author: Leaming, V. C.

text:
    Cora Hawthorne, complainant, v. Edward Odenson and Christine Odenson, defendants.
    [Submitted April 9th, 1923.
    Decided April 10th, 1923.]
    1. Where a mortgage was given to secure the purchase-money for a conveyance with full covenants of warranty of title and against encumbrances, the mortgagor is entitled, in a suit to foreclose the mortgage, to a deduction for prior mortgages, taxes or judgments which constitute encumbrances in violation of the covenant.
    2. Where a conveyance contained a warranty of title, and there has been an eviction by title paramount, the court will compel the mortgagee, in a suit to foreclose a purchase-money mortgage, to submit to an ascertainment of the damage arising from the existing breach of covenant, and will reduce to that extent the amount of the claim of the mortgagee, or, if an action is pending to try the title of the adverse claimant, the foreclosure suit will he arrested pending the result of such action.
    3. In the absence of actual eviction or a pending action to try an adverse title, the foreclosure of a purchase-money mortgage will not be arrested by a defense of want of title in the vendor, in which case the covenant of title must be relied upon by the purchaser for recovery of damages in a court of law.
    4. Where the purchase-money mortgagor has received less land than he bargained for, the mortgagee’s claim will be reduced an equitable amount, even though the error was the result of mistake unaccompanied by fraud.
    5. As a general rule, the purchaser’s measure of protection in matters of title, in the absence of fraud, is in the covenants which he exacts from his vendor, which are not to be deemed as broken until eviction,, and where he purchases without covenants of title the doctrine of cwoeat emptor must apply, and neither failure of or defects in title give ground for relief.
    6. Though a fraudulent intent must be shown in an action at law for relief to recover for misrepresentations by a vendor as to the physical condition of the property, a court of equity may grant relief though the false representations in that respect were innocently made.
    7. Where a conveyance of land is made containing full covenants and warranty of title, a misrepresentation by the vendor that the title is perfect will not ordinarily afford ground for equitable relief, if the vendor made the representations in good faith and believed they were true, and in such circumstances the purchaser will be deemed to have relied upon the covenants.

      8. Where a purchaser accepts a deed of conveyance containing a warranty of title expressly limited to claims under the vendor, the covenant, in effect, declares that the vendor does not warrant against a title paramount, and nothing short of a fraudulent intent of the vendor in representing his title to be good, or concealment where the duty of disclosure exists, can authorize relief for his misrepresentations as to the title.
    9. Where the vendor’s agent knew that the purchaser was an ignorant man and relied upon the vendor to furnish a proper contract and deed, it was unconscionable conduct for the. agent to submit to the purchaser a second contract more definitely describing the premises from which was omitted the provision of the first contract requiring covenants of full warranty, without calling attention to the omission, and to tender a deed containing only special warranty, knowing at the time that the special warranty was breached by a previous -conveyance by the vendor, and that there was an outstanding paramount title against which the warranty gave the purchaser no protection, and, therefore, the purchaser is entitled to recover the purchase-money.
    10. Though ordinarily neither a vendor nor a purchaser owes to the other any duty of disclosure and the mere circumstance of unequal business experience or mental powers does not defeat contracts made in the absence of natural or conventional trust relationship, there may arise from the circumstances -of a transaction and the ignorance of one of the parties, and his trustful dependence in the other, a relationship of confidence which equity regards as essentially fiduciary and a violation of the obligations of which entitles a purchaser to. recover the purchase-money.
    11. Where a purchaser was entitled to rescind his purchase because of fraud of the vendor, he is entitled to a cancellation of the purchase-money mortgage given by him, and a return of the payments already made, and also: to compensation for expenditures by him. against which he will be charged for the reasonable value of the use of the premises during the period of his possession.
    12. Though the erection of valuable buildings on the property by the purchaser might defeat his right to. rescind because of his inability to restore former conditions, the making of repairs of a minor nature, for which he can -be recompensed, does not have that effect.
    On final hearing on hill to foreclose.

      Mr. Orville P. DeWitt, for the complainant.

      Mr. Joseph A. Oorio, for whom appeared Mr. John 0. Reed, for the defendants.
   Leaming, V. C.

The bill seeks foreclosure of a purchase-money mortgage. The deed of conveyance from complainant to defendant contains no covenant except that which is commonly known as a covenant of special warranty, that is, a covenant to defend against persons claiming under the vendor. Defendant claims a failure of title as to an essential part of the premises by a title paramount which does not fall within the covenants of the deed of conveyance. Also a failure of title of the entire premises by act of complainant falling within the covenant. Also certain fraudulent conduct on the part of complainant. Defendant has not been dispossessed and no suit is pending for that purpose.

The defenses available to a mortgagor, in the absence of fraud, in resisting the foreclosure of a purchase-money mortgage which has been given to his vendor for all or a portion of the consideration of a deed of conveyance to him for the same premises, when such deed contains full covenants of warranty of title or against' encumbrances, have been frequently considered by the courts of this state. The adjudications will be found collected by the late Vice-Chancellor Stevens in Kuhnen v. Parker, 56 N. J. Eq. 286. It will be observed by the authorities there cited that it has been determined in cases of that class that where the deed of conveyance contains a covenant against encumbrances the mortgagor is entitled to a deduction for prior mortgages (Stiger v. Bacon, 29 N. J. Eq. 442, 445), for prior taxes (Union Nat. Bank v. Pinner, 25 N. J. Eq. 495), for prior assessments (White v. Stretch, 22 N. J. Eq. 76), and for prior judgments (Dayton v. Dusenberg, 25 N. J. Eq. 110). It has also been determined that where the deed of conveyance contains covenants of warranty of title, and there has been an eviction by title paramount, the court will compel the mortgagee who is seeking foreclosure to submit to an ascertainment of the damage arising from the existing breach of covenant, and will reduce to that extent the amount of the claim of the mortgagee (Coster v. Monroe Manufacturing Co., 2 N. J. Eq. 467); or if an action is in fact pending to try the title of an adverse claimant the foreclosure will be arrested pending such action. Jaques v. Esler, 4 N. J. Eq. 461; Price v. Lawton, 27 N. J. Eq. 325; affirmed, 28 N. J. Eq. 581. But in the absence of actual eviction or a pending action to try an adverse title the foreclosure will not be arrested by a defense of want of title in the vendor. In such cases the covenants of title must be relied upon by the vendee for recovery of damages in a court of law. Price v. Lawton, supra. It has also been determined that where the mortgagor has received by his deed of conveyance less land than he bargained for the mortgagee’s claim will be reduced an equitable amount, even though the error was the result of mistake and unaccompanied by fraud on the part of the mortgagee. Couse v. Boyles, 4 N. J. Eq. 212; McMichael v. Webster, 57 N. J. Eq. 295. This is sometimes referred to as the fight of partial rescission.

It will be observed that all of these restricted defenses available to a mortgagor in a foreclosure suit of a purchase-money mortgage (save that relating to a deficiency of acreage of land) have reference to and are dependent upon the covenants of the mortgagee in his deed of conveyance to the mortgagor; a breach of covenants of title being considered as sufficiently established when there has been an eviction through a title paramount, and a breach of a covenant against encumbrances being considered as sufficiently established by the existence of a prior encumbrance. The defense of deficiency in acreage, when the error in the deed is not the result of fraud, appears to be entertained as falling within the equitable jurisdiction to relieve from mutual mistakes.

The general rule appears to be that in the absence of fraud, when a sale of real estate has been consummated by the execution and delivery of a deed of conveyance, the purchaser’s measure of protection in matters of title to the land is to be found in the covenants which he exacts from his vendor, and such covenants are not to be deemed as broken until eviction. In buying without covenants of title, the doctrine of caveat emptor must apply, and neither failure of, nor defects in title, in the absence of fraud, affords ground for relief; and this rule applies equally whether the money has been paid-or is secured to be paid. Phillips v. City of Hudson, 31 N. J. Law 143, 150; Slocum v. Seymour, 36 N. J. Law 138, 141; see also Barkhomsted v. Case, 5 Conn. 528; McDonough v. Martin, 88 Ga. 675, and authorities there collected. In the latter case it is also held that even in a jurisdiction in which words of grant imply covenants of title, no such covenants can be implied where an express but qualified covenant of title exists, and also that a statutory provision that words of grant shall import certain covenants is overcome by an express but qualified covenant. See, also, Baldwin v. Johnson, 1 N. J. Eq. 441, 454; Havens v. Bliss, 26 N. J. Eq. 363, 372.

But in addition to the defense of failure of title, defendant has filed a counter-claim in which he alleges fraud on the part of complainant, and seeks a decree rescinding the transactions between the parties by having the deed which was made to him by complainant and the mortgage which was' made by him to complainant canceled, and also prays for a restoration to him of all moneys paid by him to complainant and also seeks recovery of certain moneys which have been expended by him for improvements on the property in question.

The fraud asserted by defendant is the claim that when he agreed to purchase the property the agent of complainant represented to him that the title to the land was good and that no'searches were necessary; that defendant relied upon these representations and thereafter executed all papers presented to him by complainant without knowing their contents and wholly depending upon complainant’s promise to convey a good title.

