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    Llewellyn James v. T. Owen Aller and wife et al.
    [Filed March 19th, 1904.]
    1. A settlement by a father, after a second marriage, on the children of the first marriage, ■ covering his homestead and half his personal property, executed voluntarily and without any solicitation from them, will be sustained, though containing no power of revocation, where it was not unreasonable in amount, and was executed with advice of his own counsel, when he was steadily' accumulating money and was entirely -competent to act.
    2. A subsequent gift by the father to his children of his entire property remaining after the previous transfers to them, and constituting the balance of his earnings, made without any advice, when his'second wife, who had separated from him, was threatening him with legal proceedings for support, and containing no power of revocation, and ■without any provision for his future support, may -be revoked, though, executed without any undue influence of the children.
    3. Where a father has executed a gift of property to his children, and they have' received the income, relying on the gift of it, and have ex-. pended it mainly as the father directed, on the revocation of the gift the income cannot be recovered.

      4. A father attempting to set aside an unreasonable settlement of his property on his children, executed in 1881, is not precluded by delay, where he was ignorant of his rights until 1900, and has not by -his conduct or'delay waived his right to revoke or plqced his children in a situation where it would be unreasonable to assert his claim.
    On Mil, answer, replication and proofs.

      Mr. Benjamin W. Bllicott, for the complainant. •

      Mr. Paul A. Queen and Mr. George PL. Large, for the answering defendants.
   Emery, V. C.

This suit calls in question separate transactions of two kinds-between complainant and his children. The first transaction relates to the conveyance by complainant to his children of his homestead, and to the assignment to them, at the same time, of mortgages for $4,200, and the second transaction relates to the delivery, some time later, by the complainant to his daughter, Mr's. Aller, or to his son-in-law, the defendant T. Owen Aller, ■of money or notes amounting to either $4,000 or $5,000. Complainant’s own evidence in relation to the first of these transactions differs altogether from the statement in his bill. In reference to the execution of the conveyances, the deeds for the homestead and the assignment of the mortgages, the bill alleges and the answers admit, that on or about May 20th, 1880, the complainant executed and delivered three deeds for the homestead (a house and lot in High Bridge, Hunterdon county), one conveying one-fifth interest to his daughter Lydia Aller, wife of T. Owen Aller; another conveying a like interest to his ■daughter Jennie E. James (now Mrs. Hoffman), and a third convejdng the remaining three-fifths interest to his daughter Lydia Aller, as trustee for his three remaining children, Lizzie Corson, Maggie James and William James, who were then minors, aged, respectively, twenty, eighteen and fourteen years. These conveyances all reserved to ■ the complainant the rents and profits of the premises as long as he chose to occupy the same, but if he vacated the property before his death the grantees were to receive the rents, subject to his return to the property. The deed to Mrs. Aller, -as trustee, was further upon ’the trust to convey to the minors, respectively, as they came of age, their one-fifth interests, with provision for the minor’s receipt of the rents in the meantime and with a power of sale.The bill alleges that complainant was unable to read or write, and that reposing confidence in his' son-in-law, Aller, and in his daughters, he was induced to- execute and deliver these deeds for the homestead, on the representation that they were papers necessary and proper in order to enable Mr. and Mrs. Aller to properly care for Ms interests, and that he has learned since their execution that they were deeds for. the property. He further alleges-that'although the deeds purport to be acknowledged by him, he had no knowledge of this, and has learned since their execution that they were deeds, and that his children, with the assistance of Mr. Paul A. Queen, the officer before whom the acknowledgments were taken, procured him to put his mark to the papers, well knowing that he did not intend to part with his title to the property or control over it. As to the execution of the assignment of the mortgages, the bill also alleges and the answers admit the execution of three assignments on the same day, assigning to the same persons' who were grantees in the deeds, and conveying the same interests, including the three-fifths interest therein to Mrs. Aller as trustee for the minor children. In these assignments, however, no reservation is made to the complainant of any right to the interest during his life or to the principal. The assignment to-Mrs. Aller as trustee further expressly provides that it is made for the benefit of the minors, and that she is to pay over the interest (less taxes) to' the minors, on their receipt, and assign to each, as they come of age, their respective shares of the mortgage. If any of the mortgages are paid, they are to be reinvested upon other mortgages upon the same trusts. The hill alleges that these assignments were also made under the representation that they were necessary in order to enable his daughter, Mrs. Aller, and her husband to properly care for his money and property and the management thereof for him, and that upon the faith of these representations complainant was induced to fix his mark to these assignments. These charges as to representations or inducements in the execution of the deeds and assignments are denied by all of the daughters and by Mr. Aller. Their execution is claimed to have been the voluntary act of the complainant and carried out by directions to Mr. Queen, as complainant’s own counsel, and under complainant’s instructions, without any consultation whatever with any of the defendants or knowledge upon their part that the deeds were being prepared or were to be executed. At the hearing the deeds and assignments, executed by complainant bjr the fixing of his mark, were produced by the defendants. There was no proof on the part of the complainant of any misrepresentation or inducement leading to the execution of these papers, and on the contrary, the complainant, who was the only witness called in his behalf as to the circumstances of the execution of the papers, denied absolutely and positively the execution of any of these papers or the fixing of his mark to any of them at any time or place. Upon the part of the defendants, the evidence showed that the complainant, shortly before May 20th. visited Mr. Queen at his office in Flemington and employed him as his attorney to draw the deeds and assignments, giving him instructions as to his wishes and making an appointment for their execution at his home. Complainant had previously met Mr. Queen in business transactions, having purchased from him, in 1878 or 1879, two of the three mortgages assigned. Mr. Queen subsequently prepared the papers according to the instructions and on May 20th drove from Flemington to High Bridge, reaching there early in the evening, and there saw complainant alone in his house, read over and explained' each paper to him, receiving further instructions as to the names of some of the children which had not been previously given, and blanks which had been left in the papers as drawn for the insertion of these names were then and there filled up before the execution of the papers.

Complainant’s first wife had died in 1876, and Mr. Queen, at the time of the interview in his office, supposed complainant was still a widower, but at the interview at his own house complainant, for the first time, informed Mr. Queen that complainant had been married again about a month before, and after inquiring as to the rights his second wife had in the property, requested that the deeds be dated back previous to the marriage. Mr. Queen declined to comply with this request. None of the children nor any other' person than complainant and Mr. Queen were present at this interview between them, which lasted about an hour, and Mr. Queen, without conversing with anyone but Mr. James, at once returned to Fleming-ton with all the papers, which were sent by him to be recorded, and he left them for record on the same evening. After being recorded, they were returned by Mr. Queen either to the complainant directly or to someone for him.

