text:
    Alfred R. Tooker et al. v. Walter J. Vreeland et al.
    [Submitted December 14th, 1921.
    Decided February 5th, 1921.]
    1. If a husband and wife make a compact to dispose of their combined estates, the terms of which are expressed in their mutual wills, the contract will be enforced in equity. Equity will not interfere with the probate of the wife’s later will, made in violation of the contract, but will enforce the contract against her estate by impressing a trust upon the assets.
    2. Such contract to be enforceable in equity must be founded upon a valid consideration certain and defined, equal and fair, and sufficiently proven.
    3. Wlhere the survivor, in such a case, accepts the benefit of the testamentary gift of the other, he becomes legally bound to carry out the obligation of the contract between them.
    On bill, &e.

      Mr. William A. Lord, for the complainants.

      Messrs. Collins ¿6 Corbin and Messrs. Coult & Woodruff, for the defendants.
   Backes, Y. C.

On January 15th, 1914, Reuben Tooker and Emeline, his wife, executed mutual wills, whereby they gave their respective estates to each other for life, and 'as much of tire principal as necessary for his or hei' comfortable maintenance, with remainder, over, in pecuniary legacies, and the residue to certain of their kin, share and share alike. The wills a.re identical except as to a few specific bequests of trinkets. The will of Mrs. Tooker contains a provision, which is not in that of her husband’s, that

“the foregoing legacies [the pecuniary] in this paragraph set forth shall not be paid but shall lapse in case like legacies of like amounts are paid to the persons hereinabove named in this paragraph under the provisions of the last will and testament of my said husband, ReubenTooker.”

Mr. Tooker died shortly afterward and his will was probated by his widow, his executrix, March 16th, 1914, before the surrogate of Essex county, and sire took possession and enjoyed his estate.until her death, June 5th, 1919. William A. Lord, co-executor, also qualified but took no active part, in the administration of the estate during Mrs. TookeFs lifetime. Mrs. TookeFs mutual will was admitted to probate shortly after she died, and Alfred R. Tooker and William A. Lord, the executors therein nominated, duly qualified and entered upon the discharge of their duties. After her husband’s death Mrs. Tooker made another will, June 16th, 1914; a codicil thereto February 27th, 1915; a second, May 3d, 1917, and a third February 26th, 1918, which have been offered for probate to the surrogate of Essex county, but have not been proved because of a stay issued in this suit. The assets of Mr. TookeFs estate are not sufficient to pay the pecuniary legacies of his will, and the complainants Alfred B. Tooker and Jennie Tooker, whose legacies under the mutual wills are substantially diminished by the second will and codicils of Mrs. Tooker (Alfred li. Tooker’s interest was reduced from a $10,000 legacy and one-seventh of the residue: to a life estate in $8,000 and one-fourth of the residue, and Jennie Tooker’s interest from $4,000 and a one-seventh of the residue to a life estate in $3,200), set up and charge that the mutual wills were made in pursuance of a contract between Mr. and Mrs. Tooker to bequeath to each other their respective estates for life, and to leave their combined estates, remaining at the death of the survivor, to the legatees'agreed upon by them; that the mutual wills embody the terms of the contract, and they pray that the contract be specifically performed.

The law is well settled, and the proposition is not questioned, that if Mr. and Mrs. Tooker made a compact to dispose of .their combined estates, the terms of which find expression in the mutual wills, tire contract will be enforced in equity according to its established practice. Equity will not interfere with the probate of the later will, made in violation of the contract, but will enforce the contract- against the estate of the survivor by impressing a trust upon the assets. There is a wealth of authority for the relief and tire remedy. Many of the- cases are gathered by Vice-Chancellor Garrison in Deseumeur v. Rondel, 76 N. J. Eq. 394. The earty English cases are Dufour v. Pereira, 1 Dick. 419; 2 Harg. Jur. Arg. 304; Lord Walpole v. Lord Orford, 3 Ves. Jr. 402. See also- for collection of cases Stevens v. Myers, 91 Org. 114; 177 Pac. Rep. 37. An interesting discussion of the subject is to- be found in Edson v. Parsons, 155 N. Y. 555. See also Rastetler v. Hoenninger, 136 N. Y. Supp. 961; Herman v. Ludwig, 174 N. Y. Supp. 469. An early case in this state on the subject of enforcing contracts to bequeath is Johnson v. Hubbell, 10 N. J. Eq. 332, and the leading case is Duvale v. Duvale, 54 N. J. Eq. 581; 56 N. J. Eq. 375. See also Lawrence v. Prosser, 88 N. J. Eq. 43.

That such a contract be enforceable it must be, like all other contracts specifically enforceable in equity, founded upon a valid consideration, certain and defined, equal and fair, and sufficiently proven—qualities to which Lord Loughborough said in Lord Walpole v. Lord Orford, supra, he knew no limitations.

The mutual wills do not on their face purport to be contractual. Their reciprocal provisions indicate that they were the result of an understanding between Mr. and Mrs. Tooker, but an understanding does not necessarily spell contract. The vital question is, Was it agreed by them- that the wills should remain irrevocable after the death of either? For the solution of this we must look to the extraneous testimony, keeping in mind that, to establish an agreement, the proofs must be clear and convincing. The contract may be found in an express promise, or inferred, as a conclusion of fact, from the circumstances surrounding the parties.

Mr. and Mrs. Tooker were aged and childless. The estates about to be disposed of were earned by the husband. Whatever Mrs. Tooker had came from her husband, either by gift, or she held it in trust for him, and they evidently looked upon their holdings as common property. The actual amount left by .either is unascertain able, because many of the securities found in thé possession of Mrs. Tooker after her death bear no ear-marks of ownership, and .whether they were held by her as executrix or in her own right could not be determined. The inventories appraising Mr. Tooker’s estate at approximately $7,000, and that of Mrs. Tooker at $43,000, are conjectural.

Shortly before the wills were executed Mr. and. Mrs. Tooker confided to a friend their purpose and understanding. This witness, intelligent and disinterested, whose word is unquestioned, and, as he seemed to me, trustworthy and dependable, gave cogent proof of the contractual nature of the arrangement. He testified that in the fall of 1913 (and that is about the time the couple were counseling with Mr. Lord, as hereafter shown),

“Mr. and Mrs. Tooker asked me if I would be an executor of their will; they said they wanted to draw rip a joint will whereby they would agree that after the death of each other their wishes would be carried out one by the other. * * * They mentioned especially to me about their nephew Alfred Tooker. * * * They told me they wanted him to get the bulk of their estate; they said that they would leave him $10.000 outright and as residuary legatee, and wanted me to act as executor of such will with a Mr. Lord.”

Mr. Lord, an esteemed member of the bar, and whose rectitude as a witness was conceded, testified that he was. sent for to draw the wills, and I quote at length from his narrative:

'T went down there and found Mr. and Mrs. Tooker, who were introduced to me by Mr. Alfred Tooker, and Mr. Tooker said to me that he and his wife had agreed that they should make a will, and the question came up as to whether it should be a joint will or two mutual wills. In fact, their idea was to sign a joint will, and my advice given to them was that they better make two wills and have them executed at the same time. * * * His wife was there. He said that they wanted to disipóse of their property according to their mutual desires; that they had talked the matter over and decided who they wanted to leave their property to. I asked Mr. Tooker, who owned the bulk of the property; ‘Oh,’ ho said, ‘that doesn’t make any difference; we are both one—I and my wife are both one—what is hers is mine and what is mine is hers also— just as much hers as it is mine.’ He said that he wanted to leave everything to her during her life; she wanted to leave everything to him during his life, and upon their death that the property be—go to certain designated legatees. He said that he wanted it to be a final disposition of the property and he did not care if it was in one will or two wills; and Mrs. Tooker—I don’t know whether it was Mr. or Mrs. Tooker handed me this slip of paper specifying the legacies which they wanted placed within the will or wills. The paper was in the handwriting of Mrs. Tooker. * * * I then went back to my office and some days later produced to them a draft of two wills, one to be executed by each. The drafts of these wills which I now have in my possession. * * * They were to be the originals but there were some changes made in them afterwards. They took these drafts of the wills and kept them—they said they wanted to look them over—said that they might want to make some changes. And after—the thing drifted along for some months until January or—no—I don’t know just when it was, but some weeks after these drafts were made, Mr. Tooker made certain changes in the amounts of the specified bequests as appears on this draft of Emaline F. Tooker’s will, and then I redrew the wills in accordance with their instructions, and in January—January 17th, 1914—the wills were in proper shape to be executed, and I was present when they were executed in the presence of Mr. Everett and Mrs. Contrell, the subscribing witness. * * * On this original paper, which I said was in the handwriting of Mrs. Tooker, they .made certain changes after it was first given to me, which appear in pencil in my handwriting. They wanted to leave their property to their relatives, whether they were relatives of Mr. Tooker or Mrs. Tooker, who were in need, rather than to some of the relatives on either side that were well fixed financially; and they discussed the matter considerably, and as I say. over a period of some months before they were ready to execute, but Mrs. Tooker was very emphatic. She didn’t want to do anything that was not the joint agreement and the consensus of opinion between her and her husband, and that they wanted this will when executed to be their last will and to effectually dispose of their property; and the question came up as to whether—in fact, I asked them, ‘Supposing the estate or what property belonging to one is not sufficient to pay these legacies?’ Well, they said, the legacies, of course, would all come out of the property belonging to the other; but Mr. Tooker was still insistent that their property—didn’t want any of the property to be considered his or his.wife’s, but. he wanted to dispose of it as if it belonged to both of them, and for that reason the clause in Mrs. Tooker’s will was inserted that if the bequests, which I think appear to be identical in both wills, were made out of Mr. Tooker’s estate they should lapse and not be paid out of Mrs. Tooker’s estate. * * * I believe Mr. Tooker just said that he wanted it understood that this was the last will of both of them and that they were to be considered mutual wills, or some words to that effect, and I said I so understood it, and in my opinion it was better for them to execute two wills than to execute one will jointly. Mr. Tooker, on most of the interviews, did most of the talking, but Mrs. Tooker always assented to it and said she wanted everything arranged just as her husband, Reuben, wanted it, and wanted the property disposed of according to his wishes after he was dead.”