A broad and well-defined distinction exists between the relief that can be awarded to a vendee of real estate who has been injured by reason of misrepresentations of his vendor touching material matters relating to the physical condition of the property and the relief that can be awarded by reason of statements made by a vendor, declaring his title to be good. Bor the former class of misrepresentations in an action at law for deceit, a fraudulent intent must be shown; in a court of equity, relief may be granted although the false representations were innocently made. Cowley v. Smith, 46 N. J. Law 380; Eibel v. Von Fell, 63 N. J. Law 3; affirmed, 64 N. J. Law 364; Eibel v. Van Fell, 55 N. J. Eq. 670; DuBois v. Nugent, 69 N. J. Eq. 145. But where a conveyance of land is made containing full covenants and warranty of title, a representation by the vendor that the title is perfect will not ordinarily afford ground for equitable relief if the vendor made the representations in good faith and believed that the representations so made were true, since in such circumstances the parties will appropriately be deemed to have relied upon the covenants of title. The difficulty in assuming that the vendee relied upon the statements touching the title, when at the consummation of the transaction he exacted a deed with covenants of title for his protection, is pointed out in Gihon v. Morris, 90 N. J. Eq. 230. See, also, to the same effect, Andrus v. St. Louis Smelting Co., 130 U. S. 643, where it is stated that in such cases the prior representations of the vendor, touching his title, are merged in the warranty and covenants which determine the extent of his liability. Where the deed, which is accepted by a vendee, is wholly without covenants, it would seem to be in no way inconsistent with the inferences incident to the- transaction to accept the claim of the vendee that false representations touching the title were made and relied upon by the vendee.

But when a vendee accepts a deed of conveyance containing a warranty of title which is expressly limited to claim under the vendor, and thus specifically defines the extent of the vendor’s liability, the negative element of the covenant, which in effect declares that the vendor will not warrant against a title paramount, so forcefully appears as the final contractual measure of the vendor’s obligations and as in effect merging declarations of the vendor touching his title into the restricted covenant (as suggested in Gihon v. Morris, and Andrus v. St. Louis Smelting Co., supra), that nothing short of fraudulent intent on the part of the vendor in representing his title to be good, or concealment where the duty of disclosure exists can appropriately be made the foundation.of relief. This appears to be the view generally, though not uniformly, adopted. In Edwards v. McLeary, G. Cooper 308 (36 Eng. Reprint 625), cited by defendant, the relief is expressly based upon the fact that the vendor knew that a portion of the land, which portion was essential to the enjoyment of the remaining part, was within a common, and concealed that fact from the vendee, and that that fact could not be discovered by the abstract. See, also, the same case on review. 2 Swans. 287 (36 Eng. Reprint 625). Gibson v. D’Este, 2 Y. & C. C. C. 542 (63 Eng. Reprint 243), also cited by defendant, was reversed in 1 H. L. C. 605 (9 Eng. Reprint 897), sub nom. Wilde v. Gibson. The reversal was expressly upon the ground that the misrepresentations touching the title were innocently made.

The evidence in this case discloses that under date of February 22d, 1919, a written contract of sale was signed by complainant and defendant, whereby' complainant agreed to convey to defendant the property here in dispute for $2,200, payable as follows:

“Amount paid on execution of contract, $150; additional cash on delivery of contract, $350; balance payable $150 yearly with interest at six per cent, per annum. Deed to be delivered after half has been paid.’
“And the said party of the first part, on receiving such payments at the time and in the manner above mentioned, shall at her own proper cost and expenses execute, acknowledge and deliver to said party of the second part, or to his heirs and assigns, a proper deed containing a general warranty and the usual full covenants for the conveying and assuring to them the fee-simple of the said premises free from dll encumbrance.
“Contract shall be delivered on the 8th day of March, 1919, at one o’clock p. m., at the office of Harry L. Murphy, in the city of Hammonton, N. J.”

This agreement was signed by both complainant and defendant and the $150 first pajonent was made. The contract was not acknowledged. Why it called for the execution of another contract before the deed was to be delivered does not appear. The contract is complete in its terms except that it describes the land by a general and abbreviated description; the need of a more formal contract is not apparent, unless it should be for a more complete description of the land and for the signature of complainant’s husband. But a second contract is clearly called for. Defendant has testified that when he signed this contract he asked the agent who negotiated the sale about procuring searches, and that the agent replied that no searches were necessary as the title was all right. Defendant further states that he relied upon that representation touching the title and ordered no searches for that reason. The agent has testified that he has no specific recollection in the matter; but that he always advises searches. On or about the 3d day of March, 1919, a typewritten contract, drawn in duplicate and executed and acknowledged by complainant and her husband under date of March 3d, 1919, was sent by mail by complainant’s attorney (not the agent who had negotiated the sale and prepared the contract above referred to) to defendant for him to sign. Defendant signed them and by mail returned one copy to complainant. This appears to have been five days prior to the date called for in the original contract. This second agreement is a carefully prepared and formal contract of sale in which complainant and her husband agree to convey to defendant the land here in question, which land is fully. described—the description in the former agreement having been much less specific—■ and in which defendant agrees to pay $2,200 as follows:

“Hive hundred dollars at the signing and delivery of this agreement, the receipt of which is hereby acknowledged, and the remainder in annual payments of one hundred -and fifty dollars each, together with interest at six per cent, per annum, payable semi-annually, and said second party shall keep the buildings on said place insured in some reliable fire insurance company in an amount not. less than eight hundred dollars, in the name of the said first parties hereto.”

The agreement then proceeds:

“It is mutually agreed by and between the parties hereto that when the party of the second part shall have paid eleven hundred dollars to the party of the first part on account of this agreement, the party of the first part will well and sufficiently convey by deed said premises to said party .of the second part and accept the bond and mortgage thereon of said second party for eleven hundred dollars, payable not less than one hundred and fifty dollars annually, together with interest at the rate of six per cent, per annum, payable semi-annually, together with all taxes and legal assessments that may hereafter be levied against said premises.”

Then follows:

“It is further mutually covenanted and agreed by and between the parties hereto, that in case default shall 'be made in the payments of principal or interest at the time, or any of the times above mentioned for the payments thereof and for sixty days thereafter, this agreement, and all preceding provisions thereof, shall be null and void and no longer binding, at the option, of said party of the first part, their executors, administrators or assigns, without further notice whatsoever, and all payments which shall then have been made thereon, or in pursuance hereof, absolutely and forever forfeited to the said party of the first part, and shall be considered as rent paid for use and occupation of said premises, and the party of the second part shall be liable to be dispossessed of said premises as for non-payment of rent and termination of said tenancy at the election of the party of the first part, their executors, administrators or assigns, and may be enforced and the consideration money hereinabove specified, collected 'by proceedings in law or equity against said party of the second part, his heirs, executors, administrators or assigns.”

It will be observed that while this contract specified the terms of payment essentially the same as the other contract, it contains a number of stipulations not contained in the former contract and wholly omits the former stipulations touching covenants of title and against encumbrances.

About August 21th, 1920, complainant forwarded to defendant, by mail, a deed of conveyance for the property, duly executed and acknowledged on that date, accompanied by a purchase-money mortgage bearing the same date, and an accompanying bond to be executed by defendant and returned to complainant The deed was retained by defendant and the bond and mortgage were executed by him and returned as directed. At that time, defendant had paid hut $800 on account of the purchase price. By each of the two contracts he was not entitled to a deed until he had paid $1,100. Why the deed was earlier delivered does not appear. The mortgage secures the payment of the $1,400 balance then due complainant, and is made payable one year from its date. Defendant claims that he has since reduced the mortgage to $1,250. It is that mortgage which complainant now seeks to foreclose.

Defendant also has testified that he signed the second contract without knowing what it provided and accepted the deed and signed the bond and mortgage without knowing their effect, and signed the bond and mortgage believing that the mortgage was payable in installments in accordance with its contract. It was not until this foreclosure was started, he says, that he learned that the mortgage was not payable in installments and learned that his deed gave him no protection. He then ordered searches and found that complainant was without even paper title to a large part of the land, and had also made to another person a deed of conveyance, for all the land, which deed had been made and recorded before complainant’s sale to defendant. Defendant is an illiterate man and dull of comprehension, and claims to have executed the second contract and accepted the deed and to have executed the bond and mortgage wholly in reliance upon and because of his faith in complainant’s integrity, and believing the title to be good because told so by complainant’s agent. Complainant makes no explanation as to why the terms of the original contract were changed or as to why the condition of the mortgage did not conform to • the condition set forth in both contracts; she seems to have left the preparation and procurement of the papers to others. The land conveyed to defendant comprises two adjacent tracts, one containing about two and one-half acres, the other about seven acres; the two tracts are essentially one tract comprising a house and farm land.

The evidence discloses that the only title complainant ever had to the tract of nine acres is under a deed from Galen Parkhurst, and that Parkhurst’s only title was under a tax deed from Mullica Township, dated October 27th, 1893, for a term of twenty years from October 12th, 1891. That title accordingly ended by the terms of that conveyance October 12th, 1911.

The evidence also discloses that by an instrument endorsed “Confirmation of Agreement,” dated March 16th, 1918, and recorded on that date, complainant and her husband conveyed by deed of special warranty both tracts of land here in question to Louis Nickman and Philip Bessor.

Defendant has been and is now in possession, and so far as is known no one is claiming title adverse to defendant. The reversioner in the tax title and the grantees in the deed last referred to appear to be unknown. It is accordingly clear, under the authorities above cited, that no relief can be afforded defendant unless that relief be based upon fraud.

