text:
    Mercantile Co-Operative Bank of New Jersey v. Jennie P. Goodspeed et al.
    [Argued June 7th, 1904.
    Decided January 17th, 1905.]
    1. Where a building and loan association undertakes to make a mortgage due for default, and files a bill to foreclose when it is in failing condition, and thereafter its receiver practically takes its place and conducts the suit, the case will be dealt with as if the bill had been filed by 'the receiver.
    2. A defendant in foreclosure will not be allowed to amend his answer so as to get the benefit of an inequitable forfeiture, based on non-compliance of the mortgagee, a foreign corporation, with the requirements of the statutes imposing conditions upon which such corporations may transact any business in this state.

      3. Defendants were borrowing members of a foreign building and loan association, and gave it a mortgage, which was transferred to complainant, a domestic building and loan association; and, by agreement of defendants, their stock in the foreign association was canceled, and they accepted an equivalent amount of stock in the domestic association.— Held, in a suit to foreclose, that the case would be dealt with as if the whole transaction had been between complainant and defendants.
    4. On the foreclosure, by the receiver of a building and loan association, of a mortgage of a member, no part of the bonuses included in the mortgage will be allowed in favor of the mortgagee, in ascertaining the amount due on the mortgage; the association, because of its failure, being unable to carry out its part of the agreement'as to the manner of repayment of the loan, which is the main consideration for the bonus.
    5. Dues and fines secured by a mortgage to a building and loan association are, on foreclosure by the receiver of the association, to be considered part of the mortgage debt, to the extent that they were payable prior to the association’s suspension of business.
    On bill, answer and proofs.

      Mr. Sherrerd Depue, for the complainant.

      Mr. Thomas C. Simonlon, for the defendants Goodspeed.

      Mr. Frank P. McDermott, for the defendant Cloughly.
   Stevenson, V. C.

The following are my conclusions:

.1. The receiver of the complainant corporation, a building and loan association, since the filing of the bill, has practically taken the place of the complainant and is conducting the suit. I do not think that the position of complainant’s counsel is correct to the effect that all rights and equities were fixed at the time of the filing of the bill, and that the case should now be disposed of as if the complainant were still solvent and operating its business, and offering to its members, including the defendants Mr. and Mrs. Goodspeed, the advantages of their system. The inference is fair that at the time when the complainant undertook to make the mortgage due and file its.bill of complaint in this cause the seeds of death were in it, and its enterprise in fact was a failure. Moreover, if the corporation were now solvent and continuing its business, it is not clear that the defendants would not have an opportunity, according to the regulations and practices of the company, to pay up and reinstate in all respects their relations with the company as mortgagors and members. The case will be dealt with as if the bill had been filed by the receiver.

2. The defence of usury is not sustained. The only usurious agreement attempted to be set up in the answer of the mortgagors is an alleged corrupt agreement between the New York corporation, the original mortgagee, and Mr. and Mrs. Goodspeed, the mortgagors, in violation of the usury laws of New Jersey. I ‘find that the original contracts are under the New York law. The answer does not set up usury under the New York law, and it is not claimed by anyone that the New York law governing building and loan associations, which was offered in evidence, did not fully authorize the agreements for interest and bonuses which were made.

3. The defences, based on non-compliance on the part of. the New York corporation with section 97 of our Corporation act, and chapter 251 of the laws of 1890, are not set up in the answer, and if they had merit could not be considered. The defendants certainly will not be allowed to amend their answer in order to get the benefit of an inequitable forfeiture, if such forfeiture could be claimed on the facts proved in this case. If the failure of the New York corporation to comply with these New Jersey statutes has any effect upon the mode of ascertaining the amount due on the mortgage, as counsel for the defendants seems to think, no amendment of the answer is necessary to give the defendants the benefit of any such result.

4. I think this case must be dealt with in precisely the same way as if the whole transaction from the start had been between the complainant, the building and loan association incorporated under the laws of New Jersey, and the mortgagors, Mr. and Mrs. Goodspeed. These mortgagors, originally, were borrowing members of the New York building and loan association. When the mortgages were transferred by the New York corporation to the New Jersey corporation, and the stock of the Goodspeeds in the New York corporation was canceled; and they subscribed for and took stock to the same amount in the New Jersey corporation, what in fact occurred was a substitution of the New Jersey corporation for the New York corporation. Both were building and loan associations. No difference has been pointed out in respect of the law governing them, and their minute codes of by-laws, setting forth complex and elaborate methods of business, appear to be identical. The only difference between what took place and what would have taken place, if by the consent of all parties interested the New York corporation had moved into New Jersey and come under the New Jersey law, seems to lie in the fact that the advantages of borrowing members in the two corporations were probably not the same. It appears that the New York corporation went into liquidation first. But the complete answer to this suggestion is that Mr. and Mrs. Goodspeed agreed to the substitution and surrendered their stock in the one corporation and accepted an equivalent amount of stock in the other. The only fact, I think, which calls for a discrimination between the two corporations in the work of ascertaining the amount due on the mortgage is the payment of $190, which appears, as the proofs now stand, to have been made by Mr. Goodspeed to the New York corporation after the transfer of the mortgages and the complete substitution of the New Jersey corporation for the New York corporation had been effected. The master may take any further testimony, however, as to this payment, and also inquire and report as to the other payments (two in number, I think) alleged to have been made by the mortgagors and disputed by the receiver.

5. In ascertaining the amount due the receiver will not be allowed the benefit of the two bonuses included in the mortgages,' amounting to $5,800, or any interest thereon. The amount of the monthly bonus of twenty-five cents per share, to the extent that it was actually paid by the mortgagors, will be credited to them as a payment on their debt. In dealing with these bonuses I am constrained to regard the law, so far as this court is concerned, as settled by the two cases of Weir v. Granite State Provident Association, 56 N. J. Eq. (11 Dick.) 234, decided by Vice-Chancellor Reed in 1897, and Hoagland v. Saul, 53 Atl. Rep. 704, decided November 22d, 1902, by Vice-Chancellor Grey. I think that these eases control the present decision in regard to this matter of bonuses, notwithstanding what is said by Vice-Chancellor Pitney in his brief oral opinion, in Whitehead v. Commercial Building and Loan Association, 64 N. J. Eq. (19 Dick.) 24 The learned vice-chancellor, in the latter case, does not discuss the important distinction between the status of dues and the status of a bonus in cases of this class. Moreover, while the case was apparently decided about a week after Hoagland v. Saul, it is evident that the opinion in the last-mentioned case had not yet anywhere been published.

Counsel for the receiver argues that if the whole amount of the bonuses cannot equitably be allowed, the court should permit only a pro rata abatement, based on a comparison of the estimated period of the loan according to the terms of the original contract, with the shorter period during which the loan was in fact retained, and in support of this view he cites the case of Towle v. American Building, Loan and Investment Society, 61 Fed. Rep. 446. I cannot find a sound basis for any such apportionment. There are authorities and reasons to sustain the proposition that the entire bonus should be allowed, and there are also authorities and reasons which sustain the proposition that the entire bonus should be disallowed. When both of these simple but contradictory rules, which are perfectly easy of application, are discarded, and an attempt is made by the court to frame a new bargain which the parties might or might not have been willing to make, a great deal of difficulty is naturally to be expected.

As I understand the authorities which favor the disallowance of the bonus in part or in whole, the ease is regarded as one of failure of consideration. The question seems to be whether such failure of consideration is to be deemed a total failure or as only a partial failure, in respect of which a court of equity can in some way make a just and fair apportionment.

Building and loan associations are allowed by law to' take premiums from their borrowing members, which between other parties would be usurious, not merely, I think, because of the advantage of the loan — the advantage of the use of the money — • or the advantage of what is called “priority” in respect of the right to borrow the funds of the association. The premiums are the price which the borrower pays, not only for the loan, but for the supposed advantageous provisions for the repayment of the loan which the attractive systems of these associations hold out. It is notorious that scores of inexperienced. persons are induced to pa}^ most extortionate bonuses — far beyond what they could be in any way induced to pay to an ordinary lender of money for a loan — because they are led to believe that under the system of .the building and loan association into which they enter they can wisely and profitably pay a bonus which if paid to the ordinary lender of money they would regard as extorsive and improvident. In the present ease the bonuses which were added to the mortgage amounted to $5,800, and in addition the borrowers agreed to pay a further monthly bonus of twenty-five cents on each of their shares. The actual amount of money advanced by the original building and loan association was $6,000. Now, it seems to me that the attempted apportionment of the bonus, or pro rata abatement of it, for which counsel for the receiver argues, is based upon the erroneous idea that in these peculiar mortgages made by borrowing members to building and loan associations, the bonus in fact is paid for the advantage of the loan precisely as in an ordinary case, where, for instance, the lender and mortgagee is a savings bank or a natural person. In such ordinary case, if a situation is brought about, by agreements or otherwise, in which the loan is repaid before the end of the period originally contemplated, an apportionment of a bonus, based on the actual period of the loan, as compared with the period originally agreed upon with reference to which the bonus was charged, would seem to be entirely equitable. The borrower, a corporation, for instance, which is not allowed by law to plead usury, having paid a bonus for a loan for one year, and having subsequently been obliged to pay the loan at the end of six months, certainly ought not to demand back the whole of the bonus — manifestly, such borrower ought to pay half the bonus for a loan for six months which was agreed upon as proper for the same loan for a year. A bonus, in ail these ordinary cases of loan, is merely interest; it is merely money paid by the borrower to the lender for the use of the money loaned, and the extent of the use is determined by the period of the loan. In the case, however, of a loan from a building and loan association, the main consideration for the payment of a premium, often, if not usually, is not the loan, but the opportunities for its repayment in a convenient and highly advantageous manner which are held out to the borrowing member.

