text:
    Alice C. Strong et al. v. Bernard Smith et al.
    [Submitted January 6th, 1905.
    Decided February 10th, 1905.]
    After decree of foreclosure of a first mortgage, a rule to show cause why the decree should not be opened to permit a defence was allowed, and the sale restrained until disposition of the rule. The sale was adjourned by weekly adjournments not advertised, and the rule discharged on the day preceding the last adjourned day. The-holders of the third and fourth mortgages had relied on their broker to inform them of the day of sale, and when the broker heard, on the morning of the day of sale, that the sale would take place that afternoon, he went to the city where the sale was to take place and endeavored to secure another adjournment, but was unable to do so, and was unable to obtain an agreement from the agent of complainant in foreclosure for a less percentage than that required from a purchaser, he not having a sufficient amount with him to pay the required percentage. The property was sold for a sum insufficient to produce anything for the third and fourth mortgages, and the mortgagees therein petitioned for a resale, filing affidavits showing that, on a resale, responsible parties would attend and bid $82,000, an amount sufficient to satisfy the mortgage investments. — Held, that under the facts a resale would be ordered, on condition that the petitioners give bond conditioned that a responsible purchaser would attend and bid at least $82,000, and pay the amount of the bid in case of a purchase by him, and in case of default, to pay the first and second mortgages, with all expenses.
    On appeal of Abraham Sartorions et al. from an order of the court of chancery, advised by yiee-Chancellor Bergen, who filed the following opinion:
    Application is made to have set aside a sale of lands in the county of Monmouth, in this state, made by the sheriff of that county on the 13th day of May last, under an execution issued out of this court, as the result of proceedings to foreclose a mortgage.
    The undisputed facts are as follows: Albert G-. Spaulding, being the owner of the premises on June 12th, 1900, mortgaged the same to secure the payment of $50,000 to the complainant; that Spanieling conveyed the same to Bernard Smith, April 14th, 1901, subject to this mortgage, and accepted from Smith as part payment a second mortgage on the lands for $29,000; that Smith subsequently, and in August, 1902, mortgaged the lands to Abraham Sartorious to. secure the payment of $4,500, and on February 19th, 1903, further encumbered the land by giving a mortgage to one Henry B. Smith to secure the payment of $6,000, making a total mortgage indebtedness for principal of $89,500; that the complainant caused her mortgage to be foreclosed in this court, and a final decree in her favor was duly made, fixing the amount due her and decreeing the issuing of a ;fieri facias for the sale of the lands to be directed to the sheriff in the county of Monmouth, by virtue of which the lands were sold on May 13th last to Albert G-. Spaulding for $70,150, that being the sum due on the first and second mortgages held by the complainant and the purchaser, respectively, the sale producing nothing for the third and fourth mortgagees.
    The question we are now asked to consider arises over the application of Mr. Sartorious and Henry B. Smith — the latter not being a relative of the owner of the equity of redemption — to have this sale set aside, and in support of which they have presented to the court their petition, duly verified, from which it appears that after the final decree in tire foreclosure proceedings had been made, and the propertjr advertised for sale, the owner of the equity of redemption applied to this court for and was allowed a rule to show cause why the decree should not be opened and he be permitted to- set up a defence to the foreclosure proceedings; this rule also restrained the sheriff from selling as advertised until the disposition of the rule. The rule was allowed on April 25th, 1904, and was discharged during the afternoon of May 12th following, the sheriff having in the meantime adjourned the sale, by weekly adjournments, not advertised, the last adjourned day falling on May 13th, on the morning of which, and about ten o’clock in the forenoon, the sheriff’s deputy w'as served with a copy of the order discharging the rule; that the loans made by both petitioners to. Bernard Smith were negotiated by David Lamar, a brotber-in-law of Bernard Smith, who informed them, after the allowance of the mile staying the sale, that the date of the sale was uncertain, but that he would, inform them of the day of sale — if the sale should be ordered — in ample time for' them to attend the sale; and1"that they were not so informed, and knew nothing of the sale until after it had been made, nor were either of them aware that the stay had been vacated.
    The testimony of the sheriff and his deputy shows that on the morning of May 13th, Lamar, who represented the petitioners, was notified by the deputy over the telephone that the sale would take place that afternoon; that Lamar then, being in New York City, complained of the short notice, and asked for an adjournment; that the deputy intimated that perhaps the sheriff would allow it, but he must attend and make the application in person; that Lamar went to .Red Bank, the place of sale, and made Ms application, and was told by the sheriff that there was some misunderstanding, as he at first thought that one of the adjournments prior to the rule and stay had been on the application of the complainant, but he had since been convinced that it was not so, and that both of the prior adjournments had been made by him as sheriff, and consequently his discretion was exhausted, and he could not adjourn the sale without consent of the complainant. Whereupon they went to the office of the complainant’s solicitor and met Mr. Blackwell, the New York counsel of the complainant, and Mr. Cox, the agent or representative of Mr. Spaulding; that the application to them was fruitless, they demanding that the sheriff should sell; that Lamar then asked that the percentage required from a purchaser should be reduced from twenty per cent, to eight 'or nine per cent., as that was all the money he had with Mm; this request was also refused, Mr. Cox saying it ought to be all cash. The sheriff further testified that although the terms of the sale required the payment of twenty per cent., it was not exacted from Mr. Spaulding because previous to the sale there was an agreement made with Mr. Cox by the counsel of the complainant that, if he bought, no deposit would be required. It seems to me that this uncontradicted state of facts discloses a situation which justifies affording the petitioners an opportunity to protect their claims.
    This sale had been stayed by an order of this Court. The precise day the questions raised might be disposed of could not be known with any certainty, and holders of encumbrances desiring to protect their interests could hardly be expected to attend at Red Bank to listen to a weekly adjournment, and they were justified in relying upon the promise of Mr. Lamar to give them reasonable notice. The rule happened to be discharged on the day before the time to which the sale had been last adjourned, and to force the sale so soon after the removal of the stay was, in a sense, oppressive.
    The control of the court over the use of its process ought to be liberally exercised to prevent a wrong; in this case the sale is not to an indifferent party, but to a prior encumbrancer, who can suffer no injury if protected in the payment of his debt, and the controlling of judicial sales to bring about equitable results has long been the practice of the courts of this state. In Campbell v. Gardner, 11 N. J. Eq. (8 Stock.) 428, it was held that whenever an injury was done to a person by a judicial sale, it would be set aside upon showing that he had been prevented from attending the sale by fraud, mistake or accident.
    Chancellor Williamson, in his opinion in this case, said: “I think where the mortgagee is the purchaser, and the party applying to open the sale offers to pay all the money due upon the security, and there has been really a mistake upon the part of the owner of the equity of redemption, owing to which the property has been sacrificed, the court ought to regard an application for resale with more indulgence than when a stranger is the purchaser.” It does not appear in this case, in my judgment, that the property was sold for a price so inadequate as, standing alone, to warrant an order for resale; but in all cases of this kind the court is bound to consider the special circumstances arising in each, and as between these parties, it seems to me the property has been sacrificed, so far as concerns the interests of the third and fourth mortgagees, and if they are willing to insure a purchaser who will bid a sufficient sum to indemnify the first and second mortgagees against loss, an equitable "disposition of this application requires that they should have such an opportunity. This doctrine is sustained in Mutual Life Insurance Oo. v. Goddard, S3 N. J. Eq. (S Stew.) IS®; Rowan v. Gong don, 53 N. J. Eq. (8 Dick.) 385.