The material facts are reasonably obvious. Notwithstanding defendant’s testimony it may appropriately be doubted that the real estate agent told defendant that the title was good and that he needed no searches. With defendant’s want of education and business experience, it is doubtful whether at that time he knew of such a thing as a search, or the purpose of searches. He was buying land and expected to get what he bought and obviously relied upon those he dealt with to see that he got what he bought. Eurther than that, I find it difficult to go. The first agreement was prepared by filling in the blanks of a printed" agreement of sale of land, and a printed clause in that blank called for “a proper deed containing a general warranty and the usual full covenants for the conveying-and assuring of them [him] the fee simple of the said premises, free from all encumbrances.” I doubt whether defendant saw or at the time knew of that stipulation, or would have known its meaning had it been read to him; but the real estate agent necessarily knew of it and of its meaning. It accordingly became a part of that written contract. If, indeed, the statements attributed to the real estate agent touching the title were in fact made, such statements, accompanying a contract calling for title warranty, afford feeble grounds for relief. Eor some unexplained reason the agreement called for a new agreement to be executed by a certain date, on which date an additional payment was to be made. But nothing in the original contract or in the testimony in any way suggests that the second instrument was to be the result of further negotiations or to omit or change any of the contractual stipulations of the first. The primary object of the new contract appears to have been to amplify the description of the land. In the absence of further negotiations the new agreement could appropriately amplify, as it did, the description of the land, and could be signed by the husband of complainant and acknowledged, as it was; but without some new consideration or some further negotiations between the parties it seems impossible to find any adequate justification for the preparation of a second contract by complainant or her attorney in which the material contractual stipulations of the original contract were radically changed and the presentation of such second contract to defendant for his signature without at least directing his attention to such changes. This is peculiarly so by reason of defendant’s intense ignorance and inexperience in such matters and his obvious trustful dependence on complainant to prepare the necessary papers and deal fairly with him; and to follow up this second contract with a deed of 'conveyance containing only a special warranty of title, with no suggestions that the conveyance in any way differed from the one called for by the original written bargain between the parties seems equally unjustifiable under the circumstances already referred to. If any fraud is to be found in this case which may afford relief to defendant, it is to be found in effecting in the manner stated a conveyance without either a good title or the covenants called for by the original contract. This was unquestionably accomplished through defendant’s intense ignorance and trustful, attitude. Since the original contract called for a conveyance with full warranty of title, the rule of caveat emptor no longer obtained. Defendant relied upon complainant’s attorneys (who prepared the second agreement and the deed and mortgage) to look after his interests and signed all papers prepared for his signature in trustful confidence of their sufficiency; in his ignorance the papers he so signed were to him meaningless. He bought the property and made substantial payments in good faith and got nothing but a covenant of special warranty, which had already been broken when it was made, and which complainant necessarily knew was broken since she had made the deed which broke it. The part of the tract covered by the tax deed is essential to the remainder of the tract; as to that part of the tract defendant got nothing by his purchase, since the covenant does not extend to it. In this foisting upon this ignorant defendant a worthless title with covenants inadequate for his protection when his original duly executed contract was expressly and clearly for a conveyance with full covenants complainant procured her advantage by dealing with defendant in an unfair and unconscionable manner which is in equity classed as fraudulent.

It is not to be overlooked that in ordinary or normal circumstances neither a vendor nor a vendee owes to the other any duty of disclosure; nor is the mere circumstance of unequal business experience or mental powers of the parties to be made the basis of unseating contracts or conveyance actually made in the absence of natural or conventional trust relationship between the parties and its abuse. But in the absence of any of the ordinary fiduciary relations as well as in transactions which are not in their essential nature fiduciary there may arise from the circumstances of a transaction and from the nature of the dealings of the parties or their position towards each other a trust and confidence in the particular case which equity regards as essentially fiduciary. This class of trust relations is defined by Prof. Pomeroy in 2 Eq. Jur. § 902, and is expressly approved by our court of errors and appeals in Keen v. James, 39 N. J. Eq. 527, 541. When these conditions arise the ignorance of one of the parties and his trustful dependence upon the other becomes of the utmost importance. Vice-Chancellor Green, in Mott v. Mott, 49 N. J. Eq. 192, 198, approves and quotes from Billage v. Southee, 9 Hare 534, as follows: “The jurisdiction is-founded on the principle of correcting abuses of confidence, and I shall have no hesitation in saying it ought to be applied, whatsoever may be the nature of the confidence reposed or the relations of the parties between whom it has subsisted. I take the principle to be one of universal application, and the cases in which the jurisdiction has been exercised, those of trustee and cestui que trust, guardian and ward, attorney and client, surgeon and patient, to be merely incidents of the application of the principle.” That learned vice-chancellor further approves and quotes from Lord Eldon in Gibson v. Jeyes, 6 Ves. 266, 278, as follows: “It is that great rule of the court that he who bargains in a matter of advantage with a person placing confidence in him, is bound to show that a reasonable use has been made of that confidence—a rule applying to trustees, attorneys, or any one else.”

In this case I think the evidence fully justifies the conclusion—whether or not it is believed that at the time the original contract was signed by defendant, and the first installment was paid, it was represented to him as he states, that the title was good and that he need not take out searches, and that he relied upon such statements—that defendant’s acceptance of the worthless title and the deed with restricted covenants and his execution of the purchase-money mortgage and its accompanying bond was procured by complainant or her attorney by unfair and unjustifiable means of a nature to be properly classed in a court of equity as fraudulent. In such circumstances such equitable relief as is found to be just should be afforded by a court of equity even though there has been no eviction. O’Brien v. Hulfish, 22 N. J. Eq. 471.

The delay of defendant in seeking a decree of rescission is adequately accounted for. The failure of title was not known bjr defendant until the foreclosure bill was filed when searches were ordered by him.

The relief to which defendant is entitled is a decree which shall place the parties where they were-. This includes the cancellation of the deed of conveyance and bond and mortgage and the repayment to defendant of the moneys which he has paid, with interest, and also an allowance for such expenditures as defendant has made. Against this defendant will be charged for the reasonable value of the use and occupation of the premises during the period of his possession. See as to practice and the terms of the decree, Gibson v. D’Este, 2 Y. & C. C. C. 542 (at p. 581); 63 Eng. Reprint 260; Hart v. Swain, L. R., 7 Ch. Div. 42, 47.

The remedy of rescission involves a return to former conditions. The erection of valuable buildings on the property by the purchaser might defeat that remedy by the consequent inability to restore former conditions. O’Brien v. Hulfish, supra. But the repairs which this defendant has made are of a minor nature and have created no substantial change in the property; for these defendant should be recompensed. At the hearing testimony touching the cost of these repairs was given by defendant, and some doubts touching the cost were suggested by complainant. Fo testimony was given touching the value of the use and possession.

A reference will be made to a master to hear testimony and state an account between the parties. Let the master state his account on the basis above defined and wholly upon the testimony to be taken before him.


source: Caselaw Access Project

author: Lewis, V. C.

license: Public Domain

text:
    Howard L. Ocumpaugh, complainant, v. Linde & Griffith Company et al., defendants.
    [Decided March 21st, 1923.]
    Under the United States Bankruptcy act a lien filed under the Municipal Mechanics’ Lien, law against money due a subcontractor subsequent to an adjudication that such subcontractor is bankrupt, although prior to the appointment of a trustee in bankruptcy, does not attach to the fund, but the fund is part of the assets of the bankrupt estate, and the claimant is obliged to file hifi claim in the bankruptcy proceedings.

      On bill, &e.

      Messrs. Kelsey & Ludwig, for the complainant.

      Messrs. Kish £ Fish, for Arthur E. Wells, trustee.
   Lewis, V. C.

This is a motion by the trustee in bankruptcy to dismiss the bill of complaint. It is based on the fact that the adjudica* tion in bankruptcy, having occurred on December 6th, 1921, rendered ineffectual the filing of the lien by the complainant on December 17th, 1921, and that the moneys due from Linde & Griffith Compaq, the main contractors, to Ajax Electric Company, the first subcontractor, the bankrupt, are assets of the bankrupt estate and that the complainant cannot be paid in full under his lien claim but must file his claim against the bankrupt in the bankruptcy proceedings. The suit of the complainant is under the Municipal Mechanics’ Lien law 1918 (at p. 1041). It is instituted to foreclose a lien filed by him under the act.

A contract was made by the counties of Essex and Hudson with Linde & Griffith Company to construct safety roadway and sidewalk gates on the Lincoln highway. The contract provided that the work was to be completed October 10th, 1921. The work was accepted by the counties on October 27th, 1921. At this time, thirty thousand four hundred dollars ($30,400) of the contract price had been paid, leaving a balance of seven thousand six hundred dollars ($7,600) due Linde & Griffith Company. The Linde & Griffith Company subcontracted the electrical work in connection with the operation of said gates to Ajax Electric Company, the bankrupt, agreeing to pay the Ajax Electric Company upon the completion and acceptance of the work. The Ajax Electric Company subcontracted the same work to the complainant and the complainant did the work and furnished all the materials by October 10th, 1921. The work was accepted by the Ajax Electric Company, Linde & Griffith Company and the counties on October 18th, 1921. On December 17th, 1921, complainant filed his lien. On December 6th, 1921, the Ajax Electric Company was adjudged a bankrupt, and Arthur E. Wells was appointed trustee on December 22d, 1921.

The views expressed in the cases of the Agnew Company v. The Paterson Board of Education, 83 N. J. Eq. 49; affirmed, 83 N. J. Eq. 336-339, and the Mack Manufacturing Co. v. Citizens’ Construction Co., 85 N. J. Eq. 331; affirmed, 86 N. J. Eq. 254, are highly important in considering this motion, although the facts in these cases are somewhat different from those involved in this issue. The court in the Agnew Case, among other matters, considered the question in the case of a receiver appointed and qualified before lien filed, but in this case there was an adjudication before the lien was filed but not an appointment of the receiver until a few days after— the bankruptcy statute, § 70-a (3 Rem. 2721), provides, however, that “the trustee of the estate of a bankrupt, upon his appointment .and qualification, shall be vested, bjr operation of law, with the title of the bankrupt as of the date he was adjudged a bankrupt.” Chief-Justice Fuller, in Mueller v. Nugent, 184 U. S. 1, says, “the filing of a petition in bankruptcy is a caveat to all the world and, in effect, an attachment and injunction.”*

It is conceded by the complainant that if the bankruptcy had been that of the Linde & Griffith Company, the main contractor, as was the case in the Agnew litigation, the lien would not have attached the fund and the trustee in bankruptcy would take the money, but it is contended by him that the bankruptcy being that of the Ajax Electric Company, the first subcontractor, these cases are not controlling and that he is entitled to maintain his bill.