Mr. Alfred E. Tooker, one of the complainants, testified in corroboration of the circumstances as detailed by Mr. Lord.

From this testimony, the truth of which is not challenged, it seems to me to be clearly and satisfactorily established that the wills grew out of, not simply tire mutual desire of an aged and affectionate couple to gratify the other’s wishes, but a solemn promise, an agreement—a contract—to be performed by the survivor. The consideration of the contract we readily find in the inducement held out by the one. to the other to mutually testate, in the reciprocal gifts of the life estates, and tire principal, if necessary, and the execution of the contract on the part of Mr. Tooker, by his unrevoked will at the'time of his death. And in the acceptance and the actual engovunent of the gift by Mrs. Tooker we also find that part performance which takes the oral contract out of the statute of frauds.

The disparity in the amounts of the estates involved does not militate against the conclusion I have come to’ that the mutual wills were the outcome of a contract. Equality of consideration is not essential to a binding obligation.

The apparent inequality introduces into the agreement no element of unfairness, affecting its enforceability, as the estates practically belonged to Mr. Tooker and were regarded by him and his wife as their common, property.

It is argued that, inasmuch as the thing uppermost in the minds of the testators, as to their relatives, was to provide for those “who were in need,” it was implied that the survivor could alter the gifts if and as the needs changed. . I cannot subscribe to this. It was an incident of their bargain and the two decided that question—as to who “were in need”—definitely and irrevocably. Moreover, the breach of the contract cannot he justified upon any supposed readjustment by the second will and codicils of Mjs. Tooker, based upon changes in the financial conditions of the legatees, because, in fact, there were no changes, at least, none are shown. The case presents the second will and codicils as an arbitrary revocation by Mrs. Tooker of her mutual will and a declaration not to stand by the contract which produced it.

Unquestionably, Mr. and Mrs. Tooker’s primary concern was each other, and it may well be- that they would have provided, one for the other, in the manner they did, wholly thoughtless of a bargain; but be that as it may, the fact nevertheless is that they, in consideration of reciprocal bequests to themselves and those of their choice, bound themselves to abide the provisions of the mutual wills, and Mrs. Tooker having accepted the benefit of her husband’s gift became legally and in conscience bound to cany out the obligations she undertook.

A decree will be advised enforcing the contract by impressing a trust upon the assets of the estate of Mrs. Tooker in the terms of the mutual wills, and to that end there will be an accounting.


source: Caselaw Access Project

author: Backes, Y. C.

license: Public Domain

text:
    The Swedesboro National Bank v. John C. Richman et al.
    [Submitted January 26th, 1921.
    Decided February 8th, 1921.]
    Where decedent deposited $G00 to the credit of herself or another, with intention that on her death the deposit should go to the other, though either of them could have checked out the deposit, the decedent had the right to revoke the gift to the other, which she did effectually by having the name of the other stricken from the account on the books of the bank and on the pass-book.

      On bill, &c.

      Mr. Enoch S. Fogg and 'Mr. John Boyd Avis, for the administrator.

      Mr. Jam.es Mercer Davis, for tlie defendant Crispin.
   Backes, Y. C.

This interpleader suit involves the ownership of a deposit in the Swedesboro National Bank standing in the name of Hannah S. Bichman. The contestants are her administrator and Ada E. Crispin. The facts are undisputed. In 1910 Mrs. Bichman deposited in the Swedesboro National Bank $600. At her request it was entered on the books of the bank to the credit of “Hannah S. Bichman or Ada B. Crispin.” Both signed identification cards and the bank delivered to Mrs. Bichman a pass-book made out to “Hannah S. Bichman or Ada B. Crispin.” The money was Mrs. Bichman’s, and the proofs show that she made the deposit in the joint names with tire intention that at her death it should go to Mrs. Crispin. Either could have checked out—the rules of the bank requiring the presentation and surrender of the pass-book, only upon the closing out of the account. Mrs. Crispin -made no effort in that direction and Mrs. Bichman made two withdrawals of accumulated interest. Mrs. Bichman changed her mind as to the gift, and on October 22d, 1914, changed the joint deposit to a personal account. This was done by the cashier striking the name of Ada B. Crispin from the joint account on the ledger of the bank as well as on the pass-book, at Mrs. Bichman’s request. The administrator and Mrs. Crispin claim the money, and to protect itself the bank paid it into court.

Whether the joint deposit, had it remained untouched, would have been a valid and enforceable gift'under the principle laid down in New Jersey Title Guarantee and Trust Co. v. Archibald, 90 N. J. Eq. 384; 108 Atl. Rep. 434 (there was not here, as.there, a contract with the bank as to survivorship), or invalid under the doctrine of Stevenson v. Earl, 65 N. J. Eg. 721, and the line of cases following the rule there laid down (void as a testamentary disposition), need not be considered or determined.

The ownership of the money was exclusively in Mrs. Rich-man, and the disposition of it, as she saw fit, was her privilege. Although Mrs. Crispin had it in her power to withdraw the fund (because of the form of the deposit), she had no title to the money, and had she presumed to make withdrawals they could have been recovered by Mrs. Rickman. Mrs. Rickman had the right to revoke the gift, and this she did by withdrawing the fund. That she did as effectually by having the name of Mrs. Crispin'stricken from the account on the books of the bank and on the pass-book, as if she had withdrawn the money by check and closed the account and opened another in her own name. The method was one of bookkeeping of the bank. The power to change the contract with the bank was solely in Mrs. Richman, and the form of the new account concerned her and the bank only. The new promise was to pay to Mrs. Rickman’s order, and that promise passed upon her death to her administrator and the fund will be awarded to him.


text:
    Charles R. Myers v. Mildred J. Brown et al.
    [Submitted January 21st, 1921.
    Decided February 19th, 1921.]
    1. The lien of a judgment creditor of a mortgagor, otherwise perfect, upon a fund consisting of rents which had accrued but were unpaid when a receiver was appointed in proceedings to foreclose the mortgage, is no.t impaired by the fact that the fund was in custodia legis at the time the execution was levied.
    2. A mortgagee has no right to the rents of the mortgaged premises, unless they are expressly pledged, until lie comes into possession after default ; and a receiver in foreclosure is entitled only to rents accruing after his appointment.

      3. A mortgage conveying lands, together with the rents, issues and profits, is a lien on the land only; such words apply only to rents, issues and profits after the mortgagee has taken possession. To entitle the mortgagee to more than that, there must -be an express pledge of the vents accruing before default.

      4. Rents accruing before the mortgagee takes possession for default, either personally or through a receiver, belong to the mortgagor, and having been garnished in the hands of a receiver by the mortgagor’s judgment creditor, such creditor is entitled to be paid first out of the accrued rents.
    5. Such accrued rents should not be applied to taxes accumulated pendente lite as against the claim of the mortgagor’s judgment creditor who has garnished the fund.
    On petition, &c.

      Messrs. Bourgeois & Coulomb, for the complainant.

      Mr. Martin V. Berger, Jr., for the defendants.
   Backes, Y. C.

The question presented is: Is a mortgagee entitled to rents which had accrued but were unpaid at the time of the appointment of a receiver in foreclosure, as against a judgment creditor of the mortgagor? The facts are agreed upon and stipulated by counsel and they appear to be as follows:

The complainant filed his bill February 20th, 1917, to foreclose a mortgage on the Brookhurst Hotel, Atlantic City, executed to him by Mildred J. Brown in 1914. The mortgage includes, in addition to the land, the “rents, issues and profits thereof.” The property was sold and there is a large deficiency. On July 12th, 1917, a receiver was appointed to collect “any back and future rents.” The receiver collected from the tenant two installments of rent that had accrued before his appointment, $500 on June 15th and $1,000 on July 10th, which are the subject of this litigation.

Susanna B. Trap issued an execution out of the supreme court on a judgment of $799.92 recovered by her against Mildred J. Brown, the owner of the equity of redemption, and, June 19th, 1918, the sheriff of Atlantic county levied upon the moneys in the hands of the receiver, in form and manner provided by the supplement to the Execution act of 1915. P. L. 1915 p. 182.

The judgment creditor’s lien, otherwise perfect, is not impaired by the fact that the fund was in custodia, legis at the time the execution was levied. If the mortgagee had no right to the rents, then they belonged to the judgment debtor, and as against her the levy is binding. If the mortgagee had no right to the rents the receiver had none.

It is settled law in this state that a mortgagee has no right to the rents of the mortgaged premises, unless they are expressly pledged, until he goes into possession, after default; and that a receiver in foreclosure is entitled only to rents accruing after his appointment. Stewart v. Fairchild-Baldwin Co., 90 N. J. Eq. 139; affirmed, on this proposition, 108 Atl. Rep. 301.

The appointment of a receiver in foreclosure does not relate to the commencement of the suit. The receiver is not entitled to rents accruing, pendente lite, before his appointment. The commencement of a foreclosure gives the mortgagee no title as his mortgage is only security for a debt. The title and posséssion of the mortgaged premises, unless interrupted by the appointment of a receiver, remain in the mortgagor, until the sheriff’s deed is actually delivered to the purchaser. Wilt. Mort. Fore. §13.

A mortgage conveying lands, “together with the rents, issues and profits,” is a lien upon the lands only. These words add nothing to the security of the mortgage debt. They mean nothing more than the law allows—that is, the, rents, after default, upon the mortgagee taking possession. “It is, of course, competent for the parties to provide, in the mortgage, for the payment of rents -and profits to the mortgagee, while the mortgagor remains in possession. But when the mortgage contains no such provision, and even where the income is expressly pledged as security for the mortgage debt, with the right in the mortgagee to take possession on the failure of the mortgagor to perform the conditions of the mortgage, the general rule is that the mortgagee is not entitled to the rents and profits of the mortgaged ¡oremises until he takes actual possession, or until possession is taken in his behalf by a receiver.” Freedman's Saving Co. v. Sheperd, 127 U. S. 494. That case involved the right to rents which by the mortgage had been reserved to the mortgagor until default. Mr. Justice Harlan, after referring to numerous authorities, said, further, that “even if the deed had expressly pledged the income as security for the debts named, the mortgagor, according to the doctrines of the cases cited, would have been entitled to the income, until, at least, possession was demanded under the deed; or until Iris possession was disturbed by a sale under the deed of trust or, in advance of a. sale, by having a receiver appointed for the benefit of the mortgagee.”

