text:
    Heinrich Fretz v. Carl Roth et ux.
    [Filed January 9th, 1905.]
    1. The fact that a husband handed his wife all his earnings from week to week from which to pay the family expenses does not constitute a gift to her of the surplus.
    2. Where the title to land was paid for out of such surplus moneys and was taken in the name of the husband and was conveyed to the wife to prevent the husband from encumbering it, the husband is entitled to a decree as against the devisee- of the wife.
    3. After money belonging to the husband, but deposited in the wife’s name, has been distributed pursuant to- the residuary clause of her will, the husband cannot recover the same in equity from the beneficiary.
    4. The doctrine of Garnsey v. Mundy, 2J¡. E. J. Eq. (9 O. E. Ch\) 2J¡3, applied.
    On final hearing upon bill, answer, replication and proofs, in open court.

      Mr. William M. Rysdyk, for the complainant.

      Mr. Eugene Frederic Beggs, for the defendants.
   Garrison, V. C.

This is a bill filed by Heinrich Eretz against Carl Roth and wife.

The primary purpose of the bill is to secure an injunction against Carl Roth -enjoining him from proceeding with an action of ejectment brought by him against the complainant; its ultimate object is to have it decreed that the lands in question belong to the complainant.

There is also a sum of money, approximating $3,600, received by Carl Roth from the executor of the will of Louisa Eretz, which is claimed by the complainant.

The lands which were the subject of the ejectment suit are situate in Paterson, New Jersey, and the title thereto was vested, at the time of her death, in Louisa Fretz, the wife of the complainant and the mother of tire defendant Carl Roth, and the latter claims title to the lands under the residuary clause of the will of Louisa Fretz.

I find tire facts as follows: Heinrich Fretz, now fifty-eight years of age, was married on the 14th of September, 1882, in Switzerland, to Louisa Roth. They were natives of Switzerland.

Louisa Roth, at the time of her marriage to the complainant, was the mother of an illegitimate boy, of whom the complainant was not tire father. That boy was Carl, the defendant in this suit, and at the time of the marriage of the complainant and Louisa Roth he was about four years of age.

Fretz and his wife lived in Zurich, Switzerland, for about, four 3'ears after their marriage, and then came, in 1886, to Paterson, New Jersey. When they reached this country they had between them the sum of $20.

The boy Carl did not come with them.

Fretz obtained employment in various places at Paterson, working in factories and dye shops.

His wages at first were $6 a week, and never were higher than $9 a week.

Each week he took his wages and handed them to his wife. There was no expressed agreement between them, though I find there was a tacit understanding, as hereafter described.

As a matter of fact, she took the money and paid all of the expenses of every description, giving him such money as was necessary to pay for his clothing, and depositing the balance in a bank account in her own name. Pie was ignorant of what she was doing with the money,'excepting that he knew, of course, that she was pa3Üng all tire expenses.

He testifies that he thought she was putting tire money in bank, but it is clear from all his evidence thát he did not know the fact, and that she never told him. He and the defendant Carl agree that she never told them anything about financial affairs, and atw^s spoke as if she had no money for any purpose, pretending she would he compelled to borrow for any expenditure outside of the daily routine.

In 1890 it was determined to purchase a lot of land in the city of Paterson, and the wife gave to the husband a bank book, and he went to the bank and obtained $580, the purchase-price, and paid it in consideration of the conveyance to him of the lot of land in question.

The title deed to him was dated May 14th, 1890.

. About this time there was some talk between them that he should go back to Switzerland on a visit, but learning, as he did, that an' old friend of his had died (to see whom had been the main purpose of his proposed visit to Switzerland) he determined not to go, and the wife determined that she would visit her people in 'the old country.

It is set up in the bill that tire conveyance which was made by the husband to the wife (through an intermediary) was made in anticipation of the proposed visit by him to Switzerland, and that the purpose of the conveyance was to vest title in her, so that she would be protected in the event of anything happening to him while traveling.

■Since the fact is that the conveyance from the husband to the wife was not made until April, 1891, almost a year after the time when the husband was to have gone, and when the wife actually did go to Switzerland, it is obvious that the statement in the bill does not agree with the facts.

I think that it is probably true that at the time he was contemplating his trip to Switzerland it was suggested that he should make this transfer to' his wife for the purpose indicated, but it is quite evident that it was not tire purpose which finally induced the conveyance.

That which did induce the conveyance was this:

The wife went to Switzerland about May, 1890.

While.the wife was away the husband determined to leave the employment in which he was then engaged in the factory and to purchase a horse and wagon and engage in the peddling of produce.

For this purpose he borrowed the sum of $150, and pledged the property, which, as we have seen, at this time stood in his name, for the payment of the debt.

After the return of the wife to this -country, which was in the month of September, 1890, she learned of this transaction. Just when she learned of it does not appear, but it does appear that the knowledge made her very angry with her husband, and, as he expressed it, “she felt insulted,” and she thereupon informed him that he should transfer the title to her, so that he could not, as she expressed it, “take up any more money on the lot.”

She consulted a lawyer in the city of Paterson and gave him instructions to prepare deeds which would effect a conveyance of the land from the husband to her.

She arranged and attended to the whole matter. He did nothing excepting to go to tire lawjmr’s office and sign the deed.

The lawyer testifies, “I gave them both to understand what the papers were.”

Fretz understands but little of what is said in English.

The deeds were dated April 15th, 1891, from Heinrich Fretz and wife to Herman Sontag, and from Herman Sontag to Louisa Fretz.

The complainant testifies that his wife told him at the time that she would convey the property back to him, or that she would will it to him at her death.

There is also testimony by the complainant, and by other witnesses produced by him, of conversations by tire wife, in which she stated that she would will the property to him, or that she would see to it that it was made all right at her death, one witness swearing that she said “the house she couldn’t do anything with, because it belongs to Mr. Fretz.”

This oral testimony, of course, cannot be used as the basis of a contention that there was an express trust, nor do I think it is sufficient to show a resulting trust, even if this were a case to which the doctrine of a resulting trust otherwise applied.

I do think it relevant and of weight in arriving at the intention and understanding of the parties, and that it shows clearly that there was no gift, and confirms my belief in the rectitude of the conclusion, hereafter stated, that the husband did not understand that he was stripping himself of his interest in the property.

The title thereafter remained in the wife, and the residuary clause of her will devised all of her real estate to her son, Carl Roth.

On the 5th day of March, 1892, they borrowed the sum of $1,100 and erected upon the land in question a building, in part of which they lived, part of which was rented to lodgers or boarders, and in another part of which they operated a saloon.

The license for the saloon was taken out in the name of the complainant, and the business of the saloon was carried on in his name by both the complainant and his wife, although she, here, as elsewhere, handled all the money.

In 1894 or 1895 he was injured in the dye shop in which he was then working, being affected with blood poisoning, and from that time on he remained at home, assisting his wife in the care of the household — there being boarders- — and in the care of the saloon.

He was entitled to receive $5 per week, for eighty weeks, from a beneficial society, and his wife each week went and got this money and kept it.

At the time she came back from Switzerland, in 1890, she brought her son with her, and he lived with the complainant and his wife, on and off, down to the time of his mother’s death.

The son testifies that he gave his wages to his mother.

Some little time before her death she quarreled with her son and dismissed him from the house, but shortly before her death she became reconciled to him and he came back to live at the house, and was there at the time of her death.

She was taken ill some five or six weeks before her death, spent some time in a hospital, was removed to her home some two weeks before her death, and during that period consulted with a lawyer about the drawing of her will, and executed the same on the 21st day of September, 1901, and died upon the 29th day of September, 1901.

Her husband supposed she was making a will because she sent for a lawyer, but he knew nothing about its contents.

After the death of the wife the executor named in the will, Herman Deiser, read the will in English to Carl Roth and to the complainant, and explained it in German to the complainant.

The complainant testifies that the executor told him that he (the complainant) had the real estate and tire boy got whatever money there was.

The complainant says he knew nothing about the money, where it was or how much it was, and did not know that his wife kept a bank account; but he says that since he understood from the executor that he had the real estate, he was willing that the boy should have whatever money there was.

It turns out to be the fact that she had on deposit a sum slightly over $3,600.

She willed $500 to her sister and the balance under the residuary clause to her son.

The testimony of Deiser, the executor, is entirely consistent with that of the complainant, although it differs in statement.

He says that he explained to the complainant the contents of the will, and that, in response to' a question, as I understood it, from the complainant, he stated to him that the will would not operate upon the real estate if the complainant- owned it; and since to the complainant’s mind he did own it, it will be seen' that these two witnesses are in accord.

There is testimony to show that the complainant paid the taxes assessed against the property and paid the interest upon the $1,100 mortgage.

After the death of his wife the complainant continued to occupy the premises and to carry on tire business.

About a year after her death he learned that Carl Roth claimed to own the property, and shortly after that time he was served with a summons and declaration in ejectment.

He thereupon caused the bill in this suit to be filed.

The answer and proofs of the defendants are based upon the contention that the money with which the property was bought was the wife’s money; that she was both the legal and equitable owner of the property and of the money deposited in the bank, and that the same passed, under her will, to the defendant Carl Roth.