Three of complainant's daughters, Mrs. Corson, Jennie and Margaret, were at their home on this evening when Mr. Queen called, and as each one swears, saw Mr. Queen enter the house and go into a room with their father, and Mr. Queen did not speak with either of them nor did either of them know the business upon which he came. After he left, their father came into the parlor, told them all he had signed papers giving them the home and the mortgages, and that evening, for the first time, their father told them that he had been married again, and that he wanted Mr. Queen to date the deeds back, but that it could not be done. Complainant married his second wife in New York on ApriM-l-tli, 1880, but did not bring her to his home until after this interview. Mrs. Aller, who lived at another part of the village and was not at home on this evening, was, as she says, told by her father on the next day that Mr. Queen had been up the evening before, and that he had executed these papers. Notwithstanding this detailed account of Mr. Queen as to the preparation and execution of the papers and the evidence of three other witnesses that Mr. Queen was at High Bridge and there saw complainant alone, tire complainant, on rebuttal examination, not only repeats his denial that he ever executed any of 'the papers in question but denies that Mr. Queen ever saw him at his house in High Bridge. He also denies that he ever saw Mr. Queen at his. office in Elemington in reference to these transfers and specifies in detail the times when he did see him there, which include the two transactions prior-to 1880, when the mortgages in question were obtained by complainant. Complainant is now seventy years of age, is very deaf and somewhat infirm, but I am not satisfied that his denials of his own employment of Mr. Queen at Elemington, and of any directions for the papers, and of the execution of them at his house in High Bridge, are due to failure of mental faculties or to ignorance, and am inclined to think that they must be considered as made with the knowledge on his part of whether they are true or false. So far as relates to this feature of the case — the execution of the papers — the question is whether the transfers were actually executed under the circumstances proved by the defendants. In my judgment the evidence will not support any other conclusion, and if the complainant’s right to relief, so far as these transfers are concerned, depended on his making out a case of misrepresentation and actual fraud the bill must be dismissed. But the whole evidence, as to the circumstances 'of the transfers being now fully before the court and the transaction being, on the defendants’ evidence, clearly gifts to or settlements upon children by the father, I think tire court is bound to consider the question of the validity o'f the acts upon the whole evidence. The case was argued upon this theory and should, in justice to all the parties, be disposed of on the proofs presented, giving leave to amend the bill if necessary to meet the case as presented and to raise the question arising upon the proofs and argued at the hearing. This observation as to the reliance to be placed on complainant’s evidence applies also to the claim made by' the complainant’s bill in reference to the other transactions brought in question by the bill, viz.* the alleged advances of money or securities to the defendant T. Owen Aller. Complainant’s bill charges that about the time of executing the deeds he gave to Aller a county note of $2,030, to collect the interest thereon and invest it, and that subsequently he gave to Aller a sum of $5,000 to invest for him upon mortgage; that Aller has collected the principal of the note and used both sums to purchase a farm in his own name. This latter sum of $5,000, he swears, was delivered into Aller’s own hands by him and counted by Aller in the presence of complainant’s daughters, Mrs. Aller and Margaret. He also swears that two other amounts of $300 each, not mentioned in the bill, were also delivered to Aller after the delivery of the $5,000. Mr. and Mi’s. Aller and Margaret positively deny any such transaction, or the receipt of any sums of money at all by Aller from complainant in their presence at any time, and Aller also denies receiving any money from complainant at any time for investment. As to the $2,000 county note, Aller’s testimony is that previous to the execution of the deeds and in 1879, when the Snyder mortgage for $3,000 (one of the mortgages assigned) was obtained by complainant, he (Aller) bought from complainant the county note, and complainant, adding to the proceeds $1,000 of other money, invested the whole amount, $3,000, in the Snyder mortgage. I am satisfied from the evidence that this was the nature of this transaction and that complainant’s account is mistaken. Complainant is also mistaken as to subsequently advancing to Aller himself the sum of $5,000 or any other sum. There was an amount of $4,000 in notes or securities belonging to complainant, which came to the hands of Mrs. Aller and not her husband, in 1881, under the circumstances hereafter stated, and which was invested in her name on a note of her husband. This monejq after being invested by her husband, along with money of his own on mortgages, was ultimately, when these mortgages were paid off, used together with some money of the husband’s in the purchase of a farm by him, his wife holding his note for the $4,000. It is claimed by the defendants that this sum of $4,000 was given to his daughter by the complainant in 1881 upon the trusts that Mrs. Aller should have charge of its investment, that the income should go to the daughter Margaret until she married, when the fund was to be divided among tire daughters only, unless she chose to divide it earlier. The $4,000 in notes or securities were delivered to Mrs. Aller to take care of for her father in the spring of 1881, and the directions as to the disposal of it were made in the fall of that year verbally by the father to the daughters, Mrs. Aller and Margaret. The income of this fund has been received by the daughters since 1881 without, as they claim, any demand or request by the father for either principal or interest on it until the filing of this bill, June 19th, 1902. The payment to the father of $1,000 in April, 1900, is admitted, the daughters saying that they gave it voluntarily out of the $4,000 fund while the father says it was a payment on account of the $1,200 mortgage after his demand for that money.

The father left the'home at High Bridge to live in Port Oram in 1881, and the daughters received the rents of the house from that time up to 1895, since which date and up to about the time of filing the bill the rents, or a portion of them, were remitted to the father. These payments of principal and interest are claimed not to have been recognition oí any right of the father in the lands or moneys, but to have been voluntary advances' by the daughters to the father to assist in his support and to prevent his return to the High Bridge house, as he had a right to do under the deed, with a woman whom he had subsequently married at Port Oram. He had lived'with this woman at Port Oram several years previous to his marriage to her, and had by her a son bom some years before the marriage and now about twelve or thirteen years of age. The evidence of the defendants must, I think, be taken in preference to that of the father as to the circumstances of these transactions, both in 1880 and 1881, and the questions in the case are whether the settlements, or either of them, are valid against the father and irrevocable by him. The circumstances attending the two settlements and the situation of the donor at the time were different, and they must, therefore, be separately considered.

Complainant was a miner, and for many years prior to 1880 he had been a mining contractor, doing work for the Thomas Iron Company, with the founders of which company he had originally been employed on coming from Wales. Besides paying for his house and lot, he had, at the time the deeds were executed, accumulated probably $3,000 or $4,000 beyond the amount invested in the mortgages in question. His first wife, the mother of his five children, had died in 1876, and he had, in April, 1880, without the knowledge of his children, married a woman named Mary Williams in Hew York and was about to bring her to his home. One of the daughters (Mrs. Aller) says that before her mother’s death she had asked her husband to make some provision for her children, and he promised to do so; but after her death and up to the time of his marriage no conversation appears to have occurred about a settlement between the fattier and the children. The execution of the transfers was solely the idea of the father, and the motive for making it at the time when it was made was manifestly his second marriage and its object was to protect his daughters against possible changes arising from this marriage. The declarations by the father to his daughters, after Mr. Queen’s visit to High Bridge for the execution of the deeds, shows that this was the occasion for the settlement. Complainant, after receiving the transfers from the-record office, kept them, together with his money and other valuable papers, insurance policy, notes, &c., in a box, which was kept in a bureau in her room by one of the daughters, Jennie, who kept house for him after Iris wife’s -death and assisted him in his accounts until she was married and left home in 1881. Complainant had brought his second wife to his home shortly after May 20th, 1880, and afterwards in that year pursued his mining business at or near Port Oram, in another county. Prom this time on he returned to his home in High Bridge only once a month.

In' February, 1881, Jennie was married to Mr. Hoffman, and in April, 1881,- removed from High Bridge. The second wife was intemperate, and on Mrs. Hoffman leaving home complainant told her, as she says, “the box that is upstairs you take over and give it to Mrs. Aller in her charge, because all that is in that box belongs to the girls.” This box contained the deeds and assignments, besides about $1,000 in money and notes amounting to between $2,000 and $3,000, and comprised substantially the entire property of complainant. Mrs. Hoffman delivered the box to her sister, Mrs. Aller, saying to her, as Mrs. Aller says, that “father told her to, bring it over to me and to leave it there with us; that we were to take care of it, and he didn’t want to leave it with his second wife; he didn’t want her to know anything.” Shortly after, the complainant, returning home from Port Oram, came to Mrs. Aller’s, and in the presence of her father and her sister Maggie, who lived with her, the box was brought out and the contents examined. Mrs. Aller told him what was in it, and he said, “You take good care of it; that is for you girls;” not giving at that time, or until the fall of 1881, any special or further direction as to the disposition of the money. On cross-examination, speaking of the papers, Mrs. Hoffman further says that her father had told her to “take them over to Lydia’s for safe-keeping.” In August, 1881, complainant’s second wife left him, and never afterwards returned, and after she left home complainant gave up the High Bridge house and resided permanently at Port. Oram, visiting Mrs. Aller, however, about once a month, except during the winter, up to 1895 or later. On his leaving High Bridge .the son William, then about fifteen years of age, also-went to- Mrs. Aller’s to live. After the second wife left home she wrote a letter, dated August 22d, 1881, to complainant at Port Oram, telling him that she would not return to High Bridge, but was willing to live with him at Port Oram, if he-would take a house there, or would consent to separation,-either on payment of a monthly sum or a gross sum, with no further claim. She also asked for money to pay her board. Eeceiving no answer, this letter was followed by another, threatening that if she didn’t hear from him at once she would come to Eichard Mine (Port Oram), and that he was bound by law to keep her. Complainant (by a friend, Mr. Morris, with whom he boarded and who read the letters to him) answered this letter, stating that she had left his home of her own accord, and Mrs. James replied, denying-this, and stating that if he didn’t send her money that week to pay her hill for board she would take legal proceedings against him, bring him to Newark and make him disclose the money he was making and the taxes he was paying. She again repeated her offer to take a monthly allowance. Complainant does not seem to have complied with either of these-requests or to have paid any further- attention to- these demands, but I have considered these details important as bearing upon the subsequent action of the complainant in reference to- the money and securities in Mrs. Aller’s hands. Mrs. Aller says that in the fall of 1881 her father told her and her sister Margaret what disposition was to be made of this money, and it is from the conversation with Mrs. Aller and Margaret James, which then occurred, that the second gift or settlement is dated. Some of the notes had been paid in the meantime,, and Mrs. Aller says that

“in the fall of 1881 we had about 84,000, and he told us that was for us girls, and we should invest it and Margaret should have the incomes;, and William wasn’t to have any of it, because he didn’t know how to-use it; he was a dissipated boy; Margaret was to have the income on. the four, as-long as she was home, or she seen fit to divide it; it was under her control, and. he would always say it is ours; ‘say nothing about it, it is for yon girls;’ always did, not only once, but a dozen times.”

He said she (Margaret) was to have it until she married, or when she seen lit to- divide; when she did, she could divide it. Margaret says that at the talk with her father when the box was first brought over he told 'them to collect the notes and put out the money in the spring of 1882.

“I was to have the income. It amounted to $4,000, and that was to be divided between us four children — four girls — and Willie was to have no share in it. I was to keep it until I was married, unless I saw fit to divide it before. My sister, Mrs. Aller, was to look after it; she was the oldest.”