That this proposition is true as applied to the present case is strongly indicated by some features of the transaction which I have not mentioned. The original mortgage was for $18,000, composed of $6,000 of loan, $2,000 of bonus and $10,000 the amount of an existing first mortgage held by an insurance company and drawing interest at five per cent., which mortgage, however, the building and loan association only assumed to take care of as long as the mortgagors kept up* their payments. This first mortgage is of the class which generally remains undisturbed indefinitely. The building and loan association, however, collected interest monthly at the rate of six per cent, per annum on this $10,000, and also collected monthly a bonus on the one hundred shares which represented this sum, amounting to $300 per annum, while the association paid over only five per cent, per annum semi-annually to the insurance company. The borrowing members subscribed, in all, for one hundred and eighty shares. Is it not plain that the $2,000' of bonus, and the further bonus of twenty-five cents per share per month, amounting to an annual bonus of $540, were not paid merely as interest or for the prior right to borrow and use $6,000 of the funds of the association, but that the main consideration to the mortgagors for the payment of these large sums of money was the means which the mortgagee undertook to maintain for the gradual and complete discharge of the entire indebtedness of the mortgagors, including the $10,000 due to the insurance company? Whether in case the transaction as contemplated had 'been pursued to a finish, and the entire mortgage indebtedness had been paid off by maturity of the shares, the mortgagors would in fact have been benefited by the performance of a prudent contract on both sides, or would have been the victims of an unconscionable contract which they did not understand,' is a question not to be discussed in this case. I am not pointing out that the mortgagors, by being brought into a complex mathematical system which they have not understood, have been deluded into making an unconscionable contract. That might be true in the case of an ordinary loan from a money lender not having the advantageous position of a building and loan association. What I am endeavoring to point out is that this ease indicates that the main consideration for tírese enormous payments, made and ' agreed to be made on a contract for the use of money, must in fact have been not merely the use of the money, or the prior right to use the moneys of the association, but the maintenance by the lender of its system for the repayment of the entire mortgage debt, including the $10,000 mortgage held'by an outside party. When such a system breaks down utterly, in a case like this, there seems to be very little left of tire consideration for the payment of the bonus of $5,800, and no rule of apportionment by which a fair bonus for the loan of $6,000 for the brief period of that loan can be fixed.

In order that the nature and extent of the moneys paid and agreed to be paid by the borrowers in this case over and above ordinary legal interest may be fully understood, the transaction should be viewed in its final form. The mortgage for $18,000 is dated November 30th, 1897. In October, 1898, ten months later, the mortgagors, finding their monthly payments inconvenient to meet, a new deal was made. No more money was loaned, but a new mortgage was made for $21,800, which included the $18,000 covered by the first mortgage and an additional bonus of $3,000. The mortgagors were placed in a different class of members and the amount of their monthly dues on their shares, which were increased from one hundred and eighty to two hundred and eighteen, was reduced, while the monthly bonus was continued at the original figure of twenty-five cents per share, so that the annual amount of such bonus became $654. I do not pause to endeavor to calculate the time when the shares under the new arrangement would probably mature and the loan be paid, but the period, presumably, would be a great many years, unless the operations of the company were extraordinarily successful. It must be conceded that if the association managed successfully very many such loans as the one that these defendants were induced to contract with it, large dividends would soon be payable. A calculation of what these borrowers agreed to pay for an alleged prior right to borrow $6,000 of the funds of their association, and for the enjoyment of the alleged extraordinary facilities which the association agreed to provide for the discharge of this indebtedness and the' discharge of $10,000 owing to another creditor, seems to justify the inquiry whether this is not a case not only of an unconscionable contract, but of a fraudulent contract. It might be questioned whether Mr. and Mrs. Goodspeed were not in fact deluded by the falsehoods which figures tell into making a contract analogous to the historic contract for shoeing the horse. But, altogether, aside from any such possible view of this case, it is enough for my present purpose to indicate how throughout all the com-. plexities of the contract relations between these building and loan associations and their borrowing members, Mr. and Mrs. Goodspeed, the idea dominates that these perhaps mistaken and-misguided persons paid and agreed to pay these sums of money, which were so enormous in proportion to the amount of.money which they borrowed, not merely in consideration of the loan or of any prior right to make the loan, but mainly in consideration of the special facilities for the payment of the loan, and of another and larger loan to a third party, which the association contracted to maintain.

When, as the result of a contract between two parties which has failed, money is left in the hands of either belonging to the other, I think the usual rule is that an implied contract is raised to pay over the money to the rightful owner, and generally with legal interest, certainly with nothing more. The view, however, seems to be entertained that a court of equity in the case of these peculiar contracts with which we are dealing should not hesitate to proceed and frame a contract according to its own notions which the parties by an equitable fiction may be presumed to have made. If the views which I have indicated of the nature of the consideration of the agreement for the bonus are correct, the first step must be to apportion the entire bonus, so as to discover what part of it the borrowing member is to be deemed to have agreed to pay strictly for the use of the money and what part he is to- be presumed to- have agreed to pay for tire full enjoyment of the scheme for the final repayment of the entire loan. Certainly this first tiring to be 'done involves a great deal of difficulty, especially in a case like this, where the- bonus exceeds the loan and a large part of the consideration, for the agreement to pay the bonus- must have been the agreement of the association with respect to the $10,000 mortgage. If, however, this difficulty is obviated, or the court is to- proceed without regard to it, it would seem to- follow that the abatement of one part of the bonus is to be made strictly with reference to- the curtailment of tire period of the loan as originally fixed by the terms of the contract, while the abatement of tire other part of the bonus is to-be made strictly with reference to- the actual payment on the loan which will be effected by the share which the borrowing member will receive upon distribution of the assets. The first abatement may be made- in fixing the amount of the mortgage debt, but it is plain that the second abatement cannot be made until the business of liquidation has been carried to the last step and nothing is left but to calculate and distribute the dividends which the members are to- receive.

In case any apportionment of the bonus should be attempted in this case, probably it would appear equitable to most minds that ten-sixteenths of the bonus should be deducted at some stage of the calculation, because $10,000 of the $16,000 nominal mortgage debt in no way was received by the mortgagors or paid by the association.

There are various questions in regard to the equity of charging a borrowing- member with any share of Ms bonus determined by the dividend which he receives, but these questions I do not intend to discuss. It may be- urged that if the borrowing member has received in dividends fifty per cent, of the amount of his loan, the means of re-paying his loan must have been so far successful as to warrant an equitable charge against Mm to the extent of fifty per cent, of the bonus, after allowing Mm an equitable credit on the bonus based upon the curtailment of the period during wMch, under the original agreement, he had a right to the use of the money. If it can be ascertained by a calculation that the borrowing member, under the original contract, would probably hold the loan for eight years, and upon liquidation at the end of four years he receives a dividend equal to one-half the loan, it may be insisted that he ought to pay in equity one-half the estimated part of the bonus which he paid for the loan and one-half of the estimated part of the bonus which he paid for tire use of the means of repaying the loan. One charge would be naturally ascertained in fixing the amount due on the borrowing member’s mortgage, and the other charge would be ascertained in adjusting the amount of his dividend on final distribution.

