author: Parker, J.

text:
    Ernest Heidler, complainant-respondent, v. Werner & Company, a corporation, defendant-appellant.
    [Submitted November 10th, 1924.
    Decided March 16th, 1925.]

      X. A corporation executed a bond and mortgage to secure the debt of one of its directors and stockholders. On foreclosure of the mortgage the corporation claimed, in reduction of the amount, that complainant had agreed, at the time of. its organization, to pay for certain stock issued to another incorporator. • Held, that if such claim could properly be considered in defense to the mortgage, it had neither been proved nor properly pleaded.
    2. A business corporation, in general, has no power to execute obligations for the payment of money, or to pledge its assets as an. accommodation to its officers, stockholders or others.
    On appeal from a decree advised by Vice-Chancellor Lewis, whose opinion is reported in N. J. Adv. R. 5J/.7, and 95 N. J. Eq. 37J.

      Mr. William, 0. Michel, for the appellant.

      Mr. Joseph J. Weinberger and Mr. Irving L. Werlcsman, for the respondent.
   The opinion of the court was delivered by

Parker, J.

This is a suit to foreclose a, mortgage given by defendant to complainant. Complainant was the owner of one hundred and ninety-five shares out of a total authorized capital of two hundred and fifty shares in the defendant corporation. Five of the one hundred and ninety-five shares stood in the name of complainant’s son, the rest in his own name. He desired to sell out, and after some negotiations with one Eose, an outsider, it' was agreed that Rose should take over the one hundred and ninety-five shares for $15,000. Eose did not have the cash. After further negotiation it was agreed that the defendant corporation should make a mortgage to complainant for $15,000, and this mortgage was to be the consideration for the transfer of the one hundred and ninety-five shares of stock. This arrangement was carried out, the stock was transferred, complainant’s interest in the company ceased, and thereafter the mortgage was executed in due form. The present suit is to foreclose this mortgage.

The first defense set up in the answer was that complainant had agreed to loan the $15,000 to the defendant, but never did so. This was not even mentioned at the hearing. .

The second defense was that complainant induced Eose to take over the stock by false representations as. to its value. This was expressly waived at the hearing.

The third defense was that the complainant had agreed to pay for the remaining fifty-five shares treasury stock, which, in fact, were issued to one Werner, his original associate in the enterprise, and that he did not pay for them, so that the consideration for the mortgage failed to that extent. This is not borne out by the evidence. Whatever was done in this regard had to do. with the original formation of the company, and, not with the mortgage, as will presently appear.

The fourth defense is that, when the company was formed-complainant acquired the stock interest held by him, by putting in real estate consisting of a machine shop and contents, and a small house adjoining, at an excessive and fictitious valuation. If this is relevant to. the present issue, it is not supported by the evidence. It seems to be true that complainant received more in face value of stock for tire property than it had cost him in cash a short time previously, but there is little or nothing to> show that it was not worth fully what the corporation paid for it, and it is undeniable that at the time of the hearing in October, 1923, 'it was worth at least double what had been paid for it in 1919.

The precise arrangement at the time of organization, looking to the taking over of property and issue of stock therefor, is a little difficult of ascertainment. We have the usual resolution in that regard, unanimously adopted by the directors. This places a value of $19,500 on the property and authorizes issue of capital stock to that amount for the same. Then follows this unusual paragraph:

“Further resolved, That it having been heretofore agreed between the vendor of the property described! in said agreement and the incorporators of this company that the stock to be issued to the vendor under said agreement should include the stock subscribed by the said incorporators as evidenced by the certificate of incorporation of this company; that payment of said subscription be deemed to be made by the property agreed to be sold by the vendor as set forth in the preceding resolution.”

Now, Werner had subscribed for, and did actually receive, the other fifty-five shares, and the fair meaning of this additional resolution seems to be that Heiclleris property is to be taken, not at $19,500, but at $35,000, including the Werner stock. Werner, at the time of the hearing president of the company, was unable to say that he had paid anything for these fifty-five shares, which, in fact, were issued to him. Jf complainant was to pay for the Werner stock, the evidence shows that he was not to paj for it in cash but in property, and did so by the very language of the resolution. If there was any fraud about the issue of these fifty-five shares, it was not that of complainant.

If we assume for present purposes-, without deciding that this corporation, which has made its bond arid pledged its property to secure a personal debt from Rose to complainant, may assert, by way of counter-claim, an item arising in connection with its organization, and wholly outside the mortgage, there are two answers—first, that such counter-claim is not set up in the pleadings, and secondly, because it is not substantiated by the evidence.

A much more serious question is not raised at all, either by pleadings, evidence o-r argument. We mention it to avoid any inference of our giving countenance, even sub sileniw, to tbe idea that a corporation may lawfully execute a bond secured by mortgage on its property, to the detriment of its creditors and stockholders, as a pure accommodation to one of its officers or stockholders, or, indeed, anyone else. This is precisely what was done in this case; the corporation made the bond and mortgage to secure the debt of Rose. The law is settled to the contrary. 14-a C. J. 552; 2 Cooke Corp. (6th ed.) § 681; 3 Cooke Corp. § 774; National Bank v. Young, 41 N. J. Eq. 531; Blake v. Domestic Co., 64 N. J. Eq. (at p. 500); Vogel v. Atlantic Tar Works, 3 N. J. Adv. R. 319 (at p. 322).

But no stockholder nor creditor is a party to- this suit, and the corporation itself does not raise the point. On the case as laid before him the learned vice-chancellor properly found for the complainant in the full amount of the mortgage and interest, and the decree brought up will therefore be affirmed, with costs.

For affirmance—The Chief-Justice, Trenchard, Parker, Minturn, Kalisch, Black, Katzenbaci-i, Campbell, Lloyd, White, Gardner, Van Buskirk, Clark, McGlennon, Kays, JJ. 15.

For reversal—None.


source: Caselaw Access Project

license: Public Domain

text:
    New Jersey Zinc Company, complainant-respondent, v. Sayer Fancher et al., defendants-appellants.
    [Argued January 22d, 1925.
    Decided March 16th, 1925.]
    1. Finding of fact by the court of chancery as to the location of “high-water mark” in Wawayanda lake, as established in deeds by John Rutherford and Thomas Iron Company in 1871, held, supported by the evidence.

      2. The nineteenth course in deed of Thomas Iron Company to Rutherford, in .1871, held, controlled toy definite monument at its termination regardless of possible shortage in area -of land conveyed, resulting therefrom.
    3. In a bill to enjoin repeated acts of trespass on waters of a lake and its shore, the dispute centered about a claim by defendants to frontage on a section of the northeasterly shore of the lake, which claim was expressly disallowed by the court, as to the rest of the lake and its shores, complainant’s title was undisputed. Held, that the bill was broad enough to cover the whole lake and its shores, and that an injunction against repeated trespasses on any part of said premises was proper.
    On appeal from a decree advised by Vice-Chancellor Backes, whose opinion is reported in 2 N. J. Adv. R. 1201; D6 N. J. Eq. 65.

      Mr. Robert H. McCarter, for the appellants.

      Mr. Convvn Howell (Mr. Alfred F. Skinner and Mr. William A. Dolan, on the brief), for the respondent.
   The opinion of the court was delivered by

Parker, J.

The bill of complaint alleges repeated and persistent acts of trespass on premises- to which., or to part of which, the title of complainant’s predecessors was declared to be good as against defendants or those under whom they claim (Graves v. Fancher, 81 N. J. Eq. 407, 517), and prays injunction against such trespasses to avoid multiplicity of suits-. The learned vice-chancellor held, as will be seen by a reading of his opinion, that by the decree in the former suit the matters now litigated between the parties are res judicata both as to title and location of the premises claimed. Incidentally, he made one or two- other rulings which are brought up with the main controversy, and will be considered in due course.

The first fundamental issue o-f the controversy relates to the location of “high water mark” so called in the reciprocal conveyances between John Eutherfurd, predecessor in title of the defendants, and the Thomas Iron Company, predecessor in title of the complainants, in 1871. At that time Rutherfnrd owned a farm called the Banta farm, which bordered on the northeasterly end of Wawayanda lake, in the county of Sussex (previously called Double Pond, perhaps, because it had been cut by an old dam now some feet under water). The iron company then owned or controlled all the other lands around the lake, especially at its northerly end, including a dam at the extreme northeast corner east of the Rutherfurd property, the spillway of which supplies a brook called Double Kill, running eastwardly and connecting with Burnt House Brook, mentioned in the descriptions of the deeds. Burnt House Brook runs irregularly toward the north and forms part of the easterly boundary of the thirty-nine-acre tract presently to be mentioned. The iron company wished to raise the dam, and this, naturally, would overflow the Rutherfurd land. From the deeds, and surveyor’s notes and other evidence it is entirely plain that Rutherfurd was to get, and did get, in place of overflowed land then owned by him. upland to take its place, i. e., the “thirty-nine-acre tract” just mentioned, and which adjoins the Banta farm on the east. And the second fundamental issue of the controversy is whether the southeast line of the thirty-nine-acre tract joins the southeast line of the Banta farm above or below “high water marie” as agreed upon at the time or as existing at this time, or does not join the southeast line of the Banta farm at all. Appellants go so far as to claim that there is even a considerable gap between the ends of the two lines, which must be closed b3 the forcible interpolation of a course of from say fifty to one hundred and fifty feet below high water mark in the lake. These two southeasterly lines are nearly parallel. That .of the Banta farm ran in 1871 south, fifty-one degrees twelve minutes west; that of the thirty-nine-acre tract ran south, fifty-eight and one-half minutes west. Hence, they were bound to meet somewhere if produced far enough. Complainants s-ay they met above high water mark and so cut defendants off from any water front on the thirty-nine-acre tract. Defendants say they met, if at all, below high water mark, and this gave them some access. to> the shore, more or less. The vice-chancellor held with the complainants, and, as we conclude, correctly. But where he said .the decree in Graves v. Fancher made the matter of location res judicatathis must be read with the. assumption that the description in the bill and in the decree in that case points to monuments and landmarks that can be identified on the spot, and describes the premises in such manner that from such description, to use the language of the Ejectment act, possession may be delivered. So., that when the description in Graves v. Fancher speaks of high water mark as a “straight line cut into a certain rock, above which line are cut the letters H. W.” and such marks are in plain view and well authenticated, the case is simple; but if they should be obliterated, it will be necessary to fix their location as in the case of any other lost monument. There was much contradictory evidence on this point in the present case.