The claim of the trustee on this motion is that the lien of the complainant never attached to the fund in question. I do not see, however, how any distinction can be drawn between the effect of the bankruptcy of the main contractor, as decided in the Agnew Case, and the bankruptcy of a subcontractor, as in this case. In the event of the bankruptcy of the main contractor, all the subcontractors, materialmen and laborers, who have not filed liens, are prevented from filing liens by the adjudication in bankruptcy. There does not appear to be any sound reason why the same rule does not apply in event of the bankruptcy of the subcontractor.

It is urged by the solicitor of the complainant that the case of the National Fireproofing Co. v. Daley, 76 N. J. Eq. 35, presents a situation similar to the one of his client. I am unable, from reading the opinion in this case, to see its application. In it (the Daley Case), the court drew a distinction between an assignment by Whan, the main contractor, which, if prior to the filing of the liens, would be prior in right, and an assignment by Daley, the subcontractor, of a debt to him from Whan, the main contractor. Under section 6 of the present Lien law 1918 (p. 1041, at 1044), all assignments by contractors, or subcontractors, are postponed and subsequent to liens filed under the statute regardless of the time of making the assignment.

The work having been completed in this case prior to the adjudication, and the lien filed subsequent to it, the fund is an asset of the bankrupt’s estate.

The motion to dismiss the bill of complaint must be granted.


text:
    Margaret A. Rowley et al., complainants, v. Norman Currie et al., defendants.
    [Decided April 9th, 1923.]
    1. A clause in a will dividing two-thirds of testator’s estate equally among such of his heirs as would take if testator died intestate, and also to Mrs. R. and her children, gave one share to each of said heirs and one share each to the members of Mrs. R.’s family, there being no other provisions in the will expressing a contrary intention.
    2. Except in an entirely plain case, the court will not construe a will so as to cut off from inheritance or benefit any direct descendant of the testator.
    3. Where the direction in a will is that the estate shall go in equal shares, those who take by representation take per capita.

      4. The word “children” in a will is a word of personal description, limited to persons standing in the same relations, and has the same effect as if all the names were given.
    On bill," &C.

      Messrs. Walcelee, Thornall & Wright and Mr. Le Boy E. Vander Burgh, for the complainants.

      Messrs. Morrison, Lloyd & Morrison and Mr. Guernsey Price (of the New York bar), for Margaret A. Rowley and her three children.

      Mr. Clifford Chalmer (of the New York bar) and Mr. Jason B. Elliott, for the Leamon defendants.

      Messrs. Reed, Eetfield ,& Crane, for Norman W. Currie et al., defendants.
   Lewis, V. C.

The bill in this suit was filed by the executors and trustees under the will of Daniel A. Currie against the nephews and others of blood of said Daniel A. Currie for the purpose of having determined the distribution of the residuum of the estate of Daniel A. Currie and for instructions from the court as to certain matters connected with their duties as executors and trustees.

At the conclusion of the hearing, and upon final argument, it is my recollection that all the questions in dispute as to the various clauses in the will were disposed of save one. This was the question arising over the second clause of paragraph 23 of the will which reads as follows:

“Two-thirds of my said estate less one-twentieth leaving nineteen-thirtieths (19/30s) of my said estate to .be divided equally, share and share alike, among such of my heirs as would have taken,, excepting Agnes Ferguson and her heirs, as would have taken under the laws of the State of New Jersey had I died intestate, and also to Mrs. Margaret A. Rowley and her children.”

The testator, who lived in Englewood, died February 28th, 1911. A large part of his estate was left in trust for his wife and his sister for life and for Mrs. Eowley for three years after his death. Mrs. Eowley, with her three children, went to live with Dr. Currie in'1903 as housekeeper at the large house owned by him in Palisade avenue, Englewood. They continued to live there until the doctor’s death in 1911. Mrs. Eowley nursed Dr. Currie for months in his last illness. The testimony is that Dr. Currie’s wife was mentally incompetent and that this was the reason for installing Mrs. Eowley in his home. He made ample provision for his wife and his sister as long as they lived. His sister died October 6th, 1912. His wife died February 28th, 1918, and the time has now arrived for the distribution of the residuary estate. As before stated, the only question which I am now called upon to decide is how much of the residuary estate do each of the members of the Currie and Eowley families take under the second paragraph of the twenty-third subdivision of the will above quoted. The persons now interested in the construction of this part of the will are seven nephews and nieces of the testator, three children of a nephew who predeceased him, and Mrs. Rowley and her three children.

The heirs and next of kin at the time of the death of Dr. Currie were:

1. Elizabeth Jane Currie, sister, who died October 6th, 1912.

2. Fannie M. Currie, wife, who died February 28th, 1918.

3. Norman, Thomas, John, Orange J. and William Currie, children of John Currie, a deceased brother.

4. Elena Lockhead, daughter of Margaret Van Slyke, a deceased sister.

5. Agnes Ferguson, daughter of Robert Currie, a deceased brother.

6. Ralph, Agnes and Marion Leamon, children of Augustus Leamon, á son of Mary Leamon, a deceased sister of the testator.

All of these persons were living at the time the will was made and there has been no change since that time. Agnes Ferguson, another niece of the testator, died December 13th, 1915, but, as she and her heirs were expressly excluded from the participation in the distribution of this fund, her death does not affect the result.

This is a brief summary of the will of Dr. Currie.

I. Debts to he paid.

II. Personal 'effects to nephews; William A. Rowley named erroneously as one of the nephews.

III. Harness, horse, &c., to associate, Dr. Phillips.

IV. Medical library; specific legacies.

V. Trusts for cemeteries.

VI. Specific legacy of $3,000 to Mrs. Rowley

“in recognition of faithful services rendered me and my household during my prolonged illness, the same 'to be paid to her within thirty days after the probate of this my Last Will and Testament; and in case it he found that funds are not available to pay the whole amount within the time specified then so much thereof as are available be paid her and the balance without delay, when my estate becomes in funds.”

VII. Provision for the education of Dorothy Rowley.

VIII. The residuum in trust for the support of his wife and sister, Mrs. Rowley being one of the trustees.

IX. Real estate directed to he sold at auction.

X. House at Dwight place and Palisade avenue, Englewood, a home for 'wife and sister. This clause adds provision for Mrs. Rowley, saying:

“It is my wish, and I hereby direct, that Mrs. Margaret A. Rowley shall continue as now the custodian of the domestic management of my home, as I have every confidence in her honesty and ability.”

XI. Provision of $50 a month for Mrs. Rowley

“for her personal services as long as she is the custodian of my home and loots after the domestic welfare of my wife and sister or either one of them as hereinbefore provided.”

XII. Provision that while Mrs. Rowley is custodian her daughters shall reside with her until they become twenty-one years old without charge, and the son, William Rowley, may reside with her, paying monthly hoard to the satisfaction of the executors.

XIII. “THIRTEENTH; It is my wish and desire that my executors have Mrs. Margaret A. Rowley appointed the legal guardian of my wife as soon as possible after my decease.”

XIV. Provision for wife in lieu of dower.

XV. After death of wife and sister, bric-a-brac to specific legatees.

XVI. Hpon death of wife, certain specific legacies, as follows :

“Alída Loehhead ................................... $1,000.00
To William A. Rowley. Margaret A. Rowley and Dorothy M. Rowley, the sum of two thousand dollars ($2,000) each, six thousand dollars ($6,000) said sums to be held by their mother at her personal option, for investment for their use.............. ' 6,000.00
To the descendants of my nephew Augustus Lemon, of Saddle River, 'New Jersey, three thousand dollars ($3,000) to. be divided among them in the same shares and proportion as such descendants would inherit from his estate should he die intestate....... 3,000.00
Norman Currie .................................... 2,000.00
John A. Currie .............. 2,000.00
Orange Judd Currie ................................ 2,000.00
Daniel A. Currie, Jr................................. 1,000.00
William Currie .................................... 2 000.00
Thomas Currie ..................................... 2,000.00
Robert A. Currie .................................. 2,000.00
Agnes Ferguson '........ 500.00
Reverend John Lochhead............................ 500.00
Dr. S. Justina Ermentrout ........................... 500.00
$17,500.00”

XVII. Five hundred dollars ($500) to Daniel A. Currie Beattie.

XVIII. Trust for William Buchanan, coachman.

XIX. Three thousand dollars ($3,000) to St. Paul’s Episcopal Church, Engle'wood.

XX. Provision for twenty-five per cent, to Mary Hughes Armstrong (Mrs. Rowley’s sister) of the net profits on the sale of lands.

XXI. Provision regarding fund ont of which moneys are to he paid.

XXII. Provision regarding cemetery lot being nsed by Mrs. Rowley and her immediate family.

XXIII. This is the clause chiefly under discussion in this suit. It provides, after the death, of both wife and sister, for the use by Mrs. Rowley of the residuum of the estate for three (3) years. ' It then provides—

“Two-thirds of my said estate less one-twentieth, leaving nineteen-thirtieths (19/30) of my said estate to be divided equally, share and share alike, among such of my heirs at law excepting Agnes Ferguson and her heirs as would have taken under the laws of the State of New Jersey had I died intestate and also* to Mrs. Margaret A. Rowley and her children.”

It then provides that an undivided one-twentieth of two-thirds is to he divided equally among various persons named, and then provides that the remaining one-third of the residuum shall go to the State Grand Lodge of Masons for New Jersey, to be applied to the support, and maintenance of the present or any future Masonic House established or to be established by said Grand Lodge.

XXIV. Bequest with reference to advance to one John N. Leamon.

XXV. Appointment of executors and trustees, Mrs. Rowley being the first named.

It is contended, in behalf of the nieces and nephews and the children of the deceased nephew, that this paragraph should be construed to give one share of the fund to each of the seven nephews and nieces, one share to each of the three children of the deceased nephew, and one share to each of the four members of the Rowley family, viz., one-fourteenth of the fund to each.