Assuming that the argument which I have endeavored to state is entirely sound, the fundamental difficulty still remains that the important alluring consideration which these building and loan associations offer to induce their borrowing members to pay these enormous bonuses is the promise to maintain a complex system, which the borrowing member frequently is incapable of comprehending, by which insensibly and with very little burden to himself such member .in the course of years will be enabled to pay a very much greater sum than that which he borrowed, with less difficulty than he would find in repaying the exact amount of the loan, with lawful interest, to an ordinary mortgagee, such as a savings bank. The fact that the borrowing member is a participator in all profits may make a most unconscionably usurious contract appear reasonable and fair to persons unskilled in financial transactions and unable to understand complicated mathematical calculations. If the most of the members are borrowing members, and all of them or large numbers of them pay extraordinary bonuses on substantially the same scale, the possibility that large profits will counterbalance large bonuses certainly is increased. This condition of affairs indicates that it is the continuation of the system that constitutes the main element of the consideration of the promise to pay the bonus.

I fail to find a safe basis for any apportionment of the bonus in eases of this class, because there seem to be no data upon which to proceed in determining how much of the bonus the borrowing member agrees to pay for the use of the money and how much he agrees to pay for the enjoyment of the advantages of the system of the building and loan association for the gradual and easy repayment of the loan. Until this preliminary division of the bonus into its two elements has been made, no proportionate abatement of either part seems to be possible on any rule which has been suggested. If such division could be made, then, in large numbers of cases, including I think the one at bar, the ascertainment of the original duration of the loan as contemplated by the parties, which any abatement of the bonus or a part of the bonus absolutely requires, would contain, it seems to me, a very considerable element of guesswork. It would seem, therefore, that the consideration upon which, with the sanction of the legislature, the building and loan association has been permitted to enter into a contract with its borrowing member, which without such sanction would be usurious and illegal, must be deemed to have failed. It would also seem that such failure of consideration must be deemed to be total, in the absence of any principle or rule by which the amount of the consideration which did not fail may be ascertained. The bonus, in fact, is agreed to be paid in consideration of the entire contract — the sum total of advantages, including the use of the money which the borrowing member is entitled to receive during the whole period covered by the repayment of the loan. So far, my consideration of the subject — such consideration having extended beyond the particular illustration of extortion and hardship presented in this case— has led me to the conclusion that on the whole justice will be promoted by denying to building and loan associations their special privilege to exact usurious interest unless they carry out completely the bargain, oftentimes complex and deceptive, which they induce the borrowing member to malee.

It may be conceded that no rule for cases of this class — perhaps not even any rule prescribed by a statute — can secure equality between all the members of both kinds. I incline to think that the nearest approximation to equity will be realized if all the members — those who only share in bonuses and those who both pay and share in them' — are notified that the association can only earn and hold a bonus in case it maintains its system for the benefit of the member who has paid the bonus until he has received the full consideration upon which the bonus was paid. This rule regards the borrowing member as standing before the court in two distinct capacities. As a member he loses equally with his fellow-members. As a borrower he is dealt with as a stranger — as a party whose rights and liabilities depend upon contracts express and implied between himself and the association. This present case illustrates the difficulty of applying any other theory, and particularly the extreme difficulty in many instances of ascertaining the probable duration of the loan as contemplated by the parties to the original contract, which is the first fact to be fixed as the basis of any possible apportionment of the bonus.

It may be conceded that cases frequently occur, as is indicated in the reports, where the elements of the problem are comparatively simple, and an apportionment of the bonus seems to be practicable and more in accord with equity than the deduction of the entire bonus. Perhaps a special rule for such apportionment, strictly limited to the class of cases which I have indicated, may yet be evolved. If, however, a general rule is to be applied to all cases, it seems to me that an apportionment of the bonus upon any equitable principle applicable to all cases is impracticable, and I doubt whether any correct definition of a class of cases to which a rule of apportionment can equitably be applied could be framed, although that is not a matter which I have undertaken to consider.

I have discussed this subject of a possible apportionment of the bonus under examination in this case because the contract of the mortgagors is complex and the equitable considerations in favor of an apportionment were strongly urged in the argument.

The exact point now decided, however, is that in this ease no part of the bonuses will be allowed in favor of the mortgagee in ascertaining the amount due on the mortgage.

6. The dues and fines paid by the mortgagors constitute a contribution to the capital of the enterprise in which they were jointly engaged with the other members — an enterprise in many respects resembling a partnership. Under the rule adopted in the above cases these moneys cannot be treated as a payment on the mortgage debt. They are paid by the borrowing member as member and not as borrower. They grow out of the member’s relation to the corporation as a member, not out of his relations to the corporation as a debtor under a contract of loan.'

In regard to dues and fines which were payable prior to the suspension of the business of the corporation, it would seem that equity requires that, as they are secured by the mortgage, they should be made a part of the mortgage debt collectible in this suit. In Hoagland v. Saul, the dues secured by the mortgage payable in the future up to the maturity of the stock, and which presumably would have been paid, and' certainly would have been collectible if the business of the corporation had continued, were not allowed as a part of the mortgage debt. Such dues are not earned. But it does not appear that in Hoagland v. Saul there were any back dues owing at the time of the suspension. The reason for making the back dues collectible on the mortgage is manifest: all the members of the association must be charged with their dues in proportion to their shares down to a common date. Borrowing members who have failed to pay their dues certainly ought not to have an advantage over their fellow borrowing members who have kept their dues paid up. Vice-Chancellor Grey seems to intimate in Hoagland v. Saul that the adjustment of all equities among the members “arising upon payment or non-payment of dues” can be attended to at the final distribution of the assets. In this case, I understand, tire receiver will distribute a substantial sum. Whether these mortgagees are to be charged with their back dues and fines down to' the suspension of business or some other common date in ascertaining the amount due on their mortgage, or whether such charge is to be made by the receiver against their dividend, seems to be a matter of no importance. However, unless counsel agree, I will hear them in regard to this matter and determine it on settlement of the decree.

7. The issues in regard to the status of the mortgage of the defendant Cloughly and the amount due thereon, and the alleged equity of this defendant against the complainant in respect of a certain chattel mortgage, appear to have all been settled by consents and admissions of the parties, which appear in the proofs. The decree will therefore establish this mortgagee’s status' in accordance with these admissions and consents, and the amount of principal and interest being admitted, tbe master will merely have to carry down the interest calculation.

I do not think that there are any other matters presented by the pleadings and proofs in this case which require to be noticed at the present time. The complainant will take the usual decree, including a reference to a master.


source: Caselaw Access Project

author: Stevenson, V. C.

license: Public Domain

text:
    Frederick G. Potter v. William E. Ogden.
    [Filed January 20th, 1905.]
    Where a contract for the sale of land called for a perfect title, and, in a suit for specific performance by the vendor, it appeared that his grantor’s deed was executed as if she were unmarried, specific performance would not be decreed, though it was shown that her husband had been absent seven years at the date of the deed, whereby a presumption of death arose; it also appearing that defendant’s grantor was eighty-six years of age, and that her children possibly controlled, to a large extent, the evidence on which the rebuttable presumption was founded.
    On bill for a specific performance of a contract to purchase real estate. Heard on bill, answer and proofs.

      Mr. Willard C. Fisk, for the complainant.

      Mr. Edward J. Luce, for the defendant.
   Stevenson, V. C.

The bill is filed by the vendor to compel the vendee to take the title which the vendor has proved in this suit he is able to give. The contract seems to call for a title having something more than those characteristics which are sufficient to make it “marketable.” A blank form of agreement was employed by the draughtsman of the contract. In the printed portion the vendor agrees to convey the land “by deed of warranty, free from all encumbrance.” The terms of payment are set forth in typewriting, and one of the payments is described as follows: “One thousand dollars ($1,000) as soon as search is completed by attorneys for party of the second part and title declared all right.”

The following clause also appears in typewriting: “It is hereby agreed that if the title is not found perfect the $25 deposit shall be returned to the party of the second part.”

• A perfect title, if such a thing exists, should probably be defined, if a definition were necessary, in such a manner as to make it appear less open to criticism and attack than many titles which courts of equity deem merely marketable.

The alleged defect in the complainant’s title which the defendant points, out, is as follows: The complainant obtained title to the land in question under a warranty deed in the usual form, dated August 27th, 1900, made by one Sarah L. Brown, who is described in the deed as- a widow. The certificate of acknowledgment upon the deed is in the usual form employed in the case of a man or an unmarried woman. The defendant alleges that when this deed was made the grantor in fact was a married woman, and that therefore the complainant’s title is not marketable, and certainly not “perfect,” because it rests upon a deed executed by a married woman in which her husband did not join, and which was not acknowledged according to law. It is not insisted by the complainant that the land comes within the operation of the statute permitting a married woman living in a state of separation from her husband to convey her lands in certain cases. 2 Gen. Stat. p. 2019 §§ 32, 33. I think the proof in this case shows affirmatively that the lands in question were not within the operation of-those statutes. I certainly refrain from expressing the opinion that if the lands were within the operation of these statutes that a specific performance would be enforced against a vendor who at the time the contract was made was ignorant that the title rested upon proof of facts which made the statutes applicable. See Demarest v. Terhune, 62 N. J. Eq. (17 Dick.) 663, 668, 669.

