grantee under a conveyance by the riparian commissioners under P. h. 1869 p. 1017 authorizing conveyances to grantees having prior legislative grants, &c., may not rely on P. B. 1874 P- 103 empowering the riparian commissioners to make conveyances, the grantee applying for the grant in the manner prescribed by the act of 1869 and the commissioners acting under that act.
    7. Ordinarily a court of chancery has no jurisdiction to pass on legal titles.
    8. The court of chancery, in a proceeding by the attorney-general under P. L. 1907 p. 96 to determine title to riparian lands in which the state claims an estate, must determine the legal question according to legal rules.

      9. Where the state could not bring an action at law to test the legal title to land, and it could not sue in equity for that purpose until authorized to do so by P. L. 1907 p. 96, providing for the determination of title to riparian lands in which the sta.te claims an estate, it was not barred by laches.
    10. The government as a general rule is not barred by the laches of its officers.
    11. Where the state in a proceeding under P. L. 1907 p. 96 for a decree adjudging the invalidity of a grant made by the riparian commissioners to a railroad company under the alleged authority of P. L. 1869 p. 1017, tendered itself ready to submit to such terms as the court should establish by its decree, the defence of laches was not available.

      Mr. Chandler W. Riker, Mr. Bennet Van Syckel and Mr. Edmund Wilson, attorney-general, for the informant.

      Mr. William H. Corbin, Mr. Charles L. Corbin and Mr. Richard V. Lindabury, for the defendants.
   Stevens, V. C.

This is an information filed on behalf of the state, praying that a grant by the riparian commissioners to the Lehigh Valley Railroad Company of the state’s interest in the “Basin of 1867” may be declared to have been obtained by false suggestion and to have been, for that and other reasons, ultra vires and void. This court is asked to set aside the conveyance' on equitable terms.

In 1867 the legislature granted to the Morris Canal and Banking Company a basin adjacent to the terminus of its canal in the Hudson river. This basin is described by metes and bounds as lands under water, beginning at a point in the river in the southerly line of South street, extended seven hundred and sixty-five feet from the easterly line of Hudson street, in Jersey City. Speaking gcneralty, its front on Hudson river is about nine hundred and sixty feet and its depth one thousand seven hundred and thirty-five feet, with a small additional parallelogram in the rear. The grant is made

“on condition that for the purpose of preserving a water basin to the west of the present westerly bulkhead on said premises and of leaving open on the premises hereby granted a public navigation for all vessels to and from the Hudson river and all parts of the waters west of said westerly bulkhead, the said company shall forever keep open, the present gaps in the easterly and westerly bulkheads, each of one hundred and fifty feet in width and like gaps of like width in any structure to be erected on said premises hereby granted, so that the public may with all vessels freely navigate to and from the channel of the Hudson river, and all places east and west of said westerly bulkhead without the payment of tolls or chargesj provided that the said opening shall be kept in such condition that the owners and occupants of shore property lying' north and west of the above described property may at all times have free access to, as well as through, the same.”

The second section of the act enacts that

“the Morris Canal and Banking Company may, wider the provisions of their charter, construct piers, wharves, docks, basins, warehouses and other structures within the limits above described, and make reasonable rules and regulations for the use thereof, to enable them to carry on a transportation business in and over their canal and elsewhere, which they are hereby empowered to do and also to afford facilities for commerce.”

The third section enacts that this act shall

“be in force during the continuance of the charter of the said Morris Canal and Banking Company and, at the expiration of that time, the lands hereby granted, with the improvements thereon, shall revert to the state on the same terms and conditions provided in the original charter of the said company respecting the transfer of the property thereof to the state.” P. L. 1867 p. 251.

The charter of the company, passed on December 31st, 1824, in its twenty-fifth section provides

“that the said canal, when completed, shall forever thereafter be esteemed a public highway, free from the transportation of any goods, commodities or produce whatsoever, on payment of the tolls and conforming to the regulations made or authorized by this act.”

In its twenty-sixth section the charter provides as follows:

“Be it Enacted, That at the end of ninety-nine years from the passing of this act, it shall and may be lawful for this state to take to itself and on its own account, the said canal and its appurtenances, paying to the said company the fair value thereof, to be estimated and fixed upon by ten commissioners or a majority of them, to be mutually chosen by this state and the said company; or in case that shall not be done at that time or within one year thereafter, this charter shall continue, so far as respects its canal operations and privileges, for the further term of fifty years, when it shall cease and the said canal, with its appurtenances, become the sole property of this state.”

In the leading case of Gough v. Bell, 22 N. J. Law (2 Zab.) 441; S. C., 23 N. J. Law (3 Zab.) 624, it was held that at common law the right of the owner of lands along the shore of navigable waters in which the tide ebbs and hows extended only to ordinary high-water mark, but that in New Jersey, by force of a local common law here prevailing, such an owner may extend his improvements, by wharves or filling up over the shore in front of his lands to low-water mark unless prevented by the state from so doing.

The question whether the owner of lands fronting ón tidewater had such right of adjacency to the water, that the state could not, without making compensation, deprive him of it, by granting the lands under water in front of his lands and authorizing the improvement thereof, was left open. In Stevens v. Paterson and Newark Railroad Co., 34 N. J. Law (5 Vr.) 532, it was finally decided that he had no such right; that the state could grant such lands to anyone without compensation made to the shore owner.

Gough v. Bell was decided at the July term, 1850. In 1851 the legislature passed an act entitled “An act to authorize the owner of lands upon tidewater to build wharves in front of the same.” By this act statutory form was given to the local custom and “the right of the shore owner was dealt with by the legislature, not as an incident of property already vested, but as a privilege which required the element of public acquiescence and the performance of a prerequisite on the side of the proprietor to be converted into a legal right.” 34 N. J. Law (5 Vr.) 547.

This continued to be the only general act on the subject until the year 1864. In that year the legislature passed an 'act entitled

“An act to ascertain the rights of the state and of the riparian owners in the lands lying under the waters of the bay of New York and elsewhere in the state.”

This act provided for the appointment of a board of commissioners entrusted with the duty of causing the necessary surveys and examinations to be made by competent surveyors, of the lands lying under the bay of New York, the Hudson river and other waters and of ascertaining the present rights of the state in the same, and their value; and, in the language of the act,

“to fix and establish an exterior line in the said bays and rivers, beyond which no pier, wharf, bulkhead, erection or permanent obstruction of any kind shall be permitted to be made and to report to the next legislature.”

The commissioners were appointed and reported, but the legislature did not act on their report until 1869. Then they passed the act on which the grant under attack is founded.

Its first section adopted the exterior bulkhead and pier lines fixed by the commissioners and shown on their maps so far as the Hudson river and New York bay were concerned, but with this very important reservation:

“Except said lines drawn on said maps over or upon lands within the boundaries of the grant made to the Morris Canal and Banking Company by act approved March 14th, 1867.”

Section 2 enacts that

“it shall not be lawful to fill in with earth, stones or other solid material, in the tidewater of the Hudson river, New York bay and Kill von Kuli beyond the bulkhead line or lines of solid filling by this act adopted, fixed and established.” * * *

Section 3 repeals the Wharf act as to the tidewaters of Hudson river, New York bay and Kill von Null and then goes on to provide as follows:

“Neither this section nor any provision in this act contained shall in anywise repeal or impair any grant of land under water or right to reclaim made directly by legislative grant, or grant or license, power or authority so made or given, to purchase, fill up, occupy, possess and enjoy lands covered with water fronting and adjoining lands owned or authorized to be owned by the corporation, grantee, licensee in the legislative act mentioned, its, his or their representatives, grantee or assigns or to repeal or impair any grant or license, power or authority to erect- or build docks, wharves and piers opposite and adjoining lands owned or authorized to be owned by the corporation or grantee in the legislative act mentioned.” * * *

Sections 4 and 8 provide for grants to two different classes of persons — section 4 for the class mentioned in section 3, viz., those who already have a grant of lands under water or a license to reclaim or build docks, &c., given by prior legislative act, and section 8 for the class of persons who-have no such grant or license.