The first question calling for consideration concerns the conditions existing at the time of tire original purchase of the real estate.

If at that time the money which paid for the same was, in law, the money of the wife, then, upon familiar principles, the taking by the husband of the title in his own name would merely serve to constitute him her trustee, and she would be considered tire equitable owner, and the subsequent deed to her would be the joining of the legal and equitable 'estate in her.

On the other hand, if the money at that time was not the property of the wife, then other principles will be applied to the subsequent conveyance of the title from the husband to the wife.

While there is some testimony that for a time the wife did some washing for neighbors, there is nothing to show the amount thus earned or what she did with it.

If she contributed it to the husband or the household, that ends the inquiry.

If she did not, there is still the open question as to the husband’s assent to her retaining as her own earnings in a business not carried on separately from him.

A wife who is the sole caretaker of her home, who withdraws her services therefrom to go into other families to perform casual services, cannot be held to have the right, as against her husband, to retain as her own the amounts received for such work.

But for lack of proof that any part of the $580 purchase-price was money earned by the wife, I shall treat the money in question as the earnings of the husband accumulated in the hands of the wife.

Whatever may be held to be the law under other circumstances, I am of opinion that among people of the class to which these people belonged there is no warrant for finding an intention on the part of tire husband to make a gift to the wife of his wages which week by week he hands over to her upon pay-night.

There is, in my judgment, no question that if, upon some one of these pay-nights he handed his wages to his wife, and she, turning to anyone present, should give them to such one as a gift from her, the transaction as between her and the stranger could not be sustained, • as against the husband, as a gift, and the husband could undoubtedly recover the money.

It must therefore be conceded that whatever we call this very usual arrangement among laboring people,' it is not in any aspect a gift by the husband to the wife.

If it is not a gift at tire time that the money, week by week, is handed to her, I do not see upon what reasonable theory the excess or surplus which remains in the hands of the wife, after she has paid the current expenses, can be considered a gift.

Among those differently circumstanced, where the wife is largely, if not wholly, ignorant of her husband’s business affairs ■ — where he handles all the money; where what she receives from him may properly be said to be from his bounty — the rule of law is reasonable which holds that she is the owner of what she saves out of the moneys he gives her.

But in searching for the intention with respect to transactions among people circumstanced as these people were, I am entirely clear that there is no donative purpose indicated by tire weekly handing over by the husband of his wages to his wife.

I am of the opinion that the intention of each of the spouses is the same, and that such intention is that the money which is their all is their joint property.

This is the way that it is dealt with by such people; from it they obtain their sustenance, their shelter, their clothing, what little amusements they can afford to pay for and everything which they are required to expend.

The husband retains no money in his own hands for any purpose, and the joint hoard is theirs for all purposes.

I think that the well-understood and thoroughly-intended purpose of such people is to- have a joint hoard to' be used for every purpose while each is alive, arid to go to the survivor when the other dies. And if it be essential to determine who is the owner in law of such moneys, I incline to the opinion that in law the husband is.

I think, under such circumstances, the wife' is the disbursing agent of the husband with absolute discretion, and may freely, during her lifetime, expend the moneys entrusted to her by him; that there may be cases in which, as to the moneys accumulated by their joint efforts, she acquires a right therein so that they are owners in common and the same should be divided equally between them; - that at the death of either their intention is survivorship; but that, unless the facts otherwise indicate, the money thus accumulated in the hands of the wife is the husband’s, and she is holding it as agent for him.

If I am right in this conclusion, then the $580 which was in the wife’s hands at the time this property was bought, and which was by her given to- him and by him paid for the lot, was not the wife’s money in any such way as to constitute her the equitable owner of the real estate.

If, tiren, the husband be considered as having legal and equitable title to this property at the time, in 1891, when he conveyed it to the intermediary who conveyed it to his wife, the next question for consideration is, may he now, upon the facts shown, obtain relief P

In the first place, there is no testimony of a clear and distinct agreement between the parties made at the time of the conveyance, and if there rvere it could not be taken advantage of by this complainant because of the statute of frauds and of the canon of evidence, which forbids the reception of oral proof to vary written instruments.

I do not think there is a resulting trust.

It does not come within tire definition by Lord Hardwicke, in Lloyd v. Spillet, 2 Atk. 148, nor do I find that there is such a trust as arises where a husband has caused a title to be vested in his wife and overcomes the presumption of an advancement or settlement by proving a different contract.

I am of opinion, however, that this complainant is entitled to relief upon the doctrine established in this state in the case of Garnsey v. Mundy, 24 N. J. Eq. (9 C. E. Gr.) 243 (Chancellor Runyon, 1873), and since frequently recognized both in this court and in the court of errors and appeals.

This complainant is a man of the very lowest order of intellect. He cannot speak our language, and but imperfectly understands 'anything that is said to him in English. Even when spoken to in his own language (German) he comprehends only the simplest statements, and is similarly limited in expressing himself.

He impressed me, while testifying, as a man entirely honest, and I am under tire impression that even when read his testimony will carry conviction that tire witness is stating tire entire truth as he understands it.

In no instance did he seek to color any statement or to give any evidence which would favor him at the expense of truth.

A less truthful man, with more intelligence, would undoubtedly have testified to some statements by the wife, or to some understandings between them which would lead to favorable action in his behalf.

This complainant, however, confined his testimony to a statement of what I believe to have been the truth of the situation.

I think that his sole purpose in transferring the land from his own name to his wife’s was to show acquiescence in her purpose to keep the land free from further pledge by him to pay clebts.

I mean by this that he, having once borrowed on the strength of the title to this property, and she being angry that what they looked upon as their joint property should be thus encumbered, prevailed upon him to transfer the title to her that this might not occur again.

While it is shown that she paid off the $150 mortgage which he had placed on the lot, it is also shown that the money to do so was derived from the husband’s earnings, and that which is held concerning the ownership thereof is applicable to this. Furthermore, there is no pretence that she paid the money as a consideration of the conveyance to her, or that she became mortgagee for the advance of this $150 paid to the existing mortgagee.

The whole case shows that she was a masterful woman, that she ruled both her husband and her son, and in her household and in the business carried on therein she was the master spirit; and in all their money transactions, from the beginning, she was the treasurer.

As has already been explained, this leads me to find that the moneys in her hands, which came from her husband, were not gifts, but were part of the joint hoard, and likewise leads me to find that in transferring to her the title to the land Iris purpose was not to make a gift, but to place this also for tbeir joint benefit with her, who in all their transactions was the leading spirit and the conservator of what they were able to gather together for their joint benefit.

I do not think that he had any comprehension, when he signed the deed to the stranger to effect the conveyance of this land to his wife, that in so doing he was giving the land to her, or was enabling her to deprive him of his rights therein; but, on the contrary, I find, from the whole evidence, that his purpose was merely to deprive himself of the temptation or possibility of borrowing money upon the strength of the title to this land standing in his name; and that such purpose generated with her and was by her imposed upon him, and that each intended, that the survivor should have the land.

Hnder such circumstances as I find to exist in this ease, our courts have frequently declared that the deed should be set aside.

With respect to the prayer in the bill that the defendant Carl Roth shall be decreed to pay to the complainant the sum of $3,67-1.41, which was the money found upon deposit in the name of the wife, and which was administered by tire executor of the wife’s will, my conclusions are as follows:

At the time of the wife’s death, this money being on deposit in a bank, there was a chose in action under her control, which passed under her will to the executor. There was no res which may be followed by the husband who claims it into the hands of the legatee who1 obtained it.

Whatever may be or may have been the rights of the complainant to the moneys upon deposit in the name of the wife, I do not see how he can, by this bill, or in a proceeding of this nature, proceed against this defendant.

If it be conceded that at the time of the wife’s death this complainant was legally the owner of the funds which were deposited by the wife in her own name in the bank, it seems to me that the complainant must have proceeded against the bank to prevent its paying out the money to the wife’s representatives, or against the wife’s representatives to' contest their right, as against him, to collect-the deposit. But I do not see upon what theory the complainant can in this proceeding raise this contention with this defendant.

In a direct proceeding against the wife’s representatives, or against the bank, the real issue would be tried, and defences which might be raised against the complainant’s right to this chose in action could then he raised.

Upon this branch of the complainant’s bill I find against him, and will so advise.

The authorities which, in my opinion, sustain me in tire conclusions reached, are as follows:

There can be no' recovery herein upon the theory of an express trust; none is proven, and the lack of a writing manifesting the same is fatal.

This is too familiar and well settled to require citation.

The deed in this ease, being upon an expressed consideration, and the uses being declared therein for the grantee, there can be no resulting trust in favor of the grantor. Coffey v. Sullivan, 63 N. J. Eq. (18 Dick.) 296 (at p. 303) (Court of Errors and Appeals, 1901); to the citation on p. 303 thereof, add Lister v. Lister, 35 N. J. Eq. (8 Stew.) 49 (Chancellor Runyon, 1882).

The cases which hold that the presumption of a settlement upon a wife overcomes the presumption of a resulting trust in circumstances where the husband pays for property 'which is conveyed to the wife, but that this presumption in favor of the wife may be overcome by proof, do not apply.