No doubt, at the time this contract was made (June 11th, 1901), Mrs. Brown was living in a state of separation from her husband, and had been continuously for about fifteen years. The complainant, for the support of his title, insists that under our ancient statute establishing a presumption of death in the case of absence for seven years, enacted in 1797 and amended in 1895 (1 Gen. Stat, p. 1187 § 9), the proofs in this case establish the presumption that when Mrs. Brown undertook, in 1900, to make a conveyance of the land in question to the complainant, she was what she described herself in her deed, a widow. The defendant certainly did not prove, or undertake to prove, that Mrs. Brown’s husband was alive when this deed was made by any evidence showing that he was alive at any time after he left his wife in 1876, except the fact that he was alive in 1876.

The complainant stands on the .statute. The defendant insists that the statute should not be construed literally; that the “presumption of death does not arise from the mere fact that a person has been absent and unheard of for seven years or more, except in cases where there is no other reasonable explanation of such absence and silence.” The words of the statute seem to be satisfied whether the absentee has been heard from or not. Counsel for the defendant also argues that in this case the proofs show that the husband of Mrs. Brown left her in 1876, with intent to desert and permanently remain away from her, and that all the facts and circumstances proved in relation to this separation account for the absence of Mr. Brown and make it appear reasonable and highly probable that he would remain absent from his wife without communicating with her during all these years, without its being necessary to account for such absence and silence, on the theory of his death. There is great force in the view of the facts which counsel for the complainant has presented, and also in his argument in regard to the construction of this rigid statutory rule, which perhaps cannot be applied to many situations literally without leading to absurdity.

I do not feel obliged to discuss the facts of this case, or even to determine whether the presumption created by our statute applies to this case. I think the point is well taken, on behalf of the defendant, that even if the statute does apply, and in this suit between these parties it must be presumed that Mr. Brown was dead when Mrs. Brown made the conveyance to the complainant, still the complainant is not entitled to a decree forcing his title, thus resting upon a rebuttable presumption of fact, upon the defendant. The soundness of the complainant’s title rests upon the proof of a fact which we are now assuming has been presumptively proved in this case, but it is the title which the defendant, the vendee, is to get which is the matter for consideration.

I think that any decision of mine in this cause is controlled by my decision in the case of Barger v. Gery, 64. N. J. Eg. (19 Dick.) 263. The rule which I found supported by the authorities in that ease is “that a title dependent on a fact must be regarded as marketable when (1) the fact is so conclusively proved in the suit for specific performance that a verdict against the existence of the fact would not be allowed to stand in a court 'of law; and (2) there is no reasonable ground for apprehending that the same fact cannot be in like manner proved, if necessary, at any time thereafter for the protection of the purchaser.” It can hardly be seriously argued in this case that if this title based on this presumption of death should be forced on the defendant, he would be in no danger of being unable to- prove that Mr. Brown was dead when Mrs. Brown made this deed in any future litigation in which such proof might be necessary. Mr. Brown, if living, apparently, is about seventy-five years of age. One of the daughters of Mrs. Brown by a former husband testified to a report that Brown was living in Tombstone, Arizona, some time after the year 1876. The children of Mrs. Brown, who are her heirs-at-law, might, after Mrs. Brown’s death, bring an action of ejectment against the defendant and overcome the presumption of Brown’s death, which the defendant might establish in his defence by positive proof that Brown in fact was alive when the deed in question was executed. Certainly Mr. Brown himself might return from the west, if he is alive, and utterly defeat any title which the defendant could now obtain from the complainant. I do not overlook the fact that the words of the statute, meagre and unqualified as they are, seem to direct that in this cause this man Brown “shall be presumed to be dead,” and that it may be insisted that under the statute, strictly construed, the death of Brown must be accepted as a •fact, precisely as if actual proof of such death had been presented beyond all question. But I need not consider this point, because my decision stands, after admitting the proof of the death of Brown as a fact in this cause. It may be conceded that Brown is proved to have been dead when this deed by Mrs. Brown was made. But proof of the fact that Brown was dead, duly made in this cause, does not entitle the complainant, the vendor, whose title rests upon that fact, to a decree of specific performance within the rule above quoted. The proofs on behalf of the complainant must go further and show that not only the fact has been proved in the suit for specific performance, but that “there is no reasonable ground for apprehending” that the same fact cannot be subsequently proved for. the protection of the purchaser. Where the necessary fact in the suit for specific performance is proved by the establishment of a presumption, which can be overcome by evidence, but which is not so overcome in that suit, it does not follow, necessarily, that the title dependent on that fact can be forced upon the purchaser, unless the following two propositions are established — first, that there is no reasonable ground for apprehending that the evidence to establish presumptively the existence of the fact will not be available for the protection of the purchaser in the future; and second,, that there is no reasonable ground for apprehending that evidence to overcome the presumption, and thus defeat the purchaser’s title, can be adduced. The slightest consideration of the testimony in this cause, I think, makes it clear that if the presumption of Brown’s death is technically established in this suit under the statute, it is by no means clear that the evidence to establish the same presumption will be available to the defendant after a short time. The principal witness (Mrs. Brown) was eighty-six years of age when she was sworn in this cause. The testimony of her two daughters, who were sworn, shows that these daughters and the other children of Mrs. Brown, whose title as Mrs. Brown’s heirs or devisees might be asserted against the defendant’s title, possibly control to a very large extent the evidence by which the defendant would seek to establish the- presumption of Mr. Brown’s death in his favor. The other children of Mrs. Brown, who were not sworn, might come forward with positive evidence of Mr. Brown’s existence after the execution of the deed in question by Mrs. Brown.

If, however, the complainant succeeded in a suit brought by Mrs. Brown’s heirs or devisees, or their grantees, in establishing a presumption that Mrs. Brown’s deed to him was an efficient instrument to convey the property in dispute, it is still, in my judgment, altogether probable, as the testimony stands, that this presumption would be entirely overcome by positive proof that Mr. Brown was alive when the deed was made.

A decree will be advised that the bill be dismissed.


author: Stevenson, V. C. (orally).

text:
    Mary Chamberlain v. Stroud H. Chamberlain.
    [Argued January 9th, 1905.
    Decided January 23d, 1905.]
    The complainant and defendant were formally married, and entered into matrimonial relations in good faith, believing- that the complainant was a widow, whereas she had a former husband living; but, in order to place the legality of their relations beyond question, the complainant procured a divorce from her lawful husband, after which the defendant, in the presence of witnesses, assured complainant that she was his legal wife, and that no further ceremony was necessary, and thereby induced complainant, in reliance upon such representations, to remain with him, cohabiting- with him as his wife for over twenty years. — Held, that the relation of husband and wife between them began when the decree of divorce was obtained, and that the defendant is estopped to deny that he had intended to enter into marriage relations with the complainant.

      On bill, answer, replication and proofs.

      Mr. Peter McGinnis and Mr. John M. Ward, for tbe complainant.

      Mr. Elmer King, of the firm of Vreeland, King, Wilson & Lindabnry, for the defendant.
   Stevenson, V. C. (orally).

This bill is filed under the twentieth section of our Divorce act by Mary Chamberlain against Stroud H. Chamberlain, who she alleges is her husband, charging'that he has abandoned her, and neglected and refused to support her, and praying for the statutory, relief afforded in such a case. The answer contains an attempt, as I recall it, to answer the charges of misconduct set forth in the bill of complaint, but sets up as a- complete defence —and this is the only defence which is supported by proof so as to call for consideration — that the defendant is not the husband of the complainant, and therefore is not liable to the statutory action, and is not liable to discharge the common law duty which a husband owes to the wife in respect of support.

The brief for the defendant, which is very voluminous and discusses a large number of cases, presents at the start the following as the history of the case:

‘William 'Tissell and Mary AAralsb [Mary Walsh being now the complainant, Mary Chamberlain] were married March 29th, 1871. William Tissell left Mary Tissell and went to St. Louis, and thence to Oak Grove, Texas, March 12th or 15th, 1877. About July, 1877, a letter was received by Mary Tissell from William Tissell. Mary Tissell, under the name of Mary Walsh, was married to Stroud H. Chamberlain, April 4th, 1880. Mary Chamberlain, under the name of Mary Tissell, filed a petition for divorce in this court, sworn to by her, May 8th, 1880, and decree of divorce granted thereon June 30th, 1881. From time of marriage to Stroud H. Chamberlain, in 1880, both lived 'and cohabited together as man and wife until defendant left her, in March, 1903. There was no issue born of the marriage. Both complainant and defendant believed the first husband, AArilliam Tissell, was dead until after these proceedings [that is, tbe proceedings in this present suit] were instituted, when that he was alive was discovered by the defendant. William Tissell, the first husband, was, at the time of the filing of the bill and the hearing of this case, living at Oak Grove, Texas.”