Section 4 reads as follows:

“In case any person or corporation who by any legislative act is a grantee or licensee or has such power or authority or any of his, her or their • representatives or assigns shall desire a paper capable of being acknowledged and recorded made by and in the name of the State of New Jersey conveying the,land in the proviso to the third section mentioned whether under water now or not, and the benefit of an express covenant that the state will not make or give any grant or license, power or authority affecting lands under water in front of said lands, then and in either of such cases, such person or corporation, grantee or licensee, having such grant or license, power or authority his, her or their representatives or assigns, on producing a certified copy of such legislative act to said commissioners and, in case of a representative or assignee, also satisfactory evidence of his, her Or their being such representative or assignee and requesting such grants and benefits as in this section mentioned, shall he entitled to said paper so capable of being acknowledged and recorded and granting the title and benefits aforesaid on payment of the consideration hereinafter mentioned; and the said commissioners or any two of them with the governor and attorney-general for the time being, to be shown by the governor signing the grant and the attorney-general attesting it, shall and may execute and deliver and acknowledge in the name and on behalf of the state, a lease in perpetuity to such grantee or licensee or corporation having such grant, license, power or authority, and to the heirs and assigns of such grantee or licensee or the successors and assigns of such corporation upon his, her or their securing to be paid to the state, an annual rental of three dollars for each and every lineal foot measuring on the bulkhead line, or a conveyance * * * in fee, upon his, her or their paying to the state fifty dollars for each and every lineal foot measuring on the bulkhead line, in front of the land included in said conveyance. * * * In case any person or corporation taking a lease under .this section shall desire afterwards a conveyance of all or any part of the land so leased, the same shall be made upon payment of the said sum of fifty dollars for every such lineal foot as aforesaid of the land so desired to be conveyed; the conveyance or lease of the commissioners under this or any other section of this act shall not merely pass the title to the land therein described, but the right of the grantee or licensee, individual or corporation, his, her or their heirs and assigns, to exclude to the exterior bulkhead lime the tidewater by filling in or otherwise improving the same and to appropriate the land to exclusive private uses, and so far as the upland from time to time made, shall adjoin the navigable water, the said conveyance or lease shall vest in the grantee or licensee, individual or corporation and their heirs and assigns, the rights to the perquisite of wharfage and other like profits, tolls and charges.”

Section 8 enacts

“that if any person or persons, corporation or corporations or associations shall desire to obtain a grant for lands under water which have not been improved and are not authorized to be improved under any grant or license protected by the provisions of this act, it shall be lawful for any two of the commissioners concurring, together with the governor and attorney-general of the state, upon application to them, to designate what lands under water for which a grant is desired lie within the exterior lines and to fix such price, reasonable compensation or annual rentals for so much of said lands as lie below high-water mark as are to be included in the grant or lease for which such application shall be made and to certify the boundaries and the price, compensation or annual rentals to be paid for the same under their hands; which shall be filed in the office of the secretary of state and upon the payment of such price, or compensation or annual rentals or securing the same to be paid to the treasurer of this state by such applicant, to apply to the commissioners for a conveyance assuring to the grantee, his or her heirs and assigns, if to an individual, or to its successors or assigns, if to a corporation, the land under water so described on said certificate * * * and Up0a delivery of such conveyance, the grantee may reclaim, improve and appropriate to his and their own use the lands contained and described in the said certificate, subject however to the regulations and provisions of tho first and second sections of this act and such land shall thereupon vest in said applicant.”

There is a proviso in this section that no grant or license shall be made to any other than a riparian proprietor until six calendar months after such proprietor shall have been notified and shall have neglected to apply for a grant or license himself.

There are marked differences between section 4 and section 8, and as the solution of the present controversy depends to some extent upon these differences, it will be necessary to consider them.

Three of the differences are fundamental. The first involves the character and qualifications of the applicant. Under section 4 he must have had a prior legislative grant of the lands in respect of. which he desires “a paper capable of being acknowledged and recorded,” or a legislative license to reclaim and occupy them. Under section 8 bo may be an entire stranger to the land.

The second difference consists in the mode of ascertaining the price. Under section 4 the price or rental is a specified sum, fixed in advance by the legislature itself; under section 8 it is left to the judgment of the commissioners. The reason is apparent. In cases coming under section 4 the legislature had already granted that which they either could not or did not wish to take away. Consequently the conveyance would operate as a deed of confirmation. For this confirmatory title, and for the covenant that the state would not make a grant in front of the lands, the legislature itself fixed the sum of $3 (rent) or $50 (purchase-money) for each lineal foot measured on the bulkhead line.

The third difference is that the person showing himself to be a prior statutory grantee or licensee under section 4 is entitled to demand the conveyance as a matter of right, not of favor; while in the class of cases coming under section 8 it is altogether discretionary with the state officers to give or withhold it.

The title to be vested under the conveyance appears to be the same in both cases, although the statutory language is more emphatic where it vests under section 4 than where it vests under section 8. Under section 4 the conveyance passes

“not merely the title to the land therein described (i. e., the bare legal fee), but the right of the grantee or licensee * * * to exclude to the exterior bulkhead line the tidewater by filling in or otherwise improving the same and to appropriate the land to exclusive private uses.”

Under section 8 the effect of the grant is that “the grantee may reclaim, improve and appropriate to his and their own use, the lands contained and described in the said certificate.”

In the case in hand the Lehigh Yalley Bailroad Company, on February 3d, 1888, made a written application under section 4. It sets forth that on March 14th, 1867, the legislature granted to the canal company a certain tract of land under water (designating the basin of 1867), which grant, it alleged, was within the purview of the third and fourth sections of the act of 1869 — the act Avilóse provisions I have stated. It stated that it was the assignee of the canal company; that it desired a paper capable of being acknowledged and recorded conveying the land in the grant mentioned, in fee, Avith the benefit of an express covenant that the state would not make any grant affecting lands under water in front o£ said land. It tendered itself ready to pay to the state the sum of $50 for each and every foot measuring on the bulkhead line in front of the land so granted and it requested a conAmyance.

It thus appears that the railroad company claimed, in its character of assignee of a prior legislative grant, to be entitled as a matter of right to a conveyance in fee, for the statutory price of $50 per lineal foot, measured on the bulkhead line. The commissioners so treated the application in their deed of conveyance; they recite the matters therein stated and their they say:

"And Whereas, it appears to the said commissioners that the said Lehigh Valley Railroad Company has by virtue of the aforesaid grant from the State of Nerv Jersey and of the lease from the Morris Canal and Banking Company and the performance of said conditions, such grant and license, poAver and authority as is in the said fourth section mentioned, and is entitled to a paper capable of being acknoAvledged and recorded and granting (lie title and benefits aforesaid.” * * *

The conA’cvance grants, conveys and confirms

“the said tract of land * * * together with all the right and privilege of excluding the tideAvater from said land by fitting in or otlienvise improving the same and to appropriate the same to exclusive private use as fully to all intents and purposes as the commissioners have poAver and authority to grant.” &c.,

thus following the phraseology of the fourth and not of the eighth section of the act of 1869.

The question is whether the grant of the basin of 1867 was such a prior legislative grant as was contemplated by the terms of sections 3 and 4 of the act of 1869. It must be conceded that the legislature had itself already made a disposition of this particular tract and had devoted it to a public use. Had the commissioners power to release this use? I do not think they had. The legislative purpose was, I think, to authorize the commiesioners to cure and fortify a defective grant; not to change a perfect use.

Under the prior act of 1864, the commissioners prepared maps showing the bulkhead and pier lines in the Hudson river, and other localities whose adoption they recommended. These lines crossed the basin in question. But the legislature in adopting these maps and lines expressly excepted “said lines drawn on said maps over or upon lands within the boundaries of the grant made to the Morris Canal and Banking Company” by the act of March 14th, 1867. It left the basin without bulkhead lines in front of it, and there was, consequently, nothing by reference to which the commissioners could fix the price. The basin was not within the fourth section, because there was no way in which the price could lie ascertained under that section, and it was not within the eighth sectiqn, because the eighth section applied, in terms, to lands which were neither improved nor authorized to be'improved. Counsel for the defendants was, therefore, compelled to take the position that the exterior line of the basin of 1867 was itself a bulkhead line on which the commissioners could calculate the price. It is nowhere so designated, and it is not a bulkhead line in fact. In the various riparian acts the expression “bulkhead line” as used is synonymous with “line of solid filling.” It is the line beyond which the upland cannot be extended; the ultimate boundary between land and water. But the exterior line of the basin of 1867 is no such line. The legislature, when it gave this property to the canal company'', only authorized it to construct therein piers, wharves, docks, basins and similar structures, to enable it to carry on a transportation business. It did not authorize it to fill it up. It was to be used as a basin, in which might be built structures appropriate to its use as such. There were, at the time the grant was made, an interior basin, not granted, and two bulkheads considerably to the west of the exterior line of what was granted. In these bulkheads were gaps, and the legislative direction was that the gaps should be forever kept open, one hundred and fifty' feet in width, so that the public might, with all vessels, freely navigate to and from the Hudson river and all places east and west of said westerly bulkhead, without the payment of tolls and charges. The scheme, therefore, contemplated a waterway; a place where vessels might lie at anchor or be docked, loaded and unloaded; where they might pass from the river into an interior basin, and not an improvement bounded by an exterior line of solid filling. This shows why, when the legislature, in the act of 1869, adopted every other bulkhead line recommended by the commissioners, they excepted the lines drawn “within the boundaries of the grant made” to the canal company. As the price was an arbitrary price, fixed in advance by the legislature, to be calculated only on a bulkhead line, it necessarily follows that where that line was wanting, the calculation could not be made.