It has already been stated that the situation giving rise to the present controversy was created in 1871, when the iron company washed to raise the dam. In this aspect of the case the most illuminating piece of evidence is the original field notes of Benjamin Roome, an old-fashioned country surveyor of long experience and general familiarity with the land titles of this section of the state. Obviously, he was employed to locate the east and southeast lines of the Banta farm owned by Rutherfurd, and to tack to it the thirty-nine acres which the company was to convey. His own language will show what he did infinitely better than any paraphrase or description by another:

“1871, July 14. Went from John Rutherfurd’s, Vernon, to George Hunts, Double Pond, to run the Banta Farm, owned by Rutherfurd, 118 84-100 aeres S. 7-55 and 0%) acres, and 2 acres.
“As the beginning corner could not be found to a certainty, run several random lines and found a large peperidge tree, marked O at the northeast comer of the meadow, supposed to be the 3d corner of said tract, and run from said tree by reversing the 2d course S. 80 W. 2 deg. 12 min. Va. 8 chs. to an old stone heap.
“Then 1st course reversing S. 15 W. 2 deg. 12 min. Va. 21 chs. to the beginning corner, and proved to be the right beginning corner as per description in deed or return—a stake and large stone heap, east side of a ledge west of garden fence in front of the dwelling-house on the premises now occupied by Isaac Howard.
“Then run from peperidge 3d corner.
‘3. S. 3 5.20 E. 2 deg. 12 Va. 20.90 to stake and stone.
‘‘4. S. 49 W. 2 deg. 13 min. Va. 39 chs. to stake and stones.
“South of road from Double Pond to Rutherfurd Paddock Farm at high water mark of said pond.
“Then run the following lot to be conveyed
“B'y the Thomas Iron Co. to
“John Rutherfurd.
“Beginning at an iron post, marked B. E. G., standing on the west-side of the road leading from the Double Pond to the burnt house, and distant 2 chs. 60 Iks. S., 35 deg. 8 min. E. from a peperidge tree, the 3d corner of 118 S4-100 acres Perth Amboy Book 8-7.55, known as the Banta Farm, then as run in 1871.
“1. Along said road N. 47 deg. E. 1 ch. 33 links.
“2. Along saidi road N. 14 deg. E. 2 ch. 31 links.
“3. Along said road N. 23% deg. E. 3 min. 88 links.
“4. Along- said road N. 44% deg. E. 3 min. 80 links, to the southwesterly corner post of the bridge over the Burnt House brook along said brook.” .(Then comes courses 5 to 18, inclusive, generally south.)
"19. S. 58% W. 42 chains to a stake and stones at the edge of the Double Pond at high water mark on the 4th line of said 118 84-100 acre tract.
“20. Along the lines of said farm, N. 51.12 E. 10.70.
“21. N. 61.12 E. 14.60.
"22. N. 23.48 W 2.60.
“23. N. 51.12 E. 15.60.
“24. N. 33.08 W. 18.30 to the beginning. Continuing 39 acres strict measure.”

Courses twenty-one and twenty-two run around a- small gore added to the original Banta farm survey. Omitting this gore, course twenty would be north, fifty-one degrees twelve minutes east (or allowing two degrees twelve minutes variation, north, forty-nine degrees east), thirty-nine chains to the east corner of the Banta farm tract. That course is the exact reverse of the fourth course of the one hundred and eighteen and eightv-four hundredths acre tract. That fourth course ends at “stake and stones south of road from Double Pond to Butherfurd Paddock farm at high water mark of said pond.” The nineteenth course of the thirty-nine-acre tract ends at “stake and stones at the edge of the Double Pond at high water mark on the fourth line of the said one hundred and eighteen and eighty-four hundredths acre tract.” In short, by tbe Roome field book, the “stake and stones” and monument on the fourth line of the one hundred and eighteen eighty-four one-hundredths of the Banta, farm tract are absolutely indentified with the “stake and stones” monument at the end of the nineteenth course of the thirty-nine-acre tract, and the subsequent twentieth course of the thirty-nine-acre tract is identical with tire Banta fourth course reversed. It is idle to> claim that the nineteenth course did not join with the old fourth course; the language is too plain to yield to any considerations of short acreage or the like. Not only did they join, but they joined' at a monument at high water mark and not below it. This was in July, about three months after the deed of Rutherfurd to the iron company was dated and acknowledged (April 22d, 1871), but three months before it was recorded. In that deed high water is fixed by the line and letters II. W. on the rock beyond the dam, an eighth of a mile or more a,way. The description is identical with that in the decree in Graves v. Fancher, except that the decree omits reference to flowage contained in the deed by Rutherfurd. The Roome survey does not mention this mark on the rock, nor does the deed from the company to Rutherfurd, which follows Roome’s description of the thirty-nine-acre tract,. substituting for his “stake and stones” an “iron post marked with the letters H. W. standing at the north side of the lake at high water mark in the fourth course,” &c., but the two deeds and the survey are so nearly contemporaneous as to compel the conclusion that the parties, to the two deeds and the surveyor that settled their boundaries for them were speaking of the same high water mark, whether indicated by a mark on the rock, or by the stake and stones across an arm of the lake from that rock, or by the iron post with letters H. W. substituted for the stake and stones in the deed from the company to Rutherfurd in October. It would have been an absurdity for the company to acquire from Rutherfurd rights running up to the mark on the rock, and then turn around and convey to him a thirty-nine-acre tract that would run below the level of that mark and thus be subjected to- the very flowage that they had just acquired by his deed. To- o-ur minds there is only one rational conclusion from all the evidence: that Eoome’s “stake- and stones/’ the iron post substituted for it, and the mark on the rock, were all at substantially the same level and supplemented each other.

Where, then, were these monuments ? Are they, or is any of them, now in existence and capable- of identification? The stake and stones are gone; they had probably been removed just after Eoome’s survey. There is an iron post marked IT. W., bxxt appellants claim it is fa.r oxxt of place. We need not stop to discxiss this claim if the mark on the rock can be definitely placed. It was, apparently, there in 1911, when Graves v. Fancher was pending. Mr. Konkle, an old Sussex county surveyor, who testified in Graves v. Fancher, and for the present complainant, saw it at that time. It was a faint mark even then. He also saw the iron pin marked H. W. and observed the natural marking of the water on the rocks. They corresponded quite closely. He also located the iron pin in 1923 and again found the mark on the rock, almost obliterated, bxxt still discernible. Defendants presented expert testimony of much weight tending to show that if such a mark had been cut in 1871 at the place indicated, the character of the rock was such that it could not have been eroded away to such an extent as to be undecipherable by the expert who first saw it in 1923. But we see no reason to doubt the direct testimony of Mi'. Konkle, who was a witness in the former litigation. We concur in the findings of fact on this point by the learned vice-chancellor, without regard to the matter of estoppel suggested by him. The level of this mark on the rock has recently been re-marked by drilling of a hole in the face of the rock aixd the insertion therein of a brass pin which is tied up to other marks, and is used as a monument in the decree under review. This settles the level of high water mark correctly for the pxxrposes of this case. Based on that level, the defendants are barred of access to the lake from the Banta farm at that level or below it, for they are estopped by the Eutherfurd deed to the iron company, aixd they are similarly deprived of access via the thirty-nine-acre tract, because that tract is entirely above high water line as established by the decree.

“Note.—The accompanying sketch was prepared by the writer of the opinion to illustrate the general topography and the lines described in the Roome field notes.”

These considerations lead generally to an affirmance of the decree under review. It is urged for appellant that the decree is too broad in enjoining trespasses by defendants on any part of the lake, because the decree in Graves v. Fancher covered no more than had been conve.yed by the Eutherfurd deed in 1871, and this conveyed only part of the Banta farm. Conceding this for present purposes without deciding it, an examination of the record makes it clear that complainants not only asserted title to the whole of the lake in their present bill, but proved it by legal evidence, and, indeed, it was not disputed. It was also alleged and shown that the continued trespasses affected the whole lake. Whether the former decree related to all the lake ox only part of it is not controlling on this appeal. The meritorious question actually litigated was whether defendants had any rights on the lake, and complainant proved and the court decided they had not. The description in the bill and decree, although taken from the Rutherfurd deed, is broad enough when considered apart therefrom to cover all of the lake. This litigation should have an end, and we are not disposed to stand on technicalities in this regard.