This was a direct conveyance from the husband through an intermediary, and the evidence in any event is insufficient to show such a trust. Duvale v. Duvale, 56 N. J. Eq. (11 Dick.) 375 (Court of Errors and Appeals, 1897), citing the prior cases.

The transaction, however, is one which falls within the principle of the cases which hold that a voluntary deed by way of gift, settlement or provision, containing no provision for revocation or reversion, comprising substantially all of the donor’s property, will be set aside if it be found to be improvident and to have been made by one who did not have the benefit of proper advice and instruction, and did not fully and clearly understand and appreciate the consequences of his act.

The grantor, in the ease at bar, was ignorant of our language; the deed conveyed all he had and was absolute and unconditional, and contained no provision for revocation or reversion; he had no advice from anyone, and certainly had no understanding, in the proper sense of that word (White v. White, 60 N. J. Eq. (15 Dick.) 104 (at p. 115) (Vice-Chancellor Pitney, 1900) , as to what the effect of the conveyance was, and certainly there was no intention on Ms part to absolutely lose his rights in the property.

Under such circumstances the deed cannot stand. Anderson v. Elsworth, 3 Giff. 154; S. C., 7 Jur. (N. S.) 1047; Beard v. Beard, 3 Atk. 72; Warlick v. White, 86 N. C. 139; Story Eq. Jur. § 1374; Garnsey v. Mundy, 24 N. J. Eq. (& C. E. Gr.) 243 (Chancellor Runyon, 1873), deed of trust; Mulock v. Mulock, 31 N. J. Eq. (4 Stew.) 594 (at p. 602) (Vice-Chancellor. Van Fleet, 1879), absolute deed; Van Houten v. Van Winkle, 46 N. J. Eq. (1 Dick.) 380 (at p. 385) (Chancellor McGill, 1890); Martling v. Martling, 47 N. J. Eq. (2 Dick.) 122 (at p. 132) (Vice-Chancellor Pitney, 1890), absolute deed; Doughty v. Miller, 50 N. J. Eq. (5 Dick.) 529 (at pp. 533, 534) (Vice-Chancellor Van Fleet, 1892), absolute deed, dicta; Hall v. Otterson, 52 N. J. Eq. (7 Dick.) 522 (at p. 531) (Vice-Chancellor Green, 1894); White v. White, 60 N. J. Eq. (15 Dick.) 104 (Vice-Chancellor Pitney, 1900), absolute deed; Grant v. Baird, 61 N. J. Eq. (16 Dick.) 389 (Vice-Chancellor Pitney, 1901) ; Thorp v. Smith, 63 N. J. Eq. (18 Dick.) 70 (at p. 92) (Vice-Chancellor Pitney, 1902); Coffey v. Sullivan, 63 N. J. Eq. (18 Dick.) 296 (at p. 302) (Court of Errors and Appeals, 1901), absolute deed; Collins v. Collins, 63 N. J. Eq. (18 Dick.) 602 (Vice-Chancellor Stevens, 1902), absolute deed.

With respect to the moneys earned by the husband and turned over by Mm weekly to the wife, and from which the consideration for the real estate was paid, the question presented is a bald one. I so term it because I do not place my findings upon conversations or spoken explanations of intention, but the sole question is what inference should be drawn from certain facts, or, rather, from a certain line of conduct as between a husband and wife circumstanced as were the parties in this suit.

There is probably no subject which has given rise to more litigation, in the course of which such confusion exists arising from the contradictory opinions of different courts, and sometimes even of the same court. At the expense of some little space, I shall express my view of the law.

At common law, during the existence of a marriage, the husband had tire legal control of all of tire property without regard to ownership.

But even at common law “there was a latent idea of community between husband and wife which cannot be easily suppressed.” 2 Poll. & Mait. Hist. Eng. L. (2d ed.) 407 (*405).

In the courts of equity there grew up a principle under which it was held that there might be a separate estate in the wife in property during coverture.

This principle, however, and its application to facts, did not change the law with respect to tire relations between husband and wife in respect to their .dealings with each other.

After this principle was established, as well as before, the husband remained in control of the property without respect to its derivation, excepting such property as was settled upon the wife for her sole and separate use.

Beginning in 1839, certain of the states of the United States passed laws for the better securing to married women of their property, the statute of New Jersey being passed in 1852.

- Since there was no model after which each of the states patterned its legislation, there arose, and has since existed, great diversity of opinion concerning the construction of these acts.

Our courts have held that the act is to be strictly construed where the rights of the husband are concerned, upon the theory, I presume, that since it is in derogation of the common law rights of the husband, it will only be held to- extend so far as its language requires, and will not be, by construction, stretched further. Eckert v. Reuter, 33 N. J. Law (4 Vr.) 266 (at p. 268) (Supreme Court, 1869), citing prior cases.

Our courts hold that the design of the statute was not to disturb the relation as established at common law between the husband and wife, but was designed to -enable the wife to receive and hold property so that it should not be subject to the control of nor liable for the debts of her husband. “It was not designed to confer upon her the power of acquiring her husband's property, but to protect her own.” Dilts v. Stevenson, 17 N. J. Eq. (2 C. E. Gr.) 407 (at p. 413) (Chancellor Green, 1864). “The act confers no power on the wife to take real or personal properly directly by gift from her husband” (at p. 413).

We must approach the solution of this question, then, as it would have been approached at common law in a court of equity prior to the enactment of the Married Woman's act, holding that the purpose of that act was to secure h> the married woman her property free from the control and debts of her husband; but that in an inquiry with respect to the ownership of property once in the'husband’s ownership the presumptions of law existing prior to the act remain as theretofore. Winter v. Walter, 37 Pa. St. 155; Parvin v. Capewell, 45 Pa. St. 89; McDermott’s Appeal, 106 Pa. St. 358; Laing v. Day, 8 Ill. App. 631; Burns v. Bangert, 16 Mo. App. 22; McFerran v. Kinney, 22 Mo. App. 554.

It is too elemental to require citation that where the question of gift is being investigated the intention controls.

I also think that it is elemental that as between husband and wife the very nature of the relationship requires us to pay the slightest heed to the mere fact of possession. Parvin v. Capewell, supra; Rodgers v. Campbell, 17 Pa. Co. Ct. 72; Burns v. Bangert, supra.

In a case in our court of chancery, where the fair effect of all the testimony seems to me to be that the wife was in possession of money, which money was shown to have come partly from the income of her separate estate and partly from the savings of the husband, the court disregarded the evidence as to possession and divided the moneys so found equally between the parties. Bergen, Administrator, v. Van Liew et al., Administrators, 36 N. J. Eq. (9 Stew.) 637 (Court of Errors and Appeals, 1883).

To determine, therefore, as between husband and wife, the ownership of money, we must first ascertain the source whence it came.

In this case it was the earnings of the husband, week by week, handed to the wife.

Second, we must determine the circumstances under which the money was transferred from the possession of the husband to the possession of the wife.

Schouler on Husband and Wife p. 422 § 388, says:

“But the circumstances under which the husband’s transfer is made are always material. Thus, a husband might have placed his earnings or property in his wife’s hands for safekeeping, and not as a gift to her, in which case title to the fund should be respected accordingly as between them; or it might be regarded perhaps as bestowed for their joint benefit or that of the whole family upon due proof. Marshal v. Crutwell, L. R. 20 Eq. 328; Adlard v. Adlard 35 Ill. 212; Edgerly v. Edgerly, 112 Mass. 175; Seibold v. Christman; 7 Mo. App. 254

And further (on p. 337 § 293), he says:

“The wife was formerly supposed also to gain a title to savings out of her housekeeping allowance: Paul Real’s Case, Prec. in Ch. 44,297. But see Tyrrell’s Case, Freem. 304.
“So, where the husband allowed the wife to make profit of butter, eggs, poultry and other farm produce, which allowance he called her ‘pin money,’ it was held that she acquired a separate ownership therein. Slanning v. Style, 3 P. Wms. 337.
“But these cases rest upon questionable authority (see Macq. Hush. & W. 320), and more recently it has been decided that where the wife of a farmer, with his knowledge and sanction, deposited the produce of the surplus butter, eggs and poultry with a firm in her own name, and he called it ‘her money,’ and on his death-bed gave his executor directions to remove the money and do the best he could with it for his wife, such evidence was insufficient to establish a gift between them, and that the husband had 'made neither the firm nor himself trustee for his wife. Mews v. Mews, 15 Beav. 529. See McLean v. Longlands, 5 Ves. 78, cited herein with approval. And see Rider v. Hulse, 33 Barb. 264, for a similar American decision.”

The later English cases are in favor of the husband’s title — Hoyes v. Kindersley, 2 Sm. & G. 196 (Vice-Chancellor Stuart, 1854) Barrack v. M’Culloch, 3 Kay & J. 110 (Vice-Chancellor Wood, 1856); Lloyd v. Pughe, 42 Law Jour. Ch. (N. S.) 282 (1872); Marshal v. Crutwell, L. R. 20 Eq. 328 (Master of Rolls Jessel, 1875)—as are the following cases in the courts of this country: In re Estate of Gracie, 24 Pittsb. L. J. 9; Rodgers v. Campbell, 17 Pa. Co. Ct. 72; McDermott’s Appeal, 106 Pa. St. 358; Aaronson. v. McCauley, 19 N. Y. Sup. 690; Adlard v. Adlard, 65 Ill. 212.