In American Bridge Co. v. Heidelbach, 94 U. S. 798, the mortgage included, besides the bridge, “the rents, issues and profits of said bridge.” At the time of the foreclosure of the mortgage there was an accumulation of rents, which the American Bridge Company, a judgment creditor, levied upon and claimed as against the mortgagees. The court awarded the funds to the judgment creditor, and, in denying the claim of the mortgagees, says: “In this case, upon the default which occurred, the mortgagees had the option to take personal possession of the mortgaged premises, or to file a bill, have a receiver appointed and possession delivered to him. In either case the income would thereafter have been theirs. Hntil one or the other was done, the mortgagor, as Lord Mansfield said in Chinnery v. Blackman, 3 Doug. 391, was ‘owner to all the world and entitled to all the profit made.'”

To entitle a mortgagee to rents accruing before he takes possession, or what is its equivalent, the appointment of a receiver in foreclosure, there must be something more than the formula, addendum, to the description of the land, “together with-the rents, issues and profits.” There must be an express pledge of the rents; in other words, the mortgage must pledge the rents to accrue before default during the mortgagor’s possession.

The rents belong to the mortgagor, and, having been garnished in the hands bf the receiver by the judgment creditor, she is entitled to be paid the amount of her judgment, with costs.

Recently, after the judgment creditor’s lien attached, Mrs. Brown assigned the rents to the complainant. The receiver will be directed to pay the balance to him.

In the stipulation of facts agreement as to the binding force of the judgment creditor’s lien was reserved. The case was submitted on briefs, in which the question is-not raised, counsel having assumed, as I do, without examining the point, that a statutory lien had been lawfully effected.

Counsel makes the point that, as taxes had accumulated pendente lite, the rents ought to be applied to- their liquidation, in preference to the judgment creditor’s lien. The court of errors and appeals has ruled otherwise. Stewart v. Fairchild-Baldwin Co., supra.


author: Backes, V. C.

text:
    W. Holt Apgar, receiver of the Independent Glass Company, a corporation, v. Altoona Glass Company, a corporation, et al.
    [Submitted January 19th, 1921.
    Decided February 19th, 1921.]
    1. Service of a subpoena directed to a foreign corporation, and served upon an officer of that corporation who is temporarily attending a convention in this state, will be quashed, it appearing that the defendant corporation was not authorized and in fact never did any business in this state.
    2. The jurisdiction of the court over the persons of the defendants is properly raised by a motion to quash the writ of subpoena.
    3. A rehearing will not be granted because of an error of judgment or a mistake of la'w -by counsel as to the pertinency or -force of certain evidence.
    4. Doctor v. Desmond, SO N. J. Eg. 77, and Moulin v. Insurance Co., 24 N. J. Law 222, and National Condensed Milk Co.- v. Brandenherg, I/O N. J. Law 111, distinguished.
    On bill, &c. On motion for a rehearing.

      Messrs. Burnett, Sorg, Murray & Duncan, for the motion.

      Messrs. Homan & Buchanan, for the respondents.
   Backes, V. C.

The receiver of the defunct Independent Glass Company (Window Glass Trust) filled this bill against thirty-two foreign corporations, setting up that they were stockholders of the company, and praying that an assessment be levied against them “for the par value of the amount of stock for which they subscribed,” and that they be decreed to pay the assessment to the receiver, so that he may satisfy the company’s debts, and the cost of the administration. Process issued and was returned non est, and thereupon an order for substituted service upon the defendants was entered and published and posted as therein provided. Later, a second subpoena issued against them and was returned by the sheriff of Atlantic county served upon three, the Dunkirk Window Glass Company, Camp Glass Company and Smethport Glass Company, service being made upon the president of the first two and upon the vice-president of the third. They entered special appearances, and, upon the return of an order to show cause, the service was quashed, it appearing, by the proofs, that the defendants were not authorized and never had in fact transacted' any business in this state, which was not controverted, and that the officers upon whom process was served were, at the time, temporarily in this state upon business of their own. Service under such circumstances was obviously abortive. Camden Rolling Mill Co. v. Swede Iron Co., 32 N. J. Law 15; Puster v. Parker Mercantile Co., 79 N. J. Eq. 771.

An appeal was taken, which was withdrawn to make this motion for rehearing. The receiver has taken on new counsel, whose plea is, in effect, that if given another chance he could make a better showing of facts, and a more persuasive argument upon the facts and the law than his predecessor had made. There are no newly-discovered facts, and for that reason the motion must go down.

A motion for a reargument, on the case as made, comes too late after the entry of the order or decree. Kirschbaum v. Kirschbaum, 111 Atl. Rep. 697; 92 N. J. Eq. 7.

A rehearing will not be granted because of an error of Judgment or mistake of law by counsel as to the pertinency or force of certain evidence. Warner v. Warner, 31 N. J. Eq. 549; McDowell v. Perrine, 36 N. J. Eq. 632; Patterson v. Read, 43 N. J. Eq. 18 (cited with approval in White v. Smith, 72 N. J. Eq. 701); Cumberland, &c., Co. v. Clinton, &c., Co., 84 N. J. Eq. 557 (at p. 566).

To satisfy counsel and his client that the service was property quashed, even in the light of what he now offers, I will state the reasons.

Jurisdiction of the court over the persons of the defendants was property raised by motion to quash the writ. Brimberg v. Hartenfeld Bag Co., 89 N. J. Eq. 425.

The officers of the defendant corporations were, at the time process was served, attending a convention of the National Association of Window Glass Manufacturers at the Trajmrore, Atlantic City, of which they, individually, were members. So it appeared by the proofs. Present counsel says that if given the opportunity he believes he can show that the corporations were' members of the association; that the officers were their representatives, and that their mission into this state was upon business of their companies:—the convention—the object of which, admittedly, was to confer and act upon matters involving, solety, the policy of the confreres in their common calling. He further says that this would have been shown- upon the original hearing had the affiants been put to a cross-examination upon their depositions, and for the first time calls my attention to a request to that effect in the affidavit of the receiver. Counsel at that time neither presented nor pressed the application.

I fail to see how these developments would change the result. Section 88 of the Corporation act provides that service of process in personal actions against foreign corporations may be made “upon any officer, director, agent or engineer of such corporation” personalty or at his dwelling-house. Comp. Stat. p. 1653. But, that such service have legal vitality and constitutional sanction, the corporation must be- “found” in this state— that is, it must have subjected itself to- the jurisdiction by “doing business” in this state. Carroll v. New York, &c., Railroad Co., 65 N. J. Law 124; St. Clair v. Cox, 106 U. S. 350.

In Doctor v. Desmond, 80 N. J. Eq. 77, Vice-Chancellor Learning quashed the service of a subpoena ad respondendum served upon tlie director of a Pennsylvania corporation attending a stockholders’ meeting in this state, of a corporation of this state. He found that the officer represented the foreign corporation at the meeting, and to that extent the corporation was transacting business in this state, but he held, citing numerous authorities, that: “It appears to be well.settled that the rule that a corporation by transacting business in a foreign state voluntarily subjects itself to the laws of that state regulating the service of process on foreign corporations has reference to the transaction of some substantial part of its ordinary business by its officers or agents selected for that purpose, and that the transaction of an isolated business act is not carrying on or doing business within the meaning of the rule.” Interstate Amusement Co. v. Albert, 239 U. S. 560; Knapp et al. v. Bullock Tractor Co., 242 Fed. Rep. 543. A single or isolated transaction is not doing business. D. & H. Canal Co. v. Mahlenbrock, 63 N. J. Law 281; Von Seyfried v. Vollers, 75 N. J. Law 405. Moreover, by “business” is meant trading, in its bi'oadest sense, commereiaUy, financially, or otherwise, within the scope of corporate capacity. The business of the convention was that of the association, and the participation therein by the defendant corporations cannot by any stretch of fancy be looked upon as doing business in this state so as to render the foreign' corporations amenable to our jurisdiction and subject to a decree in personam.

Counsel next insists that it was not pointed out to me that the contract sued on was made in this state, and, consequently, it was not argued, that the case comes within an exception to the general rule, viz., that where a foreign corporation, not authorized to do business in this state, engages in. a single transaction, it is subject to process, in respect of such transaction, by service upon its officers who, afterwards, come into this state on either corporate or private business. He cites as authority Moulin v. Trenton Life and Fire Insurance Co., 24 N. J. Law 222, and Mr. Justice Dixon’s interpretation of that decision in National Condensed Milk Co. v. Brandenburgh, 40 N. J. Law 111, that “since the case of Moulin v. Insurance Co., 4 Zab. 222, and 1 Dutch. 57, it must be regarded as the settled law of this court that if a corporation makes a contract in a state other than that-in which it was .chartered, it thereby submits itself to the jurisdiction, of such foreign sovereignty so far as to be liable to suit therein in regard to that contract, when summoned according to the laws of the state.” Were it not for the opinion of this excellent judge, it would be my impression that the Moulin Case holds that jurisdiction over a foreign corporation doing business within the state continues after the corporation has withdrawn, with respect to contracts made in the state while doing business there, and that the jurisdiction may be enforced by process served according to the law of the state. If there is this exception to the rule, as the supreme court holds there is, it is not applicable here, for nowhere in the record does it appear that the contract was made in this state.

The receiver’s bill alleges that the defunct company was incorporated in Í900, with an authorized capital stock of $300,-000, divided into three thousand shares of the par value of $100 each; that it commenced business with $1,000 and “that the said corporation, in pursuance of the powers conferred upon it by said articles of incorporation, did thereafter sell and dispose of its capital stock to the following-named defendants residing at the places set opposite their respective names the amount of stock of' the par value set opposite their names;” then follows the names of the corporators and the amount in money of stock. There is no allegation that the sales were negotiated in this state, and it is not to be implied that they were. Nor is it now contended that they were, except upon the theory that as corporate stock has its situs in the state of its origin (Amparo Mining Co. v. Fidelity Trust Co., 74 N. J. Eq. 197; 75 N. J. Eq. 555), and, as it is to be assumed that the stock was issued there, that it is to be presumed that the contract of purchase was made where issued. It is manifest that the defendants did not subscribe for the stock and it is inferable that the sales were made in the home states of the defendant corporations, and this inference is strengthened by the rule that pleadings must be construed .most strongly against the pleader. Stephen, &c., Transportation Co. v. Central Railroad Co., 33 N. J. Law 229.

