author: Dixon, J. Collins, J.

text:
    William M. Donald et al., appellants, v. American Smelting and Refining Company et al., respondents.
    [Filed April 8th, 1901.]
    1. Under section 49 of our Corporation act (P. L. of 1896 p. 877), when an original issue of corporate stock for property to be purchased is contemplated, it is the duty of the directors to see that the real value of the property is at least equal to the face value of the stock.
    2. Before an original issue of corporate stock for property to be purchased takes place, the iona fide judgment of the directors as to the value of the property, while it is entitled to considerable weight, is not conclusive, but may be reviewed at the. instance of existing" stockholders; and if, on such review by a court of equity, the value of the property appears to be less than the face value of the stock, the issue should be restrained.

      S. After stock has been issued as full-paid stock for property purchased, the judgment of the directors as to .the value of the property becomes conclusive, in the absence of actual fraud in the transaction, and such stock is not liable to any further call.
    4. An increase of corporate stock, voted for by the board of directors and by the requisite majority of stockholders, in order to issue such stock for property worth less than the face value of the stock, should be restrained at the instance of dissenting stockholders.
    On appeal from an order advised by Yice-Chancellor Stevens, whose opinion is reported in 16 Dick. Gh. Rep. 158.

      Mr. Richard V. IAndabury, Mr. Eugene Treadwell' and Mr. Edward Lauterbach (of New York), for the appellants.

      Mr. William II. Gorbin, Mr. Samuel TJntermeyer and Mr. Thomas Thatcher (of New York), for the respondents.
   The opinion of the court was delivered by

Dixon, J.

The bill in this case was presented by several holders of stock in the American Smelting and Befining Company to enjoin the company and its directors from entering into a contract with M. Guggenheim’s sons for (1) the transfer to the company of the smelting and refining plants, appurtenant property and business of that firm; (2) the payment by the firm to the company, in cash or in working capital, of a smn equal to two-thirds of the company’s working capital on January 1st, 1901, said to be about $6,000,000, and (3) the payment by the firm to the company of the further sum of $6,066,666.66 in cash; and for the issuance and delivery to the firm by the company of $45,200,000 in aggregate par value of the company’s capital stock, one-half thereof preferred and one-half common; and also to enjoin them from increasing the capital stock of the company from $65,000,000 to $100,000,000, in order to use the added $35,000,000, with $10,200,000 of its originally authorized capital stock still held by the company for the carrying out of such bargain.

On filing the bill and accompanying' affidavits an order to show cause'and stay were granted by the chancellor, which, on the coming in of the answer and its accompanying affidavits, were discharged. Thereupon the complainants appealed to this court, and having secured from us a stay pending the appeal, brought on for hearing the application for an injunction pendente lite.

The controversy in its present stage turns upon the charge of the complainants, that the cash and property to be acquired by the company are not worth the par value of the stock to be issued therefor, and hence that the transaction contemplated is illegal.

The rule to be applied in determining whether on such a contention a contemplated original issue of corporate stock is legal or not, is prescribed by sections 48 and 49 of our Corporation act. P. L. of 1896 p. 277. They run as follows:

“48. Nothing but money shall be considered as payment of any part of the capital stock of any corporation organized under this act, except as hereinafter provided in case of the purchase of property.
“49. Any corporation formed under this act may purchase mines, manufactories or other property necessary for its business, or the stock of any company or.companies owning, mining, manufacturing or producing materials or other property necessary for its business, and issue stock to the amount of the value thereof in payment therefor.”

The meaning of section 48 is not questionable. The money must equal the face value of the stock. The language of section 49 is even more explicit. The corporation may issue stock to the amount of the value of the property. The value of the property in the one case, just as the value of the money in the other, must at least equal the face value of the stock. Such was the view expressed for this court by Mr. Justice Depue in Wetherbee v. Baker, 8 Stew Eq. 501, and supported by abundance of authority. ^ "

The distinction between the contemplated issue of corporate stock for property and its issue for money lies, not in the rule for valuation, but in the fact that different estimates may be formed of the value of property. When such differences are brought before judicial tribunals, the judgment of those who are by law entrusted with the power of issuing stock “to the amount of the value 'of the property,” and on whom, therefore, is placed the first duty of valuing the property, must be accorded considerable weight. ,But it cannot be deemed conclusive when duly subjected to judicial • scrutiny. Nor is it necessary that conscious overvaluation or any other form of fraudulent conduct on the part of these primary valuers should be shown to justify judicial interposition. Their honest judgment, if reached without due examination into the elements of value, or if based in part upon an estimate of matters which really are not property, or if plainly warped by self-interest, may lead to a violation of this statutory rule as surely as would corrupt motive.

The cases in this state to which we are referred (Elkins v. Camden and Atlantic Railroad Co., 9 Stew. Eq. 241; Park v. Grant Locomotive Works, 13 Stew. Eq. 114; Ellerman v. Chicago Junction Railway Co., 4 Dick. Ch. Rep. 217; Willoughby v. Chicago Junction Railway Co., 5 Dick. Ch. Rep. 656; Sewell v. East Cape May Beach Co., 5 Dick. Ch. Rep. 717; Edison v. Edison United Phonograph Co., 7 Dick. Ch. Rep. 620) in support of the proposition that the honest judgment of the managers of a corporation, with respect to matters intra vires, cannot be disturbed at the instance of stockholders; all relate to transactions for which the legislature has set up no other criterion than the discretion of thosp managers. But the original issue of corporate stock is a special function, in the exercise of which the legislature has fixed the standard to be observed, and it is the duty of the courts, so far as their jurisdiction extends, to see that this standard is not violated, either intentionally or unintentionally.

Mien corporate stock has once been issued for property purchased, then the legislature has directed the application of a different rule. In the words of the same section 49,

“the stock so issued shall be full-paid stock, and not-liable to any further call, neither shall the holder thereof be liable for any further payment under the provisions of this act; and in the absence of actual fraud in the transaction the judgment of the directors as to the value of the property purchased shall be conclusive.”

Under these provisions, after the property has been purchased and the stock issued therefor, nothing short of actual fraud in the transaction can impair the right of the holder to hold his stock as full-paid stock, free from further call. The cases of Bickley v. Schlag, 1 Dick. Ch. Rep. 533, and Rural Homestead Co. v. Wildes, 9 Dick. Ch. Rep. 668, indicate that the completed transaction was equally secure, even before the statute received its present decisive form.

By the rule above stated, then, the matter in hand must be judged.

The evidence before us shows that in the bargain projected M. Guggenheim’s Sons were to give, for $45,200,000 of stock, about $12,000,000 in cash in working capital, their plants at Perth Amboy, New Jersey; at Pueblo, Colorado; at Aguas Calientes and Monterey, Mexico, and somewhere in South America, and their leases and contracts, the nature of which is not disclosed in these proceedings. Eegarding “the cash and working-capital” as so much money, and setting it off against an equal amount of stock, there remains about $33,000,000 of stock to be equivalenced by the property purchased. It is substantially admitted that the value of the plants themselves as physical possessions does not exceed $10,000,000, thus leaving about $23,000,000 to be made up in the value of the good-will of the business and the leases and contracts mentioned.

- The defendants insist that the complainants have not borne the burden cast upon them by law of proving that these items are not worth that sum, and certainly we would be unwilling now to adjudge that such a negative is established. But it must be remembered that the cause is yet in a preliminary stage; that the complainants have shown the value of everything which they could reasonably be expected to discover before instituting their suit; that the directors are their trustees, and are intending a very large issue of stock for property which they have not seen fit hitherto to define. Under these circumstances, the legal rule imposing the burden of proof on the complainant should not be rigorously applied. Indeed, as these trustees are seeking to exercise a specially delegated power, which can be justly exercised only in accordance with a prescribed standard, it is not entirely clear that a burden does not rest on them, when challenged beforehand, to vindicate their proposed action. But assuming the burden to be on the complainants, we think that for present purposes it is sustained.

The proofs point strongly to the conclusion that in the negotiations between the parties the real value of the property to be acquired has not been the basis on which they have determined the amount of stock to be issued therefor. This is explicitly stated in the affidavit annexed to the answer made by Daniel Guggenlieim, who had entire charge of the negotiations on behalf of his firm. He said:

“From the outset the purpose of both parties was to reach a just conclusion as to comparative values, and to determine on that basis what amount of the securities we .would justly receive for our business and properties as against those of the American company, represented by its outstanding $54,800,000 of stock.”

In other words, on the assumption that the possessions of the company are worth $54,800,000, the parties concluded that what the firm was to deliver to the company is worth $45,200,000. This mode of arriving at the value of property to be purchased by the issue of stock is not that contemplated by the statute, and can be made to accord with it only by proof that the assumption is ivell found. But there is no support for the assumption above stated, except the general averment that the companjr’s net earnings for the year ending October 31st, 1900, exceed $4,500,000, i. e., about eight and a half per cent, of the par value of its outstanding stock, and the fact that the shares of that stock are fully paid. The earnings of a single year hardly afford satisfactory evidence of the value of the company’s property, and whether the shares are “fully paid” merely because they were issued for property purchased, without the presence of fraud in the transaction, and whether the consideration received for them has depreciated since the company was organized in April, 1899, we have not the means of knowing. What the defendants have taken care to show to the court, though for another purpose, is that the commercial world has never, until the proposed bargain came into view, estimated the stock of-the company at more, than two-thirds of its face value.