Finally, it is claimed that the injunction goes against some defendants who have not committed any trespass, and should not have been made parties at all. We concur in the views of the court below on this point.

The decree will be affirmed.

For affirmance—The Chief-Justice, Trenchard, Parker, Minturn, Black, Katzenbach, Lloyd, White, Gardner, Van Bitskirk, Clark, McGlennon, Kays, JJ. 13.

For reversal—None.


author: Minturn, J.

text:
    In re John F. Lippincott, an infant, et al., petitioners-appellees, v. James Lippincott et al., respondents-appellants.
    [Argued January term, 1925.
    Decided March 23, 1925.]
    1. In dealing with the custody and control of infants, their welfare and happiness, and not filial affections, is the primary consideration.
    2. The natural right of a father to the custody of liis child is not an absolute property right, but rather a trust reposed in the father by the state as paren# patriae.

    3. Equity possesses a controlling power over all guardians, and will take an infant from its guardian and deliver it to another whenever the welfare of the infant requires it.
    4. The execution of an instrument by a deceased father giving his child, in case of the father’s death, to its grandparent, possesses no greater efficacy than a like appointment of a guardian in a last will and testament, and does not prevent the disposition of the custody of the infant according to its best interests.
    5. An award of the custody of an orphaned infant, for whom its paternal grandparents had been appointed guardians by its deceased father, to its maternal grandparents for two months of each year, is proper.
    On appeal to the court of ehancerjr, advised by Vice-Chancellor Bentley, whose opinion is reported in 96 N. J. Eq. 260.

      Messrs. Melosh, Morten & Melosh, for the appellants.

      Mr. Arthiur T. Dea/r, for the appellees.
    The opinion of the court was delivered by
   Minturn, J.

John E. Lippincott, the infant in the case, was bom September 7th, 1917. His mother died on February 23d, 1919, in Brooklyn, New York, where they then resided. Immediately after the mother’s death the infant; with his father, came toi Jersey City to live with the father’s parents, where the infant has resided ever since, with the exception of about a year and a half, during which time the child lived with his father and in's father’s second wife at Ticonderoga, New York. Clifford E. Lippincott, the father of the infant, died on May 21st, 1923.

On April 30th, 1919, almost four years, before his death, Clifford, the father, executed a writing, in which, in case of his death, he delegated to. the respondent Elizabeth Lippincott, “the care, custody and nature” of the infant.

On December 31st, 1923, the appellees., who are the maternal grandparents, presented a petition to the court of chancery, praying for the custody of the infant, and to be charged with his care and maintenance; also, that a writ of habeas corpus issue.

An order thereafter was made requiring the appellants to show cause why a writ of habeas corpus should not be awarded, and such other order made respecting the infant’s custody, control, maintenance and education as to. the court should seem meet.

On March 3d, 1924, the appellants filed an answer admitting the facts herein above stated, averring that they were more competent and able financially to> taire care of the infant; that the father had executed the writing dated April 30th, 1919, and that it was the wish of the father that the infant should have nothing in common, with the appellees.

In their answer the appellants, also averred that there was nothing in the petition giving the court of chancery jurisdiction. At the hearing the appellees, abandoned the prayer for custody, and the only relief they asked was that the infant be awarded to them for a portion of his time. The court made a decree accordingly, from which this appeal was taken.

No question is presented in the case as. to- the fitness of either set of grandparents to deal properly with the child. In financial, moral and social capability no criticism is presented as to either, the learned vice-chancellor found none, and, apparently, the essential inquiry presented is whether, exercising its judgment as parens patries in behalf of the state; the court of chancery, intent alone upon promoting the best interests of the infant, may in the situation confide his custody for two- months of the year to his maternal grandparents. Were it not for the obvious, importance of the legal inquiry involved, comprehending as it does the extent of the chancery jurisdiction in a cause of this character, it were unnecessary to add anything to the very satisfactory opinion of the learned vice-chancellor.

The importance of the inquiry thus presented is accentuated by the fact that no ease of like character seems to be presented in our reports. Manifestly, the touchstone of our jurisprudence in matters dealing with the custody and control of infants; is the welfare and happiness of the infant, and not the filial affections naturally arising from parental ox family relationship. Siegel v. Hutchinson, 91 N. J. Eq. 328; State v. Stigale, 22 N. J. Law 286; Wood v. Wood, 77 N. J. Eq. 593; Baird v. Baird, 18 N. J. Eq. 202.

Thus, it has been quite generally held that even the natural right of the father- to the custody of his child cannot be treated as an absolute property right, but rather as a trust reposed in the father by the state; as parens patries for the welfare of the infant. 20 R. C. L. 597, and cases; In re Moore, 11 Irish C. L. 1; Mercein v. People, 25 Wend. 64; Purniton v. Jamrock, 195 Mass. 187.

Both Dr. Pa-ley in his moral philosophy and Chancellor Kent emphasize this as the primal consideration in morals, as well as in law. 1 Paley Moral Phil. 221; 2 Kent. Com. 203.

Greece, Egypt, Persia and the ancient civilizations generally, according to the historian Tytler, considered the child as a charge of the state, which, after early infancy, took the child into its control and educated him throughout youth, in the manners, customs, traditions and laws of the state, emphasizing in the curriculum loyalty to the state; as the first consideration from the child. Thus, says Aristotle in his “Politics,” “it is an axiom that the best laws, though sanctioned by every citizen of the state, will be of no avail, unless ¿be young are trained by habit and education in the spirit of the constitution.”

The early Homan law, on the other hand, conceded to. the father absolute dominion over the child, including the power of death, as a corrective. This arbitrary and unlimited power was afterwards modified by the state in the interest of the humanities, so that, in the days of later emperors, a father was banished from the empire for having killed his son. 1 Bl. Com. 451.

The English common law, in the light of these extreme policies, presented a composite system, which, within reasonable limitations, conceded to. the parent absolute control, subject to the power of the king, as parens patrice, to control the infantile status in the interest of the child, as well as in the interest of the state. 1 Bl. Com, supra.

This power in England was at times taken over by the state absolutely, as in ancient Greece, by various parliamentary enactments, during the continuance of the various religious hallucinations of the seventeenth and eighteenth centuries, when the children of one denomination were forcibly taken from their parents for the purpose of inculcating a denominational religious education, which was presumed to be in harmony with the policy of the reigning dynasty as opposed to the policy of a supposed foreign domination. These obnoxious enactments continued upon the British statute books until the political enlightenment attendant upon the American revolution, concerning popular rights, succeeded in the reign of George IV (chapter 7) in repealing them. 1 Sharsw. Bl. 452. These enactments, stand, however, as. a legal epoch evincing the power of the state, when deemed necessary to its political policy and safety, to intervene as parens palrice, by assuming the Spartan role of absolute possession of the infant in the interest of the state.

The' cases in this, country, illustrative of the exercise of this general power in behalf of the infant, are supplied in the main by the early chancery jurisdiction of New York, when the learning of Chancellors Kent, Walworth and Livingston lent additional emphasis to. the adjudications.. Thus, says Chancellor Kent: “This court has the care and protection of infants during their minority.” 1 Johns. Ch. 25.

And, says Chancellor Walworth in People v. Meroein: “The power of the court to intervene for the protection of the infant was not the creature of statute, but is an inherent power in the court derived from the common law.” 8 Paige Ch. 55.

So, in Mercein v. People, 25 Wend. 106, Chancellor Walworth sitting, it was declared by the New York court of errors, that “upon a review of all the authorities bearing upon the courts of this state, I have come to the conclusion that the right of the father to the custody of his child is. not absolute, and that such custody is referrable to its interest and welfare, and is to be exercised by the court in the exercise of a sound judicial discretion, irrespective of the claims of either parent. This conclusion, I believe, is warranted by the law of this state as well as by the law of nature. A sense of parental duty ought even to withhold a parent from pressing his or her claims to the custody of a child wherever the true interests of such child forbid it, and whenever the parental obligation fails to influence the conduct of the parent, it is fortunate that the enlightened principles of our law authorize our courts to interpose in behalf of the child.”

In pursuance of this equitable philosophy, the rule has been quite generally declared that “equity possess a controlling and superintending power over all guardians, including testamentary' and those appointed by the surrogate, and will take the infant from the guardian and deliver, it to another whenever the welfare of the infant requires it.” People v. Wilcox, 22 Barb. 178; Disbrow v. Henshaw, 8 Cow. 350; In re Wollstonecraft, 4 Johns. Ch, 80; Fisher v. Meader, 95 N. J. Law 59; 2 Kent Com. 205; 3 Pom. Eq. Jur. 1304.

Manifestly, therefore, even though the father, in this instance, executed an instrument in writing, assigning the child to the paternal grandmother, under the provisions of our statute concerning guardians (2 Comp. Stai. p. 2627), which is but a replica’of the English statute of 12 Can'. II ch. such instrument can possess no' greater efficacy than a like appointment contained in a last will and testament, when the manifest interest of the child presents the material and only ground for judicial interposition.

For the purpose of making this temporary change of custody from one grandparent to another, the child, in this instance, was actually in court, and within the jurisdiction.