Counsel for the Rowleys contend that the testator meant two classes, the heirs comprising one class and the Rowleys the other—that each take one-half of the nineteen-thirtieths. The cases cited in their behalf and immediately referred to, in my judgment, do not sustain this contention.

In Wintermute v. Exr. of Schneider, 3 N. J. Eq. 489, the. chief question involved was whether under a bequest to William Schneider and his heirs the father took the legacy, or whether his children were entitled to any part of it. The court held that the children were not entitled to it and the legacy went to the father.

In Stoutenberg v. Moore, 37 N. J. Eq. 63, cited, the question' was whether the children of the testator’s two sons took per stirpes or per capita and the division turned upon the use of the word “between” by the testator.

The will reads:

“All the rest, residue oí my estate, real, personal and mixed, I give, devise and bequeath the income to my sons, Robert and Edward, to be equally divided between them during their lives, and at their death to be equally divided between my grandchildren.”

Chancellor Runyon, referring to the use of the word “between,” says: “Nor is the word ‘between’ in this will without significance.” The language-is “and at their death to be equally divided between (not among) my grandchildren.” The word “between” is usually used in reference to two only and there is some evidence in the use of the word here of an intention to divide between two families of children. The chancellor decided that the children of each son take their father’s share at his death.

The testimony given in behalf of the Rowleys which is offered to sustain their claim, some of which was objected to as incompetent and irrelevant, it is not necessary to consider to ascertain the intention of the testator with respect to the Rowleys. This is clearly ascertainable from an examination of the will itself.

Among the provisions that he made for them in addition to the one now under consideration are:

The second paragraph of his will in the gift of personalty includes William R. Rowley and calls him a nephew-.

In paragraph 15 of his will he gives his furniture, china, silverware, &c., to Mrs. Rowley and her three children and his nephew, naming all by name, to be divided share and share alike.

In paragraph 16 he gives William, Mary and Dorothy, children of Mrs. Rowley, two thousand dollars ($2,000) each, the same amount that he gave to each of the sons of his own blood and his nephews. To Mrs. Rowley he gives three thousand dollars ($3,000) in recognition of faithful services.

Paragraph 6 provides for a college education for her daughter, Dorothy.

In paragraph 10 he makes Mrs. Rowley the custodian of his home, with all the expenses provided.

In paragraph 11 he gives her fifty dollars ($50) a month for her services.

And in the twelfth paragraph he provides that her daughters may live at his home without expense until they reach the age of twenty-one years.

In paragraph 13 he makes her the guardian of his wife.

In paragraph 22 he gives her, for herself and family, a two-thirds interest in his burial plot in Brookside cemetery and the right to have her and her children’s names on his monument.

In paragraph 23, after the death of his wife and sister, he gives her the whole income of his estate for three years and then malms the distribution under consideration of nineteen-thirtieths among his heirs, save Mrs. Ferguson and Mrs. Rowley and her children.

No argument is necessary after reading these paragraphs in the will to convince one of his regard for the Rowleys, but, furthermore, there is no indication from the will that he intended to divide, under the twenty-third paragraph, his residuary estate into two classes and thus prefer the Rowleys to his own kin.

Except in an entirely plain case the court will not construe a wdll so as to cut off from inheritance or benefit any direct descendant of a testator. Brooklyn Trust Company, 196 App. Div. (N. Y.) 355.

While this will is somewhat inexpertly drawn, it seems clear to me that the intention of the testator was to put Mrs. Rowley and her children in the same class with his heirs and treat them as a unit in the will.

The use of the word “among” and “also,” as appears in paragraph 23, are significant as showing that the .testator intended one class. The Rowleys not being heirs, he uses the phrase “and also Mrs. Rowley and her children” to bring them into the class to share in the fund with his heirs and provides that it is to be divided equally, share and share alike “among” them. The will does not say that the residuary estate shall be divided “between” the testator’s heirs and Mary A. Rowley and her children; but it says it shall be divided “among” testator’s heirs, except Agnes Ferguson and her heirs. If the testator intended a division between the heirs and the Eowleys he would not have said “among.” The word “between” is commonly used in reference to two only. Had he intended one-half of the said portion to go to the heirs and the other half to the Eowleys, the extent of the will signifies that he would have said so in certain terms, as such calculation into halves would have been easy as compared to the computation made by the deceased.

Where the direction of a will is that it shall go to them in equal shares, those who take by representation take per capita. Welch v. Crater, 32 N. J. Eq. 180-181.

The words “and also to Margaret A. Eowley and her children” were essential because they were not heirs of the testator. The word “also” would not have been used had Dr. Currie meant to create a separate class for Mrs. Bowley and her children. Webster defines the word “also” as “in the same manner (as something else).” The words “and also Mrs. Bowley and her children” he used the word “children” as a description instead of stating their several names. 2 Words and Phrases 1137. As words of description in law the word “children” has, and has had, a well defined meaning which is found to run through the text-books and reports and upon the proper adherence to which the stability and very existence of many titles in the commonwealth depend. Defining it from a positive standpoint, it is a word of personal description. It points to individual acquisition. So far as description goes it differs in no way from a mention of individuals by name, &c. Crawford v. Forest Oil Co., 77 Fed. Rep. 534-6.

“Children” is ordinarily used as a word of description limited to persons standing in the same relations and has the same effect as if all their names had been given, &c. Balcum v. Hayner, 96 Mass. 204-5.

In Bisson v. West Shore Railroad, 66 Hun (N. Y.) 604; affirmed, 143 N. Y. 125, the court says “this being a devise to a class and the direction being that the estate shall be divided equally, or share and share alike, the members of the class take per capita.” In this case the testator devised and bequeathed the remainder of his estate, after the death or remarriage of Ms wife, “unto my heirs and my wife, Maria Bemhardina’s heirs, their heirs and assigns forever, share and share alike.” The court said, “this being a devise to a class, and the distinction being that the estate shall be divided equally, or share and share alike, the members of the class take per capita, there being nothing in the will to show a contrary intention.” The court continued, “we think the testator intended to make but one class composed of his own and of his wife’s heirs and intended they should share alike in the premises.” This is my view of Dr. Currie’s intention in making disposition of his estate under the second clause of the twenty-third paragraph of his will. He desired to place the Rowleys in the same class with his heirs (all in one class), and under this paragraph the fund should be divided share and share alike and the members of the class take per capita.

A decree may be accordingly entered.


text:
    Maria O. Loch, complainant, v. Herman Mütz et ux., et al., defendants.
    [Decided April 25th, 1923.]
    1. Where the title to property purchased by the complainant’s father was taken in the name of the defendant in 1898 and 1902, although it appeared that complainant’s parents lived with the defendant and his family ion the land for many years, a suit to declare a resulting trust as to the property, bought in 1921, was not barred by laches.
    2. Judgment creditors stand in the shoes of the debtor and are' not purchasers for value without notice as against one claiming that property standing in the debtor’s name, is held under a resulting trust if the claim constituting the basis for the trust was paramount and one which the debtor was bound to recognize.

      On pleadings and proofs.

      Mr. J. Emil Walscheid, for the complainant.

      Messrs. Garriclc & Wortendyke, for answering defendants.
   Lewis, V. C.

This is a bill to establish a resulting trust as to certain property located on Hudson boulevard and Duer place, Weehawken, New Jersey. The property consists of lots Nos. 264 and 265, facing Hudson boulevard, and lots Nos. 266 and 267 facing Duer place, which are contiguous. The Hudson boulevard lots were purchased in 1898; and the Duer place lots in 1902, by Charles L. Gerdts, complainant’s father. Title to both tracts was taken in the name of Herman Miitz. While there is some testimony in the case from which counsel for- the answering defendants urge inferences may be drawn that some portion of the consideration may have been paid by Miitz, still, it is so vague that I am not convinced that he paid any part of the considera^ tion; and I find that the full consideration for these properties was paid, either in cash or by the transfer of other property by Gerdts. A dwelling was erected upon the boulevard tract, and when it was completed, Charles L. Gerdts, the senior, moved into it, and his son, Charles Otto Gerdts, and his daughter, Maria (or Melito) 0. Gerdts, and Herman Miitz and his wife Helena, resided there with him. Both the daughter and the son married later on and withdrew from the father’s family, but Mr. and Mrs. Miitz continued to reside with the senior Gerdts. In 1921 the son died, leaving him surviving, his widow, Martha Gerdts, and a minor son, Boy Edward Gerdts, who are made defendants in this suit. About 1907 the father suffered a paralytic stroke, and from that time until his death, in 1920, he was an invalid and unable to care for himself. After the marriage of the son, in 1908, the father was entrusted to the care of the daughter under an arrangement whereby she was paid for his maintenance by Miitz. During the period that the first group had lived in the dwelling house together, Mr. and Mrs.'Miitz paid a certain sum each week to the daughter, who managed that household for the family. Miitz and his wife remained in the boulevard dwelling until early in 1920, when Miitz absconded, having embezzled funds from an estate of which he was a trustee, and he has never returned. Thereafter, his wife, Helena Miitz, remained in sole possession of. all the premises involved in this suit. The boulevard tract was subject to a mortgage of $5,500, held by Charles E. Ebsen, and the Duer place lots were charged with a mortgage of $1,000, given by Miitz and his wife, in 1905, to one Louise M. Henrichsen. After Miitz absconded an attachment was issued by Dora B. Wettlaufer and Eliza Yutte; and judgment thereon was later entered in their favor for a sum somewhat in excess of $19,000. No execution was ever issued on this judgment. Both the Ebsen mortgage and the Henrichsen mortgage were foreclosed; and in these foreclosure proceedings Dora B. Wettlaufer and Eliza Yutte were made parties by virtue of their judgment against Herman Miitz. Messrs. Carrick & Wortendyke were the solicitors for the complainants in the foreclosure of both mortgages. On May 4th, 1921, after final decrees of foreclosure had been entered, but before sale of the mortgaged premises, the solicitor for the complainant in the present suit notified Messrs. Carrick & Wortendyke, the solicitors for the complainants in the foreclosure proceedings mentioned, that the daughter of Charles L. Gerdts, the present complainant, and the widow and infant son of Charles O. Gerdts, claimed to be the equitable owners of the premises covered by those mortgages, and were entitled to take the same free and clear of the Wettlaufer and Yutte judgment, but subject to the two mortgages under foreclosure, which they claimed the right to redeem, not having been made parties to the foreclosure suit, and not being barred by the decrees therein. The foreclosure sale was thereupon adjourned to May 12th, 1921; and on May 10th the bill of complaint in the present suit was filed. On May 11th a Us pendens was filed and Carrick & Wortendyke were notified of this action. Nevertheless, on June 9th, 1922, the mortgaged premises were sold under the foreclosure proceedings. The boulevard tract was purchased by Dora B. Wettlaufer and Eliza Yutte for the sum of $16,000, being less than the amount of their judgment in the attachment proceedings. The Duer place tract was purchased by Patrick Rock for $6,700, but Rock afterwards refused to consummate the purchase, and he was relieved of his bid because of the pendency of the present suit, by an order of Vice-Chancellor Griffin, whose conclusions have been submitted in this case. There has been no appearance entered for, or defense interposed in behalf of, Herman Miitz or his wife, Helena Miitz. The mortgagees and the judgment creditors, however, deny the right of the complainant to impress a resulting trust upon the properties involved; and contend that even though the properties were originally purchased by the senior Gerdts, and taken in the name of Miitz, still complainant should not prevail in this action because of laches in the establishment of the resulting trust.