This witness fixes the conversation about the final disposition of the money in the spring of 1881, and at the time of receiving the box, but upon this point I consider tire evidence of Mrs. Aller more reliable, corroborated, as it is, to some extent, by Mrs. Hoffman’s evidence; and as to tlie exclusion of William, I think both of the daughters are probably giving the tenor of subsequent conversations with their father, for at this time (the fall of 1881) William was a lad fifteen years of age, going to school, and could not have acquired the habits of dissipation. The date of the conversation is important, in my judgment, as throwing light on the character and circumstances of the settlement and on the reasonableness of sustaining it against the father. It comprised substantially all of his property; it was made without advice or counsel, and according to the daughters’ account no provision seems to have been made for revocation, either wholly or in part. If made subsequent to the letters of the wife, as apparently it was, it may have been, and probably was, made under the impression that it would be protected against pursuit by the second wife; and while this ■ second transfer, like the first, was not due to any influence of the daughters, but was, if made as they say, the complainant’s voluntary act, yet as it was an act done without advice of any kind, and disposed of his whole property, the question is whether in equity it can stand against a subsequent revocation.

In reference to the transfers of the homestead and of the mortgages in 1880 the children have clearly proved that these were made without any influence whatever upon their part and that they were the voluntary acts of the complainant, made under instructions to his own counsel. Complainant, at the time of their execution, was mentally competent to make them; they were his deliberate and voluntary acts, and under the circumstances the settlements were not unreasonable in -amount. Complainant at that time was in the prime of life, was steadily making and saving money, varjdng from $100 to $200 a month, sometimes as high as $300 or $500. He retained the use of the real estate for his life, if he wished. The mortgages comprised half, or perhaps rather more than half, of his personal property, but although this was a very liberal provision for his children, it cannot, as to the amount, be said to have been unreasonable. It was clearly reasonable for the complainant upon his second marriage to make some settlement upon his children by the first marriage if he wished to do so. Until the mortgages were actually delivered to Mrs. Aller in the spring of 1881, the children do not seem to have themselves received the interest on them, and it was not until complainant’s removal from the house that the daughters received the interest, applying it, as well as the rents of the house, mainly to the support of Margaret and William, who from this time were not supported by the father. The only question, as it seems to me, in reference to the settlement of 1880, is whether the transfers are invalid, because no clause of revocation was inserted in the deed or .some clause securing complainant’s support by the grantees if necessary. The mere omission of a power of revocation will not of itself invalidate a deed. Its absence or the absence of advice as to its insertion are circumstances, and circumstances merely, to be considered in connection with Hie other circumstances of the case, and if the power be omitted where the settlement would be unreasonable or improvident in the donor unless so- guarded, then the settlement will not stand unless the donor had independent advice as to the insertion of the power and the effect of its omission, and tire settlement was the free determined act of the settler after such advice. Toker v. Toker, 3 DeG. J. & S. (68 Eng. Ch.) 487, 491 (Ch. App., 1863); Hall v. Hall, L. R. 8 Ch. App. 430, 440 (1873); Guarnsey v. Mundy, 9 C. E. Gr. 243 (Chancellor Zabriskie, 1873); Hall v. Otterson, 7 Dick. Ch. Rep. 522, 531 (Vice-Chancellor Green, 1894); Van Houten v. Van Winkle, 1 Dick. Ch. Rep. 380, 385 (Chancellor McGill). Seasonable settlements voluntarily and deliberately made by a parent upon his children, without any solicitation or influence upon their part, although containing no power of revocation, may be sustained even when settlements upon others by the same deed might be set aside for that reason. Wright v. Carter, L. R. 1 Ch. 27, 38, 54, 63 (1903). My conclusion is that these deeds and transfers, constituting the settlement of 1880, must stand.

The aspect of the gift of $4,000 in 1881 is very different. From the evidence of the three daughters, Mrs. Hoffman, Mrs. Aller and Margaret _ James, as to the circumstances of the original delivery to Mrs. Aller in the spring of 1881, an irrevocable gift of the notes and money at that time is not made out, and they would seem to' have been taken for safe-keeping only. The evidence of Mrs. Aller and Miss James.as to the subsequent disposition of these bjr their father, taken in connection with their subsequent dealing with these securities and the income from them, and the fact that their father never demanded the payment to himself by them of either the income or any part of the principal sum, is sufficient to establish that a verbal gift or settlement of the $4,000 fund was probably made in the fall of 1881. I think, also, that it was made without the exercise of any influence on the part of the daughters, and was made freely by the father to carry out his wishes at that time. And if the only question on this branch of the case were the voluntary and free character of the act, there might be no reason why it should not stand. But in relation to gifts made by'a parent to a child, and made solely under the influence of the confidence and trust arising from that relation, the further question always arises whether the character and circumstances of the gift are such as to impose a dirty toward the donor, on the conscience of the donee, who claims that tire gift is irrevocable. If it is claimed to be irrevocable, then the court must be satisfied that the settlement was not unreasonable or improvident. If it was, then, under the rule in Guarnsey v. Mundy, supra, the settlement will be set aside if not guarded by a power of revocation. This settlement was, as it seems to me, clearly of this unreasonable character, and had counsel been consulted it would have been his duty to advise retaining a subsequent power of revocation, or at least the making of provision for the donor’s future support from the fund, in case of need. Powell v. Powell, L. R. 2 Ch. 243, 247 (1899); approved in Wright v. Carter, L. R. 1 Ch. 57 (1903). The gift included the entire property then owned by the father remaining after the transfers of 1880, and constituted -the balance of the entire savings of the best portion of his life. It was made without any advice, and as to the motive for making it nothing appears except that at that time his second wife, who had separated from him, had threatened him with legal proceedings for support. He does not appear to have said anything to his daughters at that time about this, and in view of his present denials of the whole transactions, as stated by -the daughter (extending even to the existence of the box sent to Mrs. Aller), the motive must be left somewhat to conjecture. It was undoubtedly made by an ignorant man, without any advice as to his rights or as to the propriety of protecting himself by a power of revocation. And while the daughters were guilty of no fraud or undue influence to secure the gift, ye`t as it took their father’s whole remaining property, without any provision for his future support, the obligation was imposed on them,, under these circumstances, to recognize his right to recall the gift. That Mrs. Aller and Miss James themselves recognized the pressure of such equitable obligation to support from the funds they had received, appears from the fact that in April. 1900, after the father had asked for the $1,200 mortgage, they voluntarily returned to the father $1,000 of the $4,000, and that from 1895 they sent to him the rents from the house, or a portion of them. Had the friendly relations between the father and daughters continued, it is probable that the necessary support for the father in his old age would have been furnished by the daughters from the fund in their hands. But these relations having terminated the father now applies for a return of the fund, thus revoking or asking the aid of this court to revoke the gift thus made. I think he is entitled to do so, and that the remainder of the fund now in their hands ($3,000) must be repaid to him, with interest thereon from the time of filing the bill. Defendants are not chargeable with interest before that time. The)', equally with their father, acted without counsel in receiving - the fund; they received the income, relying on the father’s gift of it, and have expended it mainly for the support of Margaret, as the father had directed. From 1881 the complainant did not contribute to the support of either Margaret or William, and after William left the home of Mrs. Aller, and to the time of his death, in December, 1901, he appears to have been dissipated and shiftless, and was supported to some extent by Margaret up to April, 1900. After that time Margaret had in her hands William’s share of the mortgage fund ($840), which she claims to have paid out for his benefit, or for the expense of his funeral.

The income of the fund before filing the bill cannot be recovered back. At the hearing the defendants claimed that the whole of the $4,000 fund had been divided before the filing of the bill, but no such claim was set up in the answers of Mrs. Aller and Margaret James; and, on the contrarjq the answers of these defendants, after stating that the $4,200 was received from the assignment or payment of the mortgages, March 29th, 1900, say that this money was divided among the defendants, and also “that all said moneys not divided up between the defendants are in the hands of the defendant Margaret James.” No claim is-made in their answer, which was filed on August 9th, 1902, that the $4,000 has already been divided. The answer of Mrs. Hoffman and Mrs. Corson, the other daughters, filed on August 2d, 1902, say that on the first distribution they each received $840, and that “since then Mrs. Corson has received $750 and Mrs. Hoffman $500.” The evidence in relation to the division of the funds is this: In February, 1900, when Mrs. Aller visited her father, he asked her for the $1,200 mortgage, and she then told him that was part of what he gave them, to which he said yes, but he Avould like to have some, and that then she spoke of the gift of $4,000, and that perhaps they could give him some out of that, and the father then said, “Write me if you can do anything for me and I will come.” Mrs. Aller says, further, “He came in April and I gave him $1,000; 1 mentioned it to my sisters,' and they didn’t object.”