It is easy to see why the legislature should have wished to except the basin from the commissioners’ power to grant. The business of the canal company was then in a prosperous condition. It, no doubt, wanted better terminal facilities, and so in 1867 it applied for and obtained a legislative grant. And by its charter it would cease to exist in 1974, and as its canal property would become the property of the state, without compensation, it was enacted that the basin property, with iis improvements, should, at that time, become the property of the state “on the same terms and conditions provided in the original charter of the said company, respecting the transfer of the property thereof to the state.” In other words, the canal, with its appurtenances, was to come to the state as a canal, and the basin, “with the improvements thereon,” as a basin. Is it likely that the legislature in 1824, when it granted the charter, and in 1867, when it gave the basin, contemplated that immediately upon their acquisition or resumption by the state, the state would throw away the improvement and devote the property to other uses for which it was not fitted ? In 1824 railroads were unknown. In 1867 they had not attained their present importance. Section 25 of the charter enacts that the canal, when completed,

“shall forever thereafter be esteemed a public highway, free for the transportation of goods on payment of tolls and conforming to the regulations of this act.”

As the basin was made an adjunct to the canal to revert, “with its improvements,” when the canal reverted, it seems to me that in the absence of any legislative, provision to the contrary, we must assume that the use for which alone these properties were adopted would continue, until the legislature saw fit to make some other disposition of them. This being so, why should we impute to the legislature a design to confer upon the commissioners a power to dispose of that which the legislature itself had already devoted, indefinitely, to the important public use of a basin, and when it had, in express terms, disabled the commissioners from fixing a price, in the only way in which they were authorized to fix a price for property thus circumstanced.

If the commissioners had power to convey, their conveyance must have operated in one of two ways. It either gave it to the Lehigh Valley Railroad Company absolutely, divested of all public use, or it conveyed to it the bare legal title, subject to the use that had been impressed upon it. I understand that counsel for the company, in his original brief, inclined to the former view, and in his reply brief to the latter. In this latter brief he says: “I think that in the argument that I am to refute there is a confusion of ideas; there is a failure to distinguish between the powers of the commission to convey and the powers of tire grantee over the property after it has been conveyed. The power to convey is given by the riparian acts to be exercised under certain conditions; but the power of the grantee to use or dispose of the property is not made unlimited by conferring a title in fee-simple. The grantor reserves no title, but the charter and public duties of the grantee may control the use.”

Counsel does not make it very plain whether by “grantee” he means the “canal company” or the “railroad company.” It will hardly be contended that their uses are identical. If by “grantee” he means the railroad company, then his claim is that the commissioners could divest the use, so far as it was a canal or basin use, and grant it for a railroad use; but this necessarily means a complete power of disposition. If, on the other hand, by “grantee” he means the canal company, then his insistment is that the use to which the legislature had devoted the property continued, and the railroad company took nothing but the bare legal title, subject to the use. This latter view is entirely indefensible. If nothing but the bare legal fee passed, then the use continued, and will continue indefinitely, and at the expiration of the term, the grantee will hold in trust for the state or for the public — a singular and anomalous situation, not at all likely to have been intended. This view is, moreover, quite at variance with the act of 1869. Section 4 provides that the 'conveyance

“shall not merely pass the title to the land therein described, but the right oí the grantee or licensee, individual or corporation, his, her or their heirs and assigns to exclude to the exterior bulkhead line the tidewater by filling' in or otherwise improving the same and t6 appropriate the land to exclusive private uses.”

If the legislature had anticipated such a contention and had sought to exclude it they could not have done so by language more emphatic. If this language means anything, it means that the grantee shall, by the grant, acquire or be confirmed in a present right to fill in up to the bulkhead line and a present right immediately to appropriate the land to any use he may see proper. It was on this unambiguous language that the supreme court of the United States, in Hoboken v. Pennsylvania Railroad Co., 124 U. S. 656, and this court in M. & E. R. R. Co. v. Jersey City, 63 N. J. Eq. (18 Dick.) 46; 71 N. J. Eq. (1 Buch.) 308, held that the easement of a highway, over lands originally under water granted by the commissioners, had been extinguished.

The question then comes back to this: Did the legislature intend to give to the commissioners power to sell riparian lands already devoted to a public use ? If the legislature had devoted land under water to the purposes of a public park, could the commissioners have released the use 'because the legal fee continued in the state ? If not, on what principle could they release the basin from its use ?

The law is well settled that a.general affirmative statute does not repeal a prior particular one, unless there is sucli an irreconciliable inconsistency between them as indicates an intention to repeal. Sedgw. Stat. & Const. L. 98; State v. Mills, 34 N. J. Law (5 Vr.) 180; State v. Minton, 23 N. J. Law (3 Zab.) 529. Here, so far from there being any indication in the act of 1869 of an intention to authorize the commissioners to release the property from the use imposed by the act of 1867, there is a strong indication to the contrary in the refusal of the legislature to adopt the bulkhead line recommended by the commissioners, thus disabling them from fixing a price.

I will now notice the particular grounds upon which counsel place themselves in contending for the validity of the grant.

It is first insisted that the charter of the canal company authorized a lease of the basin to the railroad company. It is plain that if the canal company had thereunder the power to lease or to assign its term, such lease or assignment would not extend beyond the year 1974. As by the act of 1871 the legislature undoubtedly gave it the power to lease, it will answer no useful purpose to inquire whether its charter also gave it the power.

It is next insisted that the act of 1871 gave the canal company the power to lease “perpetually ” and that having so leased, the right of the railroad company does not rest upon the commissioners’ grant alone. This act (P. L. 1871 p. 444) provides that it shall be lawful for the canal company, with the consent of a majority in interest of its stockholders,

“to lease the canal of said company or any part thereof, with all or any of its boats, property, works, appurtenances and franchises to any person or persons, or corporation, either perpetually or for such shorter time and upo'n such rent and agreement as may be agreed upon between the said contracting parties, and it shall be lawful for the lessee or lessees in said lease to use and enjoy the said property and franchises so demised for the term in said lease mentioned.”

That I may not misstate the argument of defendants on this point, I will quote the following extract from their printed brief. Counsel says: “No doubt can exist that if the canal company had the power to lease the premises and the canal for a longer term than 1974, they exercised that power; in clear terms3 they leased all their real property perpetually, and in so doing named property which they owned for a term of years only. If the lease is valid as a perpetual lease it is so because the state by the act of 1871 has authorized it and thereby parted with its reversion in favor of the lessee. That act in clear terms not only empowered the canal company to lease the canal property and franchises perpetually but expressly provided that it shall be lawful for the lessee to enjoy the said property and franchises so demised for the term of said lessee mentioned.”

There is no indication in the act of 1871, outside of the single word “perpetually,” that the legislature intended to give either the canal company or the railroad company any property or franchise that they did not have before, and yet the contention is that by the use of that word alone, the legislature intended to give up not only its reversionary interest in the basin but in the canal property as well; and not only this, but to extend the franchises of the Morris canal in favor of the Lehigh Yalley Railroad perpetually, although by the terms of its charter those franchises were to come to an end in 1974. The only authority to lease the basin is found in the authority to lease the property, works and appurtenances of the canal. The basin is not specially mentioned; the canal is; and, therefore, any authority to lease the basin applies still more obviously to the canal. It is little short of absurd to suppose that the legislature intended, by the use of the word under consideration, to confer, first, a perpetual franchise, and then to surrender the valuable rights that it had on two previous occasions been so careful to preserve. It is easy to construe the language used so as to conform to the evident intent of the legislature. What the canal company possessed, that it might lease, perpetually, in so far as it had the absolute title, and for a shorter period, in so far as its title was circumscribed. What the statute authorized was a lease of the canal company’s property, not the state’s. The case seems to me to be a very obvious application of the rule reddendi singula, singulis. Nothing is better settled than that tire state is not presumed to have parted with any part of its property, in the absence of conclusive proof of an intention to do so. Stevens v. Paterson and Newark Railroad Co., 34 N. J. Law (5 Vr.) 532, 533; Martin v. Waddell, 16 Pet. 411 Polhemus v. Bateman, 60 N. J. Law (31 Vr.) 163. “Any ambiguity must operate against the grantee and in favor of the public.” United States v. Michigan, 190 U. S. 401.

If the contention had been that the statute gave a power to lease for the benefit of the canal company up to 1974, and thereafter for the benefit of the state, it would have been more plausible; but had such been the intention, we would have expected to find some provision guarding the state’s interests in the matter of rents to be reserved. Counsel, however, does not contend for such a construction of the act, and, in point of fact, no attempt was made bjr either company, in the lease as executed, to guard the interests of the state in this or any way. It would have been open to 'the same objections, though in less glaring form, that the other construction was open to.

Counsel’s next insistment is that if the act of 1869 did not give the riparian commissioners power to convey the basin property, the act of 1874 did. Gen. Stat. p. 2791. This act provides that from and after its passage

“it shall be lawful for the riparian commissioners or any three of them therein concurring, together with the governor of this state, to fix and determine, within the limits prescribed by law, the price or purchase-money, or annual rental to be paid by any applicant for so much of the lands below high-water mark, or lands formerly under tidewater belonging to this state, as may be described in any application therefor duly made according to law.”