Counsel also insists that the service should have been permitted to stand, if not as process, as notice to the ntai-resident defendants of the proposed assessment, as he says was done by Vice-Chancellor Stevens in Puster v. Parker Mercantile Co., 64 N. J. Eq. 599. That was not a case for an assessment upon corporate stock, and the practice there pursued was disapproved in Wilson v. American Palace Car Co., 64 N. J. Eq. 534 The course now indicated might have been adopted with propriety had it been suggested, but the complainant would have had no1 cause for complaint had it been refused, as the defendant corporations had already been served with notice as directed by the order of publication.


author: Backes, V. G.

text:
    Emma M. Archibald v. Mary Maurath.
    [Submitted February 8th, 1921.
    Decided February 21st, 1921.]
    1. Taxes become liens on property only by express legislation and can be collected only in the manner provided by statute.
    2. The existence .of a tax lien must not be left to doubtful construction.
    S. Under the Collateral Inheritance Tax act of 1894 such a tax is not a statutory lien, but simply creates a tax out of which a lien may be fashioned by following the procedure provided for that purpose.
    4. A sale of decedent’s real property by the executor in order to pay the collateral inheritance tax must be made within the time limited for sales of lands for the payment of decedent’s debts, or, if afterwards, before alienation by the devisee.
    5. Under the act of 1909 (P. L'. 190:9 p. 3$5 § 5), such taxes are in terms made a lien on real property until paid.
    On bill, &c.

      Mr. Francis Laferty, for the complainant.

      Messrs. Scharringhausen & Ilartpence, for the defendant.
   Backes, V. G.

This bill for specific performance of a contract for the sale of land is resisted by the purchaser on the ground that the property is subject to liens for taxes imposed by tire Collateral Inheritance Tax act of 1894. P. L. 1894. p. 318. The purchaser is willing to take the property, but insists that the liens be first satisfied or the purchase price abated.

The complainant derived title from Mary B. Peirce, George Richard Stammer and others. Peirce took by devise in 1901, and Stammer, by descent, in 1902. They conveyed to the complainant in 1906. In 1916 the surrogate of Essex county, upon the report of an appraiser, duly appointed, fixed the tax upon the devise to- Peirce at $220, and upon tire inheritance of Stammer at $266.67. It is conceded that the devise and inheritance were taxable under the act of 1894, but the, question raised and to he decided is, Are the assessment liens upon the land?

Taxes become liens upon property solely from express legislation, and can be collected only in the manner provided by statute. Linn v. O'Neil, 55 N. J. Law 58; Booth Brothers v. City of Bayonne, 85 N. J. Eq. 281.

The act provides:

“1. * * * That after the passage of this act all property which shall pass by will or by the intestate laws of this state from any person * * * to any person * * * other than to * * * the father, mother, husband, wife, children, brother or sister, or lineal descendants born in lawful wedlock, or the wife or widow of a son, or the husband of a daughter, shall be subject to a tax of five dollars on every hundred dollars of the clear market value of such property, * * * and all administrators, executors and trustees shall be liable for any and all such taxes until the same shall have been paid as hereinafter directed;
“2. * * * That when any person shall bequeath or devise any property * * * to a father, mother, husband, wife, children, brother or sister, the widow of a son, or a lineal descendant, during life or for a term of years, and the remainder to a collateral heir of the decedent, or to a stranger in blood, * * * the property so passing shall be appraised 'immediately after the death of said testator * * * at what shall then be the fair market value thereof * * * and after deducting therefrom the value of said life estate, or term of years, the tax prescribed by this act on the remainder shall be immediately due and payable * * * and * * * shall be and remain a lien on said property until the. same is paid; * * *
“3. That where a bequest is given to an executor or trustee in lieu of commissions the amount in excess of reasonable allowance for commissions is taxable.
“4. That all taxes are due on the death of the testator.
“0. That a penalty shall be charged for non-payment of taxes.
“6. * * * That any administrator, executor or trustee having in charge or trust any legacy or property for distribution, subject to said tax, shall deduct the tax therefrom, * * * and whenever any such legacy shall be charged upon or payable out of real estate, the heir or devisee, before -paying the same, shall deduct said tax therefrom and -pay the same to the executor, administrator or trustee, and the same shall remain a charge on such real estate until paid, and the payment thereof shall be enforced by the executor, administi’ator or trustee in the same manner that the payment of such legacy might be enforced; * * *
“7. That all executors, administrators and trustees shall have full power to sell so much of the property of the decedent as will enable them to pay said tax, in the same manner as they may be enabled by law to do for the payment of debts of their testators and intestates, and the amount of said tax shall be paid as hereinafter directed.
“8. That the taxes shall be paid to the state comptroller.
“9. That the executors, administrators or trustees shall notify the state comptroller where property passes to a corporation or other than exempt relatives.
'TO. For a refund of excess taxes paid.
“11. That stocks and bonds shall not be transferred by a non-resident executor without the payment of taxes.
“12. For refund for taxes erroneously paid.
“13. For the appointment of appraiser and his^proceedings thereunder.
“14. Prohibits the taking of reward by appraiser.
“10. Gives the ordinary or orphans court jurisdiction relative to the tax. . '
-T0. * * * That if it shall appear to the register of the prerogative court or sui-rogate that any tax accruing under this act has not been paid according to law, such- officer shall issue a citation citing the persons interested in the property liable to the tax 'to appear before the ordinary or orphans, court on a day certain, not more than three months after the date of such citation, and show cause why said tax should not be paid; the service of such citation and the time, manner and proof thereof, and fees therefor, and the hearing and determination thereon, and the enforcement of the determination or decree shall conform to the provisions of the law for the service of citations now issued by the ordinary or orphans court, and the hearing and determination thereon and its enforcement; and the register of the prerogative court or surrogate shall, upon' the request of any prosecutor of the pleas or state comptroller, furnish one or more transcripts of such decree, and the same may be by them docketed and filed by the county clerk of any county in the state, and the same shall have the same effect as a lien by judgment.
“17. Originally and as amended by act of 1902, page 670, that state comptroller shall notify prosecutor of failure to pay taxes. Prosecutor shall proceed to collect. The act of 1902 authorizes the comptroller to retain other counsel for that purpose.
“18. Requires register of the prerogative court and surrogate to make quarterly returns to comptroller.
“19. State comptroller shall pay expenses of citation.
“20. State comptroller shall furnish record books and blank forms, etc., to register of prerogative court and surrogate.
“21. Fixes surrogate’s fees.
“22. * * * That any person, or body politic or corporate, shall be entitled to a receipt from the state treasurer, countersigned by the state comptroller, for the payment of any tax paid under this act, which receipt shall designate on what real property, if any, of which any decedent may have died seized, said tax has been paid, and by whom paid, and whether or not it is in full of said tax, and said receipt may be recorded in the clerk's office of the county in which said property is situate, in a book to be kept by said clerk for such purpose, which shall be labeled ‘collateral tax.’
“23. Repeals all acts inconsistent.”

It will be observed that the only specific declarations that the tax is a lien, in certain events, are contained in section 2—upon remainders, when a gift or devise of a life estate is to certain persons in the exempt class, with remainder over to- a collateral or stranger; and section 6, where a gift is a charge upon lands.

The phraseology of section 1, that “all property which shall pass by will or by the intestate laws of this state * * * shall be subject to a tax,” does not import an impost upon the property, for our courts have construed the act as not a tax on property, but an exaction from persons taking, for the privilege of tailing, by testament or statute, and as such sustained the constitutionality of the tax. Neilson v. Russell, 76 N. J. Law 27; Eastwood v. Russell, 81 N. J. Law 672; Carr v. Edwards, 84 N. J. Law 667.

To subject property to a tax does not imply a lien. The language of the General Tax act is that “all property, real and personal, within the jurisdiction, of this state,. * * * shall be subject to annual taxation at its true value under this act” (Comp. Stat. p. 5076 § 2), but the tax is impressed as a lien upon lands by section 49, which makes “all unpaid taxes on real property * * * on and after the twentieth day of December next after the assessment a first lien upon land on which they are assessed.” Comp. Stat. p. 5129. While section 2 of the act subjects personal property as well to the tax, a lien does not attach to goods. Broeck v. Jersey City, 44 N. J. Law 156.

The only other indication of a lien is section 22, providing for the recording in the clerk’s office of the county in which the property is situate, of receipts by tire state treasurer, “which receipt shall designate on what property, if any, of which any decedent may have died seized, said tax had been paid, and by whom paid, and whether or not it is in full of said tax.” This would, by implication,, at least, presuppose a lien, to be discharged of record, but I think the provision not inconsistent with the construction I put upon the act. The record of the receipt may operate in discharge of liens given by sections 2 and 6, or they may be acquittance barring sales of land under section 7. At all events we cannot predicate a lien upon the precarious language of this section .(22). The existence of a tax lien must not be left to- doubtful construction. City of Camden v. Allen, 26 N. J. Law 398.

The legislative scheme, as it appears to me, contemplated the tax to be against the individual legatee, devisee or heir, to be collected by the executor from legatees out of moneys passing through his hands, and from devisees and heirs, by selling the lands, as he would sell land for the payment of decedent’s debts (section 7), and by. an adjudication of the assessment by the ordinary or orphans court, and docketing the decree in the county clerk’s office as a judgment (section 16) and executing it accordingly.

If this analysis is correct, it seems plain that the legislature did not design the tax to be a lien by virtue of the statute, and that the statute simply created a tax out of which a lien could be fashioned by following the procedure provided for that purpose.

It is too late now for the executor to make sale under the seventh section of the act. That must be done within- the time limits for sales of land for the payment of decedent’s debts. To have binding force the order for such a sale must be taken out within a year after decedent’s death, or, if afterwards, before alienation by the devisee. Orphans Court act, §§ 81, 94 (Comp. Stat. pp. 3838, 3845); Warwick v. Hunt, 11 N. J. Law 1; Skillman v. VanPelt, 1 N. J. Eq. 511; Bockover v. Ayres, *22 N. J. Eq. 13. There is, therefore, no encumbrance on the title on that score. And, as there was no assessment reduced to judgment when the complainant acquired title in 1906, there is no lien in that respect.