The fact just mentioned underlies another position taken by the defendants, viz., that the contemplated contract would be advantageous to the company and its stockholders, since even the mere expectation that it would be consummated has increased the value and market price of the stock, and, therefore, it is argued, the complainants, as stockholders, are not aggrieved. But not there is the pith of the controversy. If the intrinsic value and market price of the company’s stock were only sixty per cent, of its face, and an outsider were to offer eighty per cent, in money for additional stock to be issued, such an offer would clearly be .advantageous to the company and its stockholders; but it could not be legally accepted, because the legislature has required that one hundred per cent., whether in cash or in property, shall be received for corporate stock when originally issued. It is the illegality of the transaction which warrants complaint. Stockholders have the same right to prevent an issue of stock in violation of the statute as they have to prevent a use of corporate property beyond the scope of the corporate power, without regard to loss or gain. Pom. Eq. Jur. §§ 1093, 1095.

In view of the undefined nature of the property for which $23,000,000 of stock is to be issued, of the illegitimate basis on which the price to be paid for that property appears to have been fixed, and of the probability that the stock has been rated by the parties at its market value rather than at par, we think proper ground is shown for restraining the completion of the contract until full investigation can be made.

With regard to the mere act of increasing the capital stock, the defendants contend that, as the board of directors and two-thirds of the stockholders have voted in favor of the increase, the court cannot interfere. But evidently this act of the corporate authorities must stand on the same footing as other corporate doings. The fact that in making an increase of stock two-thirds of the stockholders have concurred with the board of directors, does not relieve their action from the rule that corporate bodies must keep within the legislative bounds of their authority, with respect to their ends as well as to their means. They cannot be justified in an attempt to increase the capital stock for an illegitimate object, e. g., to found a charity, or in order to issue the stock for less than par. But if the claim of these complainants shall ultimately prove well founded, this proposed increase has been favored for the purpose of so issuing it, and with no other design. The circular letter sent out by the directors to the stockholders to secure their - assent to the increase expressly declared that the object was to effectuate the contemplated bargain with M. Guggenheim’s Sons. If the stock can lawfully be used for that purpose, the stockholders have as- ■ sented to the increase and the complainants must acquiesce, but if it cannot, then it would be utterly inequitable, not only to the complainants, but also to the stockholders who have voted for it, to hold that authority for the increase has been properly given.

The proceedings to increase the stock should likewise remain in statu quo.

Collins, J.

(dissenting).

The affidavits submitted by the complainants were limited to the cost of reproduction of certain smelting and refining works specified and were largely based on common report. No attempt was made to place a value upon all the “smelting and refining plants, appurtenant property and business” of the firm of M. Guggenheim’s Sons as a going concern, and there is no charge or proof that information on that subject was ever denied or even asked. The answer filed made all discovery prayed, and there is nothing in that answer or the accompanjdng affidavits inconsistent with the statutory requirements as to the issue of stock. It does indeed appear that M. Guggenheim’s Sons were influenced, in deciding to sell their property for the price agreed on, by a comparison of the values of the two interests, to be in effect consolidated, as applied to the total stock issue that would eventually represent those interests, but it does not follow that actual values are below the face of the stock. The defendants were not, in my opinion, called on to prove anything on the subject, but it does appear from the affidavits they submitted that on the legitimate basis of earning power the stock values are actual values. I attach no importance to the exchange quotations of the stock of the defendant company. The price secured for such of the stock of new corporations, especially those of an industrial character, as gets into the general market affords very little indication of real value.

I think that the complainants failed to prove, ¶rima facia, any charge in their bill, and shall therefore vote to affirm the order denying them an injunction, and I am authorized to say that the other judges so voting concur in this opinion.

For reversal—The Chief-Justice, Van Syckel, Dixon, Garrison, Hendrickson, Adams, Vredenburgii, Voori-iees, Vroom—9.

For affirmance—Gummere, Collins, Fort, Garretson, Bogert—5.


source: Caselaw Access Project

author: Dixon, J.

license: Public Domain

text:
    The Grand Lodge Knights of Pythias of New Jersey, complainant and respondent, v. Otto Jansen, Anton Schonck and Max Seelinger, defendants and appellants.
    [Filed March 4th, 1901.]
    1. A punitive order of the court of chancery, fining or- imprisoning a party for contempt, is not appealable, if the matter and party be within the jurisdiction of the court.
    2. A remedial order of the court of chancery, made in contempt proceedings is appealable.
    3. On an application to the court of chancery to obtain, in proceedings for contempt, a remedial order directing the imprisonment of the defendant until he shall pay a money decree, it is proper for the defendant to show his inability to pay, and, if that be shown, an order for such imprisonment ought not to be made.

      On appeal from a decree advised by Vice-Chancellor Pitney, who delivered the following conclusions:
    The order to show cause was served on five defendants, and four of them, to wit, Jansen, Schonck, Eirner and Sonn, appeared and filed two affidavits.
    The order of December 8th and injunction were each served upon Eirner and Jansen. The other defendants were officers of the lodge.
    The restraining order of December 8th was in these words:
    “And it is further ordered that the said defendants, Germania Lodge No. 50, Knights of Pythias of New Jersey, and Otto Jansen and their agents in the meantime and until the further order of this court in the premises, desist and refrain from disposing of or dividing amongst the members of said lodge or any of them, or from parting with in any manner any of the funds or other property of the lodge which is in their possession or under their control.”
    The injunction was directed ,to the defendant lodge and to Otto Jansen and their attorneys and agents.
    The defendants Schonck, Sonn and Seelinger are clearly within that description, and I am satisfied, although they technically deny it, that they each had notice of the order of December 8th, for the reason that it was issued and served on Saturday afternoon, December 8th, and on Monday, December 10th, they united in a distinct and direct disobedience of it by disposing of the funds and assets of the lodge. Then after the injunction of February 12th was issued, of which I am satisfied Sonn had notice, Sonn made other disposition of the funds, contrary to the letter and spirit of the injunction. I can find no evidence that Eirner took any part in these proceedings, although he may have had notice of them. I am also satisfied that they each knew that the funds and property they were dealing with were those which the complainant claimed and which the order and injunction were intended to protect.
    I therefore adjudge Schonck, Jansen, Sonn and Seelinger guilty of a. contempt of this court. I think their affidavits submitted do not furnish any answer to the contempt.

      I will hear counsel at Newark, on Tuesday, September 12th, .as to what punishment shall be imposed upon them.
    And afterwards the following additional memorandum:
    In this case I have just received the argument of the counsel for the defendants, and am of the opinion that the cases therein relied upon of Walton v. Walton, 9 Dick. Ch. Rep. 607, and Aspinwall v. Aspinwall, 8 Dick. Gh. Rep. 681f, do not apply to this case for two reasons. In the first place, in neither of those cases was there any actual contempt of the court. In the present case the defendants have been adjudged guilty of an actual contempt of the court in disobeying an injunction issued by the court and served upon them prior to the entry of the decree.Hence, they must be punished, quite independent of their pecuniary responsibility. In the second place, the denial of means to pay the decree entered in the action after the contemptuous acts were committed was made simply by ex parte affidavits, and the defendants have never been subjected to examination on that .-subject.
    I think the case is within the principle acted upon by 'the court in Forrest v. Price, 7 Dick. Gh. Rep. 16; 8. G., 8 Dick. Gh. Rep. 698.

    I will therefore advise an order that the defendants adjudged in contempt be committed to the custody of the sheriff of the ■county of Essex until they shall have paid the amount of the •decree, with costs, and the costs of this application, and a fine to the state of $5 each.

      Mr. Robert E. McCarter, for the appellants.

      Mr. Walter F. Eayhursi, for the respondent.
   The opinion of the court was delivered by

Dixon, J.

This appeal is taken from an order in chancery made December 6th, 1899, adjudging the appellants to be in contempt for disobeying a restraining- order dated December 8tlr, 1894, and an injunction dated February 12th, 1895, the object of which was to secure control of certain moneys that had belonged to-the Germania Lodge, but were claimed by the bill filed in December, 1894, to belong then to the complainant, the Grand Lodge Knights of Pythias of New Jersey. The order appealed from directed that for their contempt the appellants should each pay to the clerk of the court for the use of the state a fine of $5, and that they should pay to the complainant the sum of $715, with interest thereon from December 8th, 1894, being the balance due the complainant on the final decree in the cause, and also the costs of the suit and of the contempt proceedings, and further directed that the appellants should be committed to-the common jail, of Essex county until' they complied with the order.

This order has a twofold character. It aims to punish the appellants for conduct derogatory to the dignity of the court, and also to afford the complainant an additional remedy by the imprisonment of the appellants until they pay the sum due.

As a mere punishment for contemptuous conduct, the- order being within the jurisdictioir of the court of chancery is not appealable, but so far as it is for the relief of the suitor, it is subject to appeal. Dodd v. Una, 13 Stew. Eq. 672; Thompson v. Pennsylvania Railroad Co., 3 Dick. Ch. Rep. 105; S. C., 4 Dick. Ch. Rep. 318; Forrest v. Price, 7 Dick. Ch. Rep. 16; S. C., 8 Dick. Ch. Rep. 693. Therefore, so much of the order as requires the appellants to pay a fine and be committed until payment, is beyond our review.

Of the remedial part of the order, the direction to pajr the sum due to the complainant is merely a re-affirmation of the final decree, and so cannot now be deemed a grievance; consequently, only respecting the order for imprisonment until the debt and costs are paid are the appellants entitled to be heard. Since the sole purpose of the imprisonment is to obtain payment for the complainant, the court should consider whether the imprisonment is likely to secure that result. To this end, the financial ability of the appellants is a proper subject of inquiry, for if they have not the means wherewith to pay, the imprisonment can surely afford no remedy.