I am clear that the contention of the complainant with regard to the resulting trust should prevail.

The question of laches, however, is not free from doubt, but under all the circumstances of the case I am convinced that the enforcement of this trust in favor of those who are entitled to the benefits of that trust ought not to be defeated because of the long period which has elapsed since the transaction took place which gave rise to it.

The object of Gerdts in taking title in the name of Miitz is not clear. There is some intimation that it may have been for the purpose of avoiding creditors. He may have had other reasons. His long illness and incapacity would satisfactorily explain his failure to call upon Miitz to change the status. There is some evidence to the effect that he did, from time to time, refer to it. There is also evidence to the effect that both Miitz and his wife recognized the trust and made assertions to the effect that ultimately the properties would be transferred to the rightful owners.

But be all this as it may, it seems to me that neither the mortgagees nor the judgment creditors are in a position to object to the enforcement of this resulting trust, nor to interpose the defense of laches. The complainant tenders herself ready to take the property subject to the mortgages, and charged with the obligation to pay them in full, the principal and interest. This will make - the mortgagees whole. The judgment creditors stand in the shoes of the debtor— and their rights can rise no higher than his. They are not purchasers for value without notice; and if the property to which their lien attached was subject to a paramount claim, which the debtor was bound to recognize and respond to, then those judgment creditors are bound by that same paramount claim and must yield to it.

I will, therefore, advise a decree in accordance with the prayer of the bill upon the terms herein indicated.


text:
    Paul W. Muller, Mathilde, his wife, and Emma E. Pfeil, complainants, v. Michael Cavanaugh and Margaret Cavanaugh, his wife, defendants.
    [Decided June 19th, 1923.]
    1. Where a complainant seeks to enforce a restrictive covenant, his, right to the relief sought must be clear. If it is doubtful, to doubt is to deny.
    2. Where the covenant in question provided that the- defendant should not “erect nor permit toi be erected on said land any building known as a tenement or community house,” and the structure in process of erection is what is known as a two-family house, lone floor to be occupied by one family and the other floor by another -family, but no part of the building, nor any of its facilities, i® to be inhabited or utilized in common by the respective occupants 'of the floors, the erection thereof will not be enjoined.

      On pleadings and proofs.

      Messrs. Humphreys & Summer, for the complainant.

      Mr. Michael Dunn, for the defendants.
   Lewis, V. C.

This litigation is initiated by the complainants for an injunction restraining the defendants from erecting on their property fronting on the boulevard at Passaic, New Jersey, a two-family house, upon -the ground that the erection of such a house is violative of a restrictive covenant affecting the property of the defendants. The facts in the caseoare agreed upon, and the only question which this court is called upon to determine is, as I conceive it, whether or not the structure which the defendants propose to erect is in violation of the covenant mentioned, which provides, among other things, that the defendants

“shall not at any time erect, nor permit boi be erected upon said premises any house or 'building for business or manufacturing purposes of any kind; * * * nor * * * any building, except for resident purposes; nor any building less than, twoi stories in height; nor that may cost less than three thousand dollars ($3,000), and then only one building on each fifty (50) feet of street frontage; nor erect, nor permit to be erected on said land any building known as a tenement or community house. * *

The property immediately affected is plot twenty-five (25), on block two hundred and thirty-eight (238), as laid out on the Third ward assessment map of the city of Passaic. It has a frontage of sixty (60) feet on the southwesterly side of the boulevard, and a depth of about one hundred and thirty-eight (138) feet.

The complainants, Paul W. Muller and Mathilde T. Muller, his wife, are the owners of plot twenty-two (22) in block two hundred and thirty-eight (238), of the same dimensions as the plot of the defendants, and immediately adjoining the same on the northwesterly side thereof. The complainant, Emma E. Pfeil, is the owner of plot twenty-eight (28), in block two hundred and thirty-eight (238), which is located at the corner of the boulevard and Mead avenue, and has a frontage on the boulevard of seventy and eight-tenths (70 8/10) feet, and a depth of about one hundred and thirty-eight (138) feet. It immediately adjoins the southwesterly side of the defendants’ plot. So that the defendants’ plot lies immediately between the Muller plot and the Pfeil plot.

Aletta M. Hageman, during her lifetime, was seized in fee of the whole of the said block two hundred and thirty-eight (238), and also of block two hundred and twenty-nine (229): She died in 1903. During her lifetime she made conveyances to several parties of several parcels or plots in those two blocks and each of her deeds contained a covenant on the part of the grantees, their heirs and assigns, with the grantor, her heirs and assigns, that the said grantees, their heirs and assigns, should not erect at any time, nor permit to be erected on the lands by those deeds granted and conveyed, any building known as a tenement or community house. Aletta M. Hageman left a will, which was duly probated, in which she devised her real estate to her executors, subject to certain trusts, with power to sell the land. After her death the executors made several conveyances to several parties of the property in said blocks two hundred and twenty-nine (229) and two hundred and thirty-eight (238), and each deed given by the executors contained the same covenant with their grantees as was contained in the deeds given by Aletta M. Hageman in heT lifetime. Among other deeds thus given by the executors was one to Charles J. Ileuser and Anna Heuser, his wife, which contained the restrictive covenant referred to. On June 7th, 1909, the Heusers conveyed the plot twenty-five (25) to the defendants, the deed containing an express provision that the said premises were conveyed subject to the restrictions contained in the former deed from the executors of Aletta M. Hageman to them.

It appears further, that all the deeds given by the executors of Aletta M. Hageman contained a covenant that the conveyances thereafter to be made by them of all lands fronting on the avenue on which the particular land described in each of said deeds fronted should contain like restrictions. Aletta M. Iiageman had similarly covenanted in her deeds.

It further appears that the only dwelling-houses erected on these lands are single family houses. The defendants admit that they intend to erect upon their plot a house designed for the accommodation of two families in separate apartments, one floor of the contemplated building to be used and occupied by them as a home for themselves; and the other to be let to a desirable tenant. They deny that the erection of such a building would constitute a breach of the restrictive covenant contained in their deed.

There is no contention that the building which defendants thus contemplate erecting falls within the term “tenement house,” as contained in the restrictive covenant. It is contended, however, by the complainants, that such a building would be “a community house;” and within the prohibition of the covenant.

It does not appear that any part of the proposed building, nor any of its facilities, will be inhabited or utilized in common by the respective occupants. The apartments will be entirely separate. The covenant itself requires that the building shall be not less than two stories in height. .

If a double house were built upon the premises involved, separated by a partition wall, which is a very usual and customary type of dwelling construction, I do not think that such a structure would violate the present restriction, for the covenant does not limit the building to a dwelling for a single family, as in the case of Shoyer v. Mermelstein, 93 N. J. Eq. 57, nor limit it for the use or purpose of a private dwelling only, as in the ease of Skillman v. Smatheurst, 57 N. J. Eq. 1; and I fail to see how it could lead to a different conclusion if the building as here contemplated were erected so that the separate dwellings were placed one above the other instead of side by side, where no part or facility thereof is to be used in common.

If it had been intended that the covenant should restrict the type of building to be constructed so that but one dwelling should be occupied by but one family on each designated plot, as contended by complainants, it could have been made clear by perfectly simple language; but this was not done.

It is a fundamental rule that where a complainant seeks to enforce a restrictive covenant his right to the relief sought must be clear. If it is doubtful, to doubt is to deny. Marsh v. Marsh, 90 N. J. Eq. 244.

I am, therefore, constrained to deny the prayer of the complainants’ bill, and will advise a decree in accordance with these views.

Furthermore, it seems to me that the, present application is premature in that the building when completed might not be used for two families, but by one only. Even though such a building were violative of the restrictive covenant when put to use after completion, it would be time enough to seek to restrain when it was apparent that the restriction would be violated. Lignot v. Jaekle, 72 N. J. Eq. 233.


text:
    In the matter of Sarah L. Stur, an alleged lunatic.
    [Decided April 30th, 1923.]
    Evidence that a woman was nearly seventy years of age, and was at times forgetful and inattentive to her affairs, but without testimony, even by the physician produced by the petitioner, that she was of unsound mind, is not, when opposed by the evidence of two physicians that she was normal mentally, sufficient to sustain a verdict that she was of unsound mind rendered after a hearing at which she was examined alone without the aid of counsel, and, therefore, the inquisition should be set aside and a new commission issued.
    On application to set aside inquisition or to permit a traverse.