The view I entertain, that no lien was created by the statute, or intended, is influenced by the specific creation of liens in the two instances to which attention has been called, sections 2 and 6. The reasons for this special treatment evidently were—in the first, because the payment of the tax on the remainder may be indefinitely deferred, upon the giving of a bond, thereby increasing the danger of loss to the state; and in the second, legacies charged upon lands do not pass through the hands of the executor; they are of, jret apart from, the devise and payable by the devisee, but from whom the executor could not collect by a sale of the lands under section 7 without the lien.

Another consideration is, that upon reframing- the law in 1909, the legislature changed its policy and expressly provided that “all taxes levied and assessed under this act on the transfer of any real property shall be and remain a lien on said property until paid.” P. L. 1909 p. 325 § 5.

A decree for complainant will be advised.


text:
    Henry T. Stetson, substitute administrator with the will annexed of Ruth Ann Kerrick, deceased, v. Arthur L. Kinch et al.
    [Submitted February 17th, 1921.
    Decided February 28th, 1921.]
    1. A bequest of the residue of an estate to certain persons and their heirs and assigns to be divided equally between them, is a ¡bequest to the legatees individually in common, not to them as a class.
    2. Under the act (3 Comp. Stat. p. 3874 § 169) where the nearest of kin were nieces and nephews, and the descendants of deceased nieces and nephews, the nieces and nephews living formed the stock entitled to the fund, the survivors taking pro rata, and the descendants of deceased nieces and nephews taking per stirpes.

    3. The act (P. L. 1914 P- 69) did not control the distribution of intestate property of one dying after its passage, but before July 4th, 1914.
    On bill, &c.

      Messrs. Horace & I-Ienry T. Stetson, for the complainant.

      Mr. William A. Lord, for the defendants.
   Backes, Y. C.

The complainant, administrator, seeks instructions as to the disposition of funds in his hands. The fifth clause of Mrs. Eerrick’s will reads:

“Fifth. All the rest, residue and remainder of my estate I give, devise and bequeath unto Catherine Reybold, wife of Edward Reybold, Margaret Matthews, widow of James Matthews, Ruth Blair, wife of Matthew Blair, children of George Kerrick and Mary Ann Kerrick, Ruth Dean, Margaret Thompson-, Elizabeth K. Brown, Lucinda Squires, children of my. sister, Susan Darling, deceased, and to Joseph Darling, Francis Arnold and John Darling, their heirs and assigns, to be divided equally between them, share and share alike.”

Lucinda Squires died before the testatrix, childless. The administrator is in doubt as to whether her sha-re lapsed. The residuary bequest is to the legatees individually, in common, not to them as a class. Collins v. Bergen, 42 N. J. Eq. 57, rules the point. It was there said:

“The rule is that where an aggregate fund is given to several persons nominatim, to be divided among them in equal shares, if one of them die before the testator, the share of such decedent will lapse. The gift in this case is to six persons by name, to each one-third of one-ha-lf of the residuary estate in remainder

“* * * It is true that the mere fact that the testator, in a devise or bequest to persons, mentions them -by name is not conclusive upon the question whether the gift is to- those persons as a class or as individuals. But the rule is- as above stated, and there is nothing in this case to take it out of the rule.”

See also Trenton Trust and Safe Deposit Co. v. Sibbits, 62 N. J. Eq. 131. The legacy to Lucinda Squires lapsed.

The administrator then asks to be advised to whom to- malee distribution of this lapsed share to Lucinda Squires which the testatrix died intestate. The testatrix died May 25th, 1914. Her nearest of kin were nephews and nieces; there were also descendants of deceased nephews and nieces. The statute of distribution, in force at the death of the testatrix, as amended by chapter 316 of the laws of 1908 (Comp. Stat. p. 3875) provides:

“111. And in case there be no widow, then all the said estate to be distributed equally to and among the children; and in case there be no child, then to the next of kindred, in equal degree, of or unto the intestate and their legal representatives as aforesaid.”

i

The section is precisely the same as section 111 of the act of 1899, construed in Smith v. McDonald, 69 N. J. Eq. 765; affirmed, 71 N. J. Eq. 261, where it was held that the nearest living next of kin of the deceased form the stock entitled to the fund; that the survivors take pro rata, and descendants of deceased members of the class take per stirpes.

Counsel argued that chapter 47 of the laws of 1914 (P. L. 1914 p. 69) was controlling. That act was passed March 20th, 1914, just before the death of the testatrix, but did not take effect until July 4th following. Comp. Stat. p. 4973 § 13.

The administrator will be directed to' distribute the intestate estate among the nephews and nieces and the descendants of deceased nephews and nieces; the nephews and nieces each taking a share, and the descendants .of deceased nephews and nieces their ancestors’ share.


author: Grieein, Y. C.

text:
    Public Service Railway Company v. William D. Reinhardt.
    [Submitted January 5th, 1921.
    Decided February 9th, 1921.]
    The act regulating the operation of auto buses on city streets (P. L. 1916 p. 28S) is for the protection of the public, and for revenue purposes, and is not for the benefit of street railway companies, and a company operating a street railway under 1¡ Comp. Btat. p. 5021, has no standing to enjoin the use of the streets by jitneys on the ground that the city’s consent under that act is invalid.
    On bill, &e.

      Mr. Frank Bergen, Mr. L. D. Howard Gilmour, Mr. B'. Ambler Armstrong and Mr. Robert H. McCarter, for the complainant.

      Mr. Merritt Lane, for the defendant.

      Mr. Jerome D. Congleton, for the city of Newark.
   Grieein, Y. C.

The complainant, a street railway company, incorporated under the act entitled “An act to authorize the formation of traction companies for the construction and operation of street railways or railroads operated as street railways,' and to regulate the same,” approved March 14th, 1893 (P. L. 1893 p. 302; 4 Comp. Stat. p. 5021), lawfully laid its. tracks and appurtenances in streets in the city of Newark, and is operating its cars on and over the same, carrying passengers, for hire, and has expended sums of money running into millions in the construction and equipment of its road in order to enable it to carry on its business as a common carrier; and likewise expends large sums of money annually as necessary maintenance and operation charges.

By the bill the defendant is charged with being engaged in competition, as a carrier of passengers for hire, in streets where complainant’s tracks are laid, running his auto buses, called “jitneys,” on and over the tracks of the complainant, impeding and obstructing the passage of its cars, thus stating a ease within the ruling in the case of Camden Horse Railroad Co. v. Citizens Coach Co., 31 N. J. Eq. 525; affirmed sub nom. Citizens Coach Co. v. Camden Horse Railroad Co., 33 N. J. Eq. 267.

On the hearing the complainant made no point of the use made by the defendant of its tracks, basing its right to relief on the sole ground that the defendant is illegally operating' his jitneys in the streets of the city of Newark, in which complainant’s cars are operated, to its great loss and damage; and that this illegality gives it a right to an injunction.

That the complainant is suffering a loss by this competition is quite apparent, when it appears that the jitneys in the city of Newark carry about four million passengers a month, and their owners pay to the city'- of Newark $160,000 annually as a five per cent, tax on gross receipts.'

The proposition thus presented is divisible into two questions:

First. Has the defendant a lawful right to carry on the business of a common carrier of passengers for hire in any of the streets of the city of Newark? Complainant contends for the negative, on the ground that the defendant has not the consent required under the so-called Kates act. P. L. 1916 p. 283. A consent has been granted by the city of Newark, but complainant contends that this consent is illegal, null and void because it was not granted in the manner provided as well by the Kates act as by the Limited Franchise act. P. L. 1906 p. 50; Public Service Railway Co. v. General Omnibus Co., 93 N. J. Law 344.

The defendant, on the contrary, asserts that his consent obtained from the city is valid, even though it was not granted in the manner directed by the Limited Franchise act; and also asserts that even if the consent was not lawfully granted, the complainant has no standing to maintain its present bill.

In the view I take of this case, it is unnecessary to determine the validity of the consent, because the case may be decided on the second division of the proposition, namely:

Second. If defendant is without such right, may complainant maintain its bill to restrain the defendant from operating over streets in which its tracks are laid on the ground that the competition is unlawful, and complainant is suffering an irreparable injury therefrom?

The. right-of defendant to operate his jitneys in the streets of the city of Newark in the manner declared permissible in Camden Horse Railroad Co. v. Citizens Coach Co., supra, could not be questioned, were it not for the Kates act, supra. Turning to the Kates act to ascertain for whose benefit the law was passed, it appears that the first section defines an auto bus to be an automobile or motor bus, commonly called a jitney, engaged in the business of carrying passengers for hire, &c. Section 2'provides (1) that no motor bus shall be operated in any street of any city (a) without the consent of the city; (5) that no such consent shall become effective, and no such operation shall be permitted until the owner of the auto bus shall file with, the chief fiscal officer of the city a policy of insurance in $5,000; (c) that with the filing of said policy the owner shall file with the same officer a power of attorney appointing the officer his attorney for the purpose of acknowledging service of process; (d) that the consent may be revoked after a hearing, if it appears that the owner has failed to keep in force the insurance and power of attorney, or to comply with the terms and conditions imposed in the grant of consent, or with any law of the State of New Jersey. Section 3 provides (oi) that on or before the tenth of each month the owner shall file, under oath, a statement of his gross receipts, and, at the same time, pay to the city five per cent, of such gross receipts “as a monthly or franchise tax for revenue for the use of the city.” Provision is also made for the sum to be paid where the auto bus operates partly within and partly outside of the city, based on mileage; (b) that the sum so paid shall be in lieu of all other franchise taxes and municipal license fees. Under section 5 it is made a misdemeanor to operate an auto bus without complying with the act.

It is quite clear that this act was passed for the protection of the public, and for revenue. West v. Asbury Park, 89 N. J. Law 402. And it nowhere appears that it was enacted in any manner for the benefit of street railway companies. This leads to the question whether, if the consent be1 invalid, may the complainant, for its own advantage, assert this invalidity ?