Since we are searching for intention and are applying the presumptions of. the law in a case between husband and wife, and, as intimated, have reached, the conclusion that mere possession as between them is but slight, if any, evidence of ownership, I am inclined to the opinion that where a wife deposits in a bank, in her own name, money which at the time of its deposit would, as between them, be determined by the court to- belong to him, the mere fact of the deposit is of little, if any, weight in determining the question of ownership.

I think it is clear that in the receipt of tírese weekly ■ sums from the husband she was his agent for the purpose of disbursing the same, and, in that view, what remained was his, in her hands as his agent. See cases last cited.

The mere fact that she, for safekeeping, placed these funds in a bank in her own name, to nry mind, throws no light whatever upon the question of intention as between the husband and wife.

I do not wish to be understood as deciding that in a case where there is other evidence of intention or other circumstances to be considered, that the fact that the wife has, with her husband’s knowledge, deposited money in a bank in her own name may not be of great weight, but I do mean that in a' case presenting the bald question I am here dealing with, the conclusion that the money remaining in the hands of the wife each week, after paying all the expenses of tire family, was the husband’s, leads us still to consider it his, notwithstanding that she, without his direction, or, as is shown in this case, without ever telling him, deposits it in a bank in her own name.

The following cases discuss and illustrate the principle Lloyd v. Pughe, 42 Law Jour. Ch. 282; L. R. 8 Ch. 88; 28 L. T. (N. S.) 250; 21 W. R. 346; Marshal v. Crutwell, 44 Law Jour. Ch. 504; L. R. 20 Eq. 328; Mews v. Mews, 16 Beav. 529; In re Estate of Gracie, 24 Pittsb. L. J. 9; Rodgers v. Campbell, 17 Pa. Co. Ct. 72; Appeal of McDermott, 106 Pa. St. 358; 51 Am. Rep. 526.

If objection be taken that tlie theory upon which the bill was framed and that upon which relief is granted vary, and it be found that such is the case, the court will still sustain the bill and grant the relief, if the relief granted be within the scope of the bill and the evidence justifies it, even if it be'found necessary to amend the bill and prayer. Aller v. Crouter, 64 N. J. Eq. (19 Dick.) 381 (at p. 387) (Chancellor Magie, 1903) ; Archer v. American Water Works Co., 50 N. J. Eq. (5 Dick.) 33 (at p. 48) (Chancellor McGill, 1892).

I have determined to exercise the discretion vested in the court by not allowing either party costs as against the other. The complainant succeeds as to part of his bill and fails as to part, and, furthermore, the defendant merely sought to- obtain by a suit at law that which on the face of the record was his, and which he therefore was entitled to proceed to obtain.

Under these circumstances I think it just that the defendant should not be visited with costs.

I will advise a decree that the injunction be made perpetual against the ejectment suit, and that the deeds from the complainant to' Herman Sontag and from Herman Sontag h> Louisa Fretz be declared and decreed to be void, and that the defendants be directed to convey the title to the complainant.


source: Caselaw Access Project

author: Garrison, V. C.

license: Public Domain

text:
    Mary A. Dithmar v. Charles G. Dithmar.
    [Filed January 10th, 1905.]
    1. Where a wife sues under section 20 of the act of April 3d, 1902 (P. L. 1902 p. 508), and neither of the parties was a resident of this state when the bill was filed, and the matrimonial domicile was not in the state at the time of the neglect complained of, the court has not jurisdiction of the suit.

      2. One against whom a writ of ne eoseat has issued may, at any time, move for a discharge on affidavits, and the court may make the discharge on any ground which shows that the writ should not have been granted.
    On motion to discharge writ of ne exeat.

      Mr. Thomas E. French, for the motion.

      Mr. Herbert A. Drake, contra.

   Garrison, V. C.

This case comes before the court upon a motion by the de- ' fendant to be discharged from a writ of ne exeat, and for the cancellation of a bond given by him under an order of this court made on the 19th day of December, 1904.

I am convinced from the proofs that each of the parties to this proceeding is a resident of the State of Pennsylvania.

The proceeding can only be maintained under the provisions of the twentieth section of the Divorce act. P. L. 190® p. &08.

By the sixth and seventh subdivisions of that act (P. L. 1902 p. 504), the legislature has defined the cases over which the court shall have jurisdiction in this respect. The two sections read as follows:

“VI. In cases of alimony or maintenance only; provided (a) the defendant is a resident of this state at the time of filing the bill, or. provided (6) the matrimonial domicile was in this state at the time of the neglect complained of, and the complainant resides in this state at the time of filing the bill, and the defendant' is served with process in this state, or has property within this state at the time of filing the bill. .
“VII. In all cases, except desertion, when either of the parties is a resident of this state at the time of filing the bill or petition and the defendant is served with process within this state.”

In tire case at bar the defendant was not a resident of this state at the time of the filing of the bill, and the matrimonial domicile was not in this state at the time of the neglect complained of, and the complainant did not reside in this state at the time of the filing of the bill, and neither of the parties was a resident of this state at the time of the filing of the bill.

I therefore hold that the defendant should he discharged from the writ of ne exeat, and will so advise.

The court of errors and appeals, in the case of Hervey v. Hervey, 56 N. J. Eq. (11 Dick.) 424, holds that “to the effectual initiation of a suit brought in the court of chancery by a wife against a husband for maintenance under the twentieth section of the act concerning divorce, two things axe necessary—jurisdiction of the subject-matter of the controversy and jurisdiction of the person of the defendant.”

And (on p. 428) that court says: “The regulation of the institution of marriage is a matter of high public policy. The persons subject to this regulation are, naturally and by general law, those who are domiciled within the borders of the state. Specifically they are those who have therein such a domicile as the state may positively prescribe.”

Since I find as a fact that neither the wife nor the husband resided in New Jersey, I conclude that the writ should not have issued, and that the defendant! should be discharged therefrom.

Practice admits application to the court for discharge to be made upon affidavits and before answer, and the court upon such motion may make the discharge upon want of equity appearing in the bill or insufficiency of the affidavits, or any other thing which shows that the writ should not have been granted. Cary v. Cary, 39 N. J. Eq. (12 Stew.) 3 (Chancellor Runyon, 1884).

The writ will only issue for equitable demand. MacDonough v. Gaynor, 18 N. J. Eq. (S C. E. Gr.) 249 (Chancellor Zabriskie, 1867).

If the court has not jurisdiction of the subject-matter, there is no equitable demand upon which the writ may rest for a basis.

I will advise an order as heretofore stated.

Application is also made by the defendant for an order that the complainant give a bond for costs in pursuance of section 21 of the Divorce act. P. L. 1902 p. 509.

It is proper that this application should be’ grabbed, and I will advise an order to that effect.


text:
    Alfred W. Booth v. The Land Filling and Improvement Company et al.
    [Filed January 25th, 1905.]
    1. Where corporate directors award a contract to themselves, the contract is voidable at the option of dissenting stockholders, and such directors have the burden of showing the fairness of the terms of the contract.
    2. A stockholder who is also a director is not estopped to maintain a bill to restrain an action at law against the corporation by a firm composed of two- other directors to recover for work on a contract awarded to them by the corporation because the complainant voted to> allow defendants to do such work, where the resolution authorizing the work did not fix the price and complainant objected to the price fixed by defendants in their own behalf.
    3. Where directors submit a contract in which they are personally interested to the stockholders, and they themselves, constituting the majority thereof, secure a majority vote in its favor, and they also constitute the majority of the directors who approve the contract, the terms of the contract, including the amount of compensation specified therein, are reviewable at the instance of the dissenting stockholders.
    On order to show cause for preliminary injunction to restrain a suit at law.

      Mr. James Benny and Messrs. Collins & Corbin, for the complainant.

      Messrs. Reed, & Coddinglon, for the defendants.
   Garrison, V. C.

Tins is a motion founded upon a bill and affidavits and a supplemental bill and affidavits to secure a preliminary injunction restraining the individual defendants Messrs. Dailey and Ivins from the fjirthef prosecution of a suit at law against the corporate defendant.

The Land Filling and Improvement Company is a New Jersey corporation, having one thousand shares of capital stock.

The complainant owns two hundred and fifty of these shares; Ivins, one of the defendants, owns two hundred and fifty, and Dailey, the other defendant, owns five hundred.

These three men constitute the board of directors of the company, Dailey being the president and Ivins the secretary and treasurer.

Dailey & Ivins are partners in business under that firm name.

There was a meeting of stockholders of the company on the 16th day of May, 1904/ at which each of the three stockholders was present.

There was a resolution introduced at that meeting in the following words:

"Resolved, That the secretary is hereby instructed to notify Messrs. Dailey & Ivins that they can dump street sweepings and grade the same on the property of the Land Filling and Improvement Company, at Newark, whenever they so desire, and at the same prices formerly paid to Messrs. Booth, Dailey & Ivins.”

■ Booth, Dailey & Ivins were formerly partners under that firm name.

There is a dispute between the parties as to the happenings at this meeting on the 16th day of May, with respect to the above-quoted resolution.