The* only inquiry therefore before the learned vice-chancellor was as to how the best interests of the infant could be subserved, and we think his disposition of the matter was equitable and correct. That it will be for the material and moral interests of the child in its parental isolation to know and enjoy the affection and love- of its mothe-Ps people will be conceded by all who are so fortunate as to be able to. revive the delectable memories of a youth so placed.

The situation thus presented is not without its. consoling compensation, for, as if by an ordinance of nature, the companionship of parental old age brings to the confiding nature of roseate youth .the balmy benediction of an expiring day, the mellow and indelible memories of a family recessional.

The decree will be affirmed.

For affirmance—The Chiee-Justice, Trenci-iard, Min-turn, Black, Katzenbach, Lloyd, Gardner, Van Bus-kirk, Clark, McG-lennon, Kays, JJ. 11.

For reversal—Parker, J. 1.


author: Kalisch, J.

text:
    Gertrude R. Weiner, complainant-appellant, v. James C. Cullens, Jr., et ux., defendants-respondents.
    [Decided March 16th, 1925.]
    1. Where the maker °of a bond and mortgage failed to pay taxes assessed against the land covered by the mortgage at the time when the terms of the mortgage provided that they should be paid, such default caused the whole amount of the principal to become due, in accordance with the provisions of the mortgage, and the right to foreclose accrued to the holder of the mortgage by reason of the default.
    2. A contention that the foreclosure proceedings were prompted by improper motives on part of the complainant, and that, therefore, the defendants were entitled to equitable relief, cannot prevail where it appears that the complainant is seeking to enforce a legal right.
    On appeal from a decree advised by Vice-Chancellor Ingersoll, dismissing complainant’s bill of complaint.

      Mr. Patrick H. Harding, for the appellant.

      Mr. George H. Jacobs, for the respondents.
   The opinion of the court was delivered by

Kalisch, J.

The complainant filed her bill of complaint in the court of chancery, to foreclose a mortgage made and given by the defendants to the complainant upon property in Oaklyn, Camden county, purchased by the former of the complainant, which mortgage was in the sum of $1,965 dollars, and was a second mortgage and payable in installments, covering a period of seven .years from October 18th, 1922, and was given by defendants to complainant as part of the purchase price for said property.

The gravamen of the bill is that the defendants have failed to comply with the terms of tire mortgage as set forth in the bill in that they had failed to produce receipt for taxes on or before the 1st day of December, 1922; and, further, that the defendants had failed and neglected to pay all municipal assessments assessed upon the property subject to the mortgage.

The mortgage contained a provision which, inter ctlia, in substance provided that the defendants shall pay the taxes assessed upon the premises fox the first half of every year on or before the 20th day of May therein, and shall produce receipts for taxes for each half of every year on or before the 1st day of June and the 1st day of December, respectively, therein; and shall also pay all other taxes, municipal assessments or charges in the nature thereof which may be laid or assessed upon the said premises immediately upon their assessment, and that if, at any time, default should be made in the payment of any tax or charge as above provided for, then the principal debt and all interest thereon shall become due and payable immediately, enforceable and recoverable.

From the uncontradicted testimony it appears that there was an assessment of $76.71 levied against the property in question on October 25th, 1922. The bill of complaint was filed in March, 1923. No payment was made of the same by the defendants. On August 24th, one-fifth of the amount due on the assessment was paid by defendants.

So far as it appears from the testimony the assessment is still unpaid. There was clear proof of a breach of the condition of the bond and mortgage. This default entitled the complainant to foreclose the mortgage. It is difficult to comprehend upon what theory the complainant’s bill Avas dismissed. No memorandum or opinion was filed in the case by the court below disclosing the reasons for the course pursued. A reading of the testimony makes it clear that the defendants had failed to establish a meritorious defense and, therefore, the complainant was entitled to a decree in her favor.

The defendants admitted that there was a curb and gutter assessment'levied against tbe property, as claimed by tlie complainant, and that the same was not paid when due. They attempt to excuse, this default, by the plea that they did not become aware of the existence of the assessment until a few months after it was levied, and that when they were made aware of its existence they paid one-fifth of the amount due to the borough and made some arrangements with the municipality to pay the balance in installments.

Of course, this was neither a legal nor an equitable defense to the foreclosure proceedings.

The agreement between the parties was that the defendants should “pay municipal assessments or charges in the nature thereof which may be laid or assessed upon the said premises immediately upon their assessment” and in default thereof the principal debt remaining due shall become payable immediately.

In Baldwin v. Van Vorst, 10 N. J. Eq. 577, this court, speaking through Chancellor Williamson (at p. 581), said: “The penalty was double the amount of the debt due, and the object-of the penalty was to secure the due fulfillment of the obligation. If this was all of the contract, there could be no difficulty as to the legal and equitable rights of the parties. But there was a further condition, in the nature of an agreement, that if the interest money should remain unpaid for thirty days after it was due and payable, then the principal should be due and payable. The object of this was to secure the prompt payment of the interest on the debt. The first interest money that became due was unpaid, and the thirty days were permitted to expire.

“The complainant was compelled to file this bill to enforce the payment of his debt. He is entitled by the terms of his agreement, to have a decree for the full amount of his debt. He has forfeited the credit of ten years, which he was to have on condition of prompt payment. If the court relieves the. defendant it destroys the very object of the agreement to secure prompt payment.” To the same effect is DeGroot v. McCotter, 19 N. J. Eq. 531.

We approve the declaration, made by Vice-Chancellor Learning, in Bergman v. Fortescue, 74 N. J. Eq. 266 (at p. 269), that "a stipulation for the prompt payment of taxes cannot be regarded as differing essentially from a like stipulation touching the prompt payment of interest.”

The basic principle appears to be, as illustrated by the cases in this court, that it is competent for the parties to a contract to agree that the time fixed therein for the prompt payment of sums due or to grow due affecting the property mortgaged, shall be the essence of the contract and to further agree that a failure to perform, at the time or times fixed therein, shall render the principal to become immediately due and payable. Thus it becomes at once apparent that it is: of no material significance whether the default is made in the prompt payment of interest due on the mortgage or in the payment of taxes or assessments levied upon the property mortgaged, if the time or tiriies for their prompt payment is or are made the essence of the contract. Nor can it be, properly, said that such a stipulation is in the nature of a forfeiture since it is quite obvious that all the defendants are required to pay to the plaintiff is the amount justly due and owing from them to her—the time for payment of the same having been shortened by several years seemingly through the defendants* neglect and fault.

There is no merit in the contention that the foreclosure proceeding was prompted by improper motives on part of the complainant, and that therefore the defendants were entitled to equitable relief. A party cannot be properly deprived of the enforcement of a legal right upon any such ground, as suggested. See Davis v. Flagg, 35 N. J. Eq. 491; Hodge v. United States Steel Corp., 64 N. J. Eq. 111; Robert v. Tompkins, 75 N. J. Eq. 580; Eggers v. Newark, 77 N. J. Law 201; Camden v. Public Service Railway Co., 84 N. J. Law 308.

The decree of the court of chancery is reversed, with the direction that a decree be entered in favor of the complainant, in the court below against the defendants for the principal with interest due and. owing upon said bond and mortgage to the complainant with costs.

For affirmance—None.

For reversal—The Chief-Justice, Trenohard, Parker, Minturn, Kalis ch, Black, Katzenbaci-i, Campbell, Lloyd, White, Gardner, Yan Buskirk, Clark, McGlennon, Kays, JJ. 15.


author: Campbell, J.

text:
    Alexander von Fell, complainant-respondent, v. Amalia Spirling et al., defendants-respondents.
    [.Submitted January term, 1925.
    Decided April 16th, 1925.]
    1. Where a paragraph in a will reads: “Siecond. I give, devise and bequeath to my children and grandchildren mentioned above, excepting my son, G. von F., all the rest’ and remainder of my estate, both real and personal, share and share like;” and a step-daughter and her children are referred to in a paragraph immediately preceding as “my daughter,” “my granddaughter” and “my grandson,” respectively, and in which- paragraph last referred to sons of testator are also referred to as “my son,” and children of such sons as “my granddaughter” and “my grandson,” held that such step-daughter and her children take under such second -paragraph.
    2. Such estate consisting entirely of personal property, the following direction in paragraph three of such will; “The legacies of any of the above named are to be retained by the executor until they reach the age of twenty-two years.” Meld, to refer to the share or legacy of any person under the age of twenty-two years taking under both paragraph one, where the shares or bequests are designated as “legacies,” and. under paragraph two, providing for the distribution of the residuary estate.
    3. Such provision for retention of shares and legacies until the person entitled thereto reaches the age of twenty-two years, when the will by its terms contains no provision or direction for payment of income thereon, as it is earned or accrues, construed to mean that the income shall be accumulated and paid with the principal of the share or legacy at the time such principal becomes payable.

      On appeal from chancerj', advised by Vice-Chancellor Lewis, whose opinion is reported in 96 N. J. Bq. BO.

      Mr. Leroy Vwilder Burgh and Mr. Wendell J. Wright, for the* appellant.

      Mr. Robert Carey, for the respondents.
   The opinion of the court was delivered by

Campbell, J.

Appellant as executor and trustee under the last will and testament of Otto von Fell, deceased, filed a bill of complaint, praying the construction by the court of chancery of certain portions of his testator’s will. The defendants answered and joined in the prayer of the bill. From the decree entered this appeal is taken.