In 1863 the case of Delaware and Raritan Canal and Camden and Amboy Railroad and Transportation Co. v. Camden and Atlantic Railroad and Raritan and Delaware Bay Railroad Co. was decided (16 N. J. Eq. 321; affirmed on appeal, 18 N. J. Eq. 546). In that case the complainants were possessed of a grant from the state which gave to them the exclusive franchise of carrying passengers and merchandise across the state between the cities of New York and Philadelphia, free from competition, unless with their consent. One of the defendants, the Camden and Atlantic Eailroad Company, had a charter to construct a road from the city of Camden, through Camden and Atlantic counties, a distance of about sixty miles, to the ocean at Absecon inlet, in the county of Atlantic. The defendant the Earitan and Delaware Bay Eailroad Company was authorized to construct a railroad from some suitable point on Earitan bay east of the village of Keyport, through the counties of Monmouth, Ocean, Burlington and Cape May, to Cape island on the Atlantic ocean. These railroads crossed at a point where, if consolidated, it would be quite impossible, by reason of the. distance to be traversed, to compete with the complainant. Accordingly, without a grant from the state, the line of one of the railroads was deflected from the right of way, making a connection at a point- nearer to Camden, thus so shortening the distance from Camden to New York that it might profitably enter into such competition. Chancellor Green enjoined the defendants, placing his grounds principally upon the exclusive franchise above referred to. The case was removed to the court of errors and appeals, where, in the opinion, Chief-Justice Beasley said that the result would be the same even if the grant was not exclusive as against the state; that no one can erect a railroad without the state’s grant, and if anyone does so, it is a nuisance and an infringement of the legal rights of those haring the exclusive franchise as against everyone but the state.

In the ease of Jersey City Gaslight Co. v. Dwight, 29 N. J. Eq. 242 (248), the hill was filed to restrain the defendants (who were really the Consumers Gas Company, a corporation organized under the Gas act) from competing with the complainant, complaining that the Consumers Gas Company were not; and never was, a corporation because the statutory conditions had not been complied with. In that case Vice-Chancellor Van Fleet said: “The business of manufacturing and selling illuminating gas is not a prerogative of government; like the manufacture and sale of any other ordinary article of traffic, it is open to all, and may be carried on by any person without legislative authority. Any one of the defendants, in point of right and privilege, is the equal of the complainants in this respect. They are invested with no exclusive privilege or monopoly to make and sell gas. But the defendants also claim the right .to use the public streets of Jersey City for the purpose of placing pipes therein through which they may furnish gas to their customers. This is a right which sovereign power alone can confer. The rule must be considered settled that no person can acquire a right to malee a special or exceptional use of a public highway, not common to all the citizens of the state, except by the grant from the sovereign power.” And, finding that the defendants had attempted to acquire corporate life and power by a feigned compliance with the law, ordered an injunction against their placing gas pipes, &c., in the public streets of Jersey City.

While the same learned vice-chancellor, in the case of Elizabethtown Gas Co. v. Green, 46 N. J. Eq. 118, concluded that this latter case was disapproved in National Docks Railroad Co. v. Central Railroad of New Jersey, 32 N. J. Eq. 755, the disapproval was not as to the above excerpts.

In Elizabethtown Gas Co. v. Green, supra, the complainant, by a special statute, was created a body corporate for the purpose of selling gas to the city of Elizabeth, with power of opening, the streets and laying its pipes therein. It established its works and was supplying gas to the city of Elizabeth, when, in 1870, the legislature created the Metropolitan Gas Light Company of Elizabeth. The Elizabethtown company there asserted that the Metropolitan company had no right, in any capacity, to the franchises they were exercising, and that their claim to them was false, fraudulent and without warrant of law; and that the legislative grant was only to taire effect after the stockholders had ¡raid $30,000, and, as the truth was that that sum had never been paid, the grant never acquired vitality, and that, as a consequence, the Metropolitan company stood precisely in the same condition as it would if it had m> grant. On this latter contention Vice-Chancellor Van Fleet said (at p. 129): “It is not necessary, in my judgment, to decide whether this argument construes the grant made to the Metropolitan company correctly or not, for, if it he conceded that it does, still.it is certain beyond all dispute that until it is made clearly to appear that the condition in question was imposed in favor of the complainant, or for its benefit, so that it has a clear right to demand its observance, the complainant’s position with respect to the condition is that simply of a stranger, and hence, it stands without the least pretence of right to complain of its breach. It is only the parties to a grant made subject to conditions, or those in whose behalf or for whose benefit the conditions are imposed, that have a right to ask that they shall be performed, or seek protection against their breach, or redress for their violation. The complainant is not mentioned in the charter of the Metropolitan company. The charter contains no word or sentence which, by the most lax construction, would support even a conjecture that the condition under consideration was imposed for the benefit or protection of the complainant.” He then points out that the purpose of the grant to the Metropolitan company was the benefit to be conferred upon the people of Elizabeth, and that the condition imposed was to protect the creditors .of the company. This case was affirmed in the court of errors and appeals by a divided court, on the opinion of Vice-Chancellor Van Fleet (49 N. J. Eq. 329).

These latter cases seem to be dispositive of the question. The right of the people to use the public highways of the state freely and without hindrance, subject only to proper police regulations, unless the legislature should otherwise ordain, is unquestioned; and in the exercise of this right the people are not exercising a franchise. Thus, persons complying with the Kates act do not acquire a franchise to use the public highways. The act is prohibitive, in that it takes away rights formerly possessed; and permissive and regulative in that it authorizes the use upon complying with the terms of the act. The plain purpose of the act was primarily not to license, but to regulate and control the operations of these vehicles in the crowded streets of cities for the public benefit and safety, and for revenue. West v. Asbury Park, supra. It was not passed for the benefit of street railroads. Elizabethtown Gaslight Co. v. Green, supra; Jersey City Gaslight Co. v. Dwight, supra. The franchise of the complainant is as to its tracks and ways, and gives it the exclusive use thereof as against competing carriers, in the manner indicated in Camden Horse Railroad Co. v. Citizens Coach Co., supra. It has no grant outside of the "tracks and ways; and, therefore, when it seeks to enjoin competing carriers from using a highway in a manner declared lawful under Camden Horse Railroad Co. v. Citizens Coach Co., supra, I feel bound, following Elizabethtown Gaslight Co. v. Green, supra, and Jersey City Gaslight Co. v. Dwight, supra, to hold that it has no standing in this court to ask for injunctive relief.

This conclusion is reached regardless of whether the defendant is operating his auto buses without having the consent required under the Kates act, and is guilty of a misdemeanor.

A decree will be advised dismissing' the bill.

Counsel, without further notice, may present their decree for signing next Monday, February 14th, at the chancery chambers at Jersey City, at ten o’clock a. m.


text:
    Public Service Railway Company v. Isadore Barnett.
    [Submitted January 5th, 1921.
    Decided February 9th, 1921.]
    The fact that one operating a jitney in a city took out one policy of insurance to cover liability in two municipalities, cannot be taken advantage of in a suit by a railway company for an injunction against the operator of the jitney to enjoin the use of the city’s streets by the jitney.
    On bill, &c.

      Mr. Franh Bergen, Mr. L. 0. Howard Gilmour, Mr. E. Ambler Armstrong and Mr. Robert H. McCarter, for the complainant.

      Mr. Merritt Lane, for the defendant.
   Grieein, Y. C.

The only difference between this case and Public Service Railway Co. v. Reinhardt, just decided, is that the defendant took out one polic3r of insurance of $5,000, covering the cities of Elizabeth and Newark. This was condemned in Fischer v. Politt, by the supreme court in an opinion filed by Mr. Justice Minturn, January 17th, 1921 (not yet reported), in which he affirmed, a conviction, under the Kates act, for operating where the bond filed included liability occurring in two municipalities. This, however, as indicated in the Reinhardt Case, complainant cannot take advantage of.

A decree will be advised dismissing the bill.'


author: Foster, Y. C.

text:
    Charles Sayre et al. v. Samuel Lemberger and Ida Klein.
    [Submitted October 22d, 1920.
    Decided November 1st, 1920.]
    1. Where land stood in the'name of K. when contract of sale was made by L. in his own name it will, in a suit for specific, performance of such contract, be held to have been bought with L.’s money, it appearing that by L.’s direction, conveyance of the lands had been made to K., his young sister-in-law, and that'L. treated the lands as his own and received the rents thereof, I\. not testifying, and the only evidence that payment was made by K. being L.’s statement to that effect.
    2. Specific performance of a contract for sale of land will be decreed though the title stands in the name of another who holds the land on an implied trust in favor of the one contracting.
    3. Where a conveyance is made to another than the one paying the consideration, the law implies a resulting trust in favor of him and those claiming under him.
    On bill, &e.

      Mr. Frank F. Bracln er, for the complainants.

      Mr. Philip J. Schotlani, for the defendants.'
   Foster, Y. C.

Complainants seek a decree for the specific performance of a contract dated August 29th, 1919, for the sale of certain lands in Essex county, made with them by the defendant Lemberger.

The title to the premises is in the name of the defendant Ida Klein, and she is not a party to the contract. The bill alleges that she holds the legal title in trust for Lemberger; the answer denies this, and a.vers that she is the sole and absolute owner of the premises in her own right.

At the hearing it was established that in April, 1914, Lemberger conveyed property owned by him on Amherst street,- East Orange, to the defendant Ida Ivlein, who is his sister-in-law, and who was at that time a young woman, about twenty-two years old. Lemberger testified that the consideration for this conveyance was $800, paid to him by Miss Klein, and that the property was conveyed to her subject to three mortgages thereon. He further testified that he supposed, or assumed, that Miss Klein had saved or accumulated the $800 she paid him from her weekly wages, and that she had been working for about two years.

Miss Klein, although an answer was filed for her and she was represented by counsel, did not testify1-.

About June, 1916, Lemberger personally negotiated with the owner for the purchase of the property in suit, and the Amherst street property, or the proceeds of its sale, were used and applied by him, in connection with the proceeds of a mortgage loan also negotiated by him in the name of Miss Klein, for the payment of the purchase price of this property, and Lemberger caused title to- the property to be placed in the name of Miss Klein.

After its purchase, with, the apparent consent of Miss Klein, and without objection from hex’, Lemberger exercised all the rights of ownership over the property; at his request he was introduced by the agent to complainants and other tenants of the premises, as the owner and landlord, although the leases were signed in the nanxe of Miss Klein. The rexxts were paid to Lenxbergex', or his wife, and he paid the interest and installments on the mortgage and other fixed charges in cash.