The foregoing extract which I have read from defendant’s brief states the leading facts. The intention undoubtedly is to state, in accordance with the proofs, that both the complainant and tire defendant, at tire time of their attempted marriage, April'4th, 1880, had been informed and verily believed that tire complainant’s first husband, William Tissell, was dead, and that they both held such belief continuously until after this suit was commenced. I will add here that the affidavit of a man, purporting to be the affidavit of William Tissell, tile complainant’s first husband, sworn to in Texas — an ex parte affidavit — was admitted by stipulation as evidence in; the cause, to have the same force as a deposition of the affiant taken de bene esse. There was no objection made to the use of the affidavit as evidence, it being apparent that tire affiant was not within the reach of the process of the court at the time of the hearing. This affidavit is signed by a person calling himself William Tissell, and the signature indicates that the affiant was an illiterate person. The complainant testified that when her first husband left Paterson, being at that time perhaps about forty years of age, Jre could neither read nor write. There were other circumstances which perhaps cast some slight doubt upon the affidavit of this man William Tissell — which perhaps create, or sustain some slight doubt as to whether tire William Tissell who signed this affidavit was tire William Tissell who left Paterson in 1877. The affidavit apparently was prepared in New Jersey and sent to Texas to be signed. The testimony of the complainant, which was not objected to, showed that notice of the pendency of the divorce suit was given by mail, and that the notice was returned in the envelope in which it was mailed, and this original envelope was put in evidence in this cause. The affidavit of this William Tissell states in'substance that he received notice of the suit by mail. I do not think, however, as the case stands, that the proposition is open to dispute that in point of fact the complainant’s first husband was living when this ex parte affidavit was made. I shall deal with the case upon that supposition.

We have, then, the ease of a man and woman who undertook to enter into, the marriage relation with each other on April 4th, 1880, both parties believing in good faith that they were competent to enter -into that relation — that each of them had the capacity to marry the other — while, in fact, one of the parties, the complainant, the woman, was under a disability on account of her having a husband then living. These two parties, entertaining such belief, were married by a clergyman in the city of Brooklyn, and thereupon began living together as man and wife, and continued to cohabit as man and wife, holding themselves out to the world as married, each recognizing the other as his or her lawful spouse for a period of twenty-three years. The proofs, I think, indicate that before the complainant undertook to marry the defendant, she went, with his knowledge, to counsel and instructed him (the counsel) to institute a divorce suit against her former husband, William Tissell, whom she believed to be dead. Without waiting, however, to obtain the decree, which was subsequently obtained, divorcing her from Tissell on the ground of desertion, she undertook to enter into the marriage relation with the defendant. Both parties appear to have had full knowledge of all the facts. The complainant relied upon the statements of two persons to the effect that Tissell was dead. The affidavit of one of these persons, George B. King, has been put in evidence by consent. This witness testifies that he went to Texas in the spring of 1880 and, at the request of the complainant, made inquiries for Tissell; that he made such inquiries, but discovered nothing about Tissell’s whereabouts, and that when he came back he told the complainant that he could not find Tissell and he must be dead. The complainant testified also that one Pierson Vreeland, now deceased, a former resident of Paterson and a man of substance and good repute, upon his return from a journey, assured her that he had learned in Texas that Tissell was dead. The complainant testifies that she informed the defendant of what Mr. Vreeland had stated to her. Mr. Vreeland was the former employer of the defendant, and evidently a friend or friendly acquaintance of both parties. The defendant, so far as his testimony shows, made no effort to inquire from Mr. Vreeland, as he might have done — to question him about the extent of his investigations in Texas and the source of his information in regard to Tissell’s death. Both of these parties acted upon this hearsay evidence, and appear to have acted in good faith. It is important to note that there is no suggestion that the complainant made any intentionally false or fraudulent statement to induce the defendant to marry her. Apparently the defendant had open to him all the sources of information which the complainant had in regard to the question whether Tissell was dead or not.

After the decree of divorce had been obtained in June, 1881, the complainant and defendant were living together, and some question was raised among the women who were living in tire same boarding-house, or living near these parties, in regard to Mrs. Chamberlain’s status. The complainant was then known, and had been known and always was known, after her marriage in April, 1S80, as Mrs. Chamberlain, and was regarded as the defendant’s wife.

Without undertaking to state the testimony of the complainant and the defendant and tire two women who were called as witnesses in regard to the matter, I think I can state tire substance of what is proved when I say that the defendant exhibited the decree of divorce which the complainant had obtained from Tissell in order to stop all gossip in regard to his relations with the woman who passed as his wife. He gave the most positive assurances to tire complainant, in the presence of these witnesses, that the complainant and himself were legally married; that she was his lawful wife, and he evidently referred to the decree of divorce as establishing the legality of the relation which he apparently sustained to the complainant. It does not appear that the defendant allowed either of these two women to learn that the date of the divorce was over a year later than his attempted ceremonial marriage with the complainant. It may be that the defendant, recognizing the difficulty of establishing the lawfulness of his marriage by proving the death of Tissell, adopted the more convenient expedient for satisfying the scruples of his neighbors which was afforded by the decree of divorce. Unless these neighbors knew the dates of both the marriage ceremony and the divorce, the defendant’s bold production of the decree of divorce would naturally be accepted as absolute proof of tire lawfulness of his relations with the complainant, while the mere statement that it had been reported that Tissell died in Texas at some time within the three years preceding the marriage would have been regarded by these worthy people as a very doubtful warrant for so early a re-marriage by Tissell’s wife. The complainant testifies that the reason why she got the divorce was because it was suggested that it would be convenient in case she or Mr. Chamberlain, her husband, should thereafter acquire property. There are indications, also that one object of the decree of divorce was to establish the legality of the relations of these two parties in case the unexpected event should occur that proof should be made that Tissell was alive. I shall not deal in detail with this matter, because both of these parties most positively testified that they believed that their original marriage was absolutely valid, and that Tissell was then'dead, and that they never believed otherwise until after this present suit was commenced.

When the decree of divorce was obtained in June, 1881, these two parties for the first time became capable of marrying each other. They thought, as they both swear, that they were capable of marriage at the time of the ceremony, April 4th, 1880. That is proved to have been a mistaken belief, but when the decree of divorce was obtained in June, 1881, then they became for the first time capable of entering into the marriage relation with each other. They continued, after the complainant’s disability had been removed, to live as man and wife until March, 1903, a period of nearly twenty-two years. During all that time they treated each other as husband and wife. The proof of continuous, unbroken matrimonial habit and repute is beyond doubt or question. They attended church together; they were received in the little church circle and social circle in which, they moved, where all their friends and neighbors were evidently reputable, respectable people, as man and wife, and, as I have stated, neither of them had a doubt, according to the testimony of both, that they were man’ and wife during all that period. They may have —I may say they did have — a mistaken notion as to the date when their marriage took place, as to the date when the relation of husband and wife began to exist between them. They thought such relation dated from April 4th, 1880; as a matter of fact, it could not have begun at that time, and could not have begun until June, 1881, when the decree of divorce was obtained.

The controverted question in this case is whether, under the circumstances that I have stated, the relation of husband and wife between these parties was created at any time after the disability of the complainant to contract marriage with the defendant had been removed by the decree of divorce, in June, 1881. In my opinion, upon the facts stated, the relation of husband and wife betwen these parties did begin — was created— at the time when the decree of divorce rendered it possible for them to marry. I am also of opinion that if this first conclusion is erroneous, the relation of husband and wife began to exist a short time after the decree of divorce was obtained, when the defendant assured the complainant that it was not necessary to have any further ceremonial marriage between them — assured her that she was his legal wife; gave her this assurance in tire presence of witnesses, and thereupon, in reliance upon such representations and statements of the defendant, the complainant remained with him, cohabiting with him as his wife from year to year.

Apart from any proof, which perhaps can be derived only from the testimony of the complainant, that there was an attempt made between these parties after the divorce had been obtained to make a formal contract of marriage, and apart, also, from the evidence from the statements proved to have been made by the defendant in regard to his relations with the complainant after the decree of divorce which goes to show an actual consent on his part, concurrent with a similar consent of the complainant, to the establishment of the marriage relation, I think the whole conduct of the defendant, including particularly those statements in reliance upon which the complainant refrained from demanding a second marriage ceremony, and in reliance upon which she continued to live with him as his wife, make out, or would make out, if necessary, an estoppel against the defendant, so that the result would be that the defendant must be held to have intended to be the husband of the complainant, concurrently with a similar intent on her pa'rt to be his wife, whether he had actually such an intent or not.