The complainant insists that he voted against the resolution, both as originally offered, which was in the form above quoted, and as subsequently amended, which amendment will be hereafter noted.

The individual defendants, upon the other hand, insist that when the resolution was offered the complainant moved that the words “ at the same prices formerly paid to Messrs. Booth, Dailey & Ivins” be stricken out and the following words substituted, “at a price to be agreed upon later by the board of directors.”

They insist that the amendment was accepted, and that the resolution, as amended, was adopted by the unanimous vote of all the stockholders, including the complainant.

The minutes bear out the contention of the defendants, and furthermore show that at a meeting of the board of directors at which the complainant was present, held on the 26th day of May, 1904, the minutes of the stockholders’ meeting were read and approved.

At the directors’ meeting .just mentioned a resolution was offered in the following language:

“Resolved, That the secretary be and that he hereby is instructed' to accept the proposition of Messrs. Dailey & Ivins for filling the property of the Land Filling- and Improvement Company, at Newark, N. J., with street cleaning matter, for the prices named, to wit * * * ”

It is admitted by all of the parties that this resolution was passed by the affirmative votes of Messrs. Dailey and Ivins over the negative vote of the complainant.

At the same meeting a resolution was passed by a similar vote instructing the secretary to send out proposals for bids for dredging in front of the property of the defendant company, and authorizing the officers to accept the lowest bid for such dredging.

The proofs show that proposals for dredging were invited and bids were received, and that the complainant requested to be notified of the meeting of the directors at which the bids should be acted upon.

The other two directors refused this request, and awarded the contract for dredging to themselves.

The defendants Dailey & Ivins commenced the dredging and also the filling, and allege that they have completed the former, and have done some considerable work upon the latter.

The complainant, by his original bill, sought to have the court enjoin the individual defendants from doing any further work under either of the contracts for dredging and for filling.

Upon a hearing as to whether the court would grant a preliminary injunction the court refused so to do, among other reasons, because, as to the dredging, it appeared that the work had already been done, and as to the filling, it appeared that the complainant, at a stockholders’ meeting, had voted with the other stockholders for a resolution authorizing Daile3r & Ivins to do this very work.

The court at that hearing was not called upon to consider anything concerning the price or compensation to be paid to Dailey & Ivins for the work already done, or that might be done in the future; the sole question, as the court conceived it, was whether the complainant, who was shown to have voted in favor of the defendants being authorized to do the work, might obtain a preliminary injunction to restrain them from doing such work.

Thereafter the defendants Dailey & Ivins commenced a suit at law against the defendant company for the sums of money alleged to be due to them for the dredging and for so much of the filling and grading as had been done to the date of the suit.

In such suit they claimed the sums named in the- contracts alleged to have been made between them and the company.

Thereupon the complainant filed a supplemental bill and affidavits, setting up in the- bill the beginning of this action at law, and praying that it might'be restrained, and that this court review the question of amount recoverable by the individual defendants.

• An order to show oause, with ad interim restraint, was granted, and the individual defendants came in with their affidavits.

They resist the issuance of a preliminary injunction, first, upon the ground that the complainant is in laches.

They insist that since the work sought to be recovered for in tire suit at law has been done the complainant is estopped to deny their right to recover compensation at the rates mentioned in the contracts.

I do not think this argument should prevail.

The utmost that the defendants can claim in this suit is that the complainant, as one of the stockholders, voted that the individual defendants might be emploj^ed to do certain work, but the resolution authorizing such' employment expressly reserved tire fixing of tire price to the directors.

There was not, in legal contemplation, any contract entered into by the vote of the stockholders.

■ They merely authorized tire directors to enter into a contract; the most important term of the contract, namely, the price at which, the work should-be done, was not passed upon by the stockholders, but was left to be settled thereafter. ^

The complainant cannot, therefore, be said to be in laches when he comes into court so soon as the contractors, by legal process, set forth the claim that they malee against the corporation.

By his vote at the directors’ meeting he plainly gave notice to the other directors that he objected to their contracting with themselves at the prices named, and this was followed by his written protests to them.

Under these circumstances, they cannot now claim that he is estopped to question the amounts to be paid to them by the company for work done by them in the face of such notice and protest by him.

The next reason urged by the defendants is that the contracts in this case having been approved by a rpajurity of the stockholders, the terms of said contracts, including the amount of compensation specified therein, are not reviewable by this court at the instance of the dissentient stockholder, and the court is referred to' the case of Hodge v. United States Steel Corporation, 64. N. J. Eq. (19 Dick.) 807 (Court of Errors and Appeals, 1902) in support of this contention.

In the Hodge Case the contract attacked was between the corporation and a number of persons, some of whom were directors of tire corporation.

The contract, in its entirety, had been submitted, a long time previous to a meeting of stockholders, to each of the stockholders, and by its terms was not to be binding until it had received tire approval of the stockholders.

The complainant, Hodge, did not attend the meeting at which the contract was voted upon, and the court held that, in the absence of fraud or want of power on the part of the corporation, stockholders may lawfully enter into or authorize a contract between the company and a third party in which directors are personally interested, if it be done by them with notice of such interest.

In the case at bar tire contracts were not submitted in their entirety to the stockholders, nor were such contracts in their entirety ever voted upon by the stockholders; it cannot, therefore, be said that the stockholders, as such, ever passed upon the contracts now in suit.

The complainant, at the meeting of tire directors where a complete contract was first considered, voted against the adoption of such contract, and by written protests thereafter gave notice to the others that -he objected thereto.

The facts in the case sub judies so differ from those found by the court of errors to exist in the Hodge Case that the judgment therein is not applicable to this case.

The defendants, however, insist that the reasoning of the court in that case, and the legal effect of .the judgment therein, changed the theretofore existing rules of law with respect to this subject-matter. They contend that the Hodge Case is authority for the-principle that wherever directors submit a contract in which they are personally interested to the stockholders and secure a majority vote in favor of it, they may enter into and carry Out such contract free from challenge, provided the corporation had power to make it and there was no actual fraud; and that this is so even if those directors who benefit by the contract constitute the majority of stock that authorized the contract and the majority of directors who approved it.

It need hardly be pointed out that under such circumstances the submission of the matter to the stockholders and securing the approval of a majority thereof is the veriest farce.

It is difficult to see, if the inference which the defendants draw from the Hodge Case be correct, what becomes of the indexible principle that trustees are always accountable for their dealings with their trust, and that the burden is always on them to vindicate and justify their own actions with respect thereto.

I cannot see how notice affects the vital question involved. I do not understand how a trustee can validate his act and shift the burden to the cestuis que trust by giving notice beforehand of the fact that he intends personally to benefit by dealings with the trust estate.

As I understand the law, a trustee may never deal with the trust estate in any way which enures to his personal benefit without assuming the burden of showing the propriety of his act, if promirály and properly challenged by any of the cestuis qxie tnist. (To hold that a majority of trustees, who constitute alscj» a majomy of the cestuis que trust, may propose to the wholal body' of cestuis que trust a contract beneñcial to themselves, andf carry it through by their own votes, and then claim that they'll are beyond challenge except for actual fraud, is to radically* alter all previously existing rules of law upon this^ubject, and I cannot accede to the argument that such is the intention or the effect of the decision of the court of errors in the cited case. .

The court of chancery, since the decision of the Hodge Case, has had occasion to consider this question, and in the case of Lillard v. Oil, Paint and Drug Co., 56 Atl. Rep. 254 (Vice-Chancellor Emery, 1903), the court held that the doctrine of the Hodge Case did not alter the theretofore existing principle which made contracts entered into by directors with themselves reviewable by a court of equity at the instance of a dissenting stockholder with respect to the amount of compensation to be recoverable by the contractors from the corporation.

If my conclusion be sound that these contracts are not protected by the rule which relates to contracts authorized by stockholders, then it comes within the principle enunciated by the court of errors and appeals, and always applied to such contracts, that the terms of the contract itself will be entirely disregarded, so far as coippensation is. concerned, and the burden is on. the contracting directors to show what they reasonably deserve to have for the work done, and nn unjust exaction will be permitted.

This principle is clearly stated in the case of Gardner v. Butler, 30 N. J. Eq. (3 Stew.) 702 (at pp. 724, 725) (Court of Errors and Appeals, 1879), and has since been frequently enunciated and applied by our courts.

The further insistment is made on behalf of the individual defendants that since there is no distinct and direct allegation on the part of the complainant that the contracts between the corporation and the individual defendants are unjust and oppressive, or are fraudulent and unreasonable, therefore this court should not enjoin the prosecution of the suit at law.

It is the fact that there is no distinct charge in either the original bill or the supplemental bill that the contracts are unjust and oppressive, fraudulent or unreasonable.

There are allegations that the filling contracted to be placed on the company’s land by the defendants is obtained by them from the city of New York, and that they are paid by the city for taking it away, and that those who are thus paid by the city to remove the street sweepings are glad to find places to dump such sweepings, and inferentialfy, therefore, that any price asked for by those who wish to dispose of such sweepings is excessive and unreasonable.

If I had to determine upon the affidavits in tins case whether the contract was a fair one or not, I should have great difficulty in finding any evidence that it is unfair and unreasonable, unjust or oppressive; but if the principle of law which I understand to be applicable is applied to this case, there is no such burden cast upon the complainant.