The testator was married twice. He had no* children by his first wife. His second wife was a, widow with one* child by her former husband. That child is Amalia Spirling. She was about eight j'ears of age at the time of her mother’s marriage to the testator. She has four children, Wilma, Hilda, Norma and Charles. Testator had two* children of this mar- ■ riage, Alexander von Fell and George vo*n Fell. Alexander has one child, Edmund, and George has two children, Henrietta and Norma.

The questions presented to the court below were:

1. Do Amalia Spirling and her children take under the second paragraph of the will ?

2. Under paragraph three does the provision to* retain legacies until the legatees arrive at the age of twenty-two* years apply to those taking under paragraph two as well as those taking under paragraph one?

3. Is the income on retained legacies to be accumulated and held and paid at the arrival of the legatee at the age of twenty-two* years, or is such income to* be paid to* such legatees as it accrues?

The decree below determines that Amalia. Spirling and her children take under the second paragraph of the will; that, the third paragraph, providing for the retention of legacies, does not apply to shares in the residuary estate under paragraph two> and that the income on retained legacies should not be accumulated but distributed as. it accrues.

There are two grounds of appeal—(1) that the decree with respect to the matters above set forth is. erroneous, and (3) that the court below improperly and illegally admitted evidence of the scrivener who prepared the- will as to- declarations, instructions and statements made by the testator to him prior to and at the time of the preparation and execution of the- will, and statements by the scrivener with respect to the construction of words used in the will and the understanding of the scrivener of testator’s instructions.

In our consideration of the case we have reached our conclusions without considering the testimony attacked by the second ground of appeal, and it, therefore, becomes unnecessary for us to consider the matters urged thereunder.

The second paragraph of the will reads:

“I give, devise and bequeath to my children and grandchildren mentioned above, excepting my son, George von Fell, all the rest and remainder of my estate, both real and personal, share and share alike.”

The first paragraph refers to Amalia Spirling as “my daughter” and to her children as his granddaughters and grandson. They were not such in fact. In the same paragraph he refers to his son George as “my son,” and in the same maimer to his son Alexander and to their children as his granddaughters and grandson.

We think the inevitable- conclusion must be that it was the intention of the testator to treat and act toward his stepdaughter, Amalia Spirling, as if she were, in fact, his daughter, and her children as if, in fact, theye were- his grandchildren by the blood. We conclude, therefore, that Amalia Spirling and her children, Wilma, Hilda,, Norma and Charles, take under the second paragraph of the will, and the decree in that respect is affirmed.

Paragraph three provides, inter alia: "The legacies of any of the above namedi are to be retained by the executor until they reach the age of twenty-two years.”

We think that herein the intention of the testator can readily be determined. Although in paragraph one the bequests are referred to specifically as legacies, and, while in the distribution of the residuary estate, under paragraph two, the language employed is, "I give, devise and bequeath,” yet the fact is that the entire estate consisted of government bonds and cash in the amount of $56,000. It is presumed that testator knew the value of his estate and what class or classes of property it consisted of. Here it was entirely personal property, and we think it would be unreasonable to assume that the testator intended to provide for a withholding of payments under paragraph one, and not a similar withholding as to the same persons under paragraph two, when his entire estate consisted of personal property only.

We conclude, therefore, that the foregoing provision in paragraph three refers alike to paragraph one and paragraph twoi, and in that respect the decree below is erroneous and should be modified.

The decree below also directs that the income upon retained shares or legacies is to be distributed from time to time to tire parties entitled to the share or legacy. In this respect, also, we conclude that the decree below is erroneous. The will is silent as to the income on retained shares or legacies, and there is nothing therein from which an intention of the testator can be inferred, that it was Ms will and intention to distribute income and withhold principal of a share or legacy.

In such a situation we think the reasonable construction must be that the income must be accumulated and paid at the time when the principal of the share or legacy is payable under the terms of the will.

In iiiis respect, also, the decree below will be modified.

The decree below is affirmed, to tbe extent herein indicated, and the cause remanded with instructions to modify the decree in other respects in accordance with the conclusions of this court herein expressed.

For affirmance—None.

For reversal—None.

For modification—The Chiee-Justice, Trenchard, Parker, Minturn, Kalis ch, Black, Katzenrach, Campbell, Lloyd, White, Gardner, Van Bhskirk, Clark, McGlennon, Kays, JJ. 15.


author: Lloyd, J.

text:
    Charles I. Seidler, complainant-appellee, v. Branford Restaurant, Incorporated, a corporation, defendant.
    [Argued January 23d, 1925.
    Decided March 16th, 1925.]
    1. The general expenses of a receivership are payable out of the funds in a receiver’s hands prior to the payment of a mortgage debt.
    2. JVIhere one holding a chattel mortgage on the goods of an insolvent corporation, bought in such goods at the receiver’s sale for an amount less than the face of the mortgage, an order confirming such sale, and providing that he need not pay the receiver the whole of the purchase price, but only so much thereof as is necessary to liquidate the expenses of the receivership, is proper.
    On appeal from the court of chancery, advised by Vice-Chancellor Church, whose opinion is reported in 97 N. J. Eq. 153.

      Mr. Thomas P. Argyris (Mr. Joseph Fucrstman and Messrs. McCarter & English, of counsel), for the appellant.

      Mr. Marry Green, for A. M. Reynolds, receiver and respondent.
   The opinion of the court was delivered by

Lloyd, J.

On July 3d, 1924, Charles I. Seidler, president of Branford Restaurant, Inc., a corporation incorporated under the laws of this state, filed a bill in the court of chancery praying the appointment of a receiver for the corporation. On its presentation an order to show cause why a receiver should not be appointed was allowed, and in the order, A. M. Reynolds was appointed temporary custodian-receiver, with power to manage, conduct and operate the business of the corporation, which, as the name implies, was that of conducting a restaurant. To this order the corporation consented. On the return of the order to show cause, on July 10th, 1924, Reynolds was made the permanent receiver, and he continued to conduct the business of the company until about the first of October following, when, it becoming apparent that the best interest of all parties were not conserved by its further continuence, and order to sell the assets of the corporation was made.

The appellant, Thomas P. Argyris, was the holder of a chattel mortgage for $10,000 on the personal property of the Branford company, and the receiver, apparently having some reason to question its validity, on July 12th, 1924, presented to the court his petition challenging the chattel mortgage, and praying the court to restrain its foreclosure. On July 15th, 1924, an order to show cause and with a restraint as prayed was made. On October 4th, 1924, an order was made, to which both the receiver and appellant consented, holding that the chattel mortgage was valid, and that the receiver sell the assets of the corporation “free and clear of the lien of the mortgage, the lien thereof to attach to the proceeds.” The sale was effected on October 14th, 1924, and the appellant became the purchaser of the assets in bulk at the price of $9,000. Appellant, upon demand by the receiver, refused to make any payment on account of the purchase price. The court thereupon, on the 15th of October, 1924, made an order confirming the sale and directing that the purchaser, the appellant, pay to the receiver the sum of $1,800 as allowance for the receiver and his counsel, $150 for appraiser’s fees, that he pay or assume the rent for use and occupation of the premises occupied by the receiver during the receivership, and, finally, to pay the auctioneers for their services and expenses in conducting the sale. Under pressure of a rule for contempt, appellant finally paid the several sums under protest.

The appeal is from the order last recited, and presents the question of its legality and propriety. It must be premised that if the terms of sale had been complied with by the appellant the purchase price of the property would have been paid into court and distributed to the claimants on the fund in the order in which they should be entitled. By the terms of the order confirming the sale, appellant is relieved of the obligation to pay the whole of the purchase price, but is required to pay so much thereof as is necessary to liquidate the expenses of the receivership. To this he can have no just cause of complaint unless, as he contends, the expenses are not entitled to be given priority over the chattel mortgage he holds, and which exceeded the amount of the purchase price by $1,000.

The appellant urges on this appeal, however, that the expenses of the receivership may not be preferred in the distribution of the proceeds of the sale of the assets over encumbrances existing at the time of the appointment of the receiver, and particularly under the facts of this case. To this contention we cannot assent. On the general principles of equity themselves, such expenses may properly be given preference in distribution. In the nature of things the cost of administration and of just distribution, where the court has jurisdiction, must be placed ahead of the claims of creditors whether secured or unsecured, and so say the text writers. Pomeroy, in his book on 13quit. Bern. (2d ed) § ldlyl, says: “In general, expenses of the receivership are payable out of the fund in the receiver’s hands prior to the payment of a mortgage debt. The reasons for such a rule are apparent. The receiver represents the court and acts for the interest of all concerned.” High, in his treatise on receivers (at pp. 961, 962), states the rule to be that "the costs of the appointment of the receiver are entitled to priority of payment out of the fund realized by him before all other demands, and the costs of receivership are property given a preference over prior liens, although the appointment of the receiver was made without prejudice to prior liens.” In our own court of chancery numerous cases are found where, in practice, this course has been pursued. In the case of Attorney-General v. Linden Cemetery Association, 90 N. J. Eq. 407, Vice-Chancellor Baches declares the rule to "theoretically settled that when a court of equity takes possession of property for the purpose of protecting and preserving it for the benefit of the parties interested, the costs of administration are entitled to priority of payment regardless of the nature of the liens and claims thereon of the litigants. This is so fundamental to the administration of justice and so generally recog- _ nized that citation of authority is unnecessary.”