    The petitioners submit affidavits showing that persons, who establish their financial responsibility under oath, will attend a resale of this land, should one be directed, and bid a much larger sum than is required to protect the petitioners’ debts. The Atlantic Realty Company, whose president swears that it is a large real estate owner in this state, agrees to attend and bid at least the sum of $82,000, and to comply with the terms of sale if the successful bidder.
    Mr. Samuel Y. Abel, who testifies that he is the owner of real estate in the city of New York having a market value in excess of $700,000, agrees to attend and bid $82,000 for this property. Under these circumstances I feel disposed to give these petitioners an opportunity to save their investments, and if they shall, within fifteen days after the filing of these conclusions, enter into a bond to the complainant and Mr. Spaulding, with suretjr, to be approved by this court or under its direction, in the sum of $82,000, conditioned that in the event of a resale a responsible purchaser will attend and bid at least the sum of $82,000 for said lands, and pay the amount of his bid if the property shall be struck off to him, and, if default be made, will pay whatever may be due to the complainant and Albert G-. Spaulding, on their respective mortgages, for debt, interest, costs, sheriff’s fees, and all other expenses of making the sales, then I will advise an order setting aside the present sale. But if such bond-be not executed and delivered within the time mentioned, then I will advise an order refusing the prayer of the petition, with costs.

      Mr. Alan II. Strong and Mr. John B. Hardin, for the appellants.

      Mr. Frederick W. Hope and Mr. Edmund Wilson, for the respondents.
   Per Curiam.

The order of the court of chancery is affirmed, for the reasons stated in the opinioh of Vice-Chancellor Bergen in the court of chancery.

For affirmance—The Chief-Justice, Dixon, Garrison, Garretson, Pitney, Swayze, Bogert, Vredenburgh, Vroom, Green, Gray—11.

For reversal — None.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    George N. Bliss et al., appellants, v. Amelia C. Cronk, executrix, &c., respondent.
    [Submitted November 19th, 1904.
    Decided March 6th, 1905.]
    On appeal from a decree advised by Vice-Chancellor Pitney, whose-opinion is reported in ¡6$ N-. J. Fq. (17 Diclc.) 496.

      Mr. Vivian M. Lewis, for the appellants.

      Mr. William W. Watson, for the respondent.
   Per Curiam.

The decree appealed -from is affirmed, for the reasons stated in the opinion of Vice-Chancellor Pitney, filed in the court of chancery.

For affirmance—The Chief-Justice, Dixon, Garrison, Port, Garretson, Pitney, Swayze, Bogert, Vredenburgh, Voorhees, Vroom, Green, Gray—13.

For reversal — None.


text:
    George R. Beach, substituted administrator, &c., respondent, v. Hudson River Land Company, appellant.
    [Argued November 18th, 1904.
    Decided March 6th, 1905.]
    Whether the existence of a highway upon a tract of land included within the metes and bounds thereof, amounts to a breach of the covenants against encumbrances, quwre.

    On appeal from a decree advised by Vice-Chancellor Pitney, whose opinion is reported in 65 N. J. Fq. (20 Dick.) J/.26.

      Mr. George G. Tennant, for the appellant.

      Mr. Randolph Perkins, for the respondent.
   Per Curiam.

We agree with the vice-chancellor that the contract between the parties required that the- highways should be included in computing the area of the land for the purpose of ascertaining the total amount of the consideration money, and the decree should be affirmed for the,reasons given by the vice-chancellor. His opinion, however, contains an intimation that the rule adopted in the Pennsylvania courts, that the existence of a highway upon a tract of land included within the metes and bounds thereof does not amount to a breach of the covenant against en'cumbranees, is the law in this state. We prefer to express no opinion upon that point until the necessity arises.

For affirmance—The Chief-Justice, Dixon, Garrison, Garretson, Pitney, Swayze, Bogert, Vredenburgi-i, Voorhees, Vroom, Green—11.

For reversal — -None.


text:
    Fannie Fessler, respondent, v. Town of Union, appellant.
    [Submitted December 5th, 1904.
    Decided March 6th, 1905.]
    On appeal from a decree advised by Vice-Chancellor Pitney, whose opinion is reported in 67 N. J. Eq. 14.

      Mr. Horace L. Allen, for the appellant.

      Messrs. Crouse & Perlcins, for the respondent.
   Per Curiam.

The decree appealed from is affirmed, for the reasons stated in the opinion of Vice-Chancellor Pitney, rendered in the court of chancery.

For affirmance—The Chief-Justice, Garrison, Fort, Garretson, Pitney, Swayze, Vredenburgh, Voorhees, Vroom, Green, Gray—11.

For reversal—Dixon, Bogbrt—2.


text:
    Richard T. Miller, receiver, &c., respondent, v. New Jersey Trust and Safe Deposit Company, appellant.
    [Submitted. December 3d, 1904.
    Decided March 6th, 1905.]
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Reed, whose opinion is reported in 67 N. J. Fq. 252.

      Mr. Joh F. Harned, for the appellant.

      Mr. Lewis Starr, for the respondent.
   Per Curiam.

The decree appealed from -is affirmed, for the reasons stated in the opinion of Vice-Chancellor Reed, rendered in the court of chancery.