Before this order for imprisonment was made each of the appellants presented to the court his affidavit, stating that he was a working man, dependent on his weekly wages for the support of himself and his family, and had no money, funds or property with which to pay the decree or any part thereof. There was no denial of these affidavits, and the inability of the appellants to pay the debt is substantially conceded.

The import of these affidavits was disregarded in the court below because they were ex parte and the affiants had not been •cross-examined on the subject. But that arose from the fact that the complainant, in prosecuting the order for contempt, had chosen to produce its proofs in the same manner—by the service •of affidavits—a practice sanctioned by the rules of the court. If the complainant had desired to deny these averments of poverty •or to cast doubt upon them by cross-examination, an opportunity to do so should have been secured before the hearing. When presented at the hearing, in accordance with the practice of the court, they could not rightfully be ignored.

It is urged, also, that the inability of the appellants to comply-with the decree ivas not a proper subject for consideration until .after the remedial order had been made. Such is not the law.

In Thompson v. Pennsylvania Railroad Co., 4 Dick. Ch. Rep. 318, Mr. Justice Van Syckel, speaking for this court, said that the eases recognized the propriety of discharging the defendant from the consequences of his apparent contempt if he can show his inability to comply with the order of the court, and in Walton v. Walton, 9 Dick. Ch. Rep. 607, Vice-Chancellor Grey held the rule to be that any facts existing when the application to hold for contempt is made, which would support a motion to enlarge from custody, ought to be shown in answer to the application to hold the defendant in contempt. We consider such a practice commendable from every point of view.

Our conclusion is that the imprisonment of these appellants was not adapted to secure the payment of the complainant’s •claims, and therefore could not justly be deemed an equitable remedy therefor. To that extent the order is reversed.

For reversal — The Chancellor, Chiee-Justice, ' Van Syckel, Dison, Collins, Fort, Garretson, Bogert, Krueger, Hendrickson, Adams, Vredenburgh, Voori-iees—13.

For affirmance—None.


text:
    Israel A. Kelsey, appellant, v. The New England Street Railway Company et al., respondents.
    [Filed March 4th, 1901.]
    A special committee of the board of directors of a private corporation, being empowered by the board to contract for the sale of the shares of stock in another company owned by the corporation, stipulated in the contract which they made that the members of the committee should personally have an option to deliver their own shares in the same company to the same vendee at the same price. Other stockholders of the corporation also owned shares in the same company, but no such option was secured for them.—Held, that the court would not decree specific performance against the objection of the corporation and its stockholders.
    On appeal from the order of August 8th, 1900, advised by Vice-Chancellor Stevens, whoso opinion is reported in 15 Diclc. Gh. Rep. 880. No opinion on final hearing.

      Mr. Flavel McGee, Mr. John G. Johnson and Mr. Charles F. Morgan, Jr. (of Philadelphia), and Mr. -Samuel C. Morehouse (of New Haven), for the appellant.

      Mr. Charles L. Corbin and Mr. William W. Cook (of New York), for the respondents.
   Tbe opinion of tbe court was delivered by

Dixon, J.

Tbe New England Street Railway Company, a corporation organized under the act concerning corporations, was formed, inter alia, to purchase, bold, sell, invest, trade and deal in stocks. In October, 1899, it owned seventeen thousand nine hundred and fifty-four shares of stock of the Winchester Avenue Railroad Company. On October 9th of that year the board of directors of the New England company passed a resolution appointing a committee, consisting of the president and two other directors, “to receive any offers that might be made for the property.” The committee opened negotiations with the complainant. On March 26th, 1900, the board of directors passed another resolution, as follows:

“On motion duly recorded it was unanimously voted that the committee appointed at the meeting of directors October 9th, 1899, be and are hereby authorized and empowered to accept any offers that may be made for the stock in the Winchester Avenue R. R. Co., owned by this company, which in their judgment are for the best interests of all concerned, and to make such agreements with reference thereto as they may be advised are necessary for the delivery of the stock and payment therefor. All such agreements to be subject to ratification by the stockholders of the company.”

Accordingly the committee entered into the following written agreement:

“New Haven, Conn., March 29th, 1900.
“Acting in behalf and by the written consent of the directors of the New England Street Railway Company and appointed by the directors for the express purpose, we do hereby give Israel A. Kelsey of West Haven, Conn., the option to buy the seventeen thousand nine hundred and fifty four (17,954) shares of the capital stock of the Winchester Ave. Railroad Company, belonging to the New England St. R’w’y Co., at the price of forty-eight ($48.00) dollars per share.
“Said option to purchase to expire April 10th, 1900, at 3 p. m.
“By said April 10th, said Kelsey must signify his intention to take up and make payment therefor as follows:
“Fifty thousand dollars in cash or certified check on that date and by June 9th, 1900, the balance of the purchase-price. Said money to be deposited in any trust company we may indicate.
“In case the final payment is not made by June 9th, 1900, then said fifty thousand dollars shall be forfeited.
“The sum of one thousand dollars is hereby received and acknowledged as paid this date to bind this option and shall be considered part of the purchase payment when final payment is made. But said one thousand dollars shall be returned if an examination of the books do not warrant the statements made. It is further agreed that we shall have the right to deliver at' the same price to said Kelsey not to exceed (2500) twenty-five hundred shares of Winchester Ave. R. R. Co., now owned by ourselves in Boston and vicinity.
“Edward E. Eloyd,
“James O. Elms,
“A. R. Mitchell.”

The bill now before us was filed by Kelsey to' compel the specific performance of the ¿greement above set forth, but such relief was denied in the court of chancery on the ground that, by the terms of the resolution under which it was made, the ratification of the stockholders was required to render it obligatory, and had been refused.

This court is not prepared to adopt the construction thus put upon the resolution of March 26th, 1900, but nevertheless we think the court below was right in denying specific performance of the contract.

The committee was only a special agent of the corporation, and therefore Kelsey, in bargaining with it, was chargeable with notice of its powers. Milne v. Kleb, 17 Stew. Eq. 378; Dowden v. Cryder, 26 Vr. 329. Moreover, the -agreement itself recited that the committee was acting “by the written consent of the directors,” and this made it his duty to learn what that written consent, viz., the resolution, disclosed. We must therefore assume the knowledge of Kelsey that the members of the committee were not authorized by their principals to introduce into their negotiations or bargain any consideration advantageous to themselves exclusively. Notwithstanding this, he, in his dealings with them, gave to them a personal option to deliver to him at the contract price other shares of the Winchester company then owned by them. The testimony shows that at the time several thousand shares of the Winchester company were held by other stockholders of the New England company, for whom the contract made no provision.

The members of the committee, being themselves directors of the company as well as representatives of the board of directors, occupied a fiduciary position in which they are practically to be regarded as trustees for the stockholders as cestuis que trust. Pearson v. Concord Railroad Corporation, 62 N. H. 537; Barnes v. Brown, 80 N. Y. 527; Guild v. Parker, 14 Vr. 430; Williams v. McKay, 13 Stew. Eq. 189; Rabe v. Dunlap, 6 Dick. Ch. Rep. 40; Williams v. Page, 24 Beav. 654. Acting in this capacity, they were not at liberty to use their power of bargaining for the corporation so as to secure for themselves an exclusive personal benefit; if they did so úse their authority, their transaction was voidable against a person knowingly participating in their abuse of power. 1 Beach Corp. §§ 240, 241; Stewart v. Lehigh Valley Railroad Co., 9 Vr. 505, 522; Gardner v. Butler, 3 Stew. Eq. 702, 721; Wardell v. Railroad Co., 103 U. S. 651, A contract is not enforceable against the corporation when the party dealing with the directors has given to any of them a secret interest in the contract. Cook Stock. § 649; Rutland Electric Co. v. Bates, 68 Vt. 579; 17 Am. & Eng. Encycl. L. (1st ed.) 91.

It is indisputable that the personal advantage which the members of the committee thus attempted to secure for themselves was never assented to by the board of directors or by the stockholders, and it may have induced those members to accept for the property of the company a less favorable offer than might have been otherwise obtained.

We therefore are of opinion that the agreement of March 29th, 1900, should not be enforced against the corporation and its stockholders, and that the order of August 8th, 1900, and the final decree of November 2d, 1900, dismissing the bill, should be affirmed.

For affirmance—The Chibe-Justice, Dixon, Collins, Fort, Garretson, Hendrickson, Bogert, Krueger, Adams, VredenBURGH, VOORI-IEES—11.

For reversal—None.


text:
    George W. Miller, trustee, complainant and respondent, v. Edward S. Savage, receiver, defendant and appellant.
    [Filed March 4th, 1901.]
    After a corporation has been adjudged insolvent and a receiver appointed to wind up its affairs, a mortgage given by the corporation, while insolvent, to prefer some of its existing general creditors, which, through a mistake of the draughtsman, conveyed a life estate in its real property, ought not to be reformed by a court of equity so as to embrace the fee, when it appears that the mortgagees did not act to their detriment on the supposition that the mortgage conveyed the fee.
    On appeal from a decree advised by Vice-Chancellor Reed, whose opinion is reported in Miller v. Savage, 15 Dick. Gh. Rep. SOI/..

      Mr. John Grvfjm, for the appellant. .

      Messrs. Wall & Green, for the respondent.
   The opinion of the court was delivered by

Dixon, J.

On January 18th, 1895, the Johnson Railroad Signal Company, a domestic corporation, executed a mortgage of its real and personal property to George W. Miller, in trust to secure the payment of certain debts previously contracted by the company. At that time the company was known to be insolvent, and on January 30th, 1895, a bill in chancery was filed, on which its insolvency was adjudged and a receiver appointed to wind up its affairs under the statute.