For lands so applied for, the commissioners, with the governor’s approval, may make a grant or lease.

It has been already shown that the act of 1869 provides for two distinct classes of cases. First, the class in which there had been a prior legislative grant or a prior legislative license to reclaim — that in which the legislature had itself fixed the price or rental to be paid. Second, the class in which there had been neither improvement of the state’s land nor authorization to improve. This latter was the class in which the legislature had authorized the commissioners to fix the price or rental. Whether the act of 1874 applies to lands of the first class may be doubtful. The act says the commissioners may fix the price "within the limits prescribed by law.” Does this mean that they may fix it, except in cases where the legislature has already fixed it? It is not, and in the present case could not be, suggested that the act of 1874 had altogether superseded the fourth section of the act of 1869; and so, if the two methods of ascertaining the price co-exist, the practical result would be that in eases where the applicant thought .he could secure a grant for less than the statutory price, he would apply under the act of 1874; and where he thought he could not, he would apply under the act of 1869. I do not feel called upon to decide this question, for, assuming that the railroad company could have secured a grant under the act of 1874, it did not apply under that act, but under the act of 1869.

The defendant, however, relies upon what was said by Justice Dixon in Elizabeth v. Central Railroad Co., 53 N. J. Law (24 Vr.) 491, viz.: “Although the act of March 21st, 1871, alone is mentioned in the deed, it is not referred to as the only source of authority for the grant. On the contrary, the grant is made in absolute terms, independent of any riparian title and without reference to anjr particular statute; consequently, it must be deemed as comprehensive as the law permitted.” This decision is not applicable. It had to deal only with legislative acts which gave the commissioners power to fix the price — acts therefore in pari materia. There, too, the act of 1871 was not referred to as the only source of authority; here, section 4 of the act of 1869 is so referred to. The deed recites that the railroad company “has made application in writing requesting such grant and benefit as are mentioned in said fourth section thát it has, by virtue of the grant of the basin to the canal company and of the lease of the basin from that company to it, “such grant and license, power and authority as in the said fourth section mentioned " and that the consideration is the sum of forty-eight thousand dollars, being fifty dollars for each lineal foot, measuring on the bullchead line." No such recitals are applicable or proper in the case of a grant made under the act of 1874. Moreover, the attorney-general joins in the grant to the railroad company, as he is required to do by the act of 1869, but not by the act of 1874.

The claim as made was that the railroad company was, as a matter of right, entitled to have a conveyance of this very valuable water front for the price of $50 per lineal foot, and to this the commissioners acceded. It is hardly probable that if they had supposed that they had any discretion as to price, they would have made a conveyance for so small a sum. But if it could be said that the deed in question was not made with reference to any particular statute, still as it seems to me the prior grant to the Morris canal, and its devotion indefinitely to the public use of a basin took it out of the class of property .to which the act of' 1874 refers. The lands “belonging to the state” were those not already devoted to some public use. This phase of the matter has already been considered.

I now comb to the question of laches and estoppel. The argument is that since 1889 the state has stood by and allowed the Lehigh Valley railroad to make various improvements in the basin without objection. These improvements consist mainly of wharves or piers, suitable to a basin properly, and such as were authorized by the lease made by the Morris Canal Company. It does not appear that these wooden structures are likely to last beyond that time unless renewed.

On this branch of the case it is important to remember that the question is one of legal title. The information is filed under the act of 1907 (P. L. 1907 p. 96), entitled

“An act to compel the determination of titles to riparian lands and lands under water in which the state claims an estate in remainder or reversion and to quiet the title to the same.”

It is quite similar in its provisions and object to the act entitled “An act to compel the determination of claims to estates in remainder in certain cases and to quiet the title to the same,” considered and upheld in Haley v. Goodheart, 58 N. J. Eq. (13 Dick.) 368; 72 N. J. Eq. (2 Buch.) 953. Its rationale is that, ordinarily, this court has no jurisdiction to pass upon legal titles, but that where the case is so circumstanced that no immediate relief can be given by action at law, it is within the competence of the legislature to give a remedy in this court. The legislature has, by the act of 1907, given such a remedy in the class of cases in which the present case is included. What this court is called upon to do, therefore, is to determine a legal question according to the legal rules that would be applied in the supreme court in case the term of years given to the canal company had come to an end and an action of ejectment had been brought. If this court had to pass upon a question of equitable relief to which informant claimed to be entitled, such a question as was presented in Attorney-General v. Central Railroad Co., 68 N. J. Eq. (2 Robb.) 198, then the equitable rules governing, such relief and referred to by Vice-Chancellor Emery in his opinion might be invoked. But the state stands on its legal rights. It is the defendants who resort to equity as a defence. The question is, have they been able to show such an equity as will prevail over the legal title ? The burden of proof is on them. The state has not been in laches in bringing this action, for not being entitled to the possession until 1974 it could not have brought an action to test the legal title in the law courts, and it could not have brought such an action in this court until it was authorized to do so by the act of 1907. It is said that it has stood by and has seen the Lehigh Valley Railroad Company make improvements without any assertion of its rights, but there is little or nothing to show that 'the company would not have made the same improvements had it had nothing more than its lease. The improvements themselves may not outlast the term. It appears from the evidence of Mr. Hocke, the engineer in charge of the work, that he made a plan of the improvement in the basin and on the adjoining property in the early part of 1888. Work was extensively prosecuted in that year and the next. The grant was applied for on February 3d, 1888. The deed of conveyance bears date on July 12th, 1889, but did not receive the governor’s approval until December 20th, 1889, and the price ($48,000) was not paid until the approval was given. In 1888 there was expended $385,808; in 1889, $262,-456.22. The total cost of the improvement was $878,898.40. It thus appears that $658,000, or nearly three-quarters of the entire amount, was spent while the railroad company had no other title than its lease from the canal company, made in 1871. It is impossible for the company, therefore, to assert that the improvement was made in reliance upon the commissioners’ title. It is more obviously referable to its lease, .which had still, in 1888, eighty-six years to run. The general rule is that the government is not barred by the laches of its officers. United States v. Kirkpatrick, 9 Wheat. (U. S.) 720; United States v. Beebe, 180 U. S. 342; United States v. Michigan, 190 U. S. 405. But recourse to this rule is hardly necessary, for it is not shown that the same improvements would not have been made in the same way under the leasehold title.

Furthermore, to quote the words of Chief-Justice Depue in American Dock Co. v. Trustee, 35 N. J. Eq. (8 Stew.) 183, “the equity of a party who relies on an equitable estoppel to give validity to an inefficient contract is not to have his contract made binding, but to put his'adversary to an election between the performance of the contract and the repudiation of it on equitable terms.” Here the state tenders itself ready to submit to such terms as the court shall establish by its decree. It should refund the purchase-money with interest. If the fee has been taxed on any different basis from that on which the term would be taxed, it should refund the difference. I do not find in the evidence any warrant for compelling the state to pay for any part of the improvement, as it is an improvement similar to that contemplated by the act of 1867, and as it does not appear that it would not have been made under the lease. The railroad has the benefit of it until 1974.


source: Caselaw Access Project

author: Stevenson, V. C.

license: Public Domain

text:
    John R. McNulty v. Eugene J. McCarthy et al.
    [Decided February 21st, 1911.]
    1. After examination of the trusts created and declared in a trust deed dated April 1st, 1895, in a creditor’s suit to satisfy a judgment out of , land conveyed by a judgment debtor (the settlor) to a trustee for himself and his children, where it appeared that the complainant’s debt was contracted after 1902 and the judgment recovered October 25th, 1905— Sell, that such deed is a fraudulent device as to all the future creditors of the settlor.

      2. Under the authority of Washington National Bank v. Beatty, 77 N. J. Bq. (7 Bueh.) 252, the rule seems to be now settled in this state that a voluntary conveyance made with actual fraudulent intent is void as against any subsequent creditor of the grantor although his debt was contracted long after the voluntary conveyance is made, and was not then contemplated by the grantor as a possibility.
    3. As between the judgment debtor and the trustee and his children, such deed is valid, and will be set aside only so far as is necessary to pay the complainant’s debt.