The rule is recognized and enforced in the eighty-fifth and eighty-sixth sections of our Corporation act (Comp. Stat. p. 1652), which read:

“See. 85. Before distribution of the assets of an insolvent corporation among the creditors or stockholders, the court of chancery shall allow a reasonable compensation to the receiver for his services and the costs and expenses of the administration of his trust and the costs of the proceedings in said court to be first paid out of said assets.”
“Sec. 86. After payment of all allowances, expenses and costs, and the satisfaction of all special and general liens upon the funds of the corporation to the extent of their lawful priority, the creditors shall be paid proportionally to the amount of their respective debts.”

In Attorney-General v. Linden Cemetery Association, 90 N. J. Eq. 398, the decree advised by Vice-Chancellor Baches was affirmed by the court of errors and appeals, and the court, in commenting on the statute, uses this language: "The well-settled rule, touching expenses of receivership of an insolvent corporation, is laid down by statute in section 85 of the Corporation act * * * and the next section clearly indicates that such allowance precedes all liens, special and general, upon the funds of the corporation.”

The court below, therefore, in the present case, under the rule so clearly established, was clothed with ample power to compel the appellant to pay the expenses incident to the receivership. But, it is said, conceding the nower, the court should not have imposed the expenses in the instant case on the appellant because the services in continuing the business were not of benefit to the holder of the mortgage. Assuming that the conduct of the business by the receiver may not, in this particular case, have operated beneficially (though in the opinion filed by the vice-chancellor the converse is stated to be the fact), it would be unfortunate indeed if the rule were that an officer of the court, acting under its direction, is dependent for his expenses and compensation on the success or failure in a copimercial sense of his efforts in carrying out the order of the court. Receivers are but the arms of chancery, appointed to preserve the property of corporate and similar entities for the benefit of all parties in interest, and in cases of insolvency to administer the estate under the direction o£ the court. In theory of law, at least, a receiver has no part in his own selection, but stands as the representative of the court impartially between the parties. To hold that one thus chosen and thus serving should incur the expenses and perform the duties of the receivership at the risk of these expenses and services being beneficial or otherwise to the estate or to any of the parties in interest would be contrary to the whole theory of his office, deprive the courts of the services in many eases of competent administrators, and be subversive of the administration of this important branch of equity jurisdiction.

The appellant is not aggrieved by the action of the court below in imposing the expenses of the receivership on him, and the order is therefore affirmed.

For affirmance—The Chief-Justice, Trencitard, Parker, Minturn, Black, Katzenbach, Lloyd, Gardner, Van Buskirk, Clark, McGlennon, Kays, JJ. 12.

For reversal—None.


text:
    William L. Greenbaum, complainant, v. Lafayette & Broad Realty Corporation et al., defendants.
    [Argued January 21st, 1925.
    Decided March 16th, 1925.]
    Where a receiver was appointed by an order of the court of chancery, which order was reversed by this court as being improvidently made and upon insufficient grounds, the costs and expenses of the receivership are a first lien on the assets in the receiver’s hands, but the charges in question should be taxed as part of the costs of the corporation as against the complainant G, as he had wrongfully-invoked the jurisdiction of the court of chancery against the corporation.
    On appeal from an order of the' court of chancery.

      Mr. Jacob L. Newman, for the complainant.

      Mr. David Bobber (Mr. Harry Unger, of counsel), for the appellants.
   The opinion of the court was delivered by

Lloyd, J.

The court of chancery on a bill and affidavits filed by the complainant, Greebaum, appointed a receiver for the Lafayette & Broad Realty Corporation in the person of A. M. Reynolds, with directions to conduct the business of the corporation. The receiver took control of the property of the company and proceeded to administer his trust. On appeal the court of errors and appeals reversed the order appointing the receiver in an opinion clearly evincing that the order of the court below was improvidently made and upon insufficient grounds. 2 N. J. Adv. B. 990j 90- N. J. Eq. 817.

On July 21, 1924, the receiver filed his report setting forth the receipts and expenditures of the- receivership, an unpaid claim for-auditing his accounts of $135 and a balance in his hands of $859.35. Subsequently, on September 30th, 1924, he applied for and was granted an order allowing him $750 for his services, and directing that this sum. together with the item of $135 for auditors’ fees, be- paid out of the fund in the receiver’s hands. From this order an appeal is taken to this court by the defendant, the Lafayette & Broad Realty Corporation.

The right of a receiver to be paid his costs and expenses from the corpus of the estate which he is called on to administer is fully considered and discussed in an opinion filed in Seidler v. Branford Restaurant, Inc., No. 34, of the present term of this court, 96 N. J. Eq. 153, and it is there held that where a receiver is appointed by a court having jurisdiction to make the appointment the costs and expenses of the receivership are a first claim on the assets of the corporation of which he is the receiver, and may by the court be placed ahead of mortgages and other liens. In the present case the court of chancery was undoubtedly possessed of jurisdiction to make the appointment, even though the jurisdiction was improvidently exercised, and for the reasons given in the case cited the order to pay the fees of the receiver and auditor will be affirmed. It does not follow, however, that these charges in the present ease should be permitted to ultimately fall on the appellant. The action of the court in appointing the receiver was invoked by G-reenbaum, the complainant, and that without warrant. It would be inequitable that the cost of the receivership, which his action thus brought into existence, should be placed on the corporation, the victim of his wrongful act; and while the order appealed from is affirmed, it will be with the further direction to the court below that the charges in question shall be taxed as part of the costs of the corporation as against the complainant, G-reenbaum, and be collectible as part thereof.

For affirmance—The Chief-Justice, Teenci-iard, Parker, Minturn, Black, Katzenbach, Lloyd, Gardner, Van Busicirk, Clark, McGlennon, Kays, JJ. IS.

For reversal—None.


author: Kays, J.

text:
    Amelia Franklin, complainant-appellee, v. Anna C. Creth and Elizabeth E. Creth, defendants-appellants.
    [Submitted January term, 1925.
    Decided March —, 1925.]
    A court of equity will not pass upon the validity of a restrictive covenant contained in a deed, even though it may not run with the land or bind the grantor covenantee, when there are subsequent grantees of other adjoining lots and a subsequent grantor covenantee of the first lot in whose deed the same restriction has been inserted, and said subsequent grantees covenantors and said subsequent grantor covenantee of the first lot are not parties to the litigation.
    On appeal from the court of chancery advised by Vice-Chancellor Ingersoll, whose opinion is not reported.

      Mr. Joseph Beck Tyler, for the appellants.

      Mr. William Finer Brown, for the appellee.
   The opinion of the court was. delivered by

Kays, J.

The bill in this case was filed for the- purpose of relieving the complainant from the operation of a restriction contained in a deed originally made by the defendants, conveying a certain lot in Ocean City, which, lot was subsequently conveyed to the complainant.

The decree advised by the vice-chancellor nullifies a restrictive covenant in deed made by Anna C. Creth and Elizabeth E. Creth, the defendants, to Sarah W. Liggett, dated September 20th, 1906, and conveying a lot designated as "number 867 in section C on a plan of lots of Ocean City Association, in Ocean City, New Jersey,” and is situate on the northwesterly corner of the intersection of Ocean avenue and Eleventh street. The lot faces Ocean avenue, which avenue is distant about two hundred and fifty-four and twelve hundredths feet from the boardwalk in Ocean City. The boardwalk extends along the ocean front.

At the time of the conveyance to Sarah W. Liggett, the defendants, Anna C. Creth and Elizabeth E. Creth, owned eight lots in this same section. The lots so owned by the defendants, fronting on Ocean avenue and immediately westward of lot number 867, were lots numbers 868, 869 and 870. Northwesterly and in the rear of these lots were four other lots owned by the defendants, being lots numbers 816, 817, 818 and 819. Lot number 867, which was conveyed by the deed in question, adjoins lot number 816, and lies between lot number 816 and Ocean avenue. The restrictive covenant in the deed reads as follows:

“Subject to the restrictions of the Ocean City Association and also tbe restriction that the said lot hereby conveyed shall be used for no other purpose than a site for private cottage, costing not less than $4,000.”

On May 1st, .1920, Sarah ~W. Liggett and husband conveyed the lot to Katharine Kendercline and inserted in the deed the same restrictive covenant quoted above. On September 25th, 1920, Katharine Kendercline and husband conveyed this lot to- the complainant, Amelia Franklin, and inserted in the deed the restrictive covenant quoted above.

Amelia Franklin, the complainant, filed this bill against the defendants, Anna C. Creth and Elizabeth E. Creth, as the sole defendants and the only other parties to- this suit for the purpose of voiding and nullifying the restrictive covenant above quoted.

At the time of the conveyance first above mentioned from the defendants to Sarah W. Liggett, the defendants owned seven other lots. These lots were subsequently conveyed by the defendants to other parties, and in none of the deeds from the defendants to other parties, of the said other lots is there a similar covenant.

The court of chancery held that because the restrictive covenant set forth in the bill of complaint was not a part of the general plan of improvement, the subsequent grantee or grantees of an adjoining lot were not entitled to enforce it against the owner; that the restrictive covenant was purely personal, and the defendants, having divested themselves of all the remaining land, had no further right to enforce the same, and that, therefore, the restrictive covenant was of no effect, invalid and unenforceable as: against complainant’s property, and that complainant’s, property is free and clear of the operation thereof.