F.or affirmance—The Chief-Justice, Dixon, Garrison, Fort, Garretson, Pitney, Swayze, Bogert, Vredenburgh, Vroom, Green, Gray—12.

For reversal — None.


author: Gummere, Chief-Justice.

text:
    John I. Weller and Julius Lichtenstein, appellants, v. The Jersey City, Hoboken and Paterson Street Railway Company, respondent.
    [Submitted March 27th, 1905.
    Decided June 26th, 1905.]
    1. A contract between attorney and client, stipulating that the former, in consideration of services to be rendered by him in prosecuting an action for the client, shall receive a part of the recovery, is executory merely; ■the cause of action remaining in the client, and the attorney obtaining no interest therein, either by way of assignment thereof or lien thereon.
    2. A right of action for personal injuries is not assignable before judgment, in the absence of a statutory provision authorizing it. •
    3. The statute concerning executors and the administration of intestates’ «states, which preserves to the executor or administrator of a decedent’s estate a right of action for a trespass to the person of the latter, occurring during his lifetime, does not transpose such a right of action into a property right, and so render it assignable by the party injured.
    4. A stipulation in a contract between an attorney and client that the latter shall not settle the cause of action which the former is employed to prosecute except with the attorney’s consent, cannot depirive the person against whom the' cause of action exists of his right to compromise with his adversary, provided the compromise is made in good faith and without any attempt to defraud the attorney. Quaire. Is not such an agreement opposed to sound public policy, and therefore void?
    On appeal from a decree of the chancellor, whose opinion is reported in '6S N. J. Eq. (21 Diolc.) 11.

      Mr. John I. Weller, for the appellants.

      Mr. William B. Gourley, for the respondent.
   The opinion of the court was delivered by

Gummere, Chief-Justice.

The appellants are attorneys-at-law, practicing as partners. They allege by their bill that they were employed by one John Meffert to prosecute an action at law against tire respondent to recover damages for personal injuries sustained by him through its negligence while he was a passenger on one of its cars; that Meffert entered into a written contract with them whereby he agreed to pay them fifty per cent, of all he might recover from the respondent, either by suit, .settlement or otherwise, as damages for such injuries, and assigned to them by the same writing fifty per cent, of any and all sums that might be so recovered therefor; that upon the making of. the agreement and assignment they caused a written notice to be served upon tire respondent apprising it of such agreement and assignment. They further allege that, pursuant to the agreement, they commenced an action at law in the supreme court of New Jersey, in the name of Meffert, against the respondent, and that after the action was on the calendar for trial, the respondent, with full knowledge of the agreement between them and Meffert and of tbe assignment by him to them, settled the cause of action directly with Meffert, without their knowledge or consent, and paid to him for his use the full amount for which the cause of action had been settled; that Meffert has not paid them for their service, and that he is insolvent. They further allege that they also commenced actions for two other claimants against the respondent, under similar agreements, assignments and notices, which were settled by it, and the moneys arising therefrom were paid directly to the claimants, or for their use; that those claimants have not paid the appellants, and that they are both insolvent. The appellants pray for an accounting by the respondent of the amounts paid by it to the respective claimants with whom the several actions and damages were settled, or for their use; that the respondent be decreed to pay unto.the appellants the amount assigned to them by the several claimants, and for further and other relief.

To this bill the respondent demurred for want of equity, and ■after hearing the bill was dismissed.

The sole contention of the appellants, both in the-court of' chancery and before us, is that by the written retainers and assignments of persons having claims against the respondent company for personal injuries, and by timely notice thereof to the company, they became in equity assignees of the proportionate parts of any sums which such injured persons should thereafter receive from the respondent company, either by a composition between them ox by recovery and judgment in actions at law, and that a trust thereupon arose binding the respondent and making it accountable in equity to them for their proportionate parts thereof. In our opinion, this contention is unsound in principle. As was said by the court of appeals in New York, in Coughlin v. New York Central, &c., Railroad Co., 71 N. Y. 450, the agreements set out in the bill do not purport to give the attorneys any present interest in the cause of action. They are simply executory agreements that the attorneys shall share in the damages recovered, the causes of action remaining intact in the respective plaintiffs. The attorneys have neither a legal nor equitable interest by way of assignment or lien on the causes of action.

But-even if the situation had been otherwise* and the parties to these agreements had attempted thereby the transfer to the attorneys of a present interest in the causes of action themselves, instead of merely a share in the damages when recovered, it would not have availed the appellants nor entitled them to the relief now-sought by them, and for this reason: A right of action for personal injuries cannot be made the subject of assignment before judgment, in the absence of a statutory provision to the contrary. Except when otherwise provided by statute, nothing is assignable, either at law or in equity, that does not directly or indirectly involve a right to property. People v. Tioga Common Pleas, 19 Wend. 73; Coughlin v. New York Central Railroad Co., supra; Rice v. Stone, 1 Allen 566; Dayton v. Fargo, 45 Mich. 153.

That this is the general rule is not disputed by the appellants, but it is insisted on their behalf that since the enactment of the fourth and fifth sections of the statute concerning executors and the administration of intestates’ estates in 1855 (2 Gen. Stat. p. 1426), which preserve to the executor of administrator of a decedent a right of action for a trespass to the person of the latter, occurring during his lifetime, the rule in this regard has been abrogated, the argument being that a right of action which survives to the personal' representatives of a deceased is necessarily assignable by him during his lifetime. We do not think that the statute appealed to has this effect’. It does not attempt to change the character of those rights of action, to transpose them into property rights, and thereby render them assignable to third persons during the lifetime of the party injured; it merely provides that, although not property rights, and therefore not assignable, they shall nevertheless survive to the personal representatives of the injured person for the benefit of his estate.

The question of the assignability of claims of this character has frequently received consideration by the courts of our sister states, and although in some jurisdictions their assignability has been affirmed, the weight of authority will be found to support the contrary view. A very full collation of the eases on this subject will be found in the foot-notes to the article “Assignment s,” in 2 Am. & Eng. Encycl. L. (2d ed.) 1021-1023, and in 4. Cyc. 24; and in some of the cases there referred to it will be found that the non-assignability of the right of action for a personal tort has been declared, notwithstanding that at the time of the decision there was in existence a statute similar to our own, providing that such a right should survive to the executors and administrators of the injured person.