      Mr. Merritt Lane, for the applicant.

      Mr. Foster W. Freeman and Mr. William B. Gourley'. contra.

   Lewis, V. C.

On March 24th, 1920, Sarah L. Stnr, the alleged lunatic, conveyed certain real estate to her son, George Stur. Later, a disagreement arose between them, and through the intervention of her daughter, Mabel Cadmus, a bill was filed in this court by Mrs. Stur to set aside the conveyance to the son. Upon the hearing before Vice-Chancellor Stevenson, the complainant, who, meantime, had returned to live with her son, appears to have changed her attitude towards him, and asked to have the proceedings discontinued, stating, contrary to her previous allegations, that she had received adequate consideration for the transfer of the property. At the suggestion of Vice-Chancellor Stevenson, application was made for a writ de lunático inquirendo. The application for the writ was made by Mabel Cadmus, the daughter. The inquisition was taken before the commissioners and a jury of twenty-four men; and by a vote of sixteen to eight Mrs. Stur was found to be of unsound mind as and from March 24th, 1920. The present application is made in behalf of the alleged lunatic to set aside the verdict upon which the inquisition is based, or for leave to traverse the inquisition.

Mrs. Stur was a woman nearly seventy years of age... At the hearing before the commissioners and jury she was examined alone, without the aid of counsel. While the evidence shows that she is forgetful and inattentive to affairs, nevertheless, the physician produced by the petitioner to testify regarding Mrs. Stur’s mental condition was unwilling to state that she was of unsound mind; and both Dr. Beling, an alienist of high standing, and Dr. Todd, a general practicing physician, produced in behalf of Mrs. Stur, testified that she was normal mentally and capable of governing herself.

With the testimony in this posture I am unwilling, in view of the manner in which the inquisition was taken, to concur iu the finding of the jury. It may well be, that as a matter of fact, Mrs. Stur is incapable of managing her affairs and caring for her property advantageously to herself and her interests, but before she is to be deprived of the right to manage her own affairs and a guardian for her is to be appointed, the condition of infirmity alleged should be established by clear and convincing proof. In the present proceeding it seems to me that this had not been done. I am, therefore, of the opinion that the verdict and inquisition under review should be set aside, and that a new commission should issue.


text:
    Michael G. Barrett et al., complainants, v. Blakeslee Cadillac Company, defendant.
    [Decided April 19th, 1923.]
    Where one who was in active conduct of the business of a company agreed with the employes of that company that in addition to their regular compensation, they were to participate in the net profits of the business for the .year 1919, and the manager who conducted the business died in January, 1920, and a newly-organized corporation succeeded to the business of the former company, and assumed its obligations, the employes are entitled to be paid what is due them under that agreement, but have no' claim for this extra compensation since the death of the manager.
    On pleadings and proofs.

      Mr. George G. Tennant, for the complainants.

      Messrs. Fish & Fish, for the defendant.
   Lewis, V. C.

This is a bill for an accounting. In the latter part of 1918 George E. Blakeslee, who was in active conduct of the business of the Crescent Automobile Company in Jersey City, made an arrangement with complainants and others, whereby, in addition to their regular compensation as employes of the company, they were to participate in the net profits for the year 1919, in accordance with a plan then submitted and agreed to. In January, 1920, Blakeslee died, and a new corporation called The Blakeslee Cadillac Company, the defendant in this suit, was organized, which succeeded to the business of the former company, and assumed its obligations. Complainants continued in the employ of the respective companies since the making of the profit-sharing agreement, and now claim to be entitled to be paid what has accrued to them under the terms of the agreement referred to. It appears that certain payments were made to complainants for their supposed percentage of the net profits for the year 1919, but they contend that they have not been paid in full. Nothing has been paid them under the profit-sharing arrangement since 1919.

It is clear that for the year 1919 complainants are entitled to be paid what is due them under the agreement. There is some evidence to the effect that the arrangement was adopted and ratified by the new company, and that those in charge after the death of Mr. Blakeslee, had arranged for its continuance.

I do not find, however, that this latter contention is sustained in a way to bind the Cadillac company.

I will, therefore, decree an accounting by the defendant to the complainants for their full share of the net profits accruing under the agreement down to the time the new managers took hold of the affairs of the company, but not beyond that period, and a reference will be ordered to take the, account.

The terms of the decree will be settled upon the usual application of counsel.


author: Backes, V. C.

text:
    Marguerite Mountford, petitioner, v. Albert N. Mountford, defendant.
    [Decided March 29th, 1923.]
    1. In an action for divorce by a wife who had left her husband— Held, that her evidence that her husband forced her to leave is sufficiently corroborated.
    2. Where a husband forced his wife to submit to an illegal operation, called her vile names, told her he had made a mistake when he married her; that he would not live with her; that he did not care what she did or where she went; that he would not support her, and where he cut off her allowance and left her without food or money, the husband was guilty of willful desertion.
    3. Desertion is not the physical absence of one of a married couple from the other, but such absence as is willful, continued and obstinate. '
    In divorce. On exceptions to master’s adverse report.

      Mr. Jacob L. Newman, for the exceptant.
   Backes, V. C.

Less than four months after they were married the petitioner left her husband. The master in recommending against a divorce reported, “that no adequate evidence has been produced before me to establish the fact that she left because of conduct on the part of the defendant which would have entitled her to a divorce from bed and board at the time of her leaving; and I therefore find and report that her leaving was voluntary on her part.”

I do not feel called upon to agree or disagree with the master that a ease of extreme cruelty is not made out, other than to observe that the wife’s testimony of cruel treatment lacks corroboration; but I do not agree with the master’s view that her leaving was voluntary on her part. The defendant took his bride to live in one room, fourth floor rear, of a tenement house in Brooklyn. He earned $42 weekly, of which he gave her but $15, out of which she had to supply the food, clothe herself and pay his doctor’s bill. He spent the rest oh himself. He drank heavily and when drunk, which was often, to use the wife’s language, “he vomited in bed, urinated in bed and excreted in bed and left it there for me to clean up.” He forced her to submit to an illegal operation under threats to leave her. He called her vile names, told her he had made a mistake when he married her; that he did not want to and would not live with her; that he did not care what she did or where she went; that she could do just as she wanted to and go• where she pleased; that he was not going to bother with her and that he- would not support her. A week before she left him he cut off her allowance and being without food or money she pawned her watch to raise enough for car fare and went back to her mother’s home in this state. He has not called upon or communicated with her since, a little more than two years before the petition was filed. There is no one to vouch for the petitioner’s story, of her misery, of course, and if the suit were, one for constructive desertion, based solely on extreme cruelty, it would fail, at least, for want of corroboration. Biut the case does not rest on the theory that the wife was justified in leaving her husband because of his extreme cruelty. Here the husband forced his wife to leave him. His conduct throughout their few months of cohabitation, though .it may be short of extreme cruelty, as to which I pass no judgment, was designed to accomplish that result. He schemed to that end, and succeeded. A husband who constantly tells his wife that she is not -wanted, and means it, and starves -her out, orders her out, and if she goes, he is the deserter. As to the husband’s desertion in this view of the case there is ample corroboration. A very short time before the wife left ■ her husband called her mother on the ’phone and asked for money to defray the expenses of the illegal operation. Upon her refusal lie told her that he was not going to live with his wife. After she left he told one of the witnesses that he did not want to live with his wife, and “that I was damn glad to get rid of her * * * he wanted it (the situation) to be just as it was, and that the separation was final and that he would not consider a reconciliation of any sort.” And then there is the convincing circumstance of his mental attitude to desert—he never sought her out—clearly evincing his determination to be rid of his wife. These things are sufficient corroboration. Hague v. Hague, 85 N. J. Eq. 537.

The desertion was willful on the part of - the husband in that he purposely created the situation that made separation inevitable. It was obstinate and it was persisted in against the will of the wife. The doctrine laid down in Hahn v. Hahn, 93 N. J. Eq. 296, is applicable. There it was said: “The view that there was no willful desertion on the part of the husband because the wife and not he left is unsupportable. Departure is not the test of desertion. The desertion contemplated by the third section of our -Divorce act (2 Comp. Stat. 1910 p. 2028) is not the physical absence of one of the married couple from the other, but such absence in a prescribed condition of mind—a willful and obstinate desertion. Hyland v. Hyland, 55 N. J. Eq. 35.

The exception will be sustained and a decree of divorce advised.


text:
    Robert G. Evans, complainant, v. Stanwood Rubber Company, defendant.
    [Decided May 14th, 1923.]
    1. A corporation had shortly before its insolvency overdrawn its bank account with a trust company and to secure the trust company executed and delivered a paper-writing purporting to transfer certain automobile tires as collateral security for the overdraft. The writing was acknowledged but not recorded. The tires remained in the possession of the company, and were taken possession of by its receiver and sold.—Held, that the instrument upon which the trust company relies is collateral security for a pre-existing debt, and in legal effect a chattel mortgage, and void as against the receiver of the company and the creditors whom he represents.
    2. The paper is also void as a transfer of property because given at a time when the company was insolvent.
    On appeal from the receiver’s ruling.

      Mr. Foster M. Voorhees, for the Union Trust Company.

      Mr. August G. Streitwolf, for the receiver.
   Backes, V. C.

Shortly before the defendant company was declared insolvent it overdrew its account with the Union Trust Company, of Elizabeth, to the extent of $10,727.88. It was then hopelessly insolvent and unable to make restitution. To secure the trust company it executed and delivered to it the following paper writing:

“Know all men by these presents:
That, Stanwood Rubber Company, a Delaware corporation, for value received hereby sells, assigns, transfers and sets over unto (sic) all those automobile tires listed and described in schedule hereto attached.
This assignment is made as collateral security to a loan of $10,-727.88 this day made by (sic) October 27th, 1920, to the said Stan-wood Rubber Corporation, it being understood and agreed that the Stanwood Rubber Corporation (sic) shall have the right to sell any or all of the said tires upon condition that it shall forthwith apply the proceeds of any tires so sold to the reduction of its obligation upon said note.
Stanwood Rubber Company,*
Attest: By Robert G. Evans, President.
W. Gderare,
Asst. See."