About March 29th, 1900, the mortgages transferred in 1880, or others taken in their place, amounting to $4,200, were collected (by payment or sale) and the proceeds divided among the children, Margaret retaining William’s share. On April 30th, 1900, Mrs. Aller gave her father $1,000 by a check for that amount. This was paid out of the moneys received by Margaret and Mrs. Aller from the mortgages as their share of that fund. These sisters also say that after paying their father $1,000, they paid to the other sisters each $750 for their respective shares of the fund invested on the Aller note (being now one-fourth of $3,000 instead of $4,000), and that then Mr. Aller gave to Mrs. Aller and Margaret each a note for $2,000, the $4,000 note to Mrs. Aller being surrendered. Whether this transaction of buying out the sisters and taking up the $4,000 note took place previous to filing the bill is not clear, for the only evidence as to the time is that of Mrs. Hoffman, who says that she received money in 1902. But assuming that it did, it took place after all the sisters knew that the father had asked for the return of some of his money in Mrs. Aller’s hands, because he needed it, and after they had returned to him $1,000 of this $4,000 fund. This sum had remained invested for nearly twenty years, and mere division or attempted division of the fund among the children so soon after their father called for some of the money cannot be considered as a disposition, of it under the trust, which deprives him of his right to call in question the original- settlement of the fund and to follow the funds in their hands.

The further objection was made that- complainant’s claim was barred by the statute of limitation. The relief sought by the bill is the enforcement of an express trust, to which the-statute is not applicable,'and the relief to which the complainant on the proofs is entitled is the setting aside of the settlement of 1881, a purely equitable remedy. Delay in cases of this character is considered, not with reference to the statute, but mainly with reference to its circumstances and effect in each case, and the enforcement of the general equitable rule in this class of cases, which requires vigilance in the prosecution of rights. Lutjen v. Lutjen, 19 Dick. Ch. Rep. 773 (Errors and Appeals, 1902); Condit v. Bigalow, 19 Dick. Ch. Rep. 504, 515 (Vice-Chancellor Emery, 1903). “Mere lapse of time is material on the question of right to relief, where tire party complaining has by his conduct done that which might he regarded as equivalent to a waiver of the remedy, or by his conduct and neglect has, though perhaps not waiving the remedy, yet put the other party in a situation in which it would not he reasonable to-place him, if the remedy were afterwards to he asserted.” Lord Blackburn, in Lindsay Petroleum Co. v. Hurd, L. R. 5 P. C. 221, 239 (1874); Rochefoucauld v. Boustead, L. R. 1 Ch. 196, 210 (1897). In this ease there has been neither waiver nór acquiescence, for the complainant was ignorant of his rights until 1900 or after; nor (except as to the income) has he by his conduct put the defendants in a situation where it would he unreasonable to assert his right to the balance of the principal sum delivered to Mrs. Aller in 1881.

■ I will advise a decree setting aside the gift or settlement of the $4,000 made in 1881 and directing payment to complainant of the $3,000, with interest from the date of filing the bill. At ■the time of settling the decree I will hear parties, if they desire, as to the separate liability of the defendants, and as to declaring' this amount a lien or charge upon the premises of the defendant T. Owen Aller, purchased in part by the use of the fund.


source: Caselaw Access Project

author: Emery, V. C.

license: Public Domain

text:
    Llewellyn James v. T. Owen Aller et al.
    [Filed May 20th, 1904.]
    1. Where a father gave his daughter money to be held in trust and invested by her, and she and her husband purchased a farm in the name of her husband, with the intention of investing the fund, the husband knowing that the money was in his wife’s hands for that purpose, the farm, while still in the name of the husband, is subject to a lien in favor of the father for the amount of the fund.
    2. Where a daughter was trustee of money of her father, with direction to invest it, and she did invest it, in good faith, in a farm purchased in the name of her husband, the father knowing of and being satisfied with the investment, she'is not personally liable in a suit to ■enforce the trust, the farm not having passed beyond the reach of the father as cestui que tmst.

    On application to settle decree.
   Emery, V. C.

The fund, which has been declared to have been a trust fund, was actually invested in the purchase of the farm of the defendant T. Owen Aller, and with the intention of making an investment of this fund, put in Mrs. Aller’s hands for that purpose, as her husband knew. It was not intended to be lent to Mr. Aller simply on his personal security. As between cestui que trust and trustee and all persons claiming under the trustee otherwise than by purchase for valuable consideration without notice, all property belonging to the trust, however changed or altered, continues to be subject to or affected by the trust. Bohle v. Hasselbroch, 19 Dick. Ch. Rep. 334, 336; Perry Trusts § 828, &c. The amount found to be due must therefore be declared to be a lien or charge upon the farm, and complainant is entitled also to a decree against the defendant T. Owen. Aller for the payment of the amount found due, such payments to be credited as payments upon the notes of Aller held by the defendants Mrs. Aller and Margaret Janies as evidences of indebtedness for the trust funds invested in the farm. There will be no decree for personal liability for the loan against Mrs. Aller or any other of the daughters. The evidence shows that •the father knew the money given to Mrs. Aller for investment had been invested in the Aller farm, and that he was satisfied with the investment. It was made in good faith by Mrs. Aller and she is not to be held personally responsible. The decree in this ease can go no further than this settlement of the complainant’s right to follow the trust fund and cannot extend to the settlement as between the defendants Mrs. Aller and Margaret and the other defendants of their rights as against each other, arising out of the payment alleged to have been made by them to Mrs. Hoffman and Mrs. Johnson for their share of the trust fund, and the decree will be declared not to affect such rights.

Complainant is entitled to costs.


text:
    Josephine K. McKinley v. Ella M. Coe et al.
    [Filed April 20th, 1904.]
    1. Evidence act (P. L. of 1900 p. SOS § J¡) excludes testimony by a party to a civil action, as to any transaction with or statement by any testator or intestate represented in the a'ction, where any party sues or is sued in a representative capacity. The payee in a note given by a testatrix, whose will charged her debts on her lands, petitioned that the proceeds oí land sold in partition proceedings between devisees be applied to the payment of her' note. — Held, that the testimony of the petitioner as to the execution of the note and its consideration was not incompetent, the devisees not being sued in a representative capacity within the statute, as construed and applied by the decisions. Cases examined.
    2. Gen. 8tat. p. 298J¡ 1i 20, provides that in all suits in chancery for partition or sale of lands, where the personal estate of the ancestor is insufficient to pay his debts, it shall be lawful for the chancellor to direct the lands to- be sold free from the lien of such debts, and to make an order touching the disposition of the proceeds of sale, as may be necessary for the ascertainment and payment of such deficiency thereout, before the distribution of the fund. — Held, that where lands of a decedent, which were charged with the payment of a debt, were sold free from the debt by a decree in partition, the lien or charge of the creditor, who was party to the suit as devisee, might be enforced against the proceeds of sale.
    3. Where a will causes a debt to be a charge on the lands of testator, there is an equitable estate in lands created, and the debt not being barred by limitations at testator’s death, it may be enforced within twenty years from his death against the lands, as if it were a legal estate given by the will.
    On petition by defendant for payment of proceeds of sale paid into court and exceptions to master’s report authorizing payment.

      Messrs. W. I. & II. Chamberlain, for the petitioner.

      Mr. Murphy (with Messrs. McEwan & McEwan), for the com-, plainant.

      Mr. Acton C. Eartshorne, for the defendant Mrs. Eterdman, contra.

   Emery, V. C.

In this case I reach the following conclusions upon the issues raised in the exceptions to the master’s report and the application at the hearing to open the proofs:

First. The application of petitioner made at the hearing on the exceptions to open the proofs must be denied. It appears by the evidence taken before the master on the first reference to him that petitioner then claimed that the note in question was signed in the presence of Mrs. McKinley. Necessary diligence by petitioner to procure other proof than her own testimony as to the execution of the note has not been shown, nor does the affidavit of the solicitor show a sufficient excuse for its non-production before the master.

Second. The petitioner’s testimony as to the transactions with the testatrix in relation to the note upon which her claim is based is admissible. This question arises upon the application of the petitioner as a creditor of the testator, claiming that her debt is charged by the will upon the lands which have been sqjd in proceedings in partition. The bill for partition was filed by one of the respondents, a residuary devisee, against the other respondent and the petitioner, the other devisees. The lands have been sold and the proceeds paid into court. The petitioner is also the executrix of the will, and upon her previous application as executrix under the chancery rules 155, &c., for the payment to her as executrix of sufficient money to pay the debts of the testatrix, including the petitioner’s own claim, the application was denied, so far as it applied to this debt, because at the time of the application recovery against her as executrix was barred by the statute of limitations. I held that, although the executrix might, so far as the personal estate was concerned, waive the statute, she could not affect the rights of heirs or devisees by her waiver, nor could she reach the proceeds of sale of land by her waiver of the statute as executrix. Petitioner’s claim is based on a promissory note, purporting to be signed by the testatrix, dated January 14th, 1891, for $450, payable one year after date, with interest at five per cent. The testatrix died December 9th, 1895, and the personal estate was insufficient to pay the debts, not including the petitioner’s claim, and on petitioner’s application an order was made in this cause, directing .pajnnent to the petitioner as executrix of the sum necessary to pay such other debts, but without prejudice to her right to apply for payment of her claim out of the proceeds of sale, as a debt charged upon the lands. This petition was thereupon filed for that purpose, and upon this application and the previous application the only proof as to the execution of the note or its cpnsideration was the evidence of the petitioner. This was objected to before the master on the reference in this petition as a statement of a transaction with decedent, but was not objected to in the proceedings on the first petition. The order of reference on the present petition directed that the evidence taken on the former petition should be used, subject to all proper objections to the legality and admissibility of any portion thereof. Assuming that under this last order objection can be now taken to the admissibility of petitioner’s evidence, the question is whether it is admissible under the Evidence act (Be-vision) (P. L. of 1900 p. 363 § 4) excluding testimony by a party to a civil action as to a-ny transaction with or statement by any testator or intestate represented in said action where any party sues or is sued ill a representative capacity, and the point to be decided is whether in a proceeding of this character the testator is “represented” by the devisees. The earliest decision of this court, Colfax v. Colfax, 5 Stew. Eq. 206 (1886), arose under the act of 1874 (Rev. p. 378 § 3), providing that no party should be sworn where either of the parties in a cause sue or are sued in a representative capacity, and Chancellor Bmiyon, on a bill filed by a vendee'for specific performance of a contract of the deceased against the heirs-at-law and the widow of vendor as administratrix, held that the heirs were sued in a representative capacity and that the evidence of complainant was not admissible.