The only other question which the case presents is the effect of the provision set out in the bill binding the several claimants therein mentioned not to settle or compromise their claims against the respondents except with the consent of the appellants.

It is universally considered that the interests of justice are best subserved by allowing parties to litigation full liberty to compromise and settle it at any time during its pendency, without interference by third persons, when the whole legal and equitable title to the cause of action rests in the plaintiff and the sole responsibility to answer to the plaintiff’s claim rests upon the defendant. In such a situation an agreement by the plaintiff with his attorney not to settle or compromise the litigation without the consent of the latter may well be considered to be opposed to sound public policy. Whether it is absolutely void, it is not necessary now to consider. Even if it is binding between the plaintiff and his attorney, the defendant is under no obligation to observe it; such an agreement cannot deprive him of his right to compromise with his adversary, provided the compromise is made in good faith and without any attempt to defraiid the attorney.

The decree appealed from should be affirmed.

For affirmance—The Chief-Justice, Dixon, Garrison, Fort, Garretson, Swayze, Bogert, Vredenburgh, Vroom, Green—10.

For reversal — Pitney—1.


text:
    Amelia Albert, respondent, v. Emily B. R. Haeberly et al., appellants.
    [Argued March 9th, 1905.
    Decided June 26th, 1905.]
    A deed of gift, made by a young woman just of age to her stepmother, of whose family she had been a member since ■ infancy, will be set aside on the application of the donor when it appears that at the time of making the conveyance there existed between the parties to it a relationship of trust and confidence, in which the donee occupied the dominant position, and also that the donor made the gift without receiving independent advice as to its nature and effect.
    On appeal from a decree in chancery.

      Mr. William I. Garrison and Mr. John W. Woscott, for the appellants.

      Mr. George A, Bourgeois, for the respondent.
   The opinion of the court was delivered by

Gummere, Chief-Justice.

The complainant, Mrs. Albert, seeks by her bill in this case to have set aside, and decreed to be null and void, so far as she is concerned, a deed of conveyance made by her and her sister, one of the defendants in the litigation, to the defendant Emily B. R, Haeberly, on the 1st day of December, 1902, for a plot of land in the city of Scranton, Pennsylvania. The decree of the court of chancery was in favor of the complainant.

Mrs. Haeberly is the stepmother of the complainant, having married the latter’s father, William Eobinson, in the year 1883, when the complainant was about two years old. Ten years later Eobinson died, and four years after his death Mrs. Haeberly married her present husband. The conveyance, the validity of which is attacked, was made by the complainant about three months after she had obtained her majority. During all the period between the time of her father’s marriage to Mrs. Haeberly and the execution of this conveyance the complainant was a member of Mrs. Haeberly’s family. The facts so far recited are established by tire testimony on both sides. There is much conflict in the evidence, however, concerning the character of tire relations existing between the complainant and her stepmother during the latter part of this period. The cpmplainant and some of her witnesses say that she was treated more as a household drudge than as a daughter, while Mrs. Haeberly and other witnesses testify that 'her treatment of the complainant was that of a beloved daughter, and that the affection which she bestowed upon the complainant was returned by the latter. Just what view of this phase of the ease was taken by the court below is unknown to us,_ as no opinion was filed in that court. We are inclined to think that the preponderance of the testimony supports the contention of the defendant upon this point.

Assuming that the relations between the complainant and Mrs. Haeberly were those of a mother and daughter, the question presented for solution is whether this conveyance, which it is admitted by the defendants had no other consideration than love and affection, is voidable at the option of the complainant, the grantor. The relationship existing between a loving parent and child is universally conceded to be one of trust and confidence, and during the youth of the child, and even after the child reaches its majority, when it continues to be a member of the parent’s family, the parent ordinarily occupies' the dominant position.

In the late case of Slack v. Rees, decided by this court at the last November Term (66 N. J. Eq. (21 Dick.) 447), we had occasion to consider the question of the validity of a deed of gift made by a father to his daughter, who was a member of his family, where, by reason of the physical condition of the father and his dependence upon the daughter for care and service, the relation ordinarily existing between parent and child had been reversed, and the daughter occupied the dominant position. We then declared, on the authority of earlier- adjudications, that a deed, of gift, which, reserved to the donor no ¡lower of revocation, was voidable at the option of the donor, or his heirs, when it appeared that at the time of its execution there existed between the parties thereto a relation of trust and confidence, in which the donee occupied the dominant position, and also that the donor, when making the deed, did not have the benefit of competent and independent advice as to its effect. This decision controls the case now before us. An examination of the conveyance itself discloses that no power of revocation is reserved therein to the. complainant, and there is nothing in the evidence submitted at the hearing which even suggests that, in the making of this gift, she received independent advice (or, in fact, any advice at all), either as to the nature or effect of the conveyance which she now seeks to avoid.

. The decree appealed from will be affirmed.

For affirmance—The Chief-Justice, Dixon, Garrison, Fort, Garretson, Swayze, Bogert, Vredenburgh, Vroom, Green, Gray—11.

For re versal—None.


author: Gummere, Chief-Justice. Fort, J.

text:
    Llewellyn James, respondent, v. T. Owen Aller et al., appellants.
    [Submitted March 25th, 1905.
    Decided November 20th, 1905.]
    A completed gift, absolute in its terms, which is made by a father to his child, with a full understanding by him of its effect, and when the normal relation of parent and child continues to exist between them (i. e., when the father, not the child, occupies the dominant position), cannot be revoked by him, even though the gift plainly appears to have been improvidently made.

      On appeal from a decree in chancery advised by Vice-Chancellor Emer}r, whose opinions are reported in 66 N. J. Bq. (21 Dick.) 52, 69.

      Mr. George U. Large and Mr. Paul A. Queen, for the appellants.

      Mr. Benjamin W. Ellicott, for the respondent.
   The opinion of the court was delivered by

Gummere, Chief-Justice.