The mortgage was made to Miller and “his successor in the trust,” and thus, by failing to use the word “heirs” in defining the estate granted, it did not convey a fee-simple in the real property. Wheeler v. Kirtland. 9 C. E. Gr. 552.

The object of the present suit is to have the mortgage so reformed that it shall embrace the fee. Thus extended, it would absorb all the assets of the corporation and leave many creditors-unpaid.

Assuming that it appears to have been the intention of the parties to encumber the fee, we nevertheless think that the aid' of a court of equity ought not to be granted under the circumstances of this case.

The equitable rule for distributing the assets of an insolvent corporation among its creditors, when the assets are insufficient to satisfy all demands, is to apportion the assets pro rata among-all the creditors, upon the principle that equality is equity. 1 Pom. Eq. § 410. Our statute is to the same effect. This rule-of course yields to legal rights and substantial equities inconsistent with it, but still it possesses in itself a force that should not be lightly disregarded. The mere intention of an insolvent debtor to give a preference to some of his creditors, when they have not thereupon acted to their detriment, should not induce a court of equity to depart from the rule. Nothing beyond that intention appears in the present case.

While it is true in a general sense that the property of an insolvent debtor passes to a statutory receiver subject to all legal- and equitable liens then existing against it, yet this doctrine does not require the receiver to give effect to an unexecuted purpose-then resting in the mind of the debtor to create a lien, which, if created, would have no other legal or equitable basis than the executed design.

The decisions relied on to support this claim for reformation are cases where the parties had changed their attitude to their disadvantage, in the supposition that the instrument was such as they sought to have it made, and consequently an equity arose to be saved from loss through the error. The more apposite eases are against the claim. Thus in Wheeler v. Kirtland, 9 C. E. Gr.. 552, this court held that “an equitable mortgage for a precedent debt has no equity superior to that of a valid subsequent judgment at law,” and in Graham Button Manufacturing Co. v. Spielmann, 5 Dick. Ch. Rep. 120, 126, Vice-Chancellor Van Fleet said that “after the property of a debtor passes into the custody of the law pursuant to [our] statute, the right of his creditors to have his property converted into money and the money applied in discharge of his debts, is, in all essential respects, precisely the same as that of a judgment creditor after levy under execution." As a reason for the decision there rendered, this declaration of the vice-chancellor was approved by this court (S. C., 5 Dick. Ch. Rep. 796), and although not then applied in .a case exactly like the present, it is applicable with at least equal force to the facts now under review. Indeed we think that, the complainant and those whom he represents have no claim so .strong in equity as that of the general creditors who seek a proportionate distribution of the assets.

The decree to reform the mortgage should be reversed and the .bill dismissed.

For reversal—The Chief-Justice, Van Syokel, Dixon, Fort, Garretson, Hendrickson, Bogert, Krueger, Adams, Vredenburgh, Vooriiees—13.

For affirmance—None.


text:
    Henry C. Forman, complainant, v. The Executors of Edmund Brewer et al., defendants and respondents.
    [Filed March 4th, 1901.]
    1. When a claim is submitted to the jurisdiction of a court for determination, the common statute of limitations, and the analogous bars and presumptions in equity and at law, are regarded, for all purposes of the pending litigation, as having ceased to. operate against the claim, so that, If it be not then barred, the subsequent lapse of time will not defeat it.

      2. Between parties holding claims equally equitable, he who has also-the legal title must prevail, when required to defend his rights in a court of equity.
    On appeals of Reeve’s executors and of Horner’s administrators-from a decree dated May 25tli, 1900, advised by Vice-Chancellor Pitney. No opinion.

      Mr. Herbert A. Drake, for the appellants.

      Mr. Samuel II. Grey, for the respondents.
   The opinion of the court was delivered by

Dixon, J.

The decree in this case, from which Reeve’s executors and Horner’s administrators appeal, rests in part upon the proposition that the judgment recovered January 19th, 1872, by Thomas J. Smith against Henry C. Forman, which was assigned to Reeve on May 19th, 1888, and the judgment recovered by Horner against Henry G. Forman on June 3d, 1873, are to be-considered as outlawed in this proceeding, because Reeve'and Horner filed their answers and cross-bills in the cause after the expiration of twenty ji-ears from the date of their judgments.. This proposition is unsound.

The original bill was filed in April, 1889, by Henry C. For-man, to have it decreed that a certain tract of land, the legal title-of which had been conveyed by him to Bulson on December 14th, 1871, and had always since that date been out of Forman, was inequity Forman’s property, and that those who had held the legal title were only mortgagees or trustees. This bill set forth the-above judgments, brought in Reeve and Horner as defendants, and prayed, inter alia, that their interest in the premises as judgment creditors might be determined by the court. By the-final decree made May 25th, 1900, the complainant is regarded as equitable owner of the land and held to be entitled to redeem the same from the encumbrances thereon, and in default of his so doing within the time limited, the land is ordered to be soldi to raise and satisfy the sums due thereon, and the residue of the proceeds of sale is ordered to be paid to the complainant.

In .this situation it is manifest that the allegations of the bill .alone are sufficient to establish the equitable lien of the judgments on the complainant’s estate in the land, and to require the court to determine whether they shall be paid out of the proceeds of sale before the residue is turned over to the complainant. Neither answer nor cross-bill was necessary to complete the jurisdiction of the court over the matter thus presented, and when by service of process the judgment creditors were brought in, their status in the cause was so far fixed that the mere lapse of time afterwards could not impair their claims in that suit. The common statute of limitations, and the analogous bars and presumptions in equity and at law, are regarded, for all purposes •of the pending litigation, as having ceased to operate against a claim from the time when it was submitted to the jurisdiction of the court. Gregory v. Hurrill, 3 Brod. & B. 212; S. C., 1 Bing. 324; Sterndale v. Hankinson, 1 Sim. 393; National Bank v. Sprague, 6 C. E. Gr. 530; Kirkpatrick v. McElroy, 14 Stew. Eq. 539; Smith v. Crater, 16 Stew. Eq. 636.

’ These judgments, therefore, must have such effect as they were entitled to at the commencement of the suit.

The principal defendant in the bill was Edmund Brewer, who had held legal title to the land since May 10th, 1879, by deed from Bulson, and had also received a conveyance from Forman in December, 1873. In equity Brewer held his title as security for his advances to and on account of Forman.

The appellants contend that their judgments should be decreed to have been liens upon the land from the dates thereof, .and should have priority over all advances made by Brewer after those dates, except advances made to discharge prior encumbrances. This contention might prevail if the legal title to the land had been in Forman, so that the judgments against him ■constituted a legal lien. But as Forman has never had legal title since the judgments were entered, the appellants must rest solely ■on their equitable claims, and we think that the relations of Forman and Brewer were such as to make the latter’s claim for his advances as good in equity as those of the judgment creditors, in view of their knowledge and acquiescence in the situation. Hence the legal title vested in Brewer should not be taken away without conceding to him whatever protection it may afford for the payment of his just debts.

As to the Smith judgment of January 19th, 1872, the evidence shows that Forman, the judgment debtor, agreed with the judgment creditor to settle it for $50, and then asked Reeve to pay that sum and take an assignment of it. Reeve did so on May 19th, 1888. It should therefore be held by his executors for that sum only, with interest. There is no evidence that this claim was ever paid by Brewer.

The decree below should be modified in favor of the appellants by deducting from Brewer’s judgment, maintained as the second lien, the sum of $50 and interest; by adding to the Reeve judgment, maintained as the third lien, the sum of $50 and interest from May 19th, 1888, and by substituting as the fifth lien the whole amount of the Horner judgment, being $1,304 and interest from June 3d, 1873.

For reversal—Ti-ie Chiee-Justice, Van Syckel, Dixon, Collins, Fort, Garretson, Hendrickson, Krueger, Adams, VREDENBURGH-10.

For affirmance—None.


author: Garrison, J.

text:
    The Chesapeake and Ohio Railway Company, complainant, v. Atlantic Transportation Company, defendant.
    [Filed March 11th, 1901.]
    A franchise tax levied by the state during the receivership of an insolvent corporation is entitled to payment ’n preference to the liabilities incurred by the receivers in carrying on the business of the insolvent corporation, but not to payment in preference to the receivers’ allowance and the expenses of winding up the corporation.

      On appeal of the State of New Jersey from a decree advised by Vice-Chancellor Pitney, whose opinion is reported in 17 Dick. Ch. Rep. 369.

      Mr. Samuel TI. Grey (attorney-general), for the state.

      Mr. Charles L. Corbin, for the receiver.
   The opinion of the court was delivered by

Garrison, J.

The decree of the chancellor appealed from recites that the assets of an insolvent corporation were not sufficient to satisfy the liens thereon and the expenses of the receivership, -and that the receivers had incurred heavy liabilities in carrying on the business of the corporation at a loss, and that a franchise tax levied by the state during the receivership had not been paid. The attorney-general contended that this tax was entitled to preference in payment. The decree

“ordered, adjudged and decreed that the application of the attorney-general for the payment of franchise taxes to the state in preference to the receivers’ allowance, and to the expenses of administration and to the liabilities incurred by the receivers in the course of administration, be denied.”

From this decree the attorney-general has appealed.

Within the principle upon which the case of United States Car Co. v. Crews, 12 Dick. Ch. Rep. 357, was decided in this court, the decree appealed from in the present case was correct in so far as it denied the application of the attorney-general for the payment of the franchise tax to the state in preference to the receivers’ allowance and the expenses of winding up the corporation, and it was incorrect in so far as it denied the application of the attorney-general for payment of the franchise tax in preference to liabilities, other than -such expenses, incurred by the receivers of the insolvent company in carrying on the business or other course of administration of its affairs. To effect this modification a reversal of the decree of the court of chancery will be necessary.