He offers xxo satisfactory explanation for contracting to sell this property which he claims belongs to Miss Klein; and states that his failure to perform the contract is due to Miss Klein’s desire to retain the property as an investment.

At the conclusion of the hearing I annouixced that the evidence was coxxvincing that Lemberger had placed title to the Axnlxerst street property in Miss Klein for his own purpose and bexxefit, and that he had xxot made an actual sale and conveyaxxce of this property to her for $800, or any other consideration, valuable or otherwise, passing from her to hiixx; and that at the time he purchased the property in questioxx, the purchase price therefor was paid by his Amherst .street property, or by the proceeds of its sale, and not from money or property belonging to Miss Klein.

A careful consideration of the record convinces me that the announcement thus made was fully warranted, as it appears that, except for LembergeFs statement, there is no proof in the case, by checks, vouchers, bank books or accounts of the withdrawal or deposit in a bank, or other depository of $800, or any other amount of money, at or about the date named, by either Miss Klein or Lemberger. Nor is there any other evidence by Miss Klein, or any member of her family, to show that she ever had $800, or any other substantial sum of money, which .she had saved from her earnings, or had obtained from any other source. Nor is there anything to show when and from whom Muss Klein obtained this $800, nor where she kept it, wduen and in wdiat form she withdrew it, nor to show the time and place and form in which she paid it to Lemberger for the purchase of the Amherst street property, or for any other purpose.

The absence of this proof, some, if not all, of which could be obtained, if the transaction was as Lemberger states, coupled with the unexplained failure of Miss Klein to testifjq satisfies me that LembergeFs testimony is false, and that he has not given Iris true and actual reason for placing title to the Amherst street property, and, also, to the property in suit, in the name of Miss Klein.

On behalf of Miss Klein it is contended that if these are the established facts, specific performance cannot be decreed, because there is no proof, in writing, as required by the statute of frauds, to establish an express trust in the property for the benefit of Lemberger. And this is so.

It is further contended that specific performance cannot be decreed because the title to the property is in Miss Klein, and not in Lemberger, the vendor.

This contention is supported by the general rule, 'Iecognizecl by all the authorities, and which rests on the reason that in such cases there does not exist a mutuality of obligation and remedy. Van Doren v. Robinson, 16 N. J. Eq. 256; Richards v. Green, 23 N. J. Eq. 536; Public Service Corporation v. Hackensack Meadows Co., 72 N. J. Eq. 285. But this, like all other general rules, is subject to exceptions; one of which is, that specific performance will not be denied because the naked legal title is outstanding in a third party, who is a party to the suit, but not a party to the contract which was executed by the owner of the equitable title. McDonald v. Youngbluth, 46 Fed. Rep. 836; Hyde v. Kelley; 10 Ohio 215.

And this exception also arises in those cases where, if title is not shown in the vendor, it is shown in those whom he has a legal or equitable right, by virtue of a contractual or trust relation, to require to join in the conveyance. Fry Spec. Perf. 431; Shreck v. Pierce, 3 Iowa 350; Kuhn v. Eppstein, 219 Ill. 154.

In tire present case we have no' proof of such contractual relation, but we have satisfactory proof of facts that create, or cause to arise, by implication of law, a trust relation between Lemberger and Miss Klein, that brings the case within the exceptions mentioned; for the evidence clearly establishes that the purchase price of the property, in excess of the amount obtained from the mortgage loan, was paid by Lemberger’s Amherst street'property, or the proceeds of its sale, and not from any property or money actually belonging to Miss Klein, and that it was Lemberger and not Miss Klein who actually purchased and paid for the propert3r and caused the title thereto to be placed in her name. Lemberger, having paid the consideration, is deemed the actual owner of the property, as the beneficial estate follows considerate and attaches to the party from whom the consideration comes. 3 Pom. Eq. Jur. § 1037. The consideration in the present case having come from Lemberger, the law implies a trust—a resulting trust—in his favor and in favor of those claiming under him, and regards Miss Klein as trustee of the legal title for his benefit. Depuyster v. Gould, 3 N. J. Eq. 474; Johnson v. Dougherty, 18 N. J. Eq. 406; Cutler v. Tuttle, 19 N. J. Eq. 549; Young v. Young, 45 N. J. Eq. 27; Down v. Down, SO N. J. Eq. 68; Andrews v. Andrews, 84 N. J. Eq. 375.

In Young v. Young, supra, Chancellor McGill held that a contract for the sale of lands may be specifically enforced against an alienee of a vendor, when such alienee has accepted a conveyance without'having paid valuable consideration for it. And, in the enforcement of a resulting trust, the trustee may be compelled to specifically perform the trust by conveying the lands, the subject of the trust, to the cestui que trust or to his vendee.

A resulting trust in the property having been found in favor of Lemberger, the vendor, a decree will be advised for the specific performance of the contract.


text:
    Franciszek Luczak and wife v. John Mariove and wife.
    [Submitted January 8th, 1921.
    Decided January 18th, 1921.]
    1. Where a bill for specific performance was filed fourteen days after the defendant agreed to deliver the deed, but failed to do so, the complainant is not guilty of laches.
    2. The contract of sale in this case sufficiently sets out the terms of the mortgage to be given.
    8. Where necessary, in the absence of definite terms in the contract, the court will presume it to have been the intention of the parties that a mortgage to be made shall be made payable on demand, and also that the interest rate shall be the legal rate.
    4. The omission of a. due date for a mortgage and the rate of interest thereon will not defeat specific performance of a contract.
    o. Acknowledgment and execution of a deed by a wife who had not acknowledged the contract of sale on which it was founded, may be'taken as evidence that the wife was willing to release her right of dower.
    fi. A decree may be entered directing the husband to deliver to complainants a deed executed by himself and his wife, where it appears that his wife is willing to release her rigflit of dower; or in the alternative to deliver to complainants a deed subject to his wife’s inchoate right of dower and payment into court of an amount sufficient to indemnify complainants' against any claim of dower, or the complainants may retain out of the purchase price the value of the dower right.
    On hill, &C.

      Mr. John Q. Frey and Mr. Frank E. Bradner, for the complainants.

      Mr. Olio A. S lief el, for the defendants.
   Foster, Y. C.

This hill seeks a decree for the specific performance of a contract dated November 25th, 1919, for the sale of real estate in’ the city of Newark, made by the defendants with the complainants.

By the terms of the contract title was to ‘be passed on February 1st, 1920, and $500 was paid on account of the purchase price of $20,000. Of .the balance of the purchase-money, $17,-500 was to be paid in cash and $2,000

“by a mortgage on the premises * * * at the interest of six per cent, per annum, interest payable semi-annually, principal of said mortgage to be payable at any time within two years of its date; said mortgage is to be subject to a first mortgage in the amount of twelve thousand dollars.”

Defendants admit the execution of the contract, which was not regularly acknowledged by Mrs. Mariove, although she did acknowledge its execution before the broker who made the sale and who drew the contracts. From the proofs it appears defendant knew that complainants expected to obtain that part of the purchase price over the mortgage of $12,000 in part by the sale of property owned by them, and that they intended to obtain the mortgage loan of $12,000 from some bank or savings institution.

About January 31st, 1920, complainants informed defendants that owing to delay in making the search they were unable to obtain a loan of $10,000, granted them by the Security Savings Bank, in time to taire title on February 1st, and thereupon the defendant John Mariove gave them an extension of thirt3r days from February 1st, 1920, for the closing of the contract.

On March 11th complainants, having disposed of their property, and having also obtained the first mortgage loan, notified defendants they would be ready to close the contract at the office of Judge Grice, the attorney of Security Savings Bank, on March 15th, 1920, at two o’clock, and requested defendants to be present and deliver the deed, and neither of the defendants appeared.

On March 30th the defendant John Mariove informed Mrs. Luczak that he was ready to deliver .the deed at any time and place selected by her attorney, and about this time a deed, in accordance with the terms of the contract, was duly executed and acknowledged by both defendants,

On March 31st complainants again notified the defendant John Mariove that they would be ready to close the matter at the office of Judge Grice on the following Thursdajr, and on April 1st Mariove notified complainants’ solicitor that he would be ready to deliver the deed and close the matter that afternoon at three p. m. a.t the office of Judge Grice, if complainants would pay the agent’s commission of $500 in addition to the purchase price. Complainants appeared at the hour named and waited in the office of Judge Grice from three o’clock until four-fifteen p. mv but neither of the defendants appeared. About April 7th or 8th, the defendants told a brother-in-law of complainants that, although the contract had expired, they were willing to convey the property to complainants if they would pay $400 of the agent’s commission, and, later, Mariove suggested that defendants would be willing to convey to this relative of complainants in order to defeat the claim of the broker for his commission on the sale; and Mariove, himself, admits that defendants were willing to convey the property to complainants after April 1st if they would, pay this commission.

It further appears that the defendant Mrs. Mariove took an active and important part in negotiating the sale and in the settlement of the terms of the contract, and that it was upon her insistment that the term of the second mortgage was reduced from four years to two years. Not one of the material facts is .seriously disputed. And, apparently, the defendants’ refusal to perform the contract was due to the rapid and pronounced increase in real estate values that occurred in the spring of 1920, and also to their desire to escape the payment of the broker’s commission.

The whole defence consists of technical objections to complainants’ right to relief, the first of which is gross laches, and the answer to tins is, that the bill was filed April 14th, 1920, or fourteen days after Mariove had agreed to deliver the deed at the office of Judge Grice, but failed to do so.

The next objection is, that the provisions of the contract respecting the mortgages, which are quoted above, are inadequate and incomplete.