The nature of the controversy between the parties and the facts submitted at the hearing are very fully set out in the opinion of the learned vice-chancellor before whom the case was tried. It is unnecessary to state them in full. - Briefly, the following case is presented: In the spring of the year 1880 Llewellyn James, the complainant, conveyed to his children, defendants herein, his homestead property in the village of High Bridge, reserving to himself the right to occupy it so long as he should- desire to do so. At the same time he assigned to them two mortgages aggregating $4,200. In the autumn of the year 1881 he gave to his daughter, Lydia Aller, certain notes and other securities amounting to $4,000. In making these several gifts he reserved to himself no power to revoke them. In June, 1902, he filed his bill in this cause seeking to annul these several transactions. In it he rested his right to relief as to the conveyance of his homestead and tire assignments of the mortgages upon the ground that he was induced to sign these papers by Mrs. Aller and her husband, through false representations made by them to him as to the character thereof, and without any knowledge of their real nature. His contention as to the notes and other securities given to Mrs. Aller in the autumn of 1881 is that they were delivered to her to hold in trust for him. The defence set up was that the conveyance of the homestead and the assignment of the mortgages were made by .the complainant to his children as a gift at the time of his second marriage, for the purpose of making provision for their support; and that the notes and other securities given by him to Mrs. Aller in 1881 were not intended by him to be held by her for his benefit, but that his purpose, expressed at the time, was that they were delivered to her as an absolute gift for herself and her sisters.

A mass of testimony was taken in the case, from a consideration of which the learned vice-chancellor reached the conclusion that in making tire conveyance of the homestead and the assignments of the mortgages the complainant thoroughly understood the nature of the papers which he was signing; that his purpose in executing these several papers was to make a gift to his children of the property which they transferred; that no influence whatever was exerted upon him by his children to induce him to make this gift, and that lie made the transfers voluntarily and deliberately, after consultation' with his counsel. He held that a gift made by a father to his children, under these conditions, -when not unreasonable in amount (and this he considered was not), was irrevocable to the donor, and that the complainant was not entitled to relief upon this part of the case.

As to the transaction of the autumn of 1881, the vice-chancellor concluded from the proofs that the notes and other securities were given by the complainant to his daughter, Mrs. Aller, for the benefit of herself and her sisters; that the gift was made freely by the father to carry out his wishes expressed at the time, and without the exercise of any influence on the part of the daughters, and that no power to revoke the gift was reserved b}r him. The vice-chancellor considered, however, that the gift was improvident, because, by making it, the complainant divested himself of all the property then owned by him, and held that for this reason it wasi inequitable for the defendants to retain this gift, after a demand for its return made upon them by the complainant, and decreed that they should pay back to him the amount thereof, less certain moneys which had been advanced by them to him prior to the time of the filing of the bill. From that portion of the decree which annuls the gift of 1881 the defendants have appealed.

Mr. James, at the time of making the gift which -was set aside, was, as is stated in the opinion of the vice-chancellor, in the prime of life, and was steadily earning from $100 to $300 a month, and sometimes as much as $500. It may well be doubted whether a man in such a situation necessarily acts improvidently in giving to his children the property which he has then accumulated. But assuming this to be so, it does not, in our view, afford any ground for declaring such a transaction voidable at his option. The law permits anyone to dispose of his property gratuitously, if he pleases, provided the rights of creditors are not injuriously affected thereby. He may, if he sees fit, reserve to himself the right to revoke his gift: or, if he desires, he may malee the gift absolute and irrevocable, and his poiver in this regard does not depend upon the providence or improvidence of his act. It has, indeed, frequently been declared that where a relation of trust and confidence exists between the donor and the donee, and the donee occupies the dominant position, the fact that the gift is improvident is of great importance in determining whether it was tire voluntary, well-understood act of the donor, and that the failure of the donor to reserve to himself a power of revocation will vitiate the transaction. The two cases referred to by the vice-chancellor in support of his conclusion that .the gift should be set aside are of this character. In Garnsey v. Mundy, 24 N. J. Eq. (9 C. E. Gr.) 243, the donor was a young woman who had just reached her majority. The gift was to her mother, in trust for the donor’s child. It was made at the solicitation of the mother, without any independent advice to the daughter, and without the reservation to her of any power of revocation. The proofs made it clear that the donor did not understand the provisions of the deed which she executed, nor their effect; that she did not suppose the conveyance would place the property beyond her reach and control, and that the donee supposed that the gift was, and intended that it should be, revocable. In Powell v. Powell, L. R. 1 Ch. Div. 243 (1900), the donor was a young woman who had attained the age of twenty-one years shortly before making the deed which was set aside. The donee was her stepmother. The gift was held to be the result of strong pressure brought to bear upon the donor by the donee. The underlying distinction between cases like those just referred to .and the present one, as it seems to us, is the relationship existing between the parties. Where no relation of trust and confidence exists between the donor and donee, or where, when such relation does exist, the donor, and not the donee, occupies the dominant position, the rule laid down in those cases has no application, and a gift absolute in its terms, made voluntarily and with a full understanding of its effect, cannot be revoked by the donor, either by his own act alone or with the aid of a judicial tribunal. Such is the ease now before us. The respondent, in the prime of life, as has already been stated, in the full possession of his faculties, as the case shows, and without the exercise of any influence over him by his children, made this gift to them. At that time no conditions existed to justify the conclusion that tire original relation existing between parent and child (i. e., a relation where the. parent occupies the dominant position) had been reversed, and that the children then occupied that position. His purpose, at the time of making the gift, was to make them the absolute owners of the property donated. It was his to dispose of as he saw fit. The gift was intended by him to be, and was, irrevocable. That being so, he has no legal right to now require the return of the property with which he then parted.

The portion of the decree appealed from should be reversed, .and a decree entered in conformity with the view herein expressed.

Fort, J.

(dissenting).

I am unable to agree with the view taken by the majority of the court in this case.

I agree with the opinion of Vice-Chancellor Emery in its entirety, and vote to affirm for the reasons given by him in the court of chancery.

Judge Vrooni concurred in this dissent.

For affirmance—Fort, Vroom—2.