      4. So much of such deed as defines the trust further examined, and under it the settlor was held to take a life estate in the rents and income of the estate (which amounts to the same thing as an equitable life estate in the corpus), and his equitable interest is primarily liable for the debt, and should be exhausted before recourse is had to the interests of the remaindermen.
    5. In case recourse is had to the interests of the remaindermen, provision may be made in the decree for apportioning the complainant’s debt equitably among the different shares.
    Case heard on hill, answer, replication and proofs taken in open court.
    Creditor’s suit to satisfy a judgment out of land conveyed by a judgment debtor to trustee for himself and his children. Date of trust deed, April 1st, 1895. Complainant’s debt contracted after 1902 and judgment recovered October 25th, 1905.
    The land, which is situate in Jersey City, was conveyed as aforesaid by the defendant William Winbeny, party of the first part named in the deed, to the defendant Eugene J. McCarthy, party of the second part, upon the following trusts:
    "1. That he (the party of the second part) will allow the said party of the first part to manage and control said property, as he may think best for the interest of his children hereinafter named and to collect and receive all of the rents and income from the same and apply same to such purposes as he may desire during the term of his natural life.
    “2. That he will at any time when requested in writing so to do by party of the first part, convey to Anna Winberry, daughter of said party of the first part, the property situate upon Wayne street, being the property hereinbefore second above described, to have and to hold to her, her heirs and assigns, forever.
    “3. That in case of the death of the said party of the first part without making such request, leaving said Anna Winberry him surviving, he will then convey said Wayne street property to her, to have and to hold, to her, her heirs and assigns, forever.

      “-L That he will at any time when requested so to do by said party of the first-part in writing, convey to William Winberry, the son of said party of the first part, the farm situate in Rockland county, New York, being property hereinbefore first above described, to have and to hold unto said William Winberry, his heirs and assigns, forever.
    “5. That in ease of the death of said party of the first part before making the request to convey said farm to his said son, William Win-berry, leaving his said son him surviving, he wall then convey said farm to said William Winberry, to have and to hold unto him, his heirs and assigns, forever.
    “0. That he will at any time, when requested in writing so to do by ihe said party of the first part, convey to Mary E. Winberry, Ray Win-berry and Eleanor Winberry, three of the children of the said party of the first part, the Gregory street property above mentioned, being the three lots and parcels hereinbefore last above described, to have and to hold unto said Mary, Ray and Eleanor as tenants in common and unto their heirs and assigns, forever.
    “7. That in case said party of the first part shall desire to have the three last mentioned lots conveyed separately and severally to said Mary, Ray and Eleanor, each to have one of them and shall so request in writing, designating which lot shall be conveyed to each of said children, he will make such conveyance accordingly, conveying one of said lots to said Mary, one to said Ray and one to said Eleanor, to have and to hold to each of them respectively, their heirs and assigns, forever:
    "8. That in case of the death of said party of the first part without requesting the conveyance of said Gregory street property, leaving said Mary, Ray and Eleanor him surviving, he will then convey the said property to them as tenants in common, to have and to hold unto them, their heirs and assigns, forever.
    “9. In case of the death of any of said children of said party of the first part, without leaving lawful issue and before the conveyance to him or her of the property above described, as hereinbefore directed, then ho will hold the property which would have been conveyed to such child so dying, if he or she had lived to receive such conveyance, in trust for the use and benefit of the surviving children of said party of the first part, to be conveyed to them as may be directed by said party of the first part, or if he fail to give such direction, then upon his death to be conveyed to said surviving children as tenants in common, to have and to hold to them, their heirs and assigns, forever.”

      Mr. Charles H. Hartshorne, for the complainant.

      Mr. Charles J. Roe and Mr. Addison Ely, for the defendants.
   Stevenson, V. C.

1. My conclusion of fact is that the whole trust in question was a fraudulent device as to all the future creditors of the settlor. It is, in my opinion, a transparent scheme to enable Mr. Winberry to enjoy the full control and use of all his property, or the more valuable part of it, while he could contract debts with impunity. In case a creditor should become urgent and proceed to apply to his debt whatever beneficial equitable interest Mr. Winberry reserved to himself in the trust estate, he (Mr. Winberry), according to the terms of the trust, could disappoint the pressing creditor by calling upon the trustee to convey the estate to his (Winberry’s) children in the prescribed portions. Mr. Winberry thus had a string on the several portions which he intended to allot to his children which enabled him to remain practically the owner of bis gstate for his own uses and purposes, while he would have nothing to satisfy any debts which he might thereafter contract. It certainly would be discouraging to a creditor to undertake to reach the equitable life interest of Mr. Winberry when, at the end of an expensive litigation like the present one, the whole life estate could be terminated at the word of Mr. Winberry and the entire estate become vested in his children.

In my judgment the law ought not to tolerate, and does not tolerate, such devices. The fraudulent intent extends to all future indebtedness. I think this is a case of actual fraud which directly affects all debts which Mr. Winberry might contract at any time after the trust conveyance was made.

2. As between Mr. Winberry and the trustee and his children the conveyance in trust of course is valid. The conveyance will be set aside only so far as is necessary to pay the debt of the complainant.

3. In my opinion under the first paragraph defining the trust, Mr. Winberry takes a life estate in the rents and income of the estate which amounts to the same thing as an equitable life estate in the corpus. He is expressly allowed to manage and control the property and to apply the rents and income to “such purposes as he may desire during his natural life.” It is impossible to find that there is any intention here that the income shall be applied only to purposes relating to the support or welfare of the children. The requirement that he shall manage and control “as he may think best for the interest of his children” indicates tq my mind only a cunning intention to make it appear that the children are equitably interested in the income during Mr. Winberry’s lifetime, while in fact such is not the case. This provision savors of fraud and deceit. Mr. Winberry is to manage and control the corpus for the interest of his children while he can apply the income to all “such purposes as he may desire.”

The equitable interest of Mr. Winberry is primarily liable for the debt and should be exhausted before recourse is had to the interest in remainder belonging to the children.

4. On account of the peculiar character of the trust by which the attempt is made to enable Mr. Winberry to distribute, his estate among his children whenever his life estate is attacked, it may not be important to provide in the decree for the exhaustion of the life interest before recourse is had to the interests of the remaindermen. This matter may be determined upon settlement of the decree.

In case recourse is had to the interests of the remaindermen provision, perhaps, may be made in the decree for apportioning the complainant’s debt equitably among the different shares. My recollection is that the share of one child consists of land situate in the State of New York. IIow far equality of burdens among the children may be incidentally effected while granting the complainant the relief to which he is entitled, may also be determined upon settlement of the decree. This matter has not been the subject of argument and possibly it may be proper to take some additional testimony. It occurs to me, whether an appeal is taken or not, that this matter may be reserved. If the complainant’s debt is to be paid out of this entire estate, it may be surmised that the defendants may avoid having the decree adjust any equities inter sese, if they are all now of full age, by making arrangements satisfactory to themselves.

* * * * * * * * * *

The foregoing memorandum was furnished to counsel as a sufficient exposition of the theory upon which the decree in favor of the complainant was based. If when this memorandum was prepared I had had the benefit of the opinion of Judge Dill, written for the court of errors and appeals in the case of Wash ington National Bank v. Beatty et al. (June 21st, 1910), 77 N. J. Eq. (7 Buch.) 252, tlie decree might also have been stood upon another ground. Probably the somewhat uncertain condition of our law, .which the above-cited case cleared up, impelled me to avoid tire discussion of several questions which were fully argued by counsel in regard to the nature of the fraudulent intent of the settlor requisite to make his gift void as against debts subsequently contracted, and not within the scope of his actual fraudulent intention. In this case of Washington National Bank v. Beatty the opinion contains what purports to be a deliverance of the entire court, which although not necessary to the decision of the case, must, I think, be regarded as settling the law of the state so far as this court is concerned.

Under the authority of this decision, or this deliverance, this voluntary settlement by Winberry must be regarded as void as against the complainant’s debt, which began to be contracted eight years later, and was plainly entirely beyond the contemplation of Winberry when the trust deed was made in 1895. The evidence satisfied my mind beyond all question that this voluntary conveyance in trust made in 1895 was made with actual intent on the part of the grantor, Winberry, to put his property where his then existing creditors could not reach it. The trust deed bears date April 1st, 1895, and was recorded July 2d, 1895, and on July 19th, 1895, the creditors of Winberry settled with him for fifty cents on the dollar in cash and notes. I do not think that it is possible under the circumstances proved in this case to doubt the actual fraudulent intent of Winberry in making this voluntary conveyance in trust. Under the sweeping rule applicable to this case laid down by the court of errors and appeals in the above-cited recent case it seems to be unnecessary to enter into the question whether any of the indebtedness existing when the voluntary conveyance was made and within the actual fraudulent intent of Winberry, remained unpaid when the complainant’s debt was contracted, or when this suit was begun, or what the effect of such fact may be under our law or the law of other jurisdictions. Accepting what strictly speaking seems to be a dictum in the opinion of Judge Dill as an authorized deliverance of the court of errors and appeals, the rule seems to be now settled in New Jersey that a voluntary conveyance made with actual fraudulent intent is void as against any subsequent creditor of the grantor even though his debt was contracted long-after the voluntary conveyance was made, and was not then contemplated by the grantor as a possibility. A voluntary deed having the taint of fraud and being therefore voidable as to any creditor seems to stand permanently as void against all future creditors of the grantor, however remote in time the creation of their debts may be from the making of the fraudulent conveyance, and however far removed they may be from any actual fraudulent intent of the grantor. As stated by Judge Dill, if the conveyance is shown to have been made with actual intent to defraud "any creditor either existing at the time when the conveyance is made or subsequently,” then it follows that “the conveyance is proven to be fraudulent and it may be set aside at the instance of any class of creditors without regard to the time when the debt came into existence.”


author: Garrison, V. C.

text:
    Lawrence A. Van Riper v. George S. Hilton et al.
    [Decided February 17th, 1911.]
    A testator established a trust to continue “until my youngest grandchild, now living, shall attain the age of twenty-six years, or would be of the age of twenty-six years if then living.” Testator died a month after the will was executed, and when the will was made there were grandchildren born, and the wife of the only son living was not then eneeinte. — Held that, as there was no possibility of the testator’s having at the date of the will any younger grandchild than then existed, the trust does not conflict with the rule against perpetuities, as extending for a longer period than two lives in being.