The cases hold that where directors contract with themselves, such contract is voidable at the option of a shareholder who promptly applies to the court; and that where work, services or material have been furnished under such contract the court will disregard its terms; and that the burden of showing what the ■work is worth, or what the materials and services are worth, is upon the contracting parties, and is not upon the complaining stockholder.

It must very often happen that a complaining stockholder has not such knowledge of the business, or has not facts within his ability to prove, which will enable him to properly charge and prove that the contract is of the character legally objectionable; and directors who deal with themselves must do so with knowledge of the law that if the contract is objected to they must carry the burden of showing its fairness and 'reasonableness as to price.

These considerations, among others, have led the courts to hold that upon the prompt application of the complaining stockholder the contract as to compensation will be disregarded, and the burden will be placed upon those claiming the compensation from the company of showing what the reasonable and fair amount should be.

TVhat the complainant must show, therefore, to entitle him to an injunction preventing the contracting directors from taking from the corporation the amount of money fixed by themselves is that such directors, by their own- votes, made a contract with themselves.

Upon final hearing the court will determine the question as to whether the compensation fixed by the contract was fair and reasonable, and all other such questions, but will not attempt to dispose of that question upon the defendants’ affidavits submitted in opposition to the motion for a preliminary injunction.

The complainant in this case, having shown that unless the law suit is stopped the whole subject-matter will be disposed of, is entitled to an injunction to hold matters as they now are until the final hearing of this suit.

I will advise that a preliminary injunction do issue.


text:
    Frederick W. Mertens, trading as F. W. Mertens & Sons, v. Henry H. Schlemme and Johanna Schlemme, his wife.
    [Filed February 1st, 1905.]
    1. Where defendant has not raised the objection that the complainant has an adequate remedy at law until after testimony on the merits has been taken, the court, in its discretion, will retain the cause.
    2. Where a wife vests her property in her husband, and permits him to appear to be the owner thereof, and he contracts debts in the course of business while he is apparently such owner, she is estopped to deny, as against the husband’s creditors, that the husband is actually the owner of the property.
    3. Personal property bought by a wife with the proceeds of real property which, as to creditors, belonged to her husband, may be subjected to the lien to which the proceeds of the real property would have been subject.
    Heard on bill, answers, replications and proofs in open court.

      This is a bill filed by Frederick W. Mertens, trading, &c., against Henry H. Schlemme and Johanna Schlemme, his wife.
    The bill sets up that about the month of October, 1903, Henry H. Schlemme became indebted to the complainant in the sum of $252, and that during the month of November, 1903, he promised to pay said indebtedness to the complainant out of the proceeds of the sale of certain real estate owned by Henry H. Schlemme; that at the time of the contracting of the indebtedness the said Henry H. Schlemme was seized in fee-simple of a certain tract of land which is described in the bill, and that on or about the 1st day of December, 1903, he sold the same to Frederick Simon for $30,500, receiving, after the payment of the mortgages, taxes and other liens upon the property, the sum of $4,117.71; that Schlemme still refusing to pay the debt, complainant commenced an action in the district court of Hoboken against the said Schlemme, and on the 5th of January, 1904, recovered judgment for the sum of $254.52 damages and $16.12 costs, and that for the purpose of -obtaining satisfaction of the judgment complainant caused an execution to be issuedj which was returned unsatisfied, and thereupon, on the 12th day of January, 1904, the complainant petitioned the said district court and obtained an order requiring Schlemme to appear before a master in chancery and make discovery; that at said examination Schlemme testified that he had given the balance of the proceeds received from the sale of the property to his wife, Johanna Schlemme, the other defendant, and that Johanna Schlemme had deposited the same in bank in her own name; that Schlemme carried on a liquor saloon in a part of the premises, and that the debt was contracted by Schlemme for merchandise used in the saloon business.
    The bill charges that the moneys deposited in bank by Johanna Schlemme are held in trust by her for Ere benefit of her husband, and prays that the defendants may discover the estate- and property belonging to Henry H. Schlemme, and what disposition has been made of the proceeds of the sale of the real estate, and in whose possession the proceeds of Eie said sale have been since the 1st day of December, 1903, where the proeeeds were deposited, who lias possessed and enjoyed the proceeds, and that the judgment of the complainant may be declared to be a lien- on said moneys and proceeds of said sale, and that said gift of the proceeds of the said sale made by Henry H. to Johanna may be declared to have been with the intent to delay, hinder and defraud the creditors of Henry, and to be fraudulent and void as 'against complainant and all other creditors, and that the said gift of the proceeds of the sale of the real estate may be returned to the said Henry Schlemme, or that the said Johanna may be declared and decreed to be a trustee for the complainant and such other creditors, and that out of the proceeds of such sale the complainant and other creditors may be decreed to be paid their debts.
    The answer of the defendant Henry admits the indebtedness to the complainant, but denies that he promised'and agreed to pay the same out of the proceeds of the sale of the real estate; admits that the deed was in his name at the time the indebtedness was contracted; admits the sale for the gross amount stated in the bill, and says that the net proceeds were not $4,117.71, but were $3,000; admits the action in the Hoboken district court-,, and admits the supplemental proceedings taken thereunder; admits that tire balance of the proceeds from the said sale of the real estate were paid by him to his wife for money due and owing to her under an agreement made by him with her at the time the property was conveyed to him by his wife; denies that she holds the money in trust for him, and insists that said moneys are her sole property.
    The answer of the wife' admits that the deed to the property stood in the name of the defendant Henry, and sets out that the lands descended to her from her father, and that she, being desirous in case of her death that her husband should have the lands, conveyed the same to him upon the express condition that should he ever sell said lands and premises in her lifetime he would pay to her the proceeds derived from such sale; and that, in pursuance of such agreement, on the 1st day of December, 1903, he paid to her the sum of $3,000, which sum she used partly in establishing a business, partly for maintenance and support of her family, and other expenses, leaving a balance in her hands of from $100 to $150.
    She denies that she holds the proceeds of the sale of the lands in trust, but insists that the same are her property.

      Mr. John J. Fallon, for the complainant.

      Mr. William S. Stuhr, for the defendants.
   Garrison, V. C.

The proofs follow the pleadings very closely.

They show that Mertens, a dealer in cigars, sold goods to Henry H. Schlemme, who was carrying on a saloon at the corner of Eighth and Washington streets, Hoboken; that in October of 1903 Schlemme owed Mertens some $252, and upon Mertens going to collect the bill Schlemme informed him that he did not then have the money, but would pay him out of the proceeds of the sale of his real estate.

The real estate, including the building in which the saloon was, was conveyed to Schlemme, through an intermediary, by his wife in 1897:

She testified that at that time they were living in New York, and were about to come to Hoboken to open up a saloon business in this building; that this building, together with other real estate, descended to her from her father, who died in 1869; that she consulted counsel to carry out an intention she had then formed, which was to place the property so that it would go to her husband in the event of her death, with the understanding that if he sold the property during her lifetime she should get the proceeds.

The deeds to carry out this conveyance were executed some two weeks before they moved to Hoboken, which they did in 1897, and since that time the husband has carried on the saloon business, as heretofore stated.

The property was sold to one Simon, and on the 1st of December the purchaser, after retaining money to satisfy all the liens, paid the balance, amounting to $3,517.79, to Henry H. Schlemme; $517.79 of this money was paid out in various ways by the husband, and $3,000 of it Henry gave to his wife in cash, and she deposited it in three different banks in New York in sums of $1,000 each, and from time to time thereafter, between the 1st of December, 1903, and July of 1904, drew out these moneys and invested them in a business, which, she is now carrying on at 304 Summit avenue, West Hoboken.

She testifies that the stock of goods at present on hand, all of which was purchased with these monej^s, is worth about $3,000.

The complainant insists that under the facts in this case he is entitled to have a lien fastened upon the stock of goods, now possessed by the wife, in his favor for the amount of his debt; that the wife, having transferred the real estate to the husband by a deed in fee-simple, is now estopped to deny that the husband was the owner of the property as against creditors of the husband, whose debts were contracted while the husband held the title.

The defendants insist, first, that there is an adequate remedy at law, and therefore the complainant is not entitled to come into equity; second, that, even as against the husband’s creditors, the wife has the right to prove that he was holding as her trustee, and that she is entitled to the proceeds of the real estate so held by him as her trustee as against his creditors; third, that by reason of the transaction between the husband and the wife at the time the real estate was conveyed to him he became her debtor, and she is entitled to retain the money he gave her because he has a right to prefer one creditor to another.

1. No objection to the jurisdiction of this court appears in any part of the defendants’ pleadings, and the objection based upon the suggestion that there is an adequate remedy at law was not made until argument, after all the proofs were in at the final hearing.

“The objection that the complainant had an adequate remedy at law came too late to avail the defendants. The court, of its own motion, may dismiss a bill at any stage of the cause on the ground that the complainant has an adequate remedy at law. But where the defendant has not raised the objection until after testimony on the merits has been taken, the court, in its discretion, will retain the cause if the court is competent to grant the relief prayed and has jurisdiction of the subject-matter. Lehigh Zinc and Iron Co. v. Trotter, 43 N. J. Eq. (16 Stew.) 185 (at p. 204) (Court of Errors and Appeals, 1887).” To the cases cited add Coast Company v. Spring Lake, 56 N. J. Eq. (11 Dick.) 615 (Vice-Chancellor Reed, 1898).