For reversal—The Chief-Justice, Dixon, Garrison, Garretson, Pitney, Swayze, Bogert, Green, Gray—9.


text:
    George E. Mausert, appellant, v. Christian Feigenspan (a corporation), respondent.
    [Submitted March 25th, 1905.
    Decided December 6th, 1905.]
    The president of a corporation has no power, virtute of/lcii, to alter the provisions of a formal agreement, under seal, entered into by the corporation itself.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Emery, who filed the following opinion and memorandum:
    In this case both complainant and 'defendant agree that complainant is entitled to the specific performance of the contract between them, dated May 20th, 1902, in relation to the execution of a lease, and as to the lease itself the case is one for the settlement of the terms or conditions to be inserted in the lease. Two disputes arise in reference to these terms — first, whether the defendant is entitled to insert a clause against assignment or subletting without consent; and second, whether complainant is entitled to have inserted in the lease a modification of the clause, which was, under the contract, to be inserted in the lease, relating to the sale of beer or liquors on the premises. On the first point, I conclude that the clause against assignment and subletting without defendant’s consent is not to be inserted. The agreement does not provide for such clause, and it expressly contemplates assignment of the agreement; and the last clause of it provides that it shall bind the assigns of the parties. The defendant is, however, entitled to have the lease recite that it is executed pursuant to the agreement, and to recite the provisions of the agreement relating to the use and sale of defendant’s goods. Defendant is entitled to this in order that when the lease is executed it may be in a position to enforce against any assignee of complainant whatever rights, legal or equitable, it may have by reason of the agreement and its provisions for binding assignees.
    As to the modification of the agreement contained in the written contract of. May 20th, 1902, for the sale of liquors, my conclusion is that a covenant of this character is a restriction of the use of lands, and within the statute of frauds. The subsequent modification relied on by complainant in his bill is denied in the answer, and except to the extent set up by the answer is proved only by parol. The statute of frauds not having been set up' in the answer, the contract, as modified, can be enforced so far as admitted by the answer, but only to that extent. Ash-more v. Evans, 11 N. J. Eq. (8 Block.) 151 (Chancellor Williamson, 1850); Gough v. Williamson, 02 N. J. Eq. (17 Dick.) 526. Defendant claims, that the covenant is not within the statute because it is a purely personal covenant, collateral to the use of the land, and does not run with the land. Whether the covenant runs with the land is not, at least in equity, the test of the applicability of tire statute, for in equity it is settled that an assignee of land with notice is subject to the restrictions, irrespective of the question whether the covenant runs with the land. Kirkpatrick v. Peshine, 21/. N. J. Eq. (9 C. E. Gr.) 206, 213; Brewer v. Marshall, 19 N. J. Eq. (1¡. G. E. Gr.) 587, \5!(2 (Court of Errors and Appeals, 1868).

    In the present case, I think it was clearly intended by the parties that the covenant related to the premises. The agreement recites that the object of defendant in taking the option and lease was to open the premises for one of its customers for the sale of its goods, and that the complainant desired to establish himself in the premises as a customer of defendant for the purpose of opening a saloon and selling the goods of defendant. The covenant which is to be inserted in the lease of the premises is that complainant is “to use and sell exclusively the goods manufactured by defendant, except those imported from a foreign country outside of the United States.”
    Talcing the whole agreement together, this covenant clearly relates to the exclusive use and sale on the leased premises of defendant’s goods for the term of the lease (five years), and is to that extent a covenant restricting the use of the lands leased, and is an equity attached to the lands by the lessor. It is therefore within the statute of frauds. In Manchester Brewery Go. v. Coombs, 10 Gh. Div. 608, 612 (1901), a covenant by a lessee to buy beer of the lessors and “their successors in business,” was held to be a covenant running with the land.
    There have been no acts of part performance to take the case out of the statute. In reference hr the modification of the contract, I think, also, that the point is well taken that the authority of the president of the corporation to modify the contract in the manner claimed by complainant has not been shown. The clause relating to the sale of liquors will therefore be the clause in the agreement, with the modificatipns stated in the answer.

      Second. In reference to the amount due upon the mortgage, the principal dispute is whether the complainant, in estimating the amount due upon tire mortgage, is entitled to a deduction of the amount paid by defendant in the settlement of the debts incurred by Sicke & Company, the contractors, to materialmen and others, for materials and labor included in their contract, and for which the contractors had been previously paid. These creditors claimed liens upon the leasehold and fixtures, and at the time of giving the mortgage the claims had not been paid. The total amount of tírese claims was included in the mortgage, with the understanding that complainant should have the benefit of any deduction in the claims made in their settlement, and after such deductions, which were in all instances made with complainant’s knowledge and assistance, the claims were paid by defendant in the belief that they were included in the mortgage.
    Complainant now claims that these duplicate payments, as they are called, became necessary because of the neglect of, defendant’s attorneys in not procuring the contract to be filed, and a large amount of evidence was produced on both sides bearing upon the question whether the failure to file the contracts was the fault of these attorneys of defendant, or of the complainant himself. Without undertaking to decide this question in this suit, my conclusion upon the whole evidence is that the mortgage in. question was given and received with the express intention and understanding that the defendant, so far as it after-wards paid these claims, was to be secured by the mortgage, and that it was not intended that as between complainant and defendant thus paying them the mortgage should be subject t-o any deduction by reason of the complainant’s claim that the attorneys were liable for the payments, and I conclude that the complainant, having procured these subsequent payments by defendant, knowing that in so paying it relied on its security under the mortgage, is -now on the entire evidence estopped from disputing that they are so secured. Complainant, however, on making the payments, is entitled to be subrogated to any claim defendant may have against its attorneys for the alleged negligence. The amount due upon the chattel mortgage will therefore not be reduced by these claims.

      Third. Complainant, as a condition to the execution and delivery of the lease, should be required to pay the amount due on the chattel mortgage, the time fixed for payment by the agreement having expired. It is true that the original agreement did not provide for such payment as a condition, and I think the parties contemplated the execution of the lease before the maturity of the mortgage.
    It appears by the evidence, however, that the failure to execute any lease before the execution of the mortgage was due to the. request of the complainant that the defendant should continue to hold the title, and was not due to any dispute between the parties as to the terms of the lease. When the defendant, in July, 1903, offered to make the lease, and submitted one for execution, there was probably an objection raised by the complainant as to the insertion of the clause against assignment, but the failure to settle this question and execute a lease at that time was not due to that objection, which was left open. The defendant, holding the legal title to the premises, paid the amount secured by the mortgage for the expenses of fitting up the premises under the contracts made in its name, and no actual conveyance to the complainant, either of the lease or fixtures, has been made. The time fixed for the payment of the mortgage having arrived, the situation is one where the ■entire equities between the parties should be settled, and the complainant, asking the equitable remedy of specific performance, should be required, on his part, to satisfy the equities which have arisen in defendant’s favor on the entire transaction. This was the view of complainant on filing the bill, which was for ■the double purpose of specific performance of the agreement for the lease and settling the amount due on the mortgage -in a .single suit. The bill asks an accounting of the amount due on the mortgage, and offers to pay the amount found due upon the performance of the agreement to execute and deliver the same. The defendant accepted the issues thus tendered, and the cause 'has proceeded to hearing- upon both questions — that of execution ■of the lease and the settlement of the amount due on the mortgage. Under these circumstances, I do not think that the complainant should now be allowed to withdraw the tender or offer in his bill and to ask that he be allowed to have the lease executed without payment of the amount due on the mortgage.