      This is a bill by Lawrence A. Van Eiper against executors and trustees of his father’s will. He sets out in his bill that his father, Hartman V. Van Eiper, made a will upon the 20th day of November, 1902, and died on the 24th of December, 1902; and that in and by his will be constituted George S. Hilton, Walter E. Hudson and Jane E. Van Eiper, executors, and that they have qualified; that Carrie E. Van Eiper is the wife of Lawrence, the complainant, and is forty-five years of age, and that they were married on the 12th of November, 1889, and that the defendants, William and Lawrence A. Van Eiper, Jr., are the lawful issue of their marriage, they being infants of the ages of eighteen and sixteen, respectively. He then sets out that his father died intestate as to certain of hi's property, because he claims that “under the tenth clause of the will the attempted trusts violate the rule against perpetuities or accumulations.
    The tenth clause of the will is as follows:
    “Tenth. I give, devise and bequeath all the rest, residjie and remainder of my estate, to Jane E. Van Riper, George S. Hilton and Walter R. Hudson, in trust:

      “First: To rent and lease any and all real estate owned by me and not hereinabove specifically devised until my youngest grandchild now living shall attain the age of twenty-six years or would be of the age of twenty-six years if then living, to collect and receive the rents, issues and profits arising therefrom and out of the same pay all charges for repairing, taxes, water and insurance and invest the balance in bonds, mortgages or other proper securities or deposit the same in some safe banking institution at interest, and keep the same, with the income, profits, interest and accumulations thereon invested as aforesaid.

      “Second: To invest all moneys which shall come into their hands as such trustee, or which may be derived from any of said real estate, sold and conveyed, under and by virtue of the power and authority given to them in this will, or which may be derived from bonds, mortgages, or other securities belonging to the said residue and remainder of my estate, in bonds, mortgages or other securities, or deposit the same in some safe banking institution at interest and keep the same with the income, profits, interest and accumulations thereof, invested as aforesaid.

      “Third: When my youngest grandchild now living shall attain the age of twenty-six years or would if then living be of the age of twenty-six years, my said trustees shall render to the propel’ courts their accounts and after the same have been approved and allowed them, my trustees compensated for their serving herein, and all costs, charges and expenses paid and satisfied, my trustees shall, if my wife, Jane E. Van Riper, is still living, set aside bonds, mortgages or other securities to the value of Ten Thousand Dollars and pay the income thereof to the said Jane E. Van Riper in frequent payments as long as she shall live. If my son, Ackerman Van Riper, is then living, my said trustees shall set apart other bonds, mortgages or other securities, to the value of Ten Thousand Dollars; and pay the income thereof to the said Ackerman Van Riper as long as he shall live.
    “My trustees shall then assign and set over to Jane Van Riper, one of the children of my deceased son George Van Riper, money, bonds, mortgages and other securities, equal in value to the one-fourth part of all the money, bonds, mortgages or other securities then remaining in their hands and shall convey to her in fee simple, by good and sufficient conveyances in the law the equal undivided oné-fourth part of all the lands and real estate then held by my trustees and shall then transfer, assign and set over to Maggie Van Riper the other child of my deceased son, George Van Riper, money, bonds, mortgages and other securities, equal in value to the one-fourth part of all moneys, bonds, mortgages or other securities then remaining in their hands, and shall convey to her in fee simple, by good and sufficient conveyances in the law, the equal undivided one-fourth part of all the lands and real estate held by my trustees. My trustees shall then divide all the rest, residue and remainder of all the moneys, bonds, mortgages and other securities remaining in their hands among all the children of my son, Ackerman Van Riper, then living, and shall convey to the children of the said Ackerman Van Riper, the equal undivided one-half of all the lands and real estate held by said trustees, it being the intention that all the children of my son, Ackerman Van Riper, whether living at the time of my decease, or born afterwards, shall share in the distribution of estate herein provided and set forth.
    “In the event of the death of either Jane Van Riper or Maggie Van Riper, children of my deceased son, George Van Riper, before attaining the age of twenty-six years and without lawful issue, leaving her sister her surviving, then I give, devise and bequeath all the lands, real estate, money, bonds, mortgages and other securities, herein devised and bequeathed to the child so dying, to the surviving child, her heirs and assigns forever.
    “In the event of both the said Jane Van Riper and Maggie Van Riper dying before attaining the age of twenty-six years and without lawful issue, and leaving a child or children of my son, Ackerman Van Riper, surviving them, then and in that event I give, devise and bequeath all the lands, real estate, money, bonds, mortgages and other securities herein devised and bequeathed to the said Jane Van Riper and Maggie Van Riper, to the children of my son, Ackerman Van Riper, their heirs and assigns forever.
    “In the event of the death of any of the children of my son, Ackerman Van Riper, before attaining the age of twenty-six years, and without lawful issue, leaving a brother or sister, or brothers or sisters him or her surviving, then and in that event, I give, devise and bequeath all the lands, real estate, moneys, bonds, mortgages and other securities herein devised and bequeathed to the child or children so dying, to the surviving child or children of my said son. Ackerman Van Riper, to them, their heirs and assigns forever.

      “In the event of all the children of my son Ackerman Van Riper dying before attaining the age of twenty-six years without leaving lawful issue and leaving a child or children of my son, George Van Riper, surviving them, and in that event, I give, devise and bequeath all the lands, real estate, moneys, bonds, mortgages and other securities, devised and bequeathed to the children of my son Ackerman Van Riper, to the children of my son George Van Riper, their heirs and assigns forever.”
    The other parties are the executors and executrix of the will, the widow individually, the grandchildren of the testator, and Carrie E. Yan Riper, the wife of the complainant.

      Mr. Henry Smith and Mr. Preston Stevenson, for the complainant.

      Mr. David D. Zabriskie, for the guardian ad litem of William P. and Lawrence A. Van Riper, Jr.

      Mr. Frederic Beggs, for Jane E. Van Riper and the guardian ad litem of Marjorie Van Riper.

      Mr. Henry Bewkes, Jr., for Carrie E. Van Riper.

      Mr. Wayne Dumont, for R. H. Fordyce, substituted trustee.

      Mr. William B. Gourley, for Hilton, Hudson and Van Riper, executors and trustees.
   Garrison, V. C.

The sole question in the case is whether the rule against perpetuities has been violated by the testator by the provisions made by him in the tenth clause of his will which is quoted in full above.

The relevant facts are few and are as follows: The will was made on the 20th day of November, 1902; the testator died on the 24th day of December, 1902. At the time of his death he left him surviving his widow, Jane E. Van Riper; Jane Van Riper and Maggie Van Riper, grandchildren, they being the children of his deceased son George Van Riper, who had died some ten years prior to the death of the testator; Lawrence A. Yan Eiper, a son; William P. Van Riper, the oldest child of Lawrence A. Van Riper, and Lawrence A. Van Riper, Jr., the youngest child of Lawrence A. Van Eiper, the said Lawrence A. Van Riper, Jr., having been born on the 27th of April, 1893.

At the time that the testator executed his will, on the 20th day of November, 1902, the wife of Lawrence A. Van Eiper was not enceinte. The youngest living grandchild, therefore, was Lawrence A. Van Riper, born on April 26th, 1893, and at the date of the making of the will he was, therefore, nine years, six months and twenty-four days old; and since the only living child of the testator was Lawrence A. Van Eiper, and his wife was not enceinte at the tipie the will was made, there was no possibility of the testator’s having at the date of the will any younger grandchild than the above-mentioned Lawrence A. Van Riper.

The contention of the complainant is based on the language in the tenth, clause above quoted which fixes the period of non-vesting or o£ accumulation. The language under review occurs in two places and is practically identical in each. It is as follows: In the first paragraph of the tenth clause the trust is to last “until my youngest grandchild now living shall attain the age of twenty-six years or would be of the age of twenty-six years if then living,” and in the third paragraph of the same clause the language is “when my youngest grandchild now living shall attain the age of twenty-six years, or would, if then living, be of the age of twenty-six years,” &e. The argument of the complainant is that since it might have been the fact that the testator’s living son Lawrence A. Van Riper, who was married at that time, might have been the father of a child en ventre sa mere, there was a possibility of a younger grandchild than Lawrence A. Van Eiper, Jr., and if such had been the case the computation based upon his age would have carried the period beyond the limit allowed by the rule against perpetuities.