There are three principal classes of cases which have come up in the courts where a man and woman have undertaken to establish before the world the status of marriage by a formal ceremony and have continuously thereafter cohabited and held themselves out to the world as man and wife, when, in fact, at the time of the ceremonial marriage one of them had a wife or husband already living, but where such incapacity during the course of the cohabitation has been removed by the death of the former wife or husband or a decree of divorce has been obtained dissolving such former marriage. One class of these cases is illustrated in Campbell v. Campbell, L. R. 1 H. L. Sc. 182, commonly referred to as th.e Breadalbane Case. In that ease a man eloped with a married woman and lived in adultery with her. Subsequently tire woman’s husband died, and this man and woman continued to cohabit as they had formerly done, holding themselves out to the world as they began to do at the time when they first lived together in adultery — as husband and wife. The house of lords found that under the circumstances of that case the true rule would establish the marriage between these people who were treating each other as husband and wife at the time when they first became capable of entering into such relation. The doctrine of this case was rejected by our court of errors and appeals in the case of Collins v. Voorhees, to which I shall next refer, and which belongs to the second class.

The case of Collins v. Voorhees, which I have before me, reported in the court of chancery under the name of Voorhees v. Voorhees Executors, 46 N. J. Eq. (1 Dick.) 411, and in the court of errors and appeals in 47 N. J. Eq. (2 Dick.), on p. 315, where the dissenting opinion of Mr. Justice Garrison appears, and on p. 555, where the opinion of the court of errors and appeals appears, through Chief-Justice Beasley, presented these facts: The man Voorhees obtained a fraudulent and void divorce in Connecticut from his wife, who resided in New Jersey. ITe knew that his suit and decree were a gross fraud on his wife and on the court. He exhibited this decree of divorce to a woman in Massachusetts and she, honestly believing that he was lawfully divorced, was publicly married to him in a church, and thereafter continuously, for some years, cohabited with him as his wife, and was held out as his wife and bore to him two children. As a matter of fact, a few months after this marriage, Voorhees’ wife in New Jersey heard of the fraudulent divorce which had been obtained in Connecticut and appeared in the cause and had the decree opened — had permission to file a cross-bill — and the result was that the original decree obtained by Voorhees was vacated as fraudulent, and a decree of absolute divorce was granted to the New Jersey wife. This decree, of course, rendered Voorhees capable of marrying his Massachusetts wife. Voorhees, however, for manifest reasons, did not inform the woman wlm was living with him as his wife in innocence, supposing that the marriage was lawful, that the decree of divorce had been set aside; he did not propose to have another marriage ceremony; he concealed, fraudulently, from the woman with whom he was living the fact that he had been incapable of marrying her when he undertook to do so, and that by the decree of divorce he had been rendered capable of such marriage. He went on for years enjoying all the fruits of his marriage, or attempted marriage, with this Massachusetts woman. In reliance upon his representations that he was her husband, and innocent of any wrongful intent, this woman surrendered herself to him and gave him all the advantages of marriage with her, and, of course, debarred herself from maniage with any other man. The decision of the court of errors and appeals, affirming the decree below in this case, was that the relations of Voorhees with the Massachusetts woman were not matrimonial at the start, because, of course, they could not be; but the decision goes further and holds that the relations between Voorhees and this woman, when by the decree of divorce he had been rendered capable of marrying her, continued to be meretricious; that the matrimonial habit and repute after the divorce had been obtained must be referred back to the origin of the relations between these people.

The court seems, in the opinion, to treat the case as belonging to the same class as the Breadalbane Case, where the relations between the parties — the man and woman — at the start, were known to both to be meretricious.

It has always seemed strange to me that in the opinions of the learned judges in this court, and in the court of errors and appeals in this Voorhees Case, no reference is made to the law of estoppel, the great doctrine which is so potent in our law for the redress and prevention of fraud. The case goes altogether upon the actual intent of Voorhees. In the Breadalbane Case the intent of both parties at the time the relations were established between them was to live in adultery, while they covered up their criminal relations by presenting the appearance of man and wife before the world. In the Voorhees Case the intention of this innocent woman was to enter into the lawful state of marriage with Voorhees. He committed a gross fraud on her in obtaining possession of her and causing her to sacrifice her life to him, but she was not to blame. It has always seemed strange to me that no one suggested that Voorhees was estopped to deny that he consented, concurrently with this woman, to enter into the marriage state when he had in the most solemn manner represented to her that he in fact did enter into that state with her, and in reliance upon that representation she had acted so much to her injury, and that in accordance with the familiar rule such estoppel became operative when he became capable of doing what he had falsely pretended to do.

I know of no reason why the doctrine of estoppel in pais should not be applied in dealing with the consent which is necessary — the concurrent consent of a man and woman capable of contracting that the marriage relation shall be established between them. A meeting of minds is necessary, generally speaking, in order to a valid contract, but oftentimes what courts enforce is not the thing which two parties have actually agreed upon; what they enforce is the obligation arising from the consent of one and the estoppel against the other to deny a corresponding consent. Suppose a man takes a woman before a clergyman or a magistrate and undertakes to go through a ceremonial marriage, and instead of answering affirmatively the most important question in the ceremony, answers negatively by adding the word “not” just loud enough for two or three convenient witnesses to hear. To make the case plainer, suppose he adds, between other responses, statements to those witnesses to the effect that the whole proceeding is a sham; suppose he then leads the woman to the church door and abandons her there and states that the whole proceeding has been a farce. We may concede that there is no marriage between them; we may concede that the case is similar to the one which has been dealt with in our courts quite frequently where both parties have gone through an apparently valid marriage ceremonjq but in jest and without matrimonial intent. But suppose the man consummates this marriage — takes the woman to himself before the world as his wife — can there be any question that he would be estopped to deny that he had consented ? Suppose, to take another case, a man and woman enter into a unit-ten contract of marriage, and by some obscure use of words, or by the use of ink which is not visible at the time the contract is signed, it is made to appear that the man had no intention whatever to enter into the marriage state with the woman. If she acts in good faith and relies on his representations and yields herself to him as his wife — gives up all her other opportunities of marriage — would he be allowed to prove his actual intent at a later time ?

I do not think that I ought to hold that the court of errors and appeals meant to exclude the operation of this great equitable doctrine of estoppel from all consideration in determining whether an effective concurrent consent has been given between a man and woman in order to establish the marriage state. It seems to me, if the case settles anything on this subject of estoppel, it establishes sub silentio that the particular facts in that case did not make out an estoppel against Yoorliees.

The third class of cases of the kind to which I have referred embraces those where the disability on the part of one party exists, but is unknown to either, and where both parties in good faith believe that no disability in fact exists, and therefore actually intend to enter into the marriage state. That is this case. In the opinion of Chief-Justice Beasley in the Yoorliees Qase, it is distinctly admitted that in such a case as is now before this court a subsequent removal of the incapacity of one of two parties marks the commencement of a valid marriage between them. He distinguishes such a case as this from the Breadalbme Qase, and the distinction is perfectly plain. Referring to the opinion of Lord Westbury in the Breadalbme Case, the chief-justice uses the following language (I read from ¶. 668) : “He [that is, Lord Westbury] does not pretend that he can find anything in its favor [that is, the doctrine which he lays down], and in his remarks he strangely compares the case before him with those instances where the parties intended originally to marry and not to commit adultery, their intent being frustrated by the existence of some unknown obstacle. And yet it is presumed that no one who will look with any care into the subject will have the slightest doubt that these two classes of eases, with respect to the methods of their proof, respectively rest upon entirely different foundations, for when the parties have intended marriage, being ignorant of an existing impediment, all that is to be established by cohabitation apparently matrimonial subsequent to the removal of such impediment is the carrying into effect by the parties of their original purpose; but when the original purpose was to live in adultery, the evidence under similar circumstances must be sufficient to show an abandonment of such purpose and the commencement of a new one. These lines of cases can be confounded only by want of careful observation of the principles upon which they rest.”

It seems to me that the distinction which Chief-Justice Beasley so sharply draws between the Breadalbane Case and this Chamberlain Case now before this court is perfectly plain. The strange thing to me, which perhaps may be due to my inability to analyze these cases correctly, is that the great chief-justice should have supposed that the Breadalbane Case and the Voorhees Case are in the same class. In the Breadalbane Case the original purpose of both parties was to live in adultery, covering up their adulterous connection by the false appearance of marriage; in the Voorhees Case the unfortunate woman had no criminal intent, but from the start intended to live in marriage relations with the man who pretended that he could marry her. As I said before, no one suggested that this man Voorhees might or ought to have been held estopped to deny his matrimonial intent at the first moment when the matrimonial intent on his part became possible. In my opinion, there is almost as wide a distinction between the Voorhees Case and the Breadalbane Case as there is between the Breadalbane Case and this Chamberlain Case.