For reversal—The Chief-Justice, Van Syckel, Dixon, Garrison, Gommere, Collins, Fort, Garretson, Hendrickson, Krueger, Adams, Vredbnburgh, Voorhees—13.

For affirmance—None.


text:
    Edward McClain’s Executors, complainants, v. Robert O. Babbitt et al., defendants.
    [Filed March 4th, 1901.]
    A bill against two trustees to compel each to account for so much of the proceeds of certain property as came into his hands was filed by one who was entitled to an aliquot part of each fund.—Held, that neither of said trustees could complain because the person who was entitled to the remainder of each fund was not made a party, nor could either of the defendants file a cross-bill for the purpose of calling upon the other defendant to account for the fund in his hands.
    On appeal of R. T. & W. B. Stout from an order of the chancellor striking out their cross-bill, and on appeal of Babbitt & Lawrence from the final decree advised by Vice-Chancellor Emery.
    Upon making the order to strike out the cross-bill, the following memorandum was filed by the chancellor:
    The solicitors in Duprai v. McClain, acting for their clients, agree that Messrs. Babbitt & Lawrence should make distribution of the moneys realized at the master’s sale, and that Babbitt & Lawrence and R. T. & W. B. Stout should control the resale of goods bought in at the master’s sale, and, impliedly, the disposition of the moneys realized at such resale. The bill in effect charges that the solicitors accepted this trust and partially, at least, performed it. It-calls upon them to account. Messrs Babbitt & Lawrence answer and admit the trust, and say that they alone received the moneys from the master for distribution, and did not participate in the resale of the goods bought in. R. T. & W. B. Stout attending to that part of the trust, and hence that they cannot account for it. No allegation charges Messrs. Babbitt & Lawrence with negligence or bad faith in leaving the management of this part of the trust to R. T. & W. B. Stout, and no reason appears why the resale should not have been left to the Stouts. Hence it does not appear why Babbitt & Lawrence should be held responsible for any default upon the part of the Messrs. Stout.. This being so, what purpose does the cross-bill serve? It asks the same account from the Stouts that the original bill asks for.. I do not perceive that Babbitt & Lawrence have any sufficient reason, as the pleadings stand, to ask such an account or, indeed, any other relief against the Stouts, for they are not, apparently, to be .charged on the Stouts’ account. The cross-bill will be stricken out.
    The conclusions of the vice-chancellor who heard the cause on final hearing are as follows:
    At the hearing in this case I reached the conclusion that upon the true construction of the stipulation relating to the division of the proceeds of sale, as modified by the final decree (which directed that the proceeds should be paid for this purpose to Babbitt & Lawrence, and not to them in connection with the Messrs. Stout), Messrs. Babbitt & Lawrence became trustees directly and in their individual capacities for the complainant’s testator as to the portion of the fund to which he was entitled. Their client, Duprat, was not a party to the bill, and his nonjoinder was objected to in their answer, and the objection being also urged at the hearing, decision thereon was reserved.
    Upon this point I conclude, after careful consideration, that Duprat is not a necessary'party. The stipulation as to the division of the proceeds of sale, after providing for the former mortgage, is “sixty-five per cent, to Edward McClain and thirty-five per cent, thereof to the complainant (Duprat), until the amount due on the said Edward McClain’s chattel mortgage is paid. The balance shall then be divided equally between the-complainant and Edward McClain.” The final decree in the cause entered on this stipulation, and for the purpose of carrying it out, provides that the money raised on the sale should be paid by “master making the sale to Babbitt & Lawrence, solicitors of the complainant, to be distributed among the several persons holding certain mortgages in accordance with the terms of the stipulation.” The amount in Babbitt & Lawrence’s hands to be paid to McClain and Duprat under their stipulation was admitted by the answer to be $2,104.48, a sum less than the amount ■due on McClain’s mortgage. By those provisions of the stipulation and decree, McClain became entitled to receive from Babbitt & Lawrence, who held the fund as trustee, a certain aliquot portion of the fund, and the case, therefore, is excepted from the .general rule relied on at the hearing that all parties interested in the trust fund as trustees or cestuis que trust must be made parties. This particular exception to the general rule is thus stated in Story Eq. PI. § 207a:

    “If each party is entitled to an aliquot part, such as a quarter or a half of an ascertained and definite trust fund, in such a case he may sue for his own portion thereof without making the other cestuis que trust (or beneficiaries) parties, for there is no community of property or other matter in virtue of which they have or, can have any interest in the suit or object of the suit.”
    This rule is applicable, and the objection for want of parties is therefore overruled. The question of payment of interest by Babbitt & Lawrence on the portion of the trust fund to which complainant was entitled was raised at the hearing and was also reserved. No authorities have been cited by counsel on either side, and, as the result of my own examination upon the subject, I conclude that they are chargeable with interest. It appears by the defendant’s answer and by the evidence, that soon after the receipt of the monejr they denied the existence of any trust for ■complainant, and claiming to hold the entire fund solely in trust for their own client, paid over the entire amount to him, after deducting their own charges and expenses. This payment was made without any application to the court for direction as to their duties; was entirely in the interest of their own client-, to •whom, together with themselves, the benefit of the use of the money was thus given in violation of the trust, and the complainants were thereby deprived of the benefit of any interest on the fund.
    It is a case, therefore, in my judgment, where the trustee, although he has not himself received interest upon or had the use of all the money, is chargeable with interest on that portion of complainants’ money which was paid over to another claimant in disregard or repudiation of their rights. The complainants, if they were following the trust funds in Duprat’s hands and claiming repayments, would clearly be entitled to interest against him from the time of its receipt, and, as it seems to me, the liability of the trustee for interest on the fund thus improperly paid to Duprat for his use, or retained for their own, must be the same.
    Interest, therefore, from the date of the payment over of the fund by Babbitt & Lawrence is receivable, and this date, if it does not appear by the evidence, or is not agreed on, may be ascertained by further proof. The form of decree against the defendants Stout will be settled on notice.

      Messrs. Corbin & Corbin, for the appellants Babbitt & Lawrence.

      Mr. Hoisted II. Wainwright, for the appellants Stout.

      Messrs. Hawkins & Durand, for the respondents, McClain’s executors.
   The opinion of the court was delivered by

Garrison, J.

McClain and Duprat each had a mortgage upon the same chattels. In a suit to foreclose these mortgages it was stipulated by the respective solicitors, R. T. & W. B. Stout and Babbitt & Lawrence, that McClain was entitled to sixty-five per cent, and Duprat to thirty-five per cent, of the value of the security, and that the chattels should be sold at public sale, and that such of them as were not bid up to a fair price should be bought in and be sold at private sale, and that the proceeds (over and above certain prior encumbrances) should be divided between McClain and Duprat in the above ratio. The public sale was had and some of the articles were bought in. The entire net proceeds of the public sale were paid to the appellants, Babbitt & Lawrence; the articles bought in went into the hands of K. T. & W. B. Stout, to be sold by them at private sale. The bill was filed by McClain, and prayed that Babbitt & Lawrence be required to account for the money that came into their hands and to pay over sixty-five per cent, of it to the complainant, and that R. T. & W. B. Stout be required to do likewise with respect to the fund in their hands. The bill was not objected to upon the ground of multifariousness, but the appellants 'contended that their client, Duprat, was a necessary party, and tHey also sought to file a cross-bill attacking the resale of the goods by R. T. & W. B. Stout .and calling upon them for an account.

The opinions delivered in the court of chancery dispose satisfactorily of the questions that are presented by this appeal. These are that the suit was against the appellants and R. T. & W. B. Stout severally and in their personal capacity, and that, in the sale of the goods, they had acted in that character, and not as representatives of their respective clients; that their legal attitude was that of trustees, with respect to the money or property each had taken into his possession; that the complainant was entitled to an aliquot part of each trust, and that the client of the appellants was not a necessary party.

The chancellor also properly decided that these appellants were not interested in the relation between the complainant and the other trustees as to the fund in their hands, and hence could not, by cross-bill, call upon them for an accounting.

The decree of the chancellor is affirmed, with costs.

For affirmance — The Chancellor, Chile-Justice, Van Syckel, Dixon, Garrison, Gummere, Fort, Garretson, Hendrickson, Bqgert, Krueger, Adams, Vredenburgh, Voorhees

For reversal—None.


author: Gummere, J.

text:
    Patrick Flaherty, complainant, v. Amos W. Cramer et al., defendants.
    [Filed March 7th, 1901.]
    V., who held the legal title to certain premises charged with a resulting trust in favor of F., conveyed the same to one IC, in satisfaction of a debt due from her to him, he having no knowledge of the existence of the trust. At the time of the conveyance F. was in possession of the premises. ■—Helé, that F.’s possession was constructive notice to K. of the right under which he was in the occupation of the premises, and that K. took title thereto subject to the trust existing in favor of F.—Helé, further, that the failure of F. to institute proceedings for the enforcement of the trust un-til the expiration of two years after the conveyance to K. was not such laches as barred him from obtaiipng full relief against K., and would not justify a court of equity in refusing to direct a conveyance of the premises by K. to him, except upon condition that he pay to K. the amount of the indebtedness in satisfaction of which the latter received the conveyance from V.
    On appeal of complainant from a decree advised by Vice-Chancellor Pitney. Opinion not filed.

      Mr. James F. Minium, for the appellant.