We believe that the validity of this restrictive covenant should not be determined by the court in this suit. The defendants, Anna C. Creth and Elizabeth E. Creth, now own none of the eight lots above referred to, and, presumably, have no further interest in the subject-matter of this litigation. On the other hand, the subsequent grantees of the defendants are the present owners of the seven other lots, and may have an interest in the matters in litigation and should be afforded an opportunity to be heard. Our courts have held that under certain circumstances subsequent grantees may enforce a personal covenant of a former grantee from a common grantor of several adjoining lots, even though the covenant does not run with the land, nor bind the common grantor. Such a rule was referred to by Vice-Chancellor Stevens in the case of Leaver v. Gorman, 73 N. J. Eq. 129, and by Chancellor Walker in the case of Hyman et al. v. Tash, 71 Atl. Rep. 742. Since the same restrictive covenant was contained in the deed from Katharine Kinderdine and husband to the complainant, Katharine Kinderdine may have an interest in the subject-matter thereof, and should be entitled to be heard, for the reason that she may be the owner of other lots affected by the restriction contained in her deed to complainants.

We might also- call attention to the fact that it is not the grantor covenantees, nor their subsequent grantees^ who are before the court asking for the enforcement of a restrictive covenant, but the grantee covenantor asking for the annulment of a covenant, which she solemnly made to her grantor.

In Coudert v. Sayre, 46 N. J. Eq. 386, Vice-Chancellor Van Fleet held that this could not be done. However, as this point was not raised before the vice-chancellor nor by counsel here, we do not now pass upon it.

We, therefore, are of the opinion that no decree should be made invalidating this restrictive covenant, since the owners of the seven other lots-, who are subsequent grantees of the defendants, and Katharine Kinderdine and husband, who were the grantors of the defendants, have not been afforded an opportunity to- be heard.

The decree appeal from will therefore be reversed.

For affirmance—None.

For reversal—The Chief-Justice, Thenchakd, Parker, Minturn, Kalis ch, Black, Katzenbach, Campbell, Lloyd, Gardner, Van Buskirk, Clark, McGlennon, Kays, JJ. 14.


author: Per Curiam.

text:
    Schindler Advertising Company, complainant-respondent, v. Public Service Transportation Company, defendant-appellant.
    [Argued October 29th, 1924.
    Decided February 19th, 1925.]
    On bill for injunction.

      Mr. Frank Bergen and Mr. William II. Speer, for the appellant.

      Messrs. Lum, Tamblyn & Qolyer and Mr. Chester W. Fair-lie, for the respondent.
   Per Curiam.

This is an appeal from an order advised by a vice-chancellor in the court of chancery granting a preliminary injunction to prevent the defendant company from removing, or causing to be removed, any display advertisements from the auto-buses acquired by the defendant company. The basis of the order, as stated by the vice-chancellor, was the extreme necessity of the case and to prevent a multiplicity of suits at law for the non-performance of an agreement with those who have entered into advertising contracts with the complainant.

At the outset, we are confronted with the well-established and long-settled rule in this court regulating the granting of a preliminary injunction. It is thus clearly and succinctty stated by this court in the case of Citizens Coach Co. v. Camden Horse Railroad Co., 29 N. J. Eq. 299. A preliminary injunction is never granted unless the act threatened to be done will inflict an irreparable injury on the complainant. Nor will the writ be issued where the right of the complainant depends on an unsettled question of law. Nor where the equity of the complainant is disproved by the answer and affidavits. In such cases a preliminary injunction is not proper.

This disposes of this case. It leads to a reversal of the order appealed from, and renders unnecessary any further discussion of the interesting questions argued on the appeal.

The order of the vice-chancellor granting a preliminary injunction is reversed.

For affirmance—None.

For reversal—The Chiee-Justio®, Teenchard, Parker, Minturn, Black, Katzenbach, Campbell, Lloyd, Gardner, Van Buskiek, Clark, JJ. 11.


text:
    Helene Salman, respondent, v. Ernest O. Salman, appellant,
    [Decided March 16th, 1925.]
    On appeal from, a decree of the court of chancery, advised by Vice-Chancellor Griffin, whose opinion is reported in 97 N. J. Eq. S3.-

      Messrs. McXirgan .& Gilson, for the appellant

      Messrs. Perkins & Dreivin, for the respondent.
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Griffin.

For affirmance—The Chibe-Justice, Teen chard, Parker, Minturn, Kalisch, Black, Katzenbach, Campbell, Lloyd, Gardner, Van Buskirk, Clark, McGlennon, BAys, JJ. 14.

For reversal—None.


text:
    David C. Reed et al., complainants-appellants, v. Solomon Docterman et al., defendants-respondents.
    [Argued January 20th, 1925.
    Decided March 16th, 1925.]
    On appeal from the court‘of chancery.

      Mr. John B. Black (Mr. Clarence L. Cole, of counsel), for the complainants-appellants.

      Messrs. Bourgeois & Coulomb, for the defendants-respondents.
   Per Curiam.

This is an appeal from a final decree of the court of chancery dismissing the complainant’s bill. When the bill, which was one for injunctive relief, was filed, a preliminary injunction was granted. The order for preliminary injunction was appealed to this court. The appeal was argued at the June term, 1923, and decided November 19th, 1923, in an opinion reported in 95 N. J. Eq. 240. The opinion reversed the order for preliminary injunction. The case was remitted to the court of chancery. The complainants brought the case on for final hearing. At the conclusion of the hearing the vice-chancellor dismissed the bill. No opinion was written. We presume, however, the bill was dismissed upon the ground that the question involved had been decided in the opinion in this court hereinbefore referred to.

The appellant now contends that while this court, in its former opinion, was correct in holding that a certain provision contained in an agreement dated March 12th, 1900, and quoted in the opinion, had no applicability to the case, that now, due to a plan offered in evidence at the final hearing, the facts involving the point sought to be made on the argument on the appeal of the order for preliminary injunction are quite clear and show why the provision of the agreement mentioned applies to the situation presented by the appellant.

The argument of the appellant in this respect has failed to impress us. We see no difference in the appellant’s case as now presented from the case as presented on the argument of the appeal from the order granting a preliminary injunction.

The decree of the court of chancery dismissing the complainant’s bill is affirmed, with costs.

For affirmance—The Chief-Justice, Teenciiard, Parker, Minturn, Black, Katzenbach, Lloyd, White, Gardner, Van Buskirk, Clark, McGlbnnon, Kays, JJ. 13.

F.or reversal—None.


text:
    Mayer J. Kobrin, appellant, v. George I. Hull et al., respondent.
    On appeal from a decree or order of the court of chancery advised by Vice-Chancellor Backes, whose opinion is reported in 96 N. J. Eq. J/l.

      Mr. Milton M. Unger, for the appellant.

      Messrs. Bosenkrans & Bosenkrans, for the respondent.
   Per Curiam.

The decree order appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Backes.

For affirmance—The Chibe-Justice, T'renohard, Parker, Minturn, Kalis ci-i, Black, Katzenbach, Campbell, Lloyd, White, Gardner,' Van Bus kirk, Clark, McGlennon, Kays, JJ. 15.

For reversal—None.


author: Per Coriam.

text:
    Nellie T. Kelleher, complainant-appellant, v. George H. Bragg, defendant-respondent.
    [Argued January 23d, 1925.
    Decided March 16th, 1925.]
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Lewis, whose opinion is reported in 96 N. J. Eq. 25.

      Messrs. Collins & Gorlin, Mr. Edward. A. Marlcley and Mr. David. A. Newton, for the appellant.

      Mr. Charles M. Mason, for the respondent.
   Per Coriam.

The bill of complaint was filed in this case to compel the specific performance of a contract to sell real estate. The property is known as Nos. 2709, 2711, 2718 and 2718A Boulevard, Jersey City. Vice-Chancellor Lewis, before whom the case was heard, refused to advise a decree for specific performance, but did advise a decree dismissing the bill of complaint.

Our consideration of the case leads us to the same conclusion as that advised by the learned vice-chancellor.

The decree of the court of chancery is therefore affirmed.

For affirmance—The Chiee-Justice, Trenchard, Parker, Minturn, Black, Katzenbach, Lloyd, White, Gardner, Van Buskirk, Clark, McGlennon, Kays, JJ. 13.