The writing whs acknowledged but not recorded. The tires mentioned in the schedule remained in the possession of the insolvent company and the receiver took and sold them for $7,000. The receiver has refused to pay this sum over to the trust company and his ruling is before me for review.

The instrument upon which the trust company relies was given, as indicated on its face, as collateral security for a pre-existing debt and is, in legal effect, a chattel mortgage, and as it was not “accompanied by an immediate delivery, and followed by an actual and continued change of possession of the things mortgaged,” it is void, under our Chattel Mortgage act (1 Comp. Stat. p. 463), as against the receiver and the creditors whom he represents. Button Company v. Speilmann, 50 N. J. Eq. 120; Hastings v. Fithian, 71 N. J. Law 311.

The paper writing as a transfer of property, whether it be regarded as a bill of sale or chattel mortgage, is also void under our Corporation act because it was given at a time when the Stanwood company was insolvent. Section of the act (2 Comp. Stat. p. 1638), provides:

“Whenever any corporation shall become insolvent or shall suspend its ordinary business for want of funds to carry on the same, neither the directors nor any officer or agent of the corporation shall sell, convey, assign or transfer any of its estate, effects, choses in action, goods, chattels, rights or credits, lands or tenements; nor shall they or either of them make any such sale, conveyance, assignment or transfer in contemplation of insolvency, and every such sale, conveyance, assignment or transfer shall be utterly null and void as against creditors; provided, that a tona fide, purchase for a valuable consideration, before the corporation shall have actually suspended its ordinary business, .by any person without notice of such insolvency or of the sale being made in contemplation of insolvency, shall not be invalidated or impeached.”

The trust company does not come within the proviso of the act, because the document was given to secure a pre-existing debt, Trust Company v. Trustees of William F. Fisher & Co., 67 N. J. Eq. 602; Agnew Company v. Paterson Board of Education, 83 N. J. Eq. 49; affirmed, Ibid. 336, 339, and also because the trust company had notice of the insolvency. In the agreed state of facts it is stipulated that the Stanwood company was insolvent, but that this was not known to the trust company. It may be that the trust company had not actual notice of the insolvency, but it seems to me nothing can be plainer, from the fact that the Stanwood company’s bank account was overdrawn and it could not make good, than that the trust company had constructive notice.

Inability to meet current obligations as they fall due through lack of cash or credit is insolvency.

The receiver’s ruling is sustained.


text:
    The Orange Society of the New Jerusalem, complainant, v. Mark M. Konski, defendant.
    [Decided May 24th, 1923.]
    1. In a contract for gale of real estate the day fixed for closing title, without more, is merely formal, but if it is stipulated that time is of the essence, or circumstances are persuasive that that is the case, prompt performance is essential. Where the time fixed is regarded as a formality only, and 1he period has gone by, or where time is of the essence and there is a waiver, time may nevertheless be made of the essence by formal demand that the title be closed by a given day; but the time given must be reasonable.

      2. A period .of seven days is not a reasonable time to close a title where there are matters involved that require unusual action. The time given for performance should bear some reasonable comparison to the time which had already elapsed since the contract was executed.
    On final hearing.

      Messrs. Horace and Henry T. Bietson, for the complainant.

      Messrs. Howe .& Davis (Mr. Edward L. Davis), for the defendant.
   Backes, V. C.

The bill prays a specific performance of a contract to purchase land. The Orange society and Mr. Konski, on August 13th, 1921, entered into a written contract wherein the society agreed to sell to Konski a piece of property on the westerly side of Essex avenue, Orange, for $19,000. One thousand was paid down, eight thousand was to be paid on the day of the delivery of the deed, and the remaining ten thousand at a time stated, to be secured by a mortgage on the property. The property was to be free and clear of encumbrances except a certain building restriction. The closing of the title was set for October 10th. The contract has this provision, in compliance with the restriction, “As a part of the consideration of this contract the purchaser agrees that he will erect on the said premises one or more buildings,each to be of one or more floors, equal or better than the exterior design of the building erected on the northeast corner of Central avenue and Lock street.” The type of building was to be approved by the society, the chief engineer of the Delaware, Lackawanna and Western Railroad and the mayor of Orange, and if either of the latter two refused or was unwilling to approve the plans, and if Konski then would not modify them so as to meet their approval, the money paid down was to be returned, but, and I quote from the contract, “If the necessary plans for the erection of the said building are neither approved nor rejected, by the 10th day of October, then the purchaser may, at his option, (1) cancel this contract, and in such event the seller agrees to return to him all moneys paid on account of the contract, or (2) take the title to the property subject to all the other terms and conditions of this contract, and in the event that he exercises the last option, the contract shall be performed within five (5) days thereafter.” Neither side was ready on the appointed day. Konski had furnished a sketch of his proposed building, but the plans were not submitted until about the 25th of the month. They were approved by the engineer of the railroad and were satisfactory to the mayor, but he declined to give his approval unless a pending zoning ordinance be modified relieving the site of a ban against industrial structures. All hands, including Konski, worked industriously to have this done. Konski at-length became impatient and under date of November 18th wrote to the society as follows:

“I would suggest that we agree on some definite date, say, not later than November 25th, for Mayor Lord or other interested Orange city officials to come (o a final decision in reference to allowing the erection of factory on plot in question.
“In the event that no decision-is arrived at on date mentioned, our negotiations will be discontinued on terms and conditions outlined in our agreement of August, 1921.
“Trusting above meets with your kind approval and that I will hear from you to that effect by return mail, &c.”

There- was no reply to the letter. On November 22d Konski and the representatives of the society again urged the mayor to act, hut he simply reiterated his position that he would not until the ordinance was out of the way. The zoning commission made the desired amendment December 2d; on the following day the mayor approved the plans, and Konski was notified, by letter, on December 6th. Konski refused to take title, claiming that as the mayor had not approved the plans by November 25th he had the right to terminate the agreement, and that he had done so. Thereafter a formal tender of the deed was made and this action was promptly brought.

I said during the course of the argument that time was of the essence of the contract. That statement was too broad. I should have said that the assent of the engineer ■and the mayor was, at all events, a condition precedent to performance and that it was Konski’s privilege to withdraw from the contract if his building plans were not accepted by the 10th of October. It was his right to do so arbitrarily, but he did not, and it is quite evident from what transpired that neither party regarded performance on that date imperative. Konski had not in mind that if his plans were not approved by October 10th, and the society was not minded that if the purchase price was not paid by that-time, that the contract was to be at an end, if either so elected. I need not dwell longer on that phase because even if punctual performance was considered essential at the time the contract was made it was waived, and it seems to me we need look no further than the letter of November 18th. Indeed Konski relies solely upon the letter, and the failure to meet its terms, as justifying his stand. The law is that a day fixed in a contract for closing title, without more, is merely formal; but if it is stipulated that time is of the essence, or the circumstances are persuasive that that is the case, prompt performance is essential, and it is also the law that where the time fixed is regarded as a formality only, and the period has gone by, or where time is of the essence and there is a waiver, that time may nevertheless be made of the essence by formal demand that the title be closed by a given day; but the time given must be reasonable. Now, as I read Konski’s letter, he did not fix November 25th as final. He suggested that the matter be closed by that day; that is, he asked the society to agree with him that it come to an end one way or another by then. The society did not agree, and I think Konski so understood it, for after writing the letter he appeared with the society’s attorney before the mayor to get him to give his consent. But if I am mistaken in my interpretation of the letter, and if it is to be regarded as peremptorily fixing November 25th to make good or quit, I think Konski cannot avail himself of it as a means of terminating the bargain. As I have indicated, to make time of the essence of the contract under such circumstances the extension, that is, the time given for performance, must be reasonable. Here but seven days were allowed. In the circumstances it was, in my judgment, too short. Konski knew what the difficulties were. He knew they could, and in all likelihood would, be overcome. He knew the mayor was standing out only on a matter of policy. He knew that the mayor would give his approval the minute the zoning commission acted and its favorable action was almost assured, and he knew of the efforts that were being made, and in these he participated. The contract for sale had been made in August to be executed in October, and I think that that period is to be considered in measuring reasonableness of time for performance. In other words, the time to elapse must bear some reasonable comparison to the time which has already elapsed. An instructive case is King v. Ruckman, 20 N. J. Eq. 316. Some of the cases upon the question as to what constitutes a reasonable time are King v. Wilson (1843), 6 Beav. 124; Mitchell v. Wilson (1912), 2 D. L. R. (Can.) 714, 20 West L. R. 671; Smedberg v. More (1841), 26 Went. (N. Y.) 238, and Marotta v. Reynolds (1914), 25 Ont. Week. Rep. 833; 5 Ont. Week. N. 907, all cited in Mr. Davis’ brief. I repeat that I think the time fixed for the conclusion of the contract was entirely too short under the circumstances. Considering that three months had gone by, demand then for performance within seven days was unjustified. I think at least twenty days should have been given. The snap action by Konski' was not, in my judgment, for the reason that he wanted to bring the matter to a-conclusion because time was of importance to him, but rather, as I look upon it, because he wanted to back out of his contract, and he saw what he thought was his opportunity. I think his motive is pretty clearly shown by the excuses he gave on the stand, that he was ill and his financial and business affairs had undergone a change. He may have been ill; if he was, the illness was of a passing nature; and as to adverse change in finances or in trade, that was not borne out by the testimony.

Mr. Konski will have to perform and a decree to that effect will be advised.