      Fourth. Defendant, on. the cross-bill, is entitled' to an injunction restraining the breach of the covenant relating to the •sale on the premises of goods other than those supplied by defendant.
    The form of decree will be settled on notice, unless counsel .agree upon the form.
    FURTHER MEMORANDUM AS TO FORM OF LEASE.

      First. The lease should bo for the full term of the lease from •the Bernard estate to the company. Leases to a subtenant for the •full term create the relation of landlord and tenant, as between •the original lessee and the sublessee, if they so intend. Stewart v. Long Island Railroad Go., W'Z N. Y. 60S, and cases cited (at p. 609). The effect as between the original landlord and •the sublessee is not before me for decision, and upon further consideration I conclude that no restriction of the full term-should be made.

      Second. In the clause as to the option, the lease should follow •the terms of the original lease. Whether, as between the original lessor and the company, the sublease for the full term operates as an assignment of the right or option to renew, is a question not now to be decided, and I do not consider that I have the right on a bill for specific performance to deviate from the form of contract which parties have agreed upon.

      Third. Neither party is entitled to costs as against the other. Although complainant was obliged to file his bill in oi'der to obtain s]Decific performance, lie claimed performance on terms in the lease to which it was decided he was not entitled. On the other hand, defendant originally, and up to the time of filing answer, refused any specific performance, and at the hearing insisted on terms in the lease to which it was not entitled. So far, therefore, as the case is to be treated as one of specific performance, both sides were in fault, and the general rule in such cases is that neither party is entitled to costs. [8 Dan. Ch. Pr. §§ 11(00, llfil. So far as the bill was a bill to settle the amount due on the mortgage and to redeem, the mortgagee would be entitled to the costs of the suit so far as they related to the mortgage claim, and if these could well be separated from the other costs of the suit they might be allowed. But both questions of specific performance and mortgage indebtedness were tried together, and it is impracticable to separate the costs. On the whole case, it is most equitable that neither side pay costs.

      Messrs. Riker & Riker, for the appellant.

      Mr. Scott German and Mr. Francis Child, for the respondent.
   The opinion of the court was delivered by

Gummere, Chief-Justice.

By a formal agreement under seal, entered into by the parties to this litigation on May 20th, 1902, the respondent (a brewing company) contracted to lease to the appellant certain premises in the city of Newark, and to expend tire sum of $2,500 — and $1,000 more, if necessary — in fitting them up‘ for use as a beer saloon by him. He agreed, on his part, among other things, to use and sell only the goods manufactured and sold by the respondent company, or imported from outside the United States, and also to give to it a chattel mortgage upon the goods and fixtures contained in the saloon for such sums as the respondent might invest in the premises or loan or advance to him. The fitting up of the premises in the manner provided by the agreement having been completed in the latter part of September, the appellant entered into possession, although no lease had been executed by the respondent. At the same time he gave td the respondent a chattel mortgage upon the stock and fixtures of- the saloon. Some two or three months later a lease was tendered him by the respondent, containing a prohibition against his subletting the premises. He declined to accept the lease with this provision in it, for the reason that his contract with the company contained no such prohibition. Some months later he applied to the president of the respondent company to be permitted to sell beer brewed in Milwaukee, Wisconsin, and claims that unrestricted permission, to do so was granted to him by that officer. This the respondent denies, but admits in its answer that it granted permission to him to sell from two to four half barrels of that product, upon the express understanding that he would discontinue its sale upon notice from the respondent company to that effect. About a year after the appellant took possession of the premises, a dispute having in the meantime arisen between the parties as to his right to sell the Milwaukee beer, and also as to the amount due on the chattel mortgage, the bill in this case was filed. It has a twofold aspect. By it the appellant seeks — first, to compel the respondent company to execute and deliver to him a written lease for the premises, in compliance with the provisions of the contract of May 20th, 1902, as modified by tire alleged agreement made subsequently by the president of the respondent company with relation to the sale of Milwaukee beer in unrestricted quantities; and second, to obtain an accounting of the amount due upon the chattel mortgage, and a decree of redemption upon payment of the amount found to be due upon such accounting.

By the decree of the court of chancery it was adjudged — first, that the appellant was entitled to have a written lease executed and delivered to him by the respondent, and that the lease should contain the provisions of the contract of May 20th, 1902, with the restricted modification relating to the sale of Milwaukee beer, which was admitted by the respondent to have been made by it, but not with the unrestricted modification claimed by the appellant to have been made by the respondent company’s president; second, that the amount due upon the chattel mortgage was the sum of $6,691.55, and that the appellant was entitled to redeem the property covered by it upon payment of this amount. The appellant appeals from both branches of the decree, contending that the amount found due upon the chattel mortgage is excessive, and that he is entitled to have the lease contain a provision permitting the unrestricted sale of Milwaukee beer.

The opinion filed in the court of chancery by the learned vice-chancellor who heard the cause contains a full statement of the facts out of which the controversy arose between the parties with relation to the amount due upon the chattel mortgage, and also the reasons upon which his finding rests that the amount due was the sum above stated. A restatement of either of them by this court is not necessary. It is enough to say that this portion of the decree is affirmed on that opinion.

The vice-chancellor placed his conclusion that the appellant is not entitled to have a provision permitting him to sell Milwaukee beer in unrestricted quantities, upon two1 grounds— first, that the agreement for the sale of liquors contained in the contract of May 20th, 1902, is a restriction of the use of lands, an equity attached to them by the lessor, and that a subsequent parol agreement altering it, if made, is void under the statute of frauds; and second, that it was not shown that the president of the company had authority to modify the contract in the manner claimed by tire appellant.