      Mr. Joseph 8. Parry and Mr. Charles C. Black, for the respondent Joseph W. ICayser.
   The opinion of the court was delivered by

Gummere, J.

The appellant, who’was. the owner of certain lands in the city of Hoboken, filed his bill in this cause to obtain relief against a sheriffs sale thereof, had under a judgment which had apparently been entered against him, and in favor of one Cramer, in the Hoboken district court (but which, in fact, had no legal existence), and also against a subsequent conveyance thereof made by the sheriff’s grantee, a Mrs. Voorhees, to Kayser, the respondent.

The facts and circumstances of the ease are very fully and accurately set out in the opinion of the vice-chancellor, and a restatement of them is not necessary for the determination of this appeal. On those facts the vice-chancellor considered that Flaherty was entitled to the relief sought by him as against the defendants, Cramer and Voorhees, but that he was not entitled to have the conveyance made by Voorhees to the respondent set aside, except upon condition that he pay to the latter the amount of a certain- judgment which had been recovered against Cramer and the respondent by one Meyenberg, upon a bond upon which respondent was a surety, and which he had been compelled to pay; and it was so decreed. From this part of the decree the appeal is taken. The conveyance made by Mrs. Voorhees to Kayser was for the purpose of reimbursing him for the moneys he had been compelled to pay on account of the Meyenberg judgment, she having given him a bond indemnifying him against loss on that account; and the vice-chancellor considered that, in equity, the appellant was bound to refund to him the amount paid by him on the Meyenberg judgment because he delayed filing his bill in this cause until the expiration of nearly two years after the making of the conveyance to the respondent, and, in the meantime/ failed to notify the latter of his claim to be the real owner of the property, thereby, probably, causing the respondent to refrain from prosecuting Mrs. Voorhees upon her bond of indemnity.

It does not seem .to me that the delay of the appellant in the institution of this suit, even if not excused by the facts in evidence (a conclusion which, in my opinion, is not warranted), and his failure to notify the respondent of his claim of title, justify the imposition.of the condition decreed by the court below. At the time of the conveyance by Mrs. Voorhees to the respondent she held the title to the premises as trustee of the appellant, who was then, and has ever since been, in possession thereof; and although no actual notice was given to the respondcnt of the appellant’s rights, yet he was put upon inquiry by the latter’s possession, and was chargeable with constructive notice of the rights upon which that possession was founded. He was neither a purchaser for a valuable consideration, nor a purchaser without notice, and stood in the same position as that occupied by his grantor. This being so, he is not entitled'to hold the appellant’s property as a security for the repayment of the moneys expended by him in discharge of the Meyenberg judgment.

It appears from the evidence in the case that, subsequent to the conveyance to the respondent, and prior to the institution of this suit, there was paid by him in satisfaction of certain taxes and water rents assessed against the property involved in this litigation the sum of $75.96. These payments inured to the benefit of his cestui que trust, the appellant, and it is but equitable that the latter should reimburse him for this expenditure. The appellant is entitled to a decree directing the conveyance of the premises by Ivayser to him, upon being paid the amount expended for taxes and water rents, with interest thereon from the dates of payment.

The-portion of the decree appealed from should be reversed, and a decree should be entered in accordance with the veiws here expressed.

The appellant is entitled to costs.

For reversal■—-Ti-ie Chancellor, Chief-Justice, Van Syckel, Dixon, Garrison, Gummerb, Collins, Fort, Hendrickson, Bogert, Adams, Vrbdenburgi-i, Voori-iees—13.

For affirmance—None.


text:
    Margaret E. Selover, complainant and appellant, v. Francis S. Selover, defendant and respondent.
    [Filed March 8th, 1901.]
    The expenditure by a husband of his own moneys in the improvement of the property of his wife is presumed to be a gift to her, in the absence of proof of a contrary intent.
    On appeal from a decree advised by Vice-Chancellor Emery.

      Messrs. Hawkins & Durand, for the complainant and appellant.

      Mr. David Harvey, Jr., for the defendant and respondent.
   The opinion of the court was delivered by

Gummere, J.

This is a bill filed by a wife against her husband to-recover the possession of premises at Ocean Grove, which had been conveyed to her by her husband, through a third party, and for an accounting for the use of the same; and is, in its nature, an action of ejectment and for mesne profits, brought in the court of chancery because of the disability of the complainant to maintain an action at law against the defendant, because of their marital relationship. The defendant answered and also filed a cross-bill, alleging that, at the time of the transfer of the said premises by him to his' wife, he was about to embark in a business venture, and it was decided between them that the title should be held by the complainant, and that, at her request, and in consideration that she would continue to live with him, and the marital relations then existing between them should continue, he conveyed said premises to her; and that it' was understood and agreed, at the time of said conveyance, that said property should be held by her for him, and'should continue to be and remain his property.

The complainant, by her answer to the defendant’s cross-bill, denies that there was any agreement that the premises were to continue the property of the defendant, and, on the contrary, avers that said property was conveyed to her as a gift, to be her sole and separate property, and that, by said conveyance, she became the absolute owner thereof.

The vice-chancellor, after hearing the proofs, reached the conclusion that the defendant had failed to establish the existence of a resulting trust, or an equitable title, in his favor; that the conveyance to the wife must be considered as a gift to, or a settlement upon, her; and that she was entitled to an accounting from her husband for the rents of the property from the time of her making demand upon him for them. He further considered that the defendant was entitled to an equitable lien upon the premises for certain moneys which, the proofs showed, he had expended in making improvements thereon, after the conveyance to the complainant, and while the parties were occupying them as husband and wife.

A decree was made upon these lines, and both parties have appealed therefrom; the defendant from the whole decree, and the complainant from that portion thereof which establishes a lien upon the premises in favor of the defendant for the moneys expended by him in improvements.

We concur in the conclusion reached by the vice-chancellor that the defendant has failed to establish a resulting trust, or an equitable title, in his favor in the premises,' and that he should account to the complainant for all rents received by him after demand made upon him by her for them. The conveyance to her does not express any trust, and the legal presumption arising from a transaction of this kind, in the absence of proof to the contrary, is that a settlement upon the wife was intended. The proofs in the case confirm rather than overcome the presumption of a settlement. To this extent the decree should be affirmed.

The portion, of the decree appealed from by the complainant, however, does not seem to be justified by the facts in the case. The same reasons which support the' presumption that, by purchasing property and taking title thereto in the name of his wife, a husband intends to make a settlement, apply with equal force to expenditures made by him in the improvement of her separate estate (Black v. Black, 3 Stew. Eq. 215; Lister v. Lister, 8 Stew. Eq. 49; S. C. on appeal, 10 Stew. Eq. 331); .and particularly is this so when the property upon which the expenditures are made has previously been conveyed by the husband to the wife by way of a settlement upon her.

It is true that the presumption that such expenditures áre made by way of a gift to the wife may be rebutted by proof that such was not the intention with which they were made, but we find no such proof in the case before us. The improvements were made by the husband, not at the request of the wife, but of his own volition; and, although frequent conversations took place between them, regarding their character and cost, nothing was said at any time by him which suggested the idea that he expected to be reimbursed by the complainant for his outlay; nor was anything said by her to induce such a belief on his part.

The portion of the decree appealed from by the complainant should be reversed.

For reversal—The Chief-Justice, Yan Syckel, Dixon, Garrison, Gummere, Collins, Fort, Garretson, Hendrickson, Bogert, Krueger, Adams, Yredenburgi-i, Yoorhees—-14.

For affirmance—None.


author: Collins, J.

text:
    In the matter of the petition of Ezra W. Miller, trustee, for leave to use trust moneys to erect building.
    [Argued December 4th, 1900.
    Decided March 28th, 1901.
    Filed May 13th, 1901.]
    1. An order made by the chancellor under- the “Act empowering executors and trustees, holding land and real estate in trust, to improve the same and erect buildings thereon,” approved April 9th, 1897 (P. L. of 1897 p. 190), is appealable.
    2. Where the proof leaves it doubtful that an improvement proposed under said act will be beneficial to the trust it should not receive judicial sanction.
    On appeal from an order advised by Vice-Chancellor Pitney, who delivered no opinion.
    Ezra Miller, late of the township of Ilohokus, in the county of Bergen, died, July 12th, 1885, leaving a last will and testament, published December 26th, 1883, which was duly admitted to probate by the orphans court of the county of Bergen. The sixth clause of this will is as follows:

      “Sixth. I give and bequeath my homestead farm, situate in the said township of Hohokus, which was conveyed to me in several different parcels by the following deeds, viz.: * * * /making about three hundred and fifty-six and thirty-five one-hundredths acres in all, together with the household furniture and farming implements and tools, unto my son, Ezra W. Miller, my friends, William Walter Phelps and Garret Ackerson, Jr., and the survivor of them, their heirs and assigns, in trust that they and the survivor of them will rent and manage the same, and collect the rents, income and profits thereof, and pay the taxes, repairs, insurance and all other expenses incident to the management of said farm and divide the net proceeds thereof from time to time at the discretion of said trustees among my five children, Ezra W. Miller, Amanda Josephine I-Iinman, Harriet Martha Van Kirk, Jordan G. Miller and Franklin P. Miller, and in case of the death of either of my said children, the children of the person so dying to receive their parent’s share. And upon the further trust that my said trustees and the survivor of them, after the death of my last surviving child shall sell and dispose of my said- farm and furniture and farming implements at public or private sale in such portions and at such times as my said trustees in their discretion may think proper, and pay the proceeds thereof .as follows: one-fifth thereof to the lawful heirs of my son Ezra W. Miller, one-fifth thereof to the lawful heirs of my daughter Amanda Josephine Hinman, one-fifth thereof to the heirs of my daughter Harriet Martha Van Kirk, one-fifth thereof to the heirs of my son Jordan 6. Miller, one-fifth thereof to the heirs of my son Franklin P. Miller.”
    Of the trustees named, who were -also executors of the will, Erza W. Miller alone survives. Of the children named all except Harriet Martha Van Kirk survive, and are of full age. Mrs. Van Kirk died April 14th, 1897, leaving her surviving two children, Mabel Van Kirk, now of full age, and John Henry Van Kirk, notv about eighteen years old.
    At the time of the death of the testator there was upon his homestead farm a house of twenty-two rooms, arranged and occupied for a private residence, which had cost him about $60,000, a complete set of farm buildings and a reservoir for a water supply. Upon the death of the testator an attempt was made to lease the premises, but no tenant willing to pay more than $500 per year was found, and therefore, with the consent of the other children, Ezra 'W. Miller occupied the same, paying taxes and fire insurance premiums and keeping the premises in repair. He established there a business of taking summer boarders. On August 29th, 1899, the superstructure of the dwelling-house was destroyed by fire. The trustee having received, or being about to receive, the sum of $20,000 from insurance, presented to the chancellor, in November, 1899, his petition representing that, by reason of the long use and well-established reputation of his boarding-house, the best use for the insurance money would be in erecting a first-class boarding-house or rural inn upon the existing foundation, and praying authority to use the same for that purpose. Upon this petition such proceedings were had that, on September 17th, 1900, the trustee was authorized, by the chancellor’s order, to enter into a contract for the erection of an inn or hotel, according to designated plans and specifications, for a sum not to exceed $27,000, upon condition that a competent tenant, experienced in the hotel business, should be procured to take a lease of the premises for five years from the time of the completion of the building, at an annual rental of $2,500, giving sufficient security for the payment of the rent, with the right to an abatement of one-half of such rent for the first year and one-quarter thereof for the second year of the term. From this order Mabel Yan Kirk, Jordan G. Miller and Franklin P. Miller have appealed.

      Mr. Robert L. Lawrence, for the appellants.

      Mr. Anderson Price and Mr. William II. Corbin, for the respondent.
   The opinion of the court was delivered by

Collins, J.

There is in the mind of some members of this court great doubt of the power of the chancellor, as against the objections of owners sui juris, to make such an order as he has made in this case. We have found no inherent equitable jurisdiction to make it, and, indeed, the respondent urges no support for it other than “An act empowering executors and trustees, holding land and real estate in trust, to improve the same and erect buildings thereon,” approved April 9th, 1897. P. L. of 1897 p. 190. If the legislature has power, after the death of a testator, to supersede the provisions of his will, it is not clear that the statute cited applies to a case like that before us.

But we need not decide doubtful questions, for we are all agreed that, on the merits of the application, the order made was not justified. The main reasons for supporting it are that the testator’s so-called farm was originally wild land, in the midst of attractive mountain scenery, reclaimed with gregt difficulty and expense; that it is not valuable for agriculture, and, unless kept up by constant care, will relapse into a wilderness, and that the foundation referred to, which is very substantial, should in some way be made available to the trust. It is the opinion of the architect who has made the plans for the proposed rural inn that such an inn would be profitable if golf links and other improvements should be made, and that if the inn is built and occupied and the surrounding grounds are kept up, and the farm buildings and reservoir are utilized, the character of the vicinity is such that there will be a greater value in the property when the time fixed by the testator for its sale shall arrive than there otherwise would be. The trustee and one of his boarders and a gentleman living in the neighborhood share this opinion, which may be well founded, but it is plain that the matter must be largely one of experiment. It is conceded that, with the same external attractions, except such as would require further expenditure, a twenty-two roomed house of a most substantial character has not been capable of producing even $500 annual income. To build a cheaper house on the same foundation, even though more commodious and better arranged for the purpose of keeping summer boarders, in the hope of getting a much larger revenue, is to assume a greater risk than we are willing to authorize against the active opposition of most of the persons interested. Two of the four surviving children of the testator have appealed from the chancellor’s order. Another, while not formally appealing, is shown, by the proof, to be strongly opposed to the project. The only one of the heirs of the deceased child who is of age joins in appeal, and she, at least, has a vested remainder, and therefore that standing, additional to the other appellants, who are merely life tenants. The rights of mere life tenants, however, must not be overlooked, in the effort to preserve the corpus of the estate for those unknown persons who may, in the remote future, succeed to it. An investment of $28,000 will afford a considerable income. The possible rental of a, summer hotel, which may not prove successful^ is 'at best a doubtful substitute therefor.

The learned vice-chancellor guarded the order he advised by the condition that a tenant for five years can be procured who will give security for the payment of a rental which, undoubtedly, would be beneficial to the trust, but the very fact that he thought such a condition necessary shows that the venture must, at best, be a doubtful one. The rebate from the first year’s rent leaves the objectors not so well off as with a five per cent, investment, and should the enterprise prove a failure, the security which will be exacted will not be a very satisfactory alternative. At most, a revenue for five years only is secured, and if the rural inn should not prove as attractive as the architect thinks it will be, the prospects of future revenue will, of course, be correspondingly- diminished. The building would require to be kept in repair, with no income available therefor except that which experience has shown to be very meagre.

Where the proof leaves it doubtful that an improvement proposed under the act involved in this case will be beneficial to the trust, it should not receive judicial sanction.

It is urged that the chancellor’s order rests in discretion; but we think it comes within the class of appealable matters. It substantially affects equitable, if not legal, rights, and thus is a proper subject of appeal. Camden and Amboy Railroad Co. v. Stewart, 6 C. E. Gr. 484, 488.

The appellants are entitled to a reversal of the order appealed from and to an order denying the prayer of the trustee’s petition.

For reversal—The Chief-Justice, Dixon, Collins, Fort, Garretson, Hendrickson, Bogert, Adams, Vredenburgi-i, Yoorhees—10.

For affirmance—None.


text:
    The Greenville and Hudson Railway Company, appellant, v. Samuel H. Grey, attorney-general, ex rel. The Morris & Cumings Dredging Company, respondent.
    [Argued June, 1900.
    Decided March 4th, 1901.
    Filed March 4th, 1901.]
    1. Under the General Railroad law (Gen. Stat. p. 2654 Pi- 01), more than one railroad may, as against the state, be constructed and operated upon one surveyed route or location.
    2. Under the same law (Gen. Stat. p. 2660 pi. 88) the survey for a branch of a railroad need not be made and filed with the survey of the main line and a branch railroad may lawfully be constructed, although the termini of the main line are both within the same county.

      3. Under “An act concerning railroad corporations,” approved March 10th, 1893 (Gen. Stat. p. 2716 pi. 338), municipal consent is only required for the construction of such branch railroads in cities or towns as acquire legal authority from that statute, namely, those to a mill, factory or other manufacturing establishment or clay-bed.
    4. Under the supplement, approved March 3d, 1880 (Gen. Stat. p. 2685 pi. 201), to “An act respecting railroads and canals,-' whenever the railroads of any railroad corporations existing by, or organized under, any law of this state approach each other within the distance of one mile, a branch railroad may, by the consent of the two companies, be constructed by either company for the purpose of connecting such railroads, and it will be no objection to the legality of such a branch railroad that it unites with the main line on both sides of the connection.
    On appeal from two orders advised by Vice-Chancellor Emery, the one granting an injunction and the other refusing to dissolve it. The opinions of the vice-chancellor are respectively reported in 1(6 Atl. Rep. 686, 688.