Subsequent to the decision in Colfax v. Colfax occurred two decisions of the court of errors and appeals — Hodge v. Coriell, 15 Vr. 456 (Supreme Court, 1882); affirmed, 17 Vr. 354 (1884), and Palmateer v. Tilton, 13 Stew. Eq. 555 (1885). These later decisions were considered by Vice-Chancellor Van Fleet, in Crimmins v. Crimmins, 16 Stew. Eq. 86 (1887), as overruling Colfax v. Colfax, and on a bill filed by a widow against heirs-at-law of her husband to set aside a deed made to the husband of property formerly standing in her name, because of fraud and undue influence practiced on her by the husband, the vice-chancellor held that the wife was a competent witness to prove transactions with the husband, under the statute of 1880, which provided that the party suing or being sued in a civil action might be sworn as a witness, “provided that testimony should not be given as to any transaction with or statement by any testator or intestate represented in .said action.” He considered (at p. 85) that Colfax v. Colfax had decided that heirs suing or defending in the right of their testator were “representatives” of the testator, -under the statute of 1874, but that a.more limited scope had been given to the word “representative” by the decisions of the court of errors and appeals in the Hodge and Palmateer Cases, and that by these decisions the test of representative capacity under the statutes was whether one party or the other appeared on the record as the representative of the decedent. Then followed the decision of the court of errors and appeals in Smith v. Smith, 23 Vr. 207 (1889). This was an action for dower brought by plaintiff claiming, as widoA^; against the lessees and devisees of the husband. The marriage (alleged to bo a common law marriage) was disputed, and the evidence of complainant as to the marriage was held competent. The reason given (at p. 210) was “that the defendants were sued as devisees having legal title to the land under the will, and not as executors or legal representatives.” The Hodge, Palmateer and Crimmins Cases were cited and approved on this point, and the decision of the court was by a unanimous vote. In Smith v. Smith, the circumstance that the devisees were sued merely as holders of the title to the lands in question; and not as representatives, was first referred to as a test of the ‘Representative” character, and in subsequent chancery decisions this test has been the one applied, as having been established by this decision. Vreeland v. Vreeland, 8 Dick. Ch. Rep. 387, 390 (1895), was a bill for specific performance of a contract of. the intestate filed by the vendee against the heirs of the vendor, and upon the three decisions in the court of appeals and the Crimmins Case the evidence of complainant as to transactions with the decedent was held admissible. These cases were considered as settling the rule that the evidence was admissible “where the defendants Avere sued, not in a representative capacity, but for property to which they held title, descended to them from their father” (at p. 390).

In the Crimmins and Vreeland Cases the matter of the scope and effect of the previous decisions of the court of errors and appeals upon this question of the admissibility of the evidence of the party claiming against the heir or devisee of lands, under contracts or transactions with the testator, was an issue necessary to be decided. The Grimmins Case has, on the point of admissibility, been expressly approved by the unanimous decision of the court of errors and appeals in the Smith Case, and this latter case-has never since been questioned or doubted by any subsequent decisions of the highest court. There are two subsequent decisions of the court of errors and appeals which apply the statute in cases involving claims by or against executors or administrators. In Smith v. Burnet, 8 Stew. Eq. 314 (1882), the question arose upon exceptions to an executor’s account for not charging himself with certain stock, which the executor claimed to have been given to him by the testator. The executor’s testimony as to the statements of testator was held inadmissible, it being considered that this proceeding on exceptions was a civil action, and (at p. 822) that the decedent was “represented” in the action, either by the exceptants or by the executor himself. In Adoue v. Spencer, 17 Dick. Ch. Rep. 782, 794 (1900), which approved Smith v. Burnet, the administrator of the deceased (at p. 79k) "was held to be a’ necessary party defendant, and was held to be a party against whom the claim of the other defendant to charge decedent’s lands for a mortgage debt was made. The evidence of such other defendant as to transactions with the intestate was therefore held inadmissible. In neither of these cases was the representative relation between the decedent and his heirs or devisees involved, nor were either of the previous decisions of the same court questioned or referred to. It has, however, been urged that there is another line of decisions, in the supreme court and in this court, holding the evidence inadmissible. In Joss v. Mohn, 26 Vr. 407 (Supreme Court, 1895), it was held that in an action by a creditor against devisees, under the statute relating to heirs and devisees, for a debt of the testator, the devisees represented the testator, and the evidence of the plaintiff as to transactions with the testator was held inadmissible. The decision in this case seemed to be rested entirely upon the representative character of the heirs and devisees under the act, and the previous decisions in the court of errors and appeals were not referred to, although all of the judges who decided the Joss Case had also sat, either in the first instance or on appeal, in the Hodge and Smith Cases. Vice-Chancellor Pitney, in Greenwood v. Henry, 7 Dick. Ch. Rep. 447, 450 (1894), and Vice-Chancellor Grey, in Kempton v. Bartine, 14 Dick. Ch. Rep. 149; S. C. on appeal, 15 Dick. Ch. Rep. 411, considered Colfax v. Colfax and Joss v. Mohn as establishing that in the cases before them (which were similar to the Crimmms and Vreeland Cases) heirs and devisees were representatives of the testator, and held that evidence of the opposite party as to transactions with the decedent was not admissible.' But as I understand these cases before the vice-chancellors, in neither of them was a decision upon this point necessary. In Greenwood v. Henry it-was decided that the testimony, if within- the statute, was admissible under an exception expressly made by the statute, and m. Kempton v. Bartine the court, on appeal, expressly declined to consider the question, because it was not involved.' I must therefore be governed by the Crimmms and Vreeland decisions, and their construction of the effect of the previous decisions on appeal, and especially so as the Vreeland Case was 'decided subsequent to Greenwood v. Henry. And as to the effect to be given to Joss v. Mohn as qualifying or affecting the'previous decisions of the court of errors and appeals or in chancery, it should also be ■stated that Vice-Chancellor Eeed, who, as associate justice, delivered the opinion of the court in Joss v. Mohn, has subsequently, in Wyckoff v. Norton, 15 Dick. Ch. Rep. 474, 477 (1900), given his view of the effect of the former decision and his conclusion that the decision in Joss v. Mohn has not affected the admissibility of evidence against devisees in casés where the devisees are sued merely as the owners of land upon which, of in relation to which, equitable rights are claimed.

In this status of the decisions I must hold that the question of the admissibility of the evidence has been settled affirmatively by authorities binding upon me.

Third. The debts of the testatrix, including the debt due petitioner, were charged on the lands by her will. The will first directs “that all my just debts and funeral expenses be duly paid and satisfied as soon as conveniently can be after my decease,” and then, after two pecuniary legacies of $300 and $200, proceeds: “I give, bequeath and devise all the residue of my estate, both real and personal, and wheresoever situated, to my three daughters [the petitioner and the two respondents],, to be equally divided between them, share and share alike,” &c.

This general direction of the testatrix that her debts be paid charges them on the real estate, under our decisions. Shreve v. Shreve, 2 C. E. Gr. 487, 494 (Errors and Appeals, 1864); Thomas v. Thomas, 2 C. E. Gr. 356 (Beasley, Master); Suydam v. Voorhees, 13 Dick. Ch. Rep. 157 (Vice-Chancellor Reed, 1899).

The personal estate is, of course, the primary fund, but in, this case the personal estate has been exhausted.

Fourth. The petitioner’s debts being charged on the land,, she has a right, as creditor, to enforce in this court the equitable lien thus created against the lands (Suydam v. Voorhees, supra; also, 3 Pom. Eq. Jur. § 1247), and the lands having-been sold free from petitioner’s debt, by the decree obtained in the partition suit (which directed a sale of all the petitioner’s rights in the land), the lien or charge may be enforced against the proceeds of sale. Gen. Stat. p. 2984 20, tit. “Sale of Lands." Independent of this statute, the rule seems to be that where a sale in partition has been made a creditor may come in by petition to have the debts paid out of the proceeds of' sale. Latimer v. Hanson, 1 Bland Ch. 51, approved in Speer v. Speer, 1 McCart. 240, 251 (Chancellor Green, 1862), and the practice of this court in relation to the application of executors and administrators for so much of the proceeds as is necessary to pay the debts (whether they are parties to the suit or not),, is based upon this theory.