For reversal—None.


text:
    Edward J. Fuchs, complainant. v. M. Casewell Heine, as receiver, &c., et al., defendants.
    [Decided October 17th, 1923.]
    On appeal from an order of the court of chancery advised by Vice-Chancellor Church, who filed the following opinion:
    “On February 14th, 1921, the United Advertising Agency and the complainant, Fuchs, entered into an agreement by which it was provided that for the purpose of testing out the selling abilities of what was called the Fertall gun and ball fertilizer, United should do the advertising described in the agreement, and Fuchs should superintend the manufacture of a sufficient number of Fertall gun and ball fertilizer to supply the demand. Within thirty days a corporation for the manufacture and sale of these products should be formed. At the end of the thirty-day period the parties entered into another agreement supplementing the foregoing, which provided that the United will organize a New Jersey corporation. Said agreement also provided that United shall receive fifty-one per cent. (51%) of the stock of said corporation for financing fin its 'discretion the said corporation,’ and Fuchs was to receive forty-nine per cent. (49%) upon an assignment of his patent and his rights in the Fertall balls, business, good-will, &c. This agreement also provided, ‘should the manufacture and sale of Fertall guns, balls and tablets be discontinued for any time for a period exceeding one year, then all rights thereto shall revert to Fuchs.’ The certificate of incorporation, in substance, provided that the corporation was to acquire the business of Fuchs, including his patents. About March 24th, 1921, the Fertall Company was incorporated under the laws of New Jersey. At the first meeting of stockholders, at which the complainant was present and elected a director, a resolution was adopted which recited that Fuchs had offered to sell said business to the corporation together with ‘any patents, patents pending * * * granted or pending/ and that the board of directors be authorized to accept said offer, the consideration for said transfer being one hundred thousand dollars ($100,000) of the capital stock of said corporation, and on the same day the board of directors, including Euchs, passed a resolution accepting said Euchs’ offer and authorizing the proper officers to issue such stock to Euchs, or his nominee, and, thereafter, Euchs requested the corporation, in writing, to issue such stock pursuant to said resolution, forty-nine thousand dollars ($49,000) to himself, and fifty-one thousand dollars ($51,000) thereof to three (3) officers of the United Advertising Agency.
    “Euchs transferred to the company his business with the plant, stock and other properties, good-will, pending contracts, patents, &c., on the issuance of a thousand shares of common stock. This company proceeded with the business of manufacturing and selling its product until June, 1921, when it was decided that it was inadvisable for the United Advertising Company to make further advances or incur further indebtedness. A letter was written by Mr. Dreyfuss to Mr. Euchs, setting forth its position, and offering some sort of a plan for liquidation. These negotiations being fruitless, Yice-Chancellor Lewis appointed Herbert S. Simon, of Newark, a receiver. On application of Mr. Euchs, YiceChancellor Lewis vacated said receivership and gave Euchs leave to file an answer and a counter-claim in said cause in which the receiver was appointed. Euchs filed his answer and counter-claim. The answer and counter-claim, which set forth, in substance, the material allegations contained in the bill of complaint in this cause con/fcained the following prayers:
    “ ‘2. That all and singular the capital stock of the defendant company issued to said Leonard Dreyfuss, E. Forrest Fettinger and Theodore S. Fettinger, as described in the premises of this counter-claim, as well as all stock certificates relating to the same and all other evidence of ownership of the same be returned to and delivered up to the defendant company.
    “ ‘3. That a decree be made in this case requiring the complainant company to deliver to the Fertall Company, defendant, complainant’s general release, releasing defendant company of all claims and demands against it.’
    “Thereafter, a hearing was had before Vice-Chancellor Lewis, which resulted in an order appointing M. Casewell Heine receiver, which order contains the finding that United Advertising Agency ‘is the equitable owner of fifty-one thousand dollars [$51,000] of the issued and outstanding capital stock of the defendant.’ This order was never appealed from. An order was afterwards made That the said Edward J. Fuchs be and he is hereby directed to forthwith execute good and sufficient instruments assigning to the said defendant and to Heine, receiver for the stockholders, all patents, &c.,’ and to do other things.
    “Fuchs complied with this order. The receiver has been conducting the business since that time. The complainant alleges, in substance, in his complaint, that the minimum of the financing of the proposed Fertall Company by the United Advertising Agency should be as follows: ‘The said United Advertising Agency to spend at least two thousand dollars [$2,000] per month for a period of twelve months,’ &c.
    “The theory of the bill of complaint seems to be that the court may add to the written agreement provisions which the agreement does not contain, and compel a surrender of said fifty-one thousand dollars ($51,000) of stock to Fertall and a retransfer of the patent to Fuchs. (But even if said conversations were admissible in view of all of the testimony in the case, I am. of the opinion that United Advertising. Agency only agreed to finance in its discretion.) Fuchs’ answer and counter-claim raised the same issues as are here raised. He attempted, before Vice-Chancellor Lewis, to procure an adjudication that the United or its officers should surrender said fifty-one thousand dollars ($51,000) of stock. The finding of Vice-Chancellor Lewis that the complainant is the equitable owner of fifty-one per cent. (51%) of the stock necessarily decided the issues thus raised and all other issues triable under said answer and counter-claim against Euchs, and the issues there raised are substantially the same as are here raised. I permitted Mr Euchs to testify as to conversations tending to vary the terms of this written contract. This testimony seems to show that these conversations took place before the making of the agreement.
    “I am of the opinion that the written agreement of March 15th, 1921, cannot be altered by parole evidence. Naumberg v. Young, 44 N. J. Lem SSI. It seems to me also that the order advised by Vice-Chancellor Lewis appointing Heine receiver settled the questions here raised, as the questions in the case before me are practically those before Vice-Chancellor Lewis.
    “Pursuant to the resolutions and acts of the parties the patent in question became the absolute property of the corporation. The absence of a reservation of a right to a return of the patent to Euchs of the kind contained in the preliminary agreement, in my opinion, constitutes a distinct waiver of such reservation, besides, Euchs’ offer contained in the resolutions was to the corporation, an entity separate and distinct from the United, and the Eertall accepted such offer, contracted debts which are unpaid and are proved before the receiver, and such patent is a valuable asset in the hands of the receiver, the money valuation of which, when converted, ought to be applied toward the payment of the debts of the corporation, besides costs of administration.
    “I shall therefore advise a decree that the bill of complaint be dismissed, with costs.”

      Mr. Otto A. Siiefel, for the appellant.

      Messrs. Bilder & Bilder and Mr. M. Gasewell Seine, for the respondents.
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the oiiinion filed in the court below by Vice-Chancellor Church.

For affirmance—Ti-ie Chiee-Justioe, Trenohard, Parker, Minturn, Kalisch, Black, Katzenbach, Campbell, Lloyd, White, Gardner, Van Buskirk, Clark, McGlennon, Kays, JJ. 15.

For reversal—None.


text:
    Edward Beam et al. v. The Paterson Deposit and Trust Company et al.
    [Decided March 16th, 1925.]
    On appeals from orders of the court of chancery.

      Mr. William B. Beam, for the appellants.

      Messrs. Griggs & Harding, .for the respondents.
   Per Curiam.

These appeals are taken from three orders made by the court of chancery.

The situation disclosed by the case before us is as follows: The bill was filed in August, 1921. By it the complainants sought to compel the Paterson Safe Deposit and Trust Company, as trustee under the will of one Sarah A. Cooke,'to account for property which it had received under the will, to have a receiver appointed to take charge of the trust funds, and to compel the trust company to make good to the complainants losses which, it was charged, had depreciated the trust property and which had occurred through the dereliction of the trustee. The case remained undisposed of for several years after the filing of the bill, no decree having been entered therein after the completion of the hearing up to the 2d of July, 1924. A few days previous to that date William Beam, representing himself and other cestui que trusts, applied to Vice-Chancellor Griffin, to whom the case had been referred, to reopen the hearing, in order that the complainants might introduce into evidence the testimony taken and the 'exhibits offered in four different litigations which had been or were pending in the prerogative court, and in which these parties, or some of them, were concerned. This application was refused on the date mentioned, and the order of denial is made one of the subjects of this appeal. At the same time Beam applied to the court to stay the consideration and decision of this cause until the determination of the four cases in the prerogative court already referred to. This application was also denied, and this second order of denial has also been appealed from. On the 6th of August, 1924, Beam applied to the chancellor, asking him to refuse to sign the decree in this case, which had been advised by Vice-Chancellor Griffin early in the preceding month, until the chancellor should examine the proceedings on which that decree was based, and should consider every step in those proceedings, every act of the vice-chancellor and of the various counsel before him, not only in the present case but in the cases which had been tried in the prerogative court before Vice-Ordinary Griffin, and which 'have already been referred to. The chancellor refused this application, and from the order of refusal the appellants have also taken an appeal.

Taking up the consideration of these several orders in their turn: The refusal of Vice-Chancellor Griffin to reopen the hearing for the purpose of permitting the appellants to introduce into evidence the testimony taken and the exhibits produced in the prerogative court cases was entirely proper. Conceding that ordinarily a party may' have read into the testimony in a pending litigation evidence which has been taken in other cases, but which is relevant to the issues involved in the case being tried, unquestionably it would be grossly improper to permit the whole of the testimony in such cases to be injected into the pending suit, without regard to its competency or its relevancy upon the issues involved in that suit.

As to the second order appealed from: No reason was shown for staying the determination of the present suit until the determination of the litigations in the prerogative court. The present suit was required to be decided upon the issues raised by the pleadings and the testimony offered in support of or against those issues, and its decision could not be affected by the proceedings in, or the decision of, other causes, except perhaps to the extent that in those other causes legal principles were declared which were controlling as to questions involved in this litigation.

As to the third order: It is enough to say that, under the chancery practice, the chancellor signs the decree advised by a vice-chancellor as a matter of course, and we know of no reason which would justify him in refusing to do so unless application has been made to him to sit in review upon the decision of his vice-chancellor. The proposition that he should not only do this, but that he should also consider every act of the vice-chancellor and of the various counsel who had appeared before him, not only in the pending case, but also in the several cases which were tried in the prerogative court before the same judicial officer, is so palpably without legal substance as not to merit discussion

The orders appealed from will each of them be affirmed.

For affirmance—The Chief-Justice, Trenchard, Parker, Minturn, Kalis oh, Black, Katzenbach, Campbell, Lloyd, White, Gardner, Van Buskirk, Clark, McGlennon, Kays, JJ. 15.

For reversal—None.