We concur in the view of the vice-chancellor that the agreement of the president of tire company to modify the provision in the contract relating to the sale of liquor (if such agreement was made by him) did not bind the respondent. No' attempt was made to show any express authority conferred upon him for this purpose by the board of directors, and he had no power virtute officii to alter the provisions of a formal agreement under seal entered into by the corporation itself. The act of the president of a corporation, unless it is shown to pertain to his official duty, or to be within the scope of his employment, cannot be regarded as the act of the corporation, and is not binding upon it. Titus v. Cairo and Fulton Railroad Co., 37 N. J. Law (8 Vr.) 98. His powers over its business and property are strictly the powers of an agent, delegated to him by the directors, who are the managers of the corporation) and the persons in whom the control of its business and property is vested. He may, without any special authority from the board of directors, perform all acts of an ordinary nature which by usage or necessity are incident to his office, and may bind the corporation by contracts in matters arising in the usual course of business. To this extent, by virtue of his office, he is the agent of the corporation, but beyond this his official position gives him no more control over its property, funds or business, than any other director. Stokes v. New Jersey Pottery Co., 46 N. J. Law (17 Vr.) 237. Any act done by him which is outside the scope of the powers which inhere in his office will not bind the corporation, unless it is shown that authority was conferred upon him for the purpose bj the directors, either expressly or by their consent and acquiescence in permitting him to assume the direction and control of the business of the company. Stokes v. New Jersey Pottery Co., supra. As has already been said, no express power was shown to have been conferred upon the president of the respondent company to alter its formal agreément, executed by it under its corporate seal, and it cannot be inferred from the testimony that such power had been conferred upon him inferentially, by his assumption of the direction and control of the business of the corporation, with the consent and acquiescence of the directors.

Reaching the conclusion that the agreement of the respondent company’s president to modify the provision of the contract of May 20th, 1902, relating to the sale of liquors (if such an agreement was made by him) did not bind the respondent, we find it unnecessary to consider the interesting question whether that provision of the contract is a restriction of the use of lands, and, for this reason, within the statute of frauds.

The decree appealed from must be affirmed.

For affirmance—The Chief-Justice, Dixon, Garrison, Fort, Garretson, Pitney, Swayze, Bogert, Vredenburgh, Vroom, Green, Gray—12.

For reversal—None.


text:
    Michael P. O’Connor, respondent, v. International Silver Company and United States Silver Corporation, appellants.
    [Argued March 22d, 1905.
    Decided November 20th, 1905.]
    Where corporation A has acquired all the capital stock of corporation B, and at the time of such acquisition corporation B owned and held a large number of the shares of the capital stock of corporation A, the officers and directors of neither corporation have the right, at a stockholders’ meeting of corporation A, held for the purpose of electing directors of that corporation, to vote ujion the shares of the stock of corporation A held bj' corporation B at the time of the acquisition of its stock by corporation A; and an owner of shares of stock in corporation A, which he has held for several years, and who was entitled at the time of his purchase of the stock, and still continues to be entitled to have a certificate thereof issued to him, but has never exercised that right, and whose shares stand on the books of the company in the name of his grantor, 'who, however, has no interest therein, has a standing in a court of equity to ask the court to prevent corporation A, or corporation B, from voting upon such shares.
    On appeal from an order overruling a demurrer advised by Vice-Chancellor Pitney, whose opinion is reported anle p. 67.

      Mr. John W. Griggs, for the appellants.

      Mr. Charles D. Thompson, for the respondent.
   The opinion of the court was delivered by

Gummere, Chief-Justice.

The complainant in this case seeks an injunction to restrain the defendants, the International Silver Company and the United States Silver Corporation, or either of them, from voting at the stockholders’ meeting of the International company upon certain shares of stock of that company purchased and now owned by the United States corporation. The situation disclosed by the bill is that both of these companies are New Jersey corporations; that the United States corporation, shortly after its formation in 1902, acquired and still holds about ninety thousand shares of the common stock and about five thousand shares of the preferred stock of the International company; that shortly afterward the International company purchased, and now owns, all of the stock of the United States corporation, and that it is the purpose of these two companies that one or the other of them shall vote the International stock held by the United States corporation at the annual meeting of the stockholders of the International company, to be held shortly after the filing of the bill, for the purpose of electing a board of directors for the then ensuing year. The bill further shows that the complainant is the owner of four hundred shares of the cbmmon stock of the International company; that he acquired three hundred shares of said stock on the 19th of May, 1902, and the other one hundred shares on July 30th, of the same year, and that while said stock stands on the books of the company in the name of one Hart, it is only nominally in him, and belongs to and is owned by the complainant.

Each of the companies demurred to the bill. They challenge the standing of the complainant to' filé the bill for the reason, as they say, that he is not a registered stockholder of the International company, and therefore is not qualified to maintain a stockholder’s bill against them. They also contend that the-facts herein recited do not afford ground for holding that neither the one company nor the other is entitled to vote this block of International stock at the annual meeting of the stockholders of that company.

The learned vice-chancellor held against the demurrants on both points and overruled the demurrer. We concur in the conclusion reached by him. We consider that the complainant,, as the real owner of the stock of the International company which he has acquired, has a sufficient standing to lile the bill, notwithstanding that the stock has not been transferred to him upon the books of the company, and for the reasons which are given by the vice-chancellor for his conclusion upon this point.

We prefer to put our decision upon the other point of the case on a somewhat different ground from that expressed by the learned vice-chancellor.

The effect upon the United States corporation of ihe purchase by the International company of the whole issue of the-stock of the United States corporation was, ipso facto, to oust the board of directors of the latter company. Section 39 of the Corporation act (P. L. 1896 p. 290), declares that “no person shall be elected a director of any corporation issuing stock unless he shall be, at the time of his election, a bona fide holder of some of the stock thereof; and any director ceasing to be a bona fide holder of some of the stock thereof shall cease to be a director.” It also ousted the president of the corporation from his office, for, by the provision of section 13 of the Corporation act, the president must be a member of the board of rjirectors. There was therefore at the time of the filing of the bill no-agency of the United States corporation which could act for it in casting the vote upon the block of International stock held by it, and any attempt to do so by a person claiming to be its president, or the duly authorized agent of its board of directors,, would be illegal and an invasion of the rights of the complainant.

The acquisition by the International company of the whole of the stock of the United States corporation carried with it to the International company no right to vote upon the shares of its. own stock belonging to the United States corporation. By its acquisition of the United States corporation stock the International company either did, or did not, become the owner of its own. stock thus held by the United