A court of equity has jurisdiction of the subject-matter of this suit because the complainant, at the time of the recovery of his judgment against the husband, could not obtain satisfaction of that judgment out of money, which the husband had transferred previous to that time to his wife.

The real estate which, as respects the creditors of the husband, must be held to have belonged to the husband, was sold on December 1st, 1903, and $3,000 of the money received by the husband was on that day delivered to the wife.

The complainant’s judgment was obtained on the 5th of Januar}r, 1904, and what he now seeks to do is to trace that money, or tire property into which that money has been commuted, and fasten upon such money or such property a lien in his favor.

It is within the powers of a court of equity to effect this object.

2. The second contention of the defendants cannot prevail.

In the first place, the claim of a trust in favor of the wife is supported solely by the testimony of herself and her husband, and is meager and unsatisfactory.

Vice-Chancellor Van Fleet, in discussing the way that courts should view testimony relating to this subject, said: “Claims of this kind should always be regarded with a watchful suspicion, and when attempted to be asserted against creditors upon the evidence of the parties themselves, uncorroborated by other proof, they should be rejected at once, unless their statements are so full, clear and convincing as to make the fairness and justness of the claim manifest. Any other course will-encourage fraud and multiply the hazards of most business ventures.” Besson v. Eveland, 2.6 N. J. Eq. (11 C. E. Gr.) 468 (at p. 472) (Court of Chancery, 1875).

It is a great imposition upon credulity to. ask us to believe that any competent counsel advised the wife in this case that she was properly carrying out her intention to secure her property to her husband at her death by making to him an absolute deed, and that such counsel would permit her to make an absolute deed in the face of an understanding, which she says existed, that she was to receive the purchase-price if the property were sold during their joint lives.

Furthermore, it appears that this'transfer was made from her to him in contemplation of his engaging in the very business in which this debt was contracted, and that some two weeks after the transfer to him he entered upon the premises and began doing business, and. during the six years that he was in the business he retained tire title to the property.

But even if the testimony by which the trust in favor of the wife is sought to be established were of the fullest and most satisfactory character, her contention could not prevail.

If a wife vests her property in her husband and permits him to appear to the world to be the owner thereof, and he contracts debts in the course of business while he is apparently such owner, she is estopped to deny, as against his creditors for such debts, that he was Hie owner. Besson v. Eveland, supra; City National Bank v. Hamilton, 34. N. J. Eq. (7 Stew.) 158. (at p. 162) (Vice-Chancellor Van Fleet, 1881); Francis v. Lawrence, 48 N. J. Eq. (3 Dick.) 508 (at p. 511) (Vice-Chancellor Green, 1891); Wheeler & Wilson Manufacturing Co. v. Litwin, 57 N. J. Eq. (12 Dick.) 660 (at p. 663), cases cited in dissenting opinion of Mr. Justice Van Syckel.

3. The third contention of the defendants lacks all evidence to support it.

I cannot see any aspect of the case in which the wife can be said to have been a creditor of the husband, whom he might prefer. There is no suggestion in their testimony that she sold the real estate to her husband, and thus became his creditor.

If she proved anything it was that he was her trustee, and held the title as such, and agreed, if he sold, to so hold and account for the proceeds of the sale.

. This I hold she is estopped to set up. as against the complainant, and I' do not see how' she can successfully contend that by such an arrangement she became' a creditor of the husband, entitled to be preferred by him out of bis assets. There is no such suggestion in the answer, either of the husband or of herself.

The answers of each of the defendants squarely place them upon the proposition that the wife owned the money; that it was her money, and that the husband was her trustee; and do not suggest that it was his money which he paid to her in satisfaction of any debt due her.

Under all the circumstances of the case I therefore find that the complainant is entitled to a decree that the money which the husband realized from the sale of the real estate, and which he paid to his wife, was impressed with a trust in favor of the complainant for the amount of the complainant’s claim against the husband.

Since it appears by the undisputed proofs that this money has been invested by the wife in certain personal property now in her possession at West Hoboken, in this state, it follows that the lien is transferred to such personal property, which will be decreed to be subject to it.

I will advise a decree in accordance with these views.


author: Magie, Ordinary.

text:
    William J. Magie, Ordinary.
    James J. Bergen, Vice-Ordinary.
    In the matter of the estate of Ernest Breining, deceased.
    [Submitted June 15th, 1904.
    Filed December 16th, 1904.]
    Deceased employed a scrivener to draw his will, and was directed by the scrivener to come to the house of the scrivener with two witnesses to witness its execution. Deceased called upon a friend and requested him and his son to accompany him to- the house of the scrivener to witness the execution of his will, exhibiting to them at the same time a folded paper. They immediately went with deceased to the scrivener’s house, and on the way deceased stated to them his reasons for making a will. At the house, and in the presence of the scrivener, a folded paper was produced by deceased which the witnesses believed was that previously shown to them. It was that drawn by the scrivener. Thereupon it was duly signed and witnessed. — Held, that the facts established due publication of the paper as the will of deceased.

      On appeal from Essex county orphans court.

      Mr. Harry V. Osborne and Mr. Halsey M. Barrett, for the appellants.

      Mr. Henry Hahn and Mr. Frederick F. Guild, for the respondent.
   Magie, Ordinary.

The sole contest in this case is whether a paper writing purporting to- be the last will and testament of Ernest Breining, deceased, was executed with all the formalities required to establish it as a valid testamentary disposition. .

There is no formal attestation clause, and therefore the burden of proof of the will is upon the proponent thereof.

It is not contended that the formality of signing and witnessing the writing was defective. The contest is'as to the publication of it as the will of the deceased in the presence of the witnesses.

The proof before the court below showed the following facts: Deceased had employed a scrivener to draw a will for him, and had been directed to come to the scrivener’s house with two witnesses to execute it. Deceased, on the day of the execution called at the shop of a friend and, exhibiting a folded paper, requested him and his son to accompany him to the scrivener’s house and witness thfe signing of his will. They did accompany deceased to the house, and on the way he gave them Ms reasons for rnaldng a will. At the house of the scrivener, in a room in wliich were deceased, the two witnesses and the scrivener, deceased produced a paper which the witnesses believed was that previously exhibited to them. It was then signed by deceased in the presence of both witnesses, and they signed it in his presence and in that of each other; thereupon, the scrivener, who was a notary public, seems to have added the words “in witness whereof I have hereto set my hand and seal this 4th day of March, 1903,” to winch he added' further his name and notarial seal.

The witnesses, on direct examination, stated that deceased, at the house of the scrivener, declared before signing that the paper produced was his will. On cross-examination both of them seemed to qualify that statement, and perhaps their evidence, as was found by the court below, goes no further than to declare that they knew at the house that the paper to be .signed was the will of deceased, not from anything there said, but from what had been said by him when he produced the folded paper and asked them to accompany him to the house to act as witnesses to his will.

Upon these facts the court below reached the conclusion that the transaction, commencing with the announcement by deceased at the shop of his friends that he was about to malee his will, and the exhibition' of a paper as if it was that to be executed, and ending at the house of the scrivener, when a similar paper was produced by deceased and executed, was a continuous one, and that a formal and sufficient publication was thus shown. In this conclusion I concur for the reasons set forth in the opinion of Judge Skinner appearing in the transcript, which are so clearly stated as to render any repetition unnecessary.

It results that the decree appealed from must be affirmed. Under the circumstances disclosed there was such ground for review that I think the costs of the appeal should be paid out of the estate.


text:
    Patrick Grant, appellant, v. John J. Stamler, executor, et al., respondents.
    [Submitted October 18th, 1904.
    Filed January 10th, 1905.]
    1. The opinion of physicians that testatrix was incapable of making a will is not controlling on the issue of testamentary capacity, and does not preclude the court from acting on evidence satisfying it of the existence of such capacity.

      2. An executor and proponent of a will and the beneficiary thereof are competent to testify as to transactions with decedent evidencing testamentary capacity, but their interest may be considered in determining their credibility.
    3. Evidence held to show that testatrix was of sufficient capacity to make a will.
    4. The uncontradicted testimony of the beneficiary of a will that there was no attempt on her part to influence testatrix’s testamentary disposition, and that the subject of the will was not even mentioned between them, supports a finding that there was no undue influence exercised by the beneficiary over testatrix.
    5. Where, in a will contest, it was shown that contestant had so acted, in a business transaction with testatrix, as in effect to recognize her contractual capacity, and he made no attempt to deny or disprove such action, but nevertheless continued the contest, he was not entitled to counsel fees.
    On appeal from the Union county orphans court.

      Mr. George W. Flaacke, Jr., for the appellant.

      Mr. Samuel Koestler and Mr. Patrick H. Gilhooly, for the respondents.
   Magie, Ordinary.