Fifth. The debt being a charge upon lands, created at testator’s death by his will, there is an equitable estate or interest in lands, and the debt not being barred by the statute at the 'testator’s death, it may be enforced within twenty years from testator’s death, as if it were a legal estate given by the will. Condit v. Bigalow, 19 Dick. Ch. Rep. 504, 515, and cases cited.

The remedy by lien may be enforced even if action at law for the debt is barred. 11 Am. & Eng. Encycl. L. (2d. ed.) 177, 152.

Sixth. The other exceptions to the master’s report have been considered and are overruled. The items excepted to are the payments made bj petitioner as one of the tenants in common for the benefit of the estate. These were properly made, as the master finds, and no sufficient reason has been urged for rejecting any of those items allowed. Tfie claim that the petitioner excluded the other tenants in common from the premises is not sustained by the evidence. Payment to- petitioner from the funds in court will be advised, in conformity with the master’s report.


author: Reed, V. C.

text:
    St. Peter’s Catholic Church, Point Pleasant, New Jersey, v. James M. Vannote et al.
    [Filed February 2d, 1904.]
    1. Where a building contract, giving the owners the right to domplete the work on abandonment by the contractor, is abandoned by the contractor after the work is partially done, and the building is completed by his sureties under agreement with the owners, the work done by the sureties is neither for the owners nor the contractor, but to relieve themselves as cheaply as possible under their obligation as sureties.
    2. The sureties are entitled to the unpaid portion of the contract price, including, as far as necessary to reimburse them for their necessary outlay, an indemnity fund retained by the owners as the work progresses, for their security in the contingency that the work should be abandoned, and they should be required to complete it themselves.
    3. The right of the sureties is superior to the claims of materialmen and laborers for work done for, and material furnished to, the contractor, as to the indemnity fund in the hands of the owners, which they retained pursuant to the terms of the contract, to be used by them in the contingency that the contractor should not complete the work.
    4. The claims of materialmen and laborers having claims against the contractor reach only such moneys as were due at the time of the several demands and notices, or thereafter becoming due to the contractor.

      5. The amount of the contract price recoverable by the. sureties includes claims for labor done and material furnished after the contractor had abandoned the work, while the sureties were completing it.
    G. Sureties on a contractor’s bond who, with the permission of the owner, had finished a house abandoned by the contractor, are entitled to be repaid out of the moneys which thus became due upon the contract in preference to materialmen and laborers who had served notices upon the owner when there was still nothing due and unpaid. This applies to a percentage of the contract price retained by the owner as indemnity till completion of the building.
    On bill of interpleader, filed by the complainant, who owed a portion of the contract price for building a church, against which, portion retainers have been filed by laborers and materialmen.

      Mr. Peter Baches, for the complainant.

      Mr. Frank 8. Katzenbach, Jr., for William P. Taylor and James M. Vannote.

      Messrs. Parker & Pearce (Mr. Parker), for Andrew F. Van-note.

      Mr. Frank Durand, for Clark Newman.

      Mr. Fdwin P. Longstreet, for J. M. Vannote & Son.

      Mr. Thomas C. Curtis, for Z. P. Vannote, John Ii. Reid, Morriss Brothers and George A. Newbury.

      Mr. William J. Baches, for Joseph Backes, George W. Carll, Henry D. Dagitt, Dennis McElhenny and William L. Brown.

      Mr. Edmund Wilson (represented by Mr. Warren H. Smock),for Sayre & Fisher Co.

      Mr. Clarence Ii. Murphy, for George C. Newbury.
   Reed, V. C.

On May 20th, 1901, there was filed in the cleric’s office of Ocean county a contract between St. Peter’s Catholic Church, Point Pleasant, New Jersey, and Newbury & Son. By the terms of this contract G. A. Newbury and W. T. Newbury, trading as Newbury & Son, for the sum of $12,800, were, to the satisfaction of an architect, acting as agent of the owner, to perform all the work and provide all materials mentioned in the specifications annexed to the contract for the erection of a church. The price was to be paid in monthly installments upon the certificate of the architect of the value of the work and materials actually and permanently set in the building less twenty per cent:, held as a reserve until final payment. The building was to be completed by August 15th, 1901, and it was agreed that at any time it might be determined by the architect to give notice that the work was not being prosecuted with proper dispatch, and thereafter the owner might finish the work and provide materials at the expense of the contractors. A bond was to be given by the contractors to the owners in tire sum of $7,000, conditioned for the faithful performance of the contract. On May 18th, 1901, a bond was so given, conditioned to save the owners from all loss arising from the failure of the contractors, or sub-contractors, to finish tire work provided for in the contract and to save the owner harmless from all liens which might or could be filed against the premises. The sureties upon this bond were James M. Vannote and William P. Taylor.

Newbury & Son began the work of construction and continued it until about January 1st, 1902, when they abandoned the work. On January 25th, 1902, the architect, Henry D. Dagitt, notified the sureties, that as the contractors had failed to comply with the terms of the contract, that he, the architect, would, at the request of the sureties, permit them to complete the work, provided the present sub-contractors were permitted to carry out their contracts, and that new bids be taken for the finishing and carpenter work, which must be submitted to him (the architect) for approval. At the time when the contractors abandoned the work there had been paid to them upon the architect’s certificate of the value of work and materials actually and permanently set in the building the sum of $8,939.44, and there had been retained, as the twenty per cent, of the amount certified, the sum of $2,234.80. The balance of the contractors’ price therefore amounted to $1,632. Vannote and Taylor, the sureties upon the contractors’ bond, finished the building at an expense of over $3,200. Demands were made upon the contractors and notices given to the owners by claimants, whose claims amounted to $2,323.05. In addition to these claims there were also notices given to the owner, of demands made against Vannote and Ta}dor for work done and materials furnished to them in the completion of the building, which claims amounted to $747.23.

The first question respects the relative priority of the claims of the sureties upon the unpaid portion of the contract price and the claims of those who furnished labor and material to the contractors before their abandonment of the contract. The sureties insist .that they finished the building for the. owner, and are entitled to stand in the same posture that the owner would have occupied, had it been compelled to complete the building.

It is assumed by all the parties that if, after the abandonment of the work by the contractors, the owner had completed it, it. would have been entitled to retain the reasonable cost of the' work from the unpaid portion of the contract price. It is insisted for the sureties that, inasmuch as they did the work in the stead of the owner, such portion as the owner would have been entitled to retain should be turned over to them.

The testimony does not prove that the sureties completed the work as the agents of the owner in the sense that the owner became bound by their contracts and responsible for the debts incurred in the work of completion. It does, however, show that, through the architect, the owner consented to the completion of the building by the sureties. Their purpose in undertaking the completion of the building instead of. the owner is obvious. They, as sureties, were bound to see that the building was completed, and they were concerned to have it done in the most economical manner. To effect that purpose they wished to have the control of the work. The sureties did the work, not for the contractors, nor for the owner, but to relieve themselves, as cheaply as possible, from their obligation to the owner. What they did was by virtue of their contract with the owner. Their obligation as sureties was to the owner; they owed no debt to the contractors. What they did was not for the contractors. Kor can the contractors claim any portion of the contract price by reason of what- the sureties did. The notices and demands of the materialmen and laborers never reached the $1,632, being the uncertified amount of the contract price, and the sureties are entitled to this sum. McChesney v. City of Syracuse, 75 Hun 503; City of St. Louis v. O’Neil Lumber Co., 42 Mo. App. 588; S. C. on appeal, 114 Mo. 74.

But as already observed, the sureties spent about twice this amount in finishing the building. The undisputed bills paid by them amount to $3,258.70. The query is whether the remainder of these claims, after deducting the $1,632, should be paid out of the $2,234.80, being the twenty per cent, withheld under the contract until the completion of the building.

Had the owners completed the contract, they would have been entitled to deduct the cost of completion from the contract price due to tire contractors at the time of their abandoning the work, including the amount retained under conditions like the present. Kelly v. Bloomingdale, 139 N. Y. 343. Kow, the twenty per cent, was retained as indemnity against failure by the contractors to entirely execute the contract. As against the sureties, the owner was bound to so retain it, else he would have pro tanio discharged the sureties from their obligations to answer the default of the contractors. Phil. Mech. L. 260. The sureties could have compelled the owner, if its use became necessary, to devote all, or a portion, of this money to complete the building before resorting to their bond. Instead, they themselves performed the duty and discharged the obligation which the contracts put upon the contractors. By this conduct the sureties became entitled to the security held by the owner for the performance of the contract as far as it was necessary to reimburse them for their necessary outlay. Philadelphia & Reading Railroad Co. v. Little, 14 Stew. Eq. 519, 529.