With respect to the terms of the rule there is no dispute; and since I intend to concede in favor of the complainant the utmost liberality of application of the rule, it does not seem worth while to me to burden this opinion with citations of authority. For the purpose of this decision, I shall assume the rule to be that an estate must vest, or accumulations may not be permitted for longer than a life or lives in being at the date of the testator’s death and twenty-one years after the cessation of such life or lives (allowing also for the usual period of gestation); and, further, that if no lives are used, the period must not exceed twenty-one years after the date of the testator’s death; and, further, that if by any possibility the period provided for by the testator, using the elements which he based his computation upon, could exceed the term of life or lives in being at the date of the testator’s death and twenty-one years thereafter, such provisions are void.

Applying the rule as just stated to the case at bar, I find, as a matter of fact, that there was no possibility, using the elements that the testator used, which could prolong the period of the non-vesting or of accumulation beyond the time allowed by law. The elements used by the testator were, first, the youngest grandchild living at the time that he made Ms will, November 20th, 1902, and twenty-six jnars from the date of the birth of such youngest grandchild. Of course, if at that time there had been living a grandchild any younger than five years, the provision of the will under review would have to be declared void, and of course this result would follow had the wife of the testator’s son been with child at the time that the testator made his will. But, as a fact, Lawrence A. Yan Riper, Jr., then nine years and six months old, was the youngest living grandchild. And, to my mind, it is utterly immaterial that if the circumstances had been different than what they were the result would be different, because we are not dealing with the validity of this clause applied to different facts than those which existed, but with its validity tested by the existing facts.

The testator was subject to the universal presumption of knowledge of the law. He is presumed to have known that he could not prolong the time for vesting of his estate, or within which it might be accumulated beyond a certain period. He was charged, therefore, with the responsibility of definitely fixing a period within the rule; and, in my view, he did so. It is, in my view, entirely wide of the mark to say that Lawrence A. Van Riper, the son, who was the father of two children then living, might have had other children after the birth of Lawrence A. Van Riper, Jr., his youngest child, who was born more than nine years before the testator made his will. The fact is that there was not any child of his younger than the said Lawrence A. Van Riper, Jr. It is equally true that the said Lawrence A. Van Riper, the son of the testator, might have been the father of a child still in the womb of his wife, but, as a matter of fact, he was not; and this, therefore, equally disposes of that supposition. The testator was dealing with actually existing facts. How he acquired knowledge of such facts which enabled him to use them without fear of consequences is immaterial. Suppose that it should appear in a similar case that after the birth of a child born nine years before the testator made his will, his only living son and the wife of such son had separated and the wife had gone to live in some other community, entirely apart from her husband, and the latter had remained with his father, the testator, during all of the years and had never left him, so that the testator was assured for that reason that there was no younger son of his son than the one born some nine years before the time the will was made, can there be any question that he would be entitled to use those facts as a warrantable basis for a computation based upon the age of his youngest grandchild then living ? Innumerable instances could be given of a similar nature, but they all lead to the conclusion which I have stated above. This testator dealt with existing facts. The proofs before me demonstrate what those facts were. In the eye of the law they were as apparent to him then as they are to me now, and he had a right to deal with them as existing facts, and did so.

I can see no more force in the contention that if there had been a child en ventre sa mere this provision would have been void than an argument based upon the supposition that the testator might have been ignorant of the age of Lawrence A. Van Eiper, Jr., and that the said Lawrence A. Van Eiper, Jr., might have been younger than he was, or any other similar supposition.

In my view of this case there is no room for any suppositions. The testator was dealing with existing facts, and we have a right to presume that, if, as a fact, he had learned that the wife of his son were enceinte, he would have made his provision with respect to that fact, and would have made it within the law; and that since she was not enceinte, and the youngest living grandchild was the boy born more than nine years before, he dealt, as he had a right to do,'with that as an existing fact.

The result, therefore, of my consideration of this case is that the provisions of this will under review do not violate the rule against perpetuities or with respect to accumulations.

The industry of counsel furnished me with very many citations from text-books and authorities, and I have read most, if not all, of them, and have also continued the investigation personally with the result that 1 read many not cited by counsel. I have purposely refrained from citing authorities, because I have found them, with respect to this case, confusing and not helpful. I found no case (and counsel were not able to furnish me with any) tire facts of which were so nearly like the present case as to aid in its determination; and the general principles are too well settled to require citation.

As above stated, I assume the law to be as strongly in favor of the complainant as it seem possible for me to make it, and find, upon the facts, that it does not apply favorably to him in the case in hand.


text:
    Clarence Kelsey v. Agricultural Insurance Company of Watertown, N. Y.
    [Decided February 20th, 1911.]
    1. Where a fire policy, containing a mortgage clause, did not correctly set forth the contract that the loss should be payable to the first mortgagee, as his interest might appear, and to the second mortgagee, as his interest might appear, because of a failure to state the rights of the second mortgagee, the second mortgagee could sue insurer to reform the policy without making the owner or the first mortgagee a party.

      2. A bill by a second mortgagee to reform a fire policy so as to correctly set forth his rights to recover in case of loss will not be stricken out on motion on the ground of laches, where the delay of less than four years could not have injuriously affected insurer.
    3. A second mortgagee who brings an action at law on a fire policy containing a mortgage clause to recover for a loss is not thereby estopped under the doctrine of election of remedies from suing in equity to reform the policy so as to correctly set forth the contract as relied on in the action at law.
    4. A bill by a second mortgagee to reform a fire policy containing a mortgage clause, which alleges that the agent of insurer intended that the second mortgagee should be protected by the mortgage clause, that the mortgagee so intended, and that there was a mutual mistake in supposing that, by placing the second mortgagee’s name on the paper at a place other than at the commencement of the mortgage clause, he would be protected, sufficiently charges mutual mistake.
    5. The act of an owner in procuring a fire policy for the benefit of the mortgagee without regard to any act of the owner is not contrary to public policy, and the contract is enforceable at the suit of the mortgagee.
    6. The court will not on motion dismiss a bill by a second mortgagee to reform a fire policy containing a mortgage clause, so as to set forth his rights, after the first mortgagee has been satisfied, on the ground that insurer will not owe the second mortgagee anything after paying the loss to the first mortgagee as his interest appears, that being a matter to be settled at final hearing, after that contract had been reformed.
    On motion to strike out bill.
    The bill in this case sets out, inter alia, that Clarence Kelsey was the holder of second and third mortgages upon certain premises owned by one Kupfersmith; that Samuel Weinberger now holds the first mortgage on the said premises, which said first mortgage was originally held by Charles Schlagater. The bill contains this charge:
    “That on or about September 25th, 1907, your orator not having any policy of insurance to cover and protect his investment on said two mortgages, wrote said Hyman Kupfersmith requesting him to forward a policy to your orator; that your orator is informed and believes that said Hyman Kupfersmith took said letter to Ernest A. Moore. Esquire, the local agent at the city of Paterson of the Agricultural Insurance Company of Watertown, New York * * * and directed the said agent to issue a policy of fire insurance insuring him for three years against loss or damage by fire to said dwelling-house to an amount not to exceed $750. and further directed said agent to annex to said policy a mortgagee clause providing that the loss or damage thereunder, if any, should be payable to said Charles Schlagater as first mortgagee and to your orator as second mortgagee as their interests might appear, and to contain the usual provision that said insurance as to the interest of said mortgagees only therein, should not be invalidated by any act or neglect of the mortgagor or owner of said dwelling-house; and that said Hyman Kupfersmith further instructed said agent that said policy was intended for your orator in compliance with the request contained in the said letter and that when said policy was prepared and ready for' delivery it was to be mailed directly to your orator by said agent; and that said agent read said letter of your orator and agreed with said Hyman Kupfersmith to comply with the request of your orator therein contained and the said instructions and request of said Hyman Kupfersmith ; that on or about December 1st, 1907, your orator received through the mail direct from said agent a policy of insurance issued by the said Agricultural Insurance Company of Watertown, New York, numbered 2370 and countersigned by said agent, which policy of insurance your orator now brings here into court.”
    The policy itself is not attached to the bill, nor is any copy thereof attached, but the original policy was tendered at the time of the argument and such course was not only not objected to by the defendant but throughout both sides have treated the ease as if the policy in question was actually before the court by oyer or other proper course of proceeding, and I deem it improper, therefore, to avoid deciding the issues because of this irregularity, and shall consider the case as if the policy itself or a copy thereof was annexed to the bill.
    Attached to the policy there is the usual “mortgagee clause.” This clause, as is well known, is a printed form in which blanks are left for the insertion of the names of the mortgagee or mortgagees. Upon the blank which was used in this case and attached to this policy the agent had written in the name of “Charles Schlagater, first mortgagee,” and then, at the bottom of all of the printed matter, but before the date and the signature of the agent, he had inserted the name “Clarence Kelsey, second mortgagee.”
    With respect to this the bill charges
    “that in filling' out the printed form of said mortgagee clause the said agent intended to insert the name of your orator followed by the words ‘as second’ and preceded by the words ‘Charles Schlagater as second mortgagee and’ at the top thereof, but after writing in the name ‘Charles Schlagater’ at the left of the top line, he found that there was not enough space left in which to conveniently or legibly insert the name of your orator preceded by the words ‘as first mortgagee and,’ and thereupon, and finding no other space in which to insert your orator’s name, he wrote the word ‘first’ to the right of the said top line after the printed word ‘as’ and inserted the name of your orator followed by the words ‘second mortgagee’ at the bottom of said mortgagee clause, over the date and name of'said agent and partly across the printed matter of said clause; that accompanying said policy was a letter from said agent notifying your orator that said policy was issued at the request of said Hyman Kupfersmith as insurance on said property for your orator, or to that effect.”
    T3ie bill then goes on to recite that the complainant looked at the said policy and was satisfied that the clause as written showed the intention of the company to insure him, and put the policy away and had no occasion to recur to the matter until the month of December, 1908, when Moore, the above-mentioned agent of the company, called upon him and notified him of a fire and conversed with him about his insurance. He then sets out various actions at law which were brought upon the policy and shows that the defendant company in the law suits contends that the written clause does not include Kelsey as a party to the contract.
    His prayer is that the clause as written be reformed in accordance with what he charges was the intention of the parties, so that the mutual mistake which was made shall be corrected and the clause will read that Charles Schlagater as first mortgagee and Clarence Kelsey as second mortgagee are each contracted with in the terms of the said mortgagee clause.
    The bill also prays for an injunction preventing the defendant company from setting up as a defence in any law action the policy in its unreformed condition.
    To this bill the defendant objects on various grounds which will be dealt with in the opinion, and moves to strike out the said bill under the two hundred and thirteenth rule.