A paper writing purporting to be the last will and testament of Mary Grant, deceased, dated September 27th, 1.903, was admitted to probate by the surrogate. Patrick Grant, the father of Mary Grant, appealed from the action of the surrogate to tire orphans court, and that court affirmed the surrogate’s decree and dismissed the appeal.

From the decree of the orphans court Patrick Grant has appealed to this court, and now claims that it was erroneously made on two grounds — first, that upon the proofs before that court Mary Grant was shown not to have possessed testamentary capacity at the time she executed the alleged will; and second, that the making of the alleged will by her was also shown to have been the result of undue influence exerted upon her by Margaret McGuire, the principal beneficiary named therein.

It is established by the proofs, and conceded, that Mary Grant had been, for five years prior to August 12th, 1903, in confinement in ■ the Manhattan Hospital for the Insane on Ward’s island. On that day she was discharged by the officers thereof as “improved,” and she was immediately brought to Elizabeth to the house of Margaret McGuire, wife of a distant relative. The discharge was made on idle solicitation of Patrick Grant, her father and the appellant, and the removal to Mrs. McGuire’s house was at his request and by an arrangement made with her in the presence of deceased that Mrs. McGuire was to take him and his daughter as boarders in the family. Decedent was then seriously ill with consumption, and a local physician was called to her on the next day, who treated her from that time to her death, on October 12th, following. On September 27th she executed the testamentary paper, and its execution was in all respects such as is required by our statute.

In addition to the presumption which might be raised by the proof of her long confinement in a place for the treatment of persons having mental disease, the appellant produced two physicians, employed in that hospital during the whole period of her confinement there, who testified to their observation of her up to a period shortly before, her discharge. They unite in declaring that when admitted she was suffering from melancholia and that she indicated that she believed she had committed ■ unpardonable sins, for which she was to suffer punishment after death; that her conduct, at first boisterous and unrestrained, became gradually more restrained, and, as they say, she became more tractable and was discharged as “improved,” which, they explain, ought not to express mental improvement, but rather a condition of greater quiet and tractableness, which rendered it improbable that she would do injury to herself or others. But they agree that, when discharged, she was, in their judgment, insane, and that the discharge was permitted because her father desired it, and because she was suffering from consumption and not likely to survive long.

It is evident that Mary Grant was properly classed among those who are insane, as classified by physicians devoted to mental disease. Whether the mere existence in her mind of a delusion on the subject of her future state would require a court to pronounce her incapable of making a testamentary disposition of her property, not influenced by such delusion, is another question. The opinion expressed by these physicians that she was incapable of making a will cannot require the court to ignore a testamentary disposition, if the evidence satisfactorily establishes that a testator possessed capacity to make it, under the liberal rules laid down by our courts. Their further expression of opinion that, judging from her condition when they last observed her, she would not become more capable of making a will, while to be considered, must obviously yield to evidence that satisfies the judgment that she did in fact possess testamentary capacity at the time she executed her will.

The orphans court placed reliance on the evidence produced by the proponent of. the will as to the capacity of Mary Grant to make a will on September 27th. Evidence of her status before and after must be considered, but the important evidence is that respecting her condition at the time the will was executed.

Proponent offered himself as a witness and his testimony was taken. lie called the subscribing witnesses to the will, Mrs. McGuire, the principal beneficiary, her daughter, her sister, her sister-in-law, her husband, and a boarder in the house during Mary Grant’s residence there, and also the attending physician. Counsel for appellant contend that the evidence of the proponent, who is named as executor, and of the beneficiary ought to be rejected so far as it relates to transactions with the decedent. No ground is stated or discoverable for the exclusion of this testimony. But as far as the witnesses are interested, that circumstance is to be considered in determining what credit to give to their evidence.

Without taking space for an analysis of the evidence thus produced, I think it justifies the conclusion — first, that during that period Mary Grant did not disclose the illusion of which the doctors testified, and that she conducted herself as a sane person; second, that she knew the property of. which she was possessed and where it was invested, and was desirous of disposing of it by will because conscious of the fatal nature of her illness; that she knew that her father was a man of great age, of whom she was fond, as her conduct showed, and that she had no other near relatives; and third, that she formed a judgment as to what she should do with her property with a consideration of the circumstances, and that she employed means to have her intention in the distribution of her property put into effect such as a sane person would adopt.

I am aware that appellant relies upon the testimony of two witnesses to show that Mary Grant at one time, and that near the 27th of September, used language plainly indicating a continuance of her illusion. But one of those witnesses fails to remember any such language, and although a child of only eight years of age, fails to testify in agreement with the other, who is her sister. The testimony of the other witness is so extravagant and unnatural, and so contradicted by other witnesses, as to justify its being disregarded as incredible. The subscribing witnesses to the will were evidently intelligent gentlemen, although, from having no previous acquaintance with decedent, their judg- • ment as to her sanity at the time they saw her has not much weight. But they plainly show such conduct on her part as evinced appreciation of what business she was engaged in and a determination to execute the will.

In this connection I deem it proper to say that I have examined with particular care the evidence of the proponent of this will. He is an attorney lately admitted to the bar. He was notified that Mary Grant desired to see him professionally, and went to Mrs. McGuire’s house and had an interview alone with Mary Grant. He testifies that she told him she desired to make a will and to leave the most of her property to Mrs. McGuire for her kindness to her. As she also told him that she had been confined in a hospital for the insane, he hesitated, and did not take definite instructions at that time, but made an appointment for an interview the next day. As he was about to leave the house he was met by Mrs. McGuire. He was told by her of Mary Grant’s confinement in the hospital. He then learned who was the attending physician of Mary Grant and went to him. Having received his opinion that she possessed testamentary capacity, he returned to Mary Grant the next day and then received definite instructions, which were to draw a will giving to her father $100, and the residue of her property to Mrs. McGuire. Thereupon the attorney adroitly called her attention to the small amount provided for her father, while all the residue was to go to Mrs. McGuire. He testifies that she gave him two' reasons for her distribution — one, that her father was provided with sufficient money and would be as well pleased with $100 as with the whole; and the other, that she desired to compensate Mrs. McGuire for her kindness. If the first reason she gave was false, its falsity might tend to influence the judgment as to her capacity. But its falsity was not shown, the father, who could undoubtedly have disclosed the truth, not having been called as a witness. As to the other reason, it is in accord with the other statements- of Mary Grant to the effect that she longed to be removed from the hospital, where she said she never ought to have been, and was full of gratitude to Mrs. McGuire for having consented to take her to hex house, whereby she was enabled to bring about her release.

Upon the whole evidence I think the court below justly attributed to Mary Grant sufficient capacity to make this will.

But it is further contended that the proofs show that the will was the product of undue influence exerted by Mrs. McGuire, the principal beneficiary.

It is a fair presumption that Mary Grant, after her five years’ confinement and her release, would be likely to be influenced by those who effected that release — her father and Mrs. McGuire. She was, moreover, in the house of Mrs. McGuire, in which her father also lived. There is nothing in the proofs to show that Mrs. McGuire ever exerted any authority or influence upon'decedent. There is nothing to justify an inference of influence, except the propinquity and opportunity to- exert it. Nor is there much to indicate that there ever existed between Mrs. McGuire and Mary Grant a confidential relation, which, existing, would cast on the beneficiary the burden of satisfying the courtl that no advantage was taken of such confidence and no domina-" ting influence was exerted.

If this burden was cast on Mrs. McGuire, it is my judgment that she has sustained it. She testifies that not only was there no attempt on her part to influence decedent’s testamentary disposition, biit that the subject of the will was not mentioned between them. I do^not feel able to' disregard this evidence, and deem that it forbids the reversal of the decree below on the ground of undue influence.

The decree appealed from must be affirmed.

After the decree was pronounced, application was made to the court below for an allowance out of decedent’s estate of the costs of appellant and a counsel fee for the counsel who appeared for him in the contest below. The orphans court made an allowance of $50 for costs, and refused to allow any counsel fee. The order which embodied this conclusion has also been appealed from.

I agree with the results reached, but not for the reasons given. With respect to capacity, the evidence of the subscribing witnesses possessed very little force, because they had no previous acquaintance with her. But so far as capacity is concerned, the appellant was shown to have so acted as to recognize it. It was made to appear that what decedent possessed was all deposited in three savings banks in New York. While she was living at Mrs. McGuire’s appellant accompanied her and Mrs. McGuire to New York, and went to one of the banks, where, in his presence; and without any protest on his part, she drew out $1,040, all of her deposit therein, surrendering her bank book, the voucher for her deposit. This money was paid to her and she immediately handed it to him. What occurred between them would seem to indicate that she entrusted him with it to be used for the payment of her charges and expenses. It may perhaps be understood as showing a gift inter vivos. But whatever was its legal effect, the transaction indicated that appellant recognized decedent’s capacity to release and discharge her debtor, and to place her money in his hands either in trust or as a gift. When this fact appeared I think the contest ought to have ended, unless appellant was prepared to deny or disprove it. No such counter-proof or denial was made.

Another reason leads to1 the same result. The testimony was extended by the production of repetitious and irrelevant matter to such an extent as to forbid imposing upon the small estate a burden so great. Nearly five hundred typewritten pages were submitted to me, and in my judgment all of the important evidence might have been presented in less than half that space.

The order appealed from will also be affirmed.