It is apparent from the contract, and the quotations made from it, that the terms of the second mortgage are clearly set forth, and that the provision that this mortgage is payable at any time within two' years of its date, is neither uncertain nor incomplete, but defilnitely leaves it optional with complainants to allow the mortgage to stand for two years, or to pay it at any earlier date; and with respect to the first mortgage, while the contract does not state the term for which it should run, nor what rate of interest it should bear, the proofs show that these matters were purposely and necessarily left indefinite, as none of the parties knew, when the contract was made, for what time or at what rate of interest the first mortgage loan could be obtained, and by acquiescence they made the terms of this loan on which it could, be obtained part of their contract, and in the absence of definite terms in the contract, a court of equity will, if necessary, presume it to have been the intention of the' parties that the mortgage should be made payable on demand (Green v. Richards, 23 N. J. Eq. 32), and will also presume, in the absence of a specified rate of interest, that the mortgage carries the legal rate of interest after demand. And, if the omission of these terms from the contract be attributed to the negligence of the parties, such negligence on the part of the defendants will not be permitted to defeat specific performance. Krah v. Wassmer, 75 N. J. Eq. 109; affirmed, 78 N. J. Eq. 305.

And, lastly, it is insisted that the contract is unenforceable against Mrs. Mariove because she did not formally acknowledge its execution; and, further, that it does not appear that her refusal to now join in the conveyance has been the result of her husband’s procurement.

It appears, as already stated, that a deed to convey the premises to complainants under the contract was executed and properly acknowledged by Mariove, and by his wife also,' and Mariove states that this deed was destroyed by him, but it does not clearly appear when it was destroyed nor that his. wife consented to or knew of its destruction, and her execution and acknowledgment of the deed may be taken as evidence that she was willing to release her right of dower. Hulmes v. Thorpe, 5 N. J. Eq. 415; Krah v. Wassmer, supra (at p. 116). In Hulmes v. Thorpe, supra, where a somewhat similar situation was present, Chancellor Halstecl said: “If may be that the wife’s acknowledgment of the deed in this case should be considered as equivalent to her express consent to execute it, and that on this ground the court would be justified in making a decree that Thorpe deliver a deed executed by him and his wife, but it would be safer for the court to decree' the delivery of the deed already executed by her.” This latter course cannot be adopted here because of the alleged destruction of the deed by Mariove.

It is true, as defendants, contend,-that it doe's not appear that Mariove has induced his wife to refuse to join in the conveyance of the property; in fact, it does not appear that she has ever refused to do so, and her execution and acknowledgment of the deed is evidence of her willingness to do so.' And, therefore, adopting the remedy suggested by the chancellor in Hulmes v. Thorpe, supra, a decree will be advised directing Mariove to deliver to complainants a deed executed by himself and wife, and if he is unable to do so, then the circumstances of the case, and the active participation of Mrs. Mariove in the transaction, require that the practice of abatement in the purchase price or of indemnity adopted by Chancellor Runyon in Cook v. Watson, 30 N. J. Eq. 345, and followed in Farrell v. Book; affirmed, 76 N. J. Eq. 615; Stein v. Francis, 91 N. J. Eq. 205, and Schefrin v. Wilensky, 92, N. J. Eq. 109, should be followed here; and, as alternative relief, the defendant Mariove should be directed to deliver to complainants a deed for the premises, subject to the inchoate right of dower of his wife, in the event of a refusal by his wife to join in the conveyance; and, in the latter event, a decree will be advised directing the payment into court of an amount to be determined on the settling of the terms of the decree, to indemnify complainants against any claim of dower by Mrs. Mariovo; or that, instead of paying the amount in-to court, complainants may retain out of the purchase price the amount of the ascertained value of the consummated dower right of Mariove’s wife.

The terms of the decree may be settled on three days’ notice.


author: Fielder, V. C.

text:
    Charles Eschmann et al. v. Arthur Lord et al.
    [Decided December 4th, 1920.]
    1. One who has a claim for tort against a grantor at the time when he makes a conveyance and subsequently reduces it to judgment, is entitled to the benelit of the statute as to fraudulent conveyances as a creditor as of the time of the conveyance.

      2. In a suit to set aside a conveyance as fraudulent, the undisputed testimony of the grantor and the grantee (who were brothers) as to the indebtedness which was the basis of the conveyance, together with the appearance of age of the evidence of indebtedness, held sufficient to show consideration.
    3. An insolvent may prefer a creditor, and the creditor may accept the preference as security, or to extinguish his debt, so long as the creditor did not participate in the purpose of the insolvent to prevent others from getting his property to satisfy a judgment.
    4. A conveyance by an insolvent to a creditor, though ~bona fide as to him, will to tibe extent of his debt be held as security as against other creditors.
    5. The wife of an insolvent who joined in her husband’s deed to prefer one of his creditors is not entitled to dower in the proceeds of sale where the conveyance is treated as security as against other creditors.
    On bill to set aside conveyance.

      Messrs. King & Vogt, for the complainants.

      Mr. John B. Walsh, for the defendants.
   Fielder, V. C.

The bill of complaint is filed to set aside a conveyance of real estate made by1" defendants Arthur Lord and Lily M., his wife', to the defendant James W. Lord, on the ground that it was made to hinder, delay and defraud complainants in the collection of a claim for damages which they had against Arthur Lord.

September 12th, 1918, the complainant Carolyn Eschmann sustained personal injuries by being struck by an automobile driven by Arthur Lord. In a suit for damages afterward brought in the New Jersey supreme court by 'both complainants against him, Carolyn Eschmann recovered judgment for $2,500, and her husband, the complainant Charles Eschmann, recovered judgment for $1,500, with costs of suit.

The statute under which this suit is brought extends its protection to all persons having a valid cause of action arising from torts, as well as from contracts, and when the tort claimants reduced their claims to judgment, the judgment related back and became a judgment as of the time when the cause of action accrued and constitutes them as then existing creditors. Washington National Bank v. Beatty, 77 N. J. Eq. 252.

The defendants Arthur Lord and James W. Lord are brothers. They claim that at the time of the accident, Arthur was indebted to James in the sum of $2,300 for money loaned by James to Arthur three years prior, and that the conveyance was made in payment of that debt. The evidence to establish the debt and concerning the conveyance was given on final hearing by Arthur and James, and no witness was called to contradict or impeach their testimony. Such evidence was to the following effect:

In 1915, the premises in question, consisting then of a vacant lot, was conveyed to Arthur Lord, and in July or August of that yrear, he commenced the erection of a dwelling-house thereon, which was completed in October. He borrowed all, or nearly all, of the money required for the purchase of the lot and the erection of the house from J ames in three installments, and gave James receipts or due bills therefor. Three receipts signed by Arthur were put in evidence, the first dated March 10th, 1915, for $500; the second, dated May 1st, 1915, for $1,600, and the third dated October 21st, 1915, for $200. They acknowledge receipt of the respective amounts and promise to repay the same (without date) with interest at six per cent, and they were held by James from on or about their respective dates until after the conveyance to him. On the night of the day the accident occurred, Arthur, fearing a suit for damages because of the injury to Mrs. Eschmann, consulted a lawyer as to how he could protect his brother for the debt due him, and the same night he wrote James, who resided in Buffalo, New York, telling the latter of the accident, and that he, Arthur, wanted to protect James by conveying the property to James, in satisfaction of James’ debt, and James replied by letter that Arthur should do as he thought best. The lawyer whom Arthur consulted advised that the conveyance be 'made, and four days after the accident, Arthur and his wife executed the conveyance to-James, the-consideration being stated therein as one dollar and other valuable consideration; recorded it the following day and wrote James that the transfer' of title had been made. This was all the real estate Arthur owned. About the middle of October James mailed the three receipts to Arthur. After the conveyance, Arthur continued to occupy the property and paid rent to James, but there was no agreement on James’ part that the property would be held for or reconveyed to Arthur. Taxes were paid by Arthur at James’ request and deducted from the rent. Interest on the loan was paid by Arthur nearly in full to the date of the conveyance.

I know that a transaction such as this between near relatives is regarded with suspicion, and yet it is not remarkable that a failing debtor should prefer to secure or pay a relative’s claim rather than permit a stranger to take his property under execution. Roe v. Moore, 35 N. J. Eq. 528; Silvers v. Potter, 48 N. J. Eq. 539. I am also- aware that the defence presented is one easily concocted. The receipts, for instance, could be readily manufactured to give color to the story, but upon examining them, they have not the appearance of newness; on the contrary, the ink in which they are written, shows that black hue which comes with time and they have well-defined creases where folded as though they had been laid away for some period and the paper is not white and clean, but discolored and soiled. To reject the uneontradieted story told by Arthur and James would be to brand both as perjurers, and that I am not willing- to cío.

Accepting their story as true, the instant case is similar to Atlantic Refining Co. v. Stokes, 77 N. J. Eq. 119; affirmed, 78 N. J. Eq. 301, and the principles there stated will determine this case. It was Arthur’s right to prefer his brother as a creditor, as against the Esehmanns, and it was James’ right, holding an honest debt, to accept such preference as security for or to extinguish his debt. It is not sufficient to defeat the conveyance that Arthur’s purpose was, in part, to prevent complainants from taking his property to satisfy a judgment for damages; neither is it sufficient that James knew that such would be one result of the conveyance. James, did not participate in such purpose, and in accepting the conveyance he made no reservation in favor of Arthur. If James knew that the conveyance to him would defeat the collection of complainants’ debt, he also knew that his refusal of a deed would probably defeat the collection of his own debt. During the whole of the transaction James was in Buffalo, and when Arthur wrote him about the proposed conveyance, he remained passive and took no part in the transfer of title. It is true that he accepted the conveyance after notification of its execution, and I think he would have been, foolish to have rejected it.

I shall hold the transaction bona fide, so far as the defendant James W. Lord is concerned, but tire conveyance should be held to be no more than security for his debt. Evidence on behalf of complainants that the property is worth $3,500 to $4,000 is uneontradieted, and it would therefore be inequitable to deprive complainants of the equity in the property over that debt. Complainants may, if they desire, have an accounting to ascertain what is due James for principal and interest after charging him with the net rents, but if an account is not desired, I will find that the amount now due him is $2,300, because practically all interest on his debt had been paid up to the time of the conveyance, and the rent he has since received will cover all subsequent interest, so that his whole claim cannot now be more than the principal of the debt.

T will order the property sold under the direction, of a special master, and that out of the proceeds of sale there first be paid the expenses of sale; next the sum of $2,300 to James W. Lord, and, finally, the balance to complainants, to apply on their judgment. The defendant Lily M. Lord is not entitled to dower in the proceeds of sale. Campbell v. Weber, 79 N. J. Eq. 519; S. C., 80 N. J. Eq. 553.

No costs will he allowed to complainants or defendants.