      Mr. Clarence Kelsey, pro se.

      Messrs. Condict, Condict & Boardman, for the defendant.
   Garrison, V. C.

Counsel upon each side have argued this case at great length and have each furnished the court with voluminous briefs; but I do not think it would serve any good purpose for me now to enter into an extended discussion of the case, because in my view the motion to strike out should be refused, and most, if not all, of the questions which are sought to be raised by the defendant thereon should be left for final hearing. I shall, however, briefly deal with each of the points raised and indicate why I do not find that they should result in striking out the bill.

1. It is objected that there is a non-joinder of necessary parties, and that Kupfersmith or Schlagater or Weinberger, or all of them, should be parties. It is argued in this behalf that the bill shows that there has been a loss under the policy, and that the company has various rights with respect to these various persons, and that the policy should not be reformed excepting in a suit in which they are parties.

If this suit were one in which the complainant was endeavoring to recover upon the policy, so different a case would be presented that the arguments of the defendant would have to be carefully considered, if not immediately acceded to; but the complainant in this suit is not seeking in any way to enforce any right that he may have under this policy. The complainant is seeking, as against the defendant company, to have a contract which they made for his benefit express what he charges was the actual intention of the parties, and I do not see why any other party need be in the suit than Kelsey and the company. The rights of no one else are involved, and if the contract is made to read as Kelsey says it should, no one’s rights will be injuriously affected save the company’s and Kelsey’s. The other parties, so far as I can see it, are entirety unconcerned in the matter now before the court.

It has been held that the mortgagee, under the mortgagee clause, is in the same position as if he had taken out a separate policy, free from the conditions imposed upon the mortgagor or owner. Reed v. Firemen’s Ins. Co. (Supreme Court, 1903), 76 N. J. Law (47 Vr.) 11 (at p. 15); Kupferschmidt v. Agricultural Ins. Co. (Court of Errors and Appeals, 1910), 78 Atl. Rep. 225. It is this separate contract that the complainant here seeks to have reformed, and I do not see why he need join any other person in his suit than the company.

2. It is alleged that the face of the bill shows such laches on behalf of the complainant that the court should strike out the bill for this reason. The bill shows that Kelsey received the policy about December 1st, 1907; that he looked at this clause upon which his name appeared and reached the conclusion that it showed the intention of the company fo protect him; that he was confirmed in this by the agent of the company coming to him as if he were insured under the policy a year later and after a fire had occurred. None of the ordinary reasons which induce a court to dismiss a case for laches are present; that is, no witnesses have died, or papers been lost, or such time elapsed as to make it difficult or burdensome for the defendant to present its whole case with respect to the subject-matter involved; nor are any rights altered. The only possible injury or damage which' could result to the defendant by reason of the delay of the complainant in seeking to have the instrument reformed would be that it claims that it had the right to cancel the insurance on ten days’ notice, and that a loss has occurred, and that if the policy is now reformed‘so as to make Kelsey a party to the contract, it is in a different position than it would have been if he had been diligent in having the policy reformed earlier and before the loss.

This may be so, but the defendant is not thereby harmed by the present action. The matter is one which can only be properly determined at final hearing, and then the bill may be dismissed for laches if the facts warrant it — if the facts demonstrate that that is the proper disposition of the case. If the company shows in its case that it did not consider that it had insured Kelsey and was not advised that he claimed to be insured until after the loss, then it may very well be that Kelsey’s present claim must be dismissed because it is made at a time when it would be unfair to the defendant to consider it. But on the trial, if the facts show that the company knew that it had insured Kelsey and considered that he was a party to this policy, then I cannot see how it would be proper to refuse to reform the contract at this time. If the company understood that it had contractual relations with Kelsey which it might terminate upon ten days’ notice, and did not do so, there is no reason now why whatever contract Kelsey and the company had should not be expressed in such terms as to effectuate their intention.

I do not think the doctrine of laches should apply to this matter at this stage of the proceeding.

3. It is contended that because Kelsey brought a suit at law upon the policy he is now estopped to apply in equity to have the policy reformed. It is claimed by the defendant that there was an election of remedies, and that by electing to proceed at law he has waived his right to proceed in equity. I do not think that this is so, or that any doctrine of election of remedies applies to this ease.

It is true that Kelsey mistakenly supposed that the law court would hold that he was a party to the contract because his name appeared at tire bottom thereof and not in its proper place, and that the law court would find from the writing that his name was intended to be at such place in the contract as would make him a party to it. But this was entirely consistent with the position that lie takes in this court; and the fact that he began his suit at law upon the unreformed contract and subsequently had to come to this court to prevent what would be an injustice if his case Ls proven, does not invoke the doctrine of election of remedies, as I understand that doctrine.

4 and 5. These two objections are based upon the argument of the defendant that the bill does not show any mutual mistake. In this I disagree with the defendant. The bill in the part thereof which directly concerns the matter which we are now considering, charges that the agent intended that Kelsey should be protected by the mortgagee clause and that was Kelsey’s intention, and that the mutual mistake was in supposing that by placing his name on the paper containing the written terms of the clause at a place other than at the commencement of the said clause would so protect him, and it is obvious that this was a mutual mistake.

6. The sixth objection is based upon the theory that because the bill shows that Kupfersmith, the owner of the property, applied to the company to have this insurance issued to Kelsey and bargained for a clause which should insure Kelsey without regard to the act or neglect of the mortgagor or owner, the bill should be dismissed. The theory of this is that such a contract negotiated for by Kupfersmith would be against public policy. I cannot seriously consider this objection. In almost every, if not every ease nowadays, in which there is a mortgage the owner of the property takes out a policy with the mortgagee clause therein containing the provision above referred to, and I have yet to learn that this proceeding has been objected to or criticised upon the ground here stated in any court in any case.

7 and 8. The seventh and eighth objections are based upon the contention of the defendant that it will not owe Kelsey anything, even if the clause is reformed as he desires, and therefore the court should not reform the contract. I shall not devote any time to this further than to state that this is surely a matter for final hearing. As I have before pointed out, this action is not one to recover upon the policy; its sole purpose, besides incidental injunctive relief, is to have the policy written as the complainant says it was intended to have been written, and to rectify a mutual mistake. My first impression is that whether or not Kelsey can recover anything under the reformed contract should be left to be settled in the suit at law in any event; but, however this may be, it surely should not be settled upon the bill at this stage of the proceedings, and the defendant will be left to make such case concerning that in its answer as it may be advised. Without all the facts before it, this court surely should not hold that Kelsey is not entitled to have the contract reformed if he proves the proper facts to entitle him to reformation. Whether it will refuse him relief notwithstanding the proof of such facts, if with all the facts before it it should determine that he could not recover upon the reformed contract, I do not now decide. All the facts are not now before the court, and it would be entirely improper in my view to refuse the complainant relief at this stage upon the grounds set up in these objections.

The result is that the motion to strike out the bill will be denied, with costs.