I think that Chief-Justice Beasley, speaking for the court of errors and appeals, plainly admits that in a case like this, where the parties come together and in the most solemn manner accept each other as husband and wife, and concurrently intend to establish that relation, and manifest that concurrent intention in the usual solemn form before a clergyman or a magistrate, they do not intend to live in adultery; and if, in fact, by reason of an unknown impediment, an unknown incapacity on the 'part of one of them to contract the marriage which they have attempted to contract, they have begun in .fact to live in adultery, then, upon a subsequent removal of the impediment, if they continue to cohabit as man and wife, continue to live in precisely the same way in which they began to live together, such subsequent continued cohabitation must be deemed matrimonial in accordance with the original intent, and cannot be deemed illicit in accordance with an intent which neither of them ever had.

The three classes of cases which I have described seem to me to be essentially distinct from each other. In the first class, of which the Breadalbane Case is the type, both parties know of the impediment; both intend not to marry, but to live in adultery ; both intentionally make a false pretense of marriage before the world in order to conceal their meretricious relation.

In the third class, to which this case and the case of De Thoren v. Attorney-General, L. R. 1 App. Cas. 686, cited by Mr. Justice Garrison in his dissenting opinion, belong, both parties are ignorant of the impediment; both intend in good faith to marry and do not intend to commit adultery; both believe that they are in fact lawfully married, and both make an honest representation to the world to that effect.

In the second class, which is intermediate between the others, and to which the Voorhees Case belongs, one of the two parties is in the situation of both parties in. the Breadalbane Case, and the other party is in the situation of both parties in this Chamberlain Case and the De Thoren Case.

In determining the effect on the status of the parties in each of these classes of cases which is produced by the removal of the impediment while the cohabitation apparently matrimonial continues, it seems to me that a. rule laid down, in one of the classes of cases may be plainly inapplicable to either of the others. The three situations seem to be widely variant and to' call for the application of radically different principles of morals and public policy. Of course, if the rule be laid down sustaining the validity of the marriage in the Breadalbane Case, such rule may be said to apply a fortiori to the other two cases; but if the rule be laid.down adversely to the marriage set up in the Breadalbane Case, such rule is entirely inapplicable to this present case and to the De Thoren Case, as Chief-Justice Beasley so distinctly points out, and I cannot help saying that, in my humble opinion, such rule would be also inapplicable to the Yoorhees Case, the second class of cases, unless we are to reject, in the consideration of those cases, the doctrine of estoppel in pais and demand for a lawful marriage an actual, concurrent consent of the two parties in every ease.

In this present case the declarations which are proved to have been made by the defendant after the impediment had been removed by the divorce greatly strengthen the presumption that the relations between these two persons after the divorce became lawful relations — matrimonial relations — and not illicit relations, as in fact they had been theretofore. The testimony of the two women to which I have referred makes the case very much stronger tiran if the parties had merely continued together after the removal of the impediment. - These declarations amount to an affirmance in the most solemn manner on the part of the defendant of the lawfulness of the relations existing between himself and the complainant.

If I am right in the view Which I have expressed in regard to the application of the great doctrine of estoppel in cases like this and in eases like the Yoorhees Case, in establishing a lawful marriage by preventing one of the parties from denying that he or she concurrently with the other consented to the establishment of the status of marriage between them, as I think I intimated earlier, there is another ground upon which the marriage between these parties may be restéd. If the marriage should be established for this reason, then, as I said, it would date not from the removal of the disability, but from the time when the defendant made tlie representations to the complainant that he was her husband and she was.his wife, and that no further marriage ceremony was necessary between them, and the complainant acted on those representations. Even if we might suppose that these declarations are not evincive beyond doubt of the matrimonial intent on the part of the defendant; if there is any theory of the case upon which it might be held that the intent of the defendant in living with this woman in the apparent relation of marriage after the divorce had been obtained was not bona fide, and that his intent in maintaining those relations must be referred back to the actual state of tilings when the marriage ceremony was performed, I strongly incline to think that the defendant should be held estopped to deny the existence of the matrimonial intent which he manifested so distinctly, when he persuaded this woman that no further marriage was necessary and induced her to continue living with him as his wife. She acted upon the intent which he manifested to her, and it seems to me that sound law- — sound morals — require that the defendant, whatever his actual intent might have been, must be held estopped to deny the intent which he exhibited and manifested beyond doubt by representations upon which tire complainant acted for years. This case can plainly be distinguished from the Voorhees Case on account of the positive representations and assurances which the defendant made directly to the complainant after her divorce had1 been- obtained, and upon which she acted in continuing to cohabit with him as his wife. I am bound, whatever my private opinion may be, to apply the law of the Voorhees Case while that case stands not overruled;, nor even modified, but I am not bound to extend the law of that case to other eases presenting a substantially different state of facts. The Voorhees (fase, which is entirely silent on the subject of estoppel, certainly cannot be deemed authority in this state for the proposition that actual consent of the two parties is invariably necessary to effect a marriage between them, and that a lawful marriage cannot rest upon the consent of one of the parties and an estoppel preventing the other party from denying the existence of a similar concurrent' consent. The great doctrine of estoppel, which is one of the finest developments of equity, has never been limited in New Jersey in that way.

I have perhaps said too much about the doctrine of estoppel in its application to this ease, because, apart from that doctrine, I think the decision of this present case may be rested firmly upon the proposition that the proofs show beyond the shadow of a doubt that from the date of the divorce in this case, which removed this woman’s incapacity to marry, the man and woman lived together as husband and wife, believing that they were husband and wife, consenting that the status of marriage should exist between them, and believing that such marriage status did exist. This, in my judgment, makes a marriage, and it is immaterial whether there was a particular date when some ceremony was pronounced between them or some form of words was employed. It is enough if they concurrently intend that the marriage status shall exist between them and each knows that the other so intends; all the rest is a mere matter of proof.

These people lived together as man and wife in the way I have described for nearly twenty-two years; they then have a disagreement; the husband abandons the wife; this suit is brought; the husband then for the first time learns something which sets him upon an inquiry, and the result is that he finds out that this man Tissell is alive; he finds out that when he thought, and had always thought down to that time, the marriage status was established between himself and the woman whom he regarded as his wife, such status was not in fact — could not have been in fact— established because of the existence of a disability on the part of the woman which at the time he thought did not exist. The defendant does not pretend that he had not, from June, 1881, down to March, 1903, lived with this woman as her husband, and intentionally maintained relations with her which he regarded as lawful marriage relations and were regarded in like manner by her, or that each party did not know how the other regarded those relations. In brief, he does not pretend, nor would the proofs support the pretense, that during all this period these two people were not-concurrently intending 'to occupy the relation toward each other of husband and wife.

In dealing with the subject of estoppel, when applied to the class of cases to which, the Voorhees Case belongs and to cases like the present one, I think I failed to make one point plain. I have not suggested that if a man fraudulently conceals his incapacity to- marry, and persuades an innocent woman to go through a marriage ceremony with him and afterwards .live with him as his wife, that an estoppel will operate so as to effect a marriage, without reference to his actual intent, in case, before the incapacity has ceased to exist, he separates himself from the woman and makes no further pretensions that the marriage relation exists between them. In such a case the man may be conceded to be competent to contract a lawful marriage with another woman. It may be conceded in this case that, prior to the time when the complainant obtained her divorce from Tissell, the defendant might have separated himself from her and might have declined to recognize her as his wife, and might have contracted a lawful marriage with another woman. There are a number of questions which I have not even considered presented by the case where the continuous representation made by the man to the woman that their relations are matrimonial, and dating, for instance, from a formal ceremony of marriage, altogether cease before a marriage becomes possible by the removal of an obstacle. I have only intended in this case to indicate tire opinion that where the originally false representation made by the man to the woman upon which she has acted is continued, and she continues to act upon it after the representation can truthfully be made, then the estoppel begins to opera'te.

My conclusion is that the complainant is entitled to a decree which will make tire defendant liable under the statute to provide for her support and maintenance. The abandonment and neglect and refusal to support are proved in this case beyond doubt, and the decision which I have rendered disposes of the only defence which is worthy of consideration.