    On January 25th, 1900, the attorney-general, on relation of the Morris & Cumings Dredging Company, owners of land at the foot of Chapel avenue, a public highway in Jersey City, and that company, as complainant, filed a joint information and bill against the Greenville and Hudson Railway Company, a corporation organized in 1895 under the General Railroad law. It was alleged that the defendant, without consent of the municipality, was about to lay railroad tracks across Chapel avenue, at grade, some of which tracks would be outside of its filed route, and. injunction against this was prayed. The defendant answered, denying that a grade crossing had ever been contemplated and averring that its purpose then was to construct two railroad tracks across Chapel avenue, under grade, upon a route filed as its branch No. 1, on January 31st, 1900, which route, at Chapel avenue, was coincident with that of branch No. 2 of the Jersey City Belt Line Railway Company, organized in 1890 under the General Railroad law, and that such construction was to be with the consent of that company—both corporations forming part of the Le-high Valley system for receiving and handling the traffic sent to and from tide-water over the Lehigh Valley railroad. Affidavits in support of this answer and copies of the filed routes of the two branches and of the consent referred to were appended. The injunction 'prayed was denied. Thereupon, by supplemental information and bill, an injunction was sought against the crossing of Chapel avenue, under grade, at the proposed location, on the allegations that municipal consent to the construction of the defendant’s branch No. 1 had not been obtained; that the so-called branch was a mere relocation of part of the defendant’s main line which had not been constructed; that it ran for the most part practically parallel with that part of such main line and only two hundred and twenty-five feet distant therefrom, and was ultra vires, and that the proposed construction would lessen the width of the avenue. The defendant filed only an affidavit showing that the travel on Chapel avenue was véry small. On April 17th, 1900, after hearing a motion for the injunction and a cross-motion to dismiss the information and bill, the vice-chancellor decided that the bill should be dismissed, on the ground that the complainant had no special interest warranting its maintenance, but that the information should be retained, and that an injunction should issue according to its prayer. Orders effectuating this decision were made and filed on May 2d, 1900. After the decision the defendant filed its answer to the information, with supporting affidavits. It denied that branch No. 1 was an attempt to relocate its main line, and averred that such line, as originally located, was in process of construction and was to be completed. It further averred the purpose of branch No. 1 to be to connect with branch No. 2 of the Jersey City Belt Line railway, and the permanent use contemplated for it to be the transportation of cars and freight in the course of delivery to and from the city of Bayonne, and claimed it to be a lawful branch designed to reach points not reached by its main line and to make a connection of such main line with other railroads. It further averred that unless a contract with Jersey City, then in litigation on cerliorari prosecuted by the Morris & Cumings Dredging Company, should be finally held valid, it would not change Chapel avenue in grade or width or interrupt public travel thereon, except during actual construction of an under-grade crossing by its branch No. 1, but claimed that for such an undergrade crossing municipal consent was not requisite. In the meantime there had been railroad construction under grade across Chapel avenue on the line of the coincident routes of the two branches above mentioned, and proceedings in contempt had been instituted, which had been met by the defendant with affidavits that such construction was by the Jersey City Belt Line Railway Company, and a new information had been filed by the attorney-general, on relation of the Morris & Cumings Dredging Compan}1', for an injunction against both railway companies to restrain the construction then in progress. The grounds of relief were substantially those-urged against the Greenville and Hudson Railway Company, and it was claimed, as a matter of fact, that a railroad on the filed route of branch No. 2 of the Jersey City Belt Line Railway Company would not be a branch railroad within the purview of the statute, but would be a mere incident to the main line. To this information the Greenville and Hudson Railway Company filed its answer, denying any part in the construction across Chapel avenue, and the Jersey City Belt Line Railway Company filed its answer, admitting construction on the route of its branch No. 2, which it claimed to be a lawful branch, intended to connect its main line with the National Docks railway and the Bergen Neck railway, and asserting that the undergrade crossing of Chapel avenue, with two tracks, had been completed, and that public travel had been restored by means of a wooden bridge, the full width of the avenue, and that nothing more was contemplated, except the substitution, for the bridge, of a steel structure. On May 19th, 1900, the two suits were, by order, consolidated, and a hearing was had ■on three motions—first, by the attorney-general for an attachment for contempt against the Greenville and Hudson Railway Company for the railroad construction across Chapel avenue; second, by that company for dissolution of the injunction resting upon it, and third, by the attorney-general for an injunction against both railway companies upon the information last filed. On May 29th, 1900, an order was made that the motion for an attachment be continued until final hearing; that the motion to dissolve the injunction against the Greenville and Hudson Railway Company be denied, and that the injunction prayed against the Jersey City Belt Line Railway Company be denied. The existing injunction was retained solely on the ground that there could be no lawful construction of two railroads on the same-located route, and it was held that, as the Jersey City Belt Line Railway Company had, with the assent of the Greenville and Hudson Railway Company, built a railroad on its own location, its previous consent to the last-named company so doing was no-longer operative. The denial of the injunction praj'ed against the Jersey City Belt Line Railway Company was upon grounds-upholding that company’s claims in all respects except as to the question raised that its branch No. 2 was not a branch railroad within the statute, and that question was reserved for final, hearing.
    From the order of May 2d, 1900, granting an injunction, and from so much of the order of May 29th, 1900, as denies its dissolution, the Greenville and Hudson Railway Company has appealed.

      Mr. Charles L. Corbin, for the appellant.

      Mr. Lindley M. Qhrrison, for the respondent.
   The opinion of the court was delivered by

Collins, J.

The injunction against the appellant was properly awarded., The information on which it was based, and the annexed proofs,, jnesented a prima facie case that the appellant’s branch No. 1 was a mere relocation of a part of its main line. To this nothing was interposed but an affidavit minimizing the travel on the highway to be crossed. A lack of power to invade the public right-could not be disregarded merely because not much harm would be-done. The case, as made, was a clear one, and warranted a preliminary injunction. The opinion of the learned vice-chancellor,, as reported in 15 Dick. Ch. Rep. 154, is entirely satisfactory, as applied to the situation apparently existing. But the answer,, when filed, completely changed that situation or, rather, showed that it had been misconceived. On the motion to dissolve the-injunction it appeared that branch No. 1 was designed for a connection with other railroads, and the reason relied on for awarding the injunction was very properly dismissed from judicial consideration when its dissolution was refused. Under exactly like conditions the question whether branch No. 2 of the Jersey City Belt line Railway Company had legal authority was, left until final hearing, as appears by the opinion reported in 15 Dick. Ch. Rep. 154. That feature of this case will be considered later. I pass now to the ground on which alone the injunction was retained, namely, that two railroads cannot lawfully be constructed, under the franchise of the General Railroad law, upon the same surveyed route or location. That statute provides (Gen. Stat. p. 2654 pl. 61)

■“that a railroad may be located or constructed under this act, on the surveyed route or location of any other railroad, with the consent of such corporation, and not otherwise.”

The construction enjoined in this cause was to be upon the route of branch No. 2 of the Jersey City Belt Line Railway Company, and for it the appellant had the statutory consent. But the learned vice-chancellor held that this vested right had been lost by the appellant’s tacit consent to subsequent railroad construction on that route by the company that had granted it. Rights, and consequent obligations, cannot be so easily lost; but I do not admit the premise of illegality of a twofold occupation. Probably against a landowner the additional burden, perhaps ■even of an exclusive occupation by the grantee of the right, could not be imposed; but as against the state no reason for a limitation of the plain words of the statute is perceived. It seems to me that the use of the right of way, of one hundred feet in width, given by the statute is entirely at the disposal of the company .acquiring it, so that it be devoted to railroad uses under franchises derived from that source. It may be better for the state that two railroads shall run on that right of way, or even over the same tracks, than that more land shall be subjected to the broad grant of eminent domain conferred by the act. But the question is not one of expediency; it is a simple one of statutory interpretation, in which there is no room for doubt. Branch No. 1 of the •appellant has therefore a legal right to its surveyed route and location. Is there any reason why it should not be constructed ? Three reasons suggested by the respondent were, in the court below, held to be unfounded. Two were dealt with in the opinion first delivered and the other in that in the consolidated suit. All involve interpretation of statutes, and we have nothing to add to the convincing expression of the views of the vice-chancellor. We approve his declarations that, under the General Railroad law (Gen. Stat. p. 2660 pl. 83), the survey for the branch of a railroad need not be filed with the survey of the main line, and that a branch railroad may lawfully be constructed although the termini of the main line are both within the same county, and that, under “An act concerning railroad corporations,” approved March 10th, 1893 (Gen. Stat. p. 2716 pl. 338), municipal consent is only requisite for the construction of such railroads in cities or towns as require legal authority from that statute, namely, those to a mill, factory or other manufacturing establishment or clay-bed. The only other reason urged for holding the injunction is that which the vice-chancellor, as to branch No. 2 of the Jersey City Belt Line Railway Company, reserved until final hearing. As to the appellant it may be disposed of now, for the right seems clear and rests upon statute. The respondent’s claim is that appellant’s branch No. 1 is not really a branch railroad within the purview of the General Railroad law. Whether so or not, it is within the express authority of another statute. The answer avers, and uncontradicted affidavits prove, that the purpose of this branch is a connection with branch No. 2 of the Jersey City Belt Line railway. A supplement approved March 3d, 1880 (Gen. Stat. p. 2685 pl. 201), to “An act respecting railroads and canals” enacts as follows:

“Sec. 1. That whenever the railroads of any railroad corporation existing by or organized under any law of this state shall intersect or cross each other, or shall approach each other within a distance of one mile, and such corporation shall agree to connect their said railroads with each other, it shall be lawful for either corporation to determine upon constructing a branch railroad or railroads so as to effect such connection, and having first filed a map and survey of such branch railroad or railroads in the office of the secretary of state, to acquire, by purchase or by condemnation, in the manner prescribed by its charter, such land as shall be necessary for sucli branch connecting railroads, and for that purpose all such powers as shall be contained in its charter or conferred otherwise by law, shall be fully possessed by and belong to each of such corporations ; provided, that all proceedings for such condemnation shall be according to said charters, with all rights of appeal and review thereby given; provided further, that in no case shall any connection be made without mutual consent in writing under seal of such corporations.”

The case in hand falls directly within this statute. It is no objection to the legality of the proposed branch railroad that it will leave the main line on one side of the connection and return to it on the other. To compel traffic to be inconveniently carried past a natural point of departure on one side or the other and then be sent backward to the connecting point, with the alternative of laying out two branches, one from each direction, would be an unreasonable construction of the act. The authority is to construct “a branch railroad or railroads so as to effect such connection,” and a connecting loop is within the authority. The casé does not affirmatively show a sealed consent, in writing, of the two corporations, but that is a matter concerning them only, and will be timely if executed before the actual connection is made. That the two companies whose railroads are to be connected are parts of the Lehigh Valley system is immaterial. They are distinct corporations, and identity of interests affords no ground to deny them their legal rights as such. National Docks Railway Co. v. Central Railroad Co. of New Jersey, 5 Stew. Eq. 755.

The order of May 2d, 1900, awarding an injunction against the appellant will be affirmed, but the order of May 29th, 1900, denying a motion to dissolve that injunction will be reversed, and the cause will be remitted to the court of chancery, with directions to order its dissolution. Inasmuch as there will be but one bill of costs in this court and the appellant prevails on the merits of the controversy, it should have costs.

For reversal—The Chief-Justice, Dixon, Gummere, Collins, Fort, Garretson, Hendrickson, Bogert, Adams, Vre-DENBURGH, VOORHEES-11.

For affirmance—None.