This right of the sureties, so far as it concerns the owner and contractors, is clear. - I also think that the right of the sureties is superior to the claims of the materialmen and laborers. The claims of the latter reach only such moneys as was due at the time of the several demands and notices or thereafter became due to the contractors. Nothing, aside from what was already paid, became due unless the theory is adopted that the sureties were working for the contractors and therefore, upon the completion of the building by them, a debt accrued to the contractors as if they had completed the work. But, as already observed, the sureties were not working for the contractors. There was no privity between them and the contractors. Their contract was with the owner as sureties for tire default of the contractors. By the mere fact of performance of their contract they became equitable assignees of so much of the money held by the owner as was required to requite them for their expenditure.

I am therefore of the opinion that the sureties are entitled to be reimbursed for their necessary expenses in completing the contract out of the entire amount of the contract price remaining unpaid.

In excess of the $3,258.70 there were demands made upon the sureties and notices of their refusal to pay them given to the church b3 claimants for labor done and material furnished after the contractors had abandoned the work and while the sureties were completing it.

The validity of these claims become important in ascertaining whether the sureties became liable to pay these debts for work and labor done in the completion of the building, and so whether the amount to which thejr are entitled becomes enlarged by the amount of these claims. The claims of McElhenny and Brown, who seem to have been employed by Peacock, the carpenters-working for the sureties, I think, should he allowed.

I think, also-, Mr. Dagitt’s claim for $64.69 for work done by Martin Moses by arrangement with the sureties, and his-claim for $231.22 for window sash furnished under agreement with the sureties, and for $25 for labor employed in keeping up fires, should be allowed. The remainder of Mr. Dagitt’s claim for extra services should be disallowed, as, in my judgment, they were not debts incurred by the sureties.

If there is any balance remaining after the pajunent of these claims it should be distributed, first, to A. E. Vannote and next to James M. Yannote & Sons. A consideration of the validity or priority of the subsequently filed claims would be useless as, in my view of the situation, there could be no fund to pay them in any event.


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    Sarah Bayley v. William Bayley et al.
    [Filed February 13th, 1904.]
    1. A creditor’s bill need not allege that defendant has no other property liable to satisfy complainant’s judgment, if it shows that complainant has exhausted his legal remedy.
    2. A creditor’s bill is insufficient in not showing that complainant has exhausted his remedy at law, the return to the execution merely showing there was no personal property, and the bill failing to show there is no other property the legal title to which is in defendant.
    3. A Us pendens filed in a purely personal action at law gives no notice of a claim against property.

      '■ 4. A. ei-eclitoi'’s bill alleging that defendant B., to prevent complainant from collecting her claim against Mm, and to defraud her, conveyed his land to H., who conveyed to B., and that B. then conveyed to J., ■on the expressed consideration of ifl and marriage; that J. therefore married B.; that B. and J. then, in further execution of said fraudulent design, conveyed the land to G.; that no consideration was paid for any ■of the conveyances; and that, when the conveyances were made, the parties thereto knew of B.’s indebtedness to complainant — charges actual fraud of J. in the transaction.
    On demurrer to a creditor’s bill to reach property alleged to have been fraudulently conveyed.

      Messrs. Howe & Davis, for the demurrant.

      Mr. Jerome D. Qedney, for the complainant.
   Reed, V. C.

The first ground assigned is that the bill sets out no cause of irreparable injury, in that it does not show that there was no other ‘real estate belonging to the defendant out of which the complainant’s judgment might have been made.

It is not essential that there shall be an allegation that the ■defendant has no other property liable to satisf,y the complainant’s judgment, if he shows that he has exhausted his legal Temedy. Sm. Eq. Rem. 136 n; Daskam v. Neff, 79 Wis. 161. This bill, however, docs not show that the complainant has exhausted his remedy at law. If the return to the writ of ■execution had shown that there was nothing upon which to make a levy, or that the defendant had nothing but the property in question, the bill would have shown that the legal method ■of redress was exhausted. The return of the sheriff only showing that there was no personal propert)', and not showing that there was no ‘other real estate, and the bill itself failing to set out that there was no other property, the legal title to which was in the defendant, the pleading is defective. If the debtor has other property subject to the judgment and execution sufficient to satisfy the debt, there is no necessity for the creditor to resort to equity. If his debt can be satisfied out of property upon which his judgment is a lien, it is only inviting useless litigation for him to question conveyances made by the debtor, which, however they may have been intended, do not operate as a fraud upon. him. Dunham v. Cox, 2 Stock. 437, 467.

The demurrer also challenges the sufficiency of the bill in respect to its statement of fraud in conveying away the property by Bayley, the judgment debtor.

There were two properties owned by Bajdey, and the bill charges that in order to secure the said property for his own use and benefit, and to protect it from the claim of the complainant and prevent her from collecting her debt, and contriving to defraud her, the defendant did, on November 18th, 1902, convey the two tracts to one Edward E. Howard, who, on June 6th, 1903, conveyed them to William Baylejq for the consideration of $1, and by another deed said Bayley pretended to convey the.two tracts to Daisy B. Jacobs, upon the expressed consideration of $1 and marriage; that said Daisy B. Jacobs thereafter, in the month of June, was married to said William Bayley; that Bayley and wife, in' further execution of said fraudulent design, on September 12th, 1903, conveyed the tracts to one George M. Henderson. The bill charges that no consideration was paid for any of the said conveyances, and that Bayley has always held possession of the property.

The bill also states that these parties, at the several times when the conveyances ivere made, knew of the claim of the 'complainant and of the indebtedness of the said William Bayley to the complainant as aforesaid, and that-said conveyances were made after the filing of a Us pendens, &c.

The Us pendens referred to is particularly mentioned -in paragraph 4 of the bill as one filed in the action at law in which the debt of the complainant against Bayley was put in judgment.

It is quite obvious that the filing of the Us pendens was ineffective to charge anyone with notice of any claim against this property. The action at law was a purely personal action, ■which did not relate to or affect the possession of or title to land. Under our statute a Us pendens filed in such an action is a nullity. Whether the notice imputed to the parties by the pleader is confined entirely to' the constructive knowledge supposed to arise from this Us pendens is not quite clear. So far as concerns Henderson it is immaterial, for under the statements of the bill he was not a purchaser for valuable consideration, the charge being that no consideration was paid for any of the conveyances. Therefore, whether Henderson took with or without notice is of no importance, if his grantees hold the property in fraud of the complainant.

But it is insisted that the bill displays no fraud in the conveyance to Daisy B. Jacobs. The bill alleges that the debt put in judgment existed before the conveyances were made by Bayley. If the conveyances were voluntary, a fraud is presumed. But the counsel for the demurrant points out that the pretended conveyance to Daisy B. Jacobs was made upon the expressed consideration of $1 and marriage, and that a marriage between the grantor and grantee ivas thereafter consummated.

The insistence is thát it appears from this that the consideration of the conveyance was an antenuptial settlement, and therefore a valuable consideration. It is argued that the presumption arising from the antecedent indebtedness which would have existed had the conveyance been voluntary does not arise, in view of these facts. Antenuptial settlements, however, may be void as to a creditor for actual fraud, and the query is whether the bill charges the parties with such fraudulent conduct toward the complainant.

I am of the opinion that the bill charges actual fraud in the transaction, not as to Bayley himself, but to Daisy B. Jacobs. It expr'essly charges Bayley with contriving to defraud the complainant in making these conveyances, and charges that Bayley and Daisy B. Jacobs, in further execution of such fraudulent design, conveyed to Henderson. Upon the first ground I think there should be a decree for the demurrant, Avith leave to amend Avithin tAventy days, upon payment of costs.


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    Frederick W. Gnichtel, trustee, &c., v. The First National Bank of Hightstown, New Jersey.
    [Filed December 22d, 1902.]
    F., who owned a dwelling and a store, in which he had for a long time conducted a business, and whose stock seemed to be large, banked with defendant, all his transactions being with .1., its cashier. Among notes discounted was one for $4,000 made by F., and after several years reduced to $3,485. Besides this were several others, amounting to $2,580, some of which were overdue from two days to two or three months. F. had no balance in bank against which they could be charged. J., becoming suspicious that some of the notes were forged, went tu S., brother-in-law of F., and found this to be true, and intimated that F. was in danger because of this. Shortly after F., at his home in the presence oí S., paid ,JT. $2,580 and' took up the forged notes. I-Ie had obtained the money by turning over all his property to S. for $3,000. There was no testimony that J. knew at the time how the money had been raised, though it was intimated that S. had arranged for it. A statement which ,T. had received from F. showed solvency. — -Held, that J. did not have “reasonable cause to believe” that the payment, made within four months of the filing of the petition in bankruptcy against F., was intended to give the bank a preference so as to make it void under Bankruptcy act (1898 860b), as amended by act of February 5th, 1903, 32 8tat. 199 ch•. J/87 (O. 8. Comp. 81at. Supp. .1903 p. J/16), reasonable cause to “suspect” not being enough.
    On demurrer to a bill.'

      Mr. W. Eoll Apgar, for the complainant.

      Messrs. TIoli & Van Dike, for the demurrant.
   Reed, V. C.

The bill is filed b}r a trustee in bankruptcy to compel the First National Bank of Hightstown to pay over to the complainant certain moneys received by the defendant from the bankrupt.