My recollection is that the parties agreed that if tire decree of the court should be favorable to the complainant, an order of reference should be made to ascertain the amount of the alimony to which she is entitled. I will hear counsel, however, on that matter on settlement of the decree, if they do not agree upon the form of the decree.


author: Bergen, V. C.

text:
    Methodist Episcopal Church at Bound Brook v. Ellis E. Roberson.
    [Decided October 25th, 1904.]
    Land was conveyed to persons named as “trustees and their successors iu office forever,” in trust to erect a house of worship for a specified church organization. — Held, that such organization, as a corporate body, had not such title to the land, without any conveyance to it from such trustees or an adverse holding, as equity would require a vendee to accept.
    On bill, &c.

      Messrs. Codington & Swackhamer, for the complainant.

      Mr. Charles M. Dolliver, for the defendant.
   Bergen, V. C.

The object of the bill of complaint in this cause is a decree requiring the defendant to specifically perform a written contract, by the terms of which the complainant agreed to sell, and the defendant to purchase, two parcels of land located at Bound Brook, in this state. By the terms of this contract the complainant agreed to well and sufficiently convey the lands to the defendant, b3r deed of warrant3r, free from all encumbrances. It is admitted that the complainant tendered the deed required by the contract on the day named therein for that purpose, and that the defendant refused to comply, alleging as an excuse therefor the inability of the complainant to convey the 'title as it had contracted to do. The cause was argued upon bill, answer and a stipulation as to the facts counsel deemed necessary. This stipulation, after consenting that the deed upon which the complainant’s title depends, and the contract for sale, be considered as evidence without further proof, admits that the complainant has been the owner of such title to the lands, as it took under a deed made by George Winsor and others to certain persons as trustees, and hereinafter set out and considered, and has had possession of the lands since 1848; that the location of the property is no longer a desirable one for religious or church purposes, and that a change from it to another place in Bound Brook will be greatly to the benefit and advantage of the complainant. The only paper title offered by the complainant, and upon which alone it bases its title, is a deed bearing date the 13th day of December, 1848, made by George Winsor and others, in consideration of $300, to Caleb Morton, George Winsor, Thomas Winsor, Richard Brokaw “and others, their associates, trustees and their successors in office forever.” This deed describes the lands in two parcels. The habendum clause, following the description of the first tract, is to

“the said trustees and their successors in office forever, in trust that they shall erect and build or cause to be erected and built thereon a house or place of worship for the use of the members of the Methodist Episcopal Church in the United States of America, according to the rules and discipline which from time to time may be agreed upon and adopted by the said church at their general conferences in the United States of America,”

and upon the further trust to permit ministers belonging to that church to preach and expound God’s holy word therein. Following this was a covenant of warranty to the trustees and their • successors. Succeeding this covenant the deed recites “that the parties of the first part did grant, bargain, sell and convey to the said trustees and their successors in office forever” the second tract of land, describing the same, but without declaring the trusts, if any, subject to which the second tract was conveyed. The defendant insists that as to both tracts the trustees, named in the deed as “the parties of the second part,” took only a life estate, and that it nowhere appears that the complainant has any title to the land.

It is well settled in this state that a court of equity will never compel a purchaser to take a title unless it be one which puts the purchaser in all reasonable security that no flaw or doubt will come up to disturb its marketable value, provided the doubt be real and not fanciful. Dobbs v. Norcross, 24 N. J. Eq. (9 C. E. Gr.) 327 Barger v. Gery, 64 N. J. Eq. (19 Dick.) 268. The question to be determined in this cause is, has the complainant tendered a title free from such reasonable question or doubt ? The facts submitted to the court by the stipulation are very meager and unsatisfactory, but I must determine the question upon the case as counsel have submitted it. The word “heirs” was not used in the deed, so that the legal title remains in the grantors, subject to a life estate in the trustees, and the condition of affairs is somewhat similar to that existing in Fair v. Church, 57 N. J. Eq. (12 Dick.) 496, decided by Vice-Chancellor -Pitney, with the exception that- there is no provision for the selection of new trustees. Here, as in that case, no legal incorporation of the trustees was had, nor does it appear that there was any election of new trustees in the place of those named as grantees in the deed. It does not even appear that the trustees are dead, and the lapse, of time since the conveyance is not so great as to authorize the presumption that they are. The complainant contracts to convey under the name of “Methodist Episcopal Church at Bound Brook, a corporation.” There is no title of record in the complainant by that name, but it claims to own the property, as the successors of the trustees, grantees in the AYinsor deed. If this claim had any equitable foundation, there is no proof that the complainant corporation is such successor; nor does the admission of the defendant that the complainant is the owner of such title as it may have under the AYinsor deed aid the complainant. In the first place, it does not appear to have any title thereunder, and, secondly, this court cannot, in this proceeding, determine the -rights of the original grantees or their heirs, they not being parties defendant. The defendant admitted, in the stipulation, that the complainant has been in possession of -said premises from 1848 to the present time, and still is such owner and in possession thereof. But this admission must be taken as being qualified by the statement immediately preceding it, which is -that the complainant is the owner “by such title as was given it by virtue of the Winsor deed,” so that the admission is limited to the question of possession. If it clearly appeared, beyond reasonable doubt, that the complainant had held the possession of this property, since 1848, against the claims of all other persons, in such manner as to show an adverse user, the court might be justified in holding that a marketable title was offered. But there is not a scintilla of proof that this complainant has held adversely, while the presumption is that it was in possession by permission of the trustees, and the defendant ought not to be put to the risk of hereafter maintaining his title, based upon an adverse user, which might be easily 'overthrown.

My conclusion is that the complainant has not presented a case which justifies the court in exercising its discretion in its behalf, and that the defendant ought not, under all the circumstances, to be required to comply with the contract, and I will so advise.


text:
    William P. Hubbard v. International Mercantile Agency et al.
    [Decided October 28th, 1904.]
    1. A false statement by officers of a corporation, on selling shares of its stock, that none of it had been sold for less than par, is a material misrepresentation authorizing rescission.
    2. Equity has jurisdiction to rescind a contract for fraudulent misrepresentations and to compel restitution of the money obtained thereunder.
    On demurrer to bill.

      Mr. Edwin B. Williamson, for the defendants.

      Mr. William H. Corlin, for the complainant.
   Bergen, V. C.

The complainant’s bill of complaint charges that the defendant, through its officers, induced him to purchase one hundred shares of the capital stock of the defendant corporation at par, pajdng therefor, in cash, $10,000; that he was induced to make such purchase upon the representation made ■ by defendant’s officers that none of the stock had been sold for a price less than par; that this statement was untrue, shares having been sold out of the treasury stock of the company for less than par; that as soon as the complainant discovered the untruth he sought to rescind his contract of purchase, tendering his stock to the officers of the Compaq and demanding the return of his money, which the defendants at first offered to return, but afterward refused. The prayer of the bill is that the contract for the purchase of said shares may be decreed to be rescinded, and the defendants, or some of them, required to repay to the complainant the amount he had paid for the stock. The defendants named are the International Mercantile Agency, Thomas N. McCauley and Charles A. Henderson- — -McCauley and Henderson being, respectively, the president, and assistant to the president, who are charged to be the agents of the corporation for the sale of its stock to the complainant.

To this bill of complaint all of the defendants interpose a demurrer, alleging as causes — first, want of equity; second, that it appears in the bill of complaint that the complainant has an adequate remedy at law.

Assuming, as we must, that the statement made by the officers of this company to the complainant for the purpose of inducing him to purchase the stock was false, the inquiry arises, was it material. Stockholders are in a sense partners, holding a joint interest in the property of the company, and as the assets of the company represent the value of the stock it was certainly of consequence to the complainant to have the capital stock of the company full paid.

A representation to a proposed purchaser that all of the stock had been parted with at par is a material averment, upon which a purchaser has a right to rely in estimating the value of the stock and in determining whether he will make the investment. To sell to the complainant one hundred shares of stock for $10,000, and to another person a like number for $100, would produce only $10,100 of cash capital to represent an issue of $20,000 of capital stock, so that the complainant’s stock would have behind it only a trifle over one-half of its actual cost to him. Manifestly the representation that “no stock had been sold for less than par, and that the company had received and was receiving the par value of all of its shares,” if untrue, as alleged in the bill of complaint, was a material misstatement of sufficient consequence to justify the complainant in seeking a rescission of his purchase.

The relief asked is that a rescission of the contract may be decreed and the defendants required to refund the money obtained on the strength of such false statement. The right to appeal to this court for the annulment of this agreement, and as an incident thereto the restitution of the mone3r thus unlawfully. obtained, seems to be clear, even if a remedy exists at law.

The complainant being here for the purpose of having the contract he was fraudulently induced to enter into set aside, this court has ample power to administer complete relief. The principle laid down in Eggers v. Anderson, 63 N. J. Eq. (18 Dick.) 264, 269, in my judgment, controls this case, and warrants the holding of complainant’s bill. It follows that the demurrer is not well taken, and I shall advise that it be overruled.