The demurrer seems to be rested upon the authority of a case decided by one of the appellate courts of Illinois — the case of McCormick v. Page, 3 N. B. N. Rep. 1009. In that case the demurrer was sustained upon the ground that the trustee had an adequate remedy at daw, and therefore it followed that tlie remedy by equitable proceeding was excluded. But in this state the jurisdiction of equity is not' excluded in all cases where there is an adequate remedy at law. There is a class of cases where the jurisdiction of the courts are concurrent, and this class includes suits in which the gravamen is fraud, actual or constructive. The remedy at law may be perfectly adequate and yet the jurisdiction of a court of equity to afford relief exists, although it is not always exercised. Ramshire v. Bolton, L. R. 8 Eq. Cas. 294; Anderson v. Eggers, 18 Dick. Ch. Rep. 264.

In matters -Involving a recovery of the property of insolvent debtors, equity has alwa3rs asserted its authority. Nor does it matter whether the property of a debtor has gone into the hands, of a party in a transaction between the debtor and the defendant in which there existed actual fraud, or whether the transaction was constructively fraudulent. A voluntary deed made by an insolvent to a person entirely innocent of any knowledge of the grantee’s condition, will be set aside in equity at the suit of an antecedent creditor.

The transaction set out in.the bill is constructively fraudulent or unlawful, by force of the provisions of the federal Bankruptcy act. Because the property was received by the bank in the shape of mone3r, and therefore the decree asked for is that the bank pay the money to the trustee, the cause presents an aspect which at once suggested the adequacy of an action at law, and therefore suggested the exclusion of any equitable remedy. But the money held by the bank stands in exactly the same posture as any other property which the bank might have received, and the decree asked for only requires the bank to turn over to the trustee the property which it has received.

Besides, the property sought to be recovered is in its nature trust property, held by the bank for the benefit of the creditors of the bankrupt. The trustee has the right to follow it in a court of equity.

1 think there should be a decree for the complainant.


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    Charles S. Lawson v. Thomas Dunn.
    [Filed February 26th, 1904.]
    1. In the settlement of an insolvent partnership, claims of individual partners cannot be recognized until other claimants are paid in full.
    2. Where a member of an insolvent partnership conveyed property to his wife which was rented to the firm, and the conveyance was in fraud of creditors, the wife was a mere trustee in equity, the title, in respect to his creditors, remaining- in him, and she was not entitled to payment of rent while firm debts remained unpaid.
    3. Where a creditor of a firm who had obtained judgment on his claim obtained a decree against the -wife of one of the partners setting aside as fraudulent a deed to her of her husband’s property, under which decree the property was sold, but not for a sum sufficient to satisfy-the claim, on insolvency of the firm and distribution of its assets in the hands of a receiver, such creditor was entitled to share ratably on the full amount of his claim, without deducting the amount of the sale, unless the dividends would amount to more than the balance due him after applying the sum received from the sale.
    On order to show cause.

      Mr. William T. Hilliard, for the receiver.

      Mr. Charles Mecum, for Ivins, Deats & Magee et al.

      Mr. Isaac 0. Acton, for John J. Thompson, administrator.

      Mr. Jonathan W. Acton, for Mary A. Dunn.
   Reed, V. C.

This is the return day of an order to show cause why the account of a receiver of a partnership should not be approved, and distribution ordered.

The account taken by the master included all the assets of the firm and all claims against the firm, not only the claims of third parties, but of the partners as 'well.

As there is not enough assets to pay all these claims, the question now supervenes, in what manner is the money in the hands of the receiver to- be disbursed ?

It is quite clear that the claims of the partners cannot be recognized until the other claimants are paid in full. In respect of the claims of the other claimants, the first question propounded is whether the claim of Mary A. Dunn should share in the distribution before all the other valid claims, other than those of the partners, are paid in full.

Her claim is for the rent of the store in which the firm carried on its business. The title to this store, when it was originally used for this business, was in Thomas Dunn, the husband of Mary A. Dunn. In April, 1894, he conveyed this store to Mary A. Dunn. In a suit brought against Mary A. Dunn by John J. Thompson, administrator of Joseph B. Thompson — a claimant against the firm assets who obtained a judgment for the amount of his claim, to- set the deed from Dunn to his wife aside as fraudulent — a decree was made in the suit in accordance with the prayer of the bill.

I think that the testimony taken before the master shows that the conveyance was made in fraud of all creditors.

This left her a mere trustee in equity,' the real title, in respect of the husband’s creditors, being in him.

As against the receiver, so far as he represents those creditors, I do not see how she can claim rent for property which was her husband’s, any more than her husband could claim rent to be paid out of the firm assets while firm debts remain unpaid.

I see no reason why these rents could not be reached by any judgment creditor of the husband as equitable assets belonging to him. While the receiver could not recover them if they were due from a tenant other than the firm (Hiles v. Dunn, 16 Dick. Ch. Rep. 391), yet, being a claim against the firm, it is a claim, in equity, by the husband, wlm is a partner. .

I am of the opinion that her claim is not entitled to recognition in making distribution unless there remains a surplus after paying firm creditors;

The next question propounded is whether the John J. Thompson, administrator, &c., already mentioned, is entitled to share ratably upon the full amount of his claim of $3,503.75 and his •other claim of $619.30.

As already observed, he obtained a decree against Mrs. Dunn setting aside the deed to her as a fraud upon his intestate as her husband’s creditor.. The property was sold by virtue of this decree, and there remains as the proceeds of such sale the .sum of $3,118.19. The query is whether this amount should be deducted from the amount of the claims, and a dividend declared for the remainder, or whether Thompson is entitled to a dividend upon the entire amount of his claims.

The rule applied by the bankruptcy courts is that if a creditor holds security given him by the bankrupt he must surrender his security for the benefit of all the creditors, if he asks for dividends upon his entire claim. He can give credit for his security, and claim for the balance, or give up his security altogether and prove for his whole debt. Lind. Part. § 714. This rule is only applicable where the debt is payable out of the estate to which the security belongs. If the security is given by some one other than the bankrupt, the creditor can hold his security and prove for his whole debt. And partners, under this rule, are regarded a§ parties distinct from the firm. Therefore, if one partner mortgage his own property for a debt of the firm, the creditor is allowed to prove for his whole debt against the firm and retain the mortgage security given by the partner. Ex parte Caldicott, 25 Ch. Div. 716; Lind. Part. § 716. The distinction is apparent from a comparison of the case of Ex parte Caldicott, supra, and the case of Ex parte West Riding Banking Co., 19 Ch. Div. 105, in which a creditor held a mortgage upon the property of a partner who himself became a bankrupt, and it was held that the creditor could not prove without giving up his security. This rule respecting securities is the foundation •of the rule that where the claimant is the creditor, not only of the bankrupt, but also of another person, he may prove against, the estate of the former, and yet sue the latter and get from, him what he can. Ex parte Schofield, 12 Ch. Div. 337.

A creditor of a firm, one member of which has become a bankrupt, can prove against the estate of the bankrupt and sue-the other partners. Ex parte Isaacs, 6 Ch. App. 58; Lind. Part. § 718.

Under ’the rules recognized in the administration of bankrupt estates it is quite clear that the firm and the partners are-to be regarded as distinct parties, and that inasmuch as the creditor would have had the right to hold a security given him by a partner, so he has the right to sue a partner for a firm debt, and also to prove for his entire debt against the insolvent firm.

Nor am I aware that this doctrine has been questioned in the distribution of insolvent estates by receivers or assignees.

There is a contrariety of view in respect to whether, where the creditor holds collaterals of the insolvent, he can prove^ for the whole amount of his debt, but so far as I know there is no dispute when the collateral is that of a person other than the insolvent.

In the ease of State Bank v. Receivers of Bank, 2 Gr. Ch. 266, cited as opposed to the right to prove for the full amount, the pledge consisted of drafts which belonged to the insolvent Hew Brunswick Bank, and which had been endorsed over to the State-Bank as collateral security. It was held by Chancellor Yroom that the amount of the collateral should first be deducted from the claim of the State Bank. In all the cases cited by the learned chancellor the collaterals were given by the bankrupt.

The rule in respect to payments received from others than the insolvent, as applied to the relations of creditor, partner and firm, is summed up by Mr. Bates thus:

“Both in England and here, ií a joint creditor has also separate security upon the property of one of the partners, or a separate creditor-has also security given by the firm upon joint property, such creditor-could prove his debt and also realize upon his security.” 2 Bates Part.. § m-

There is no question of marshaling involved. Thompson’s right to the money raised by sale of Dunn’s property is complete and unquestioned.

If Dunn has individual creditors, they cannot now attack Thompson’s right to this money. If the amount had been sufficient to pay Thompson’s claim against the firm, then the individual creditors, if any, could, perhaps, have successfully asked to be subrogated to Thompson’s right to prove against the firm.

My conclusion is that Thompson should receive dividends upon his whole claim, unless the dividends reach an amount more than the remainder due him, after applying the sum received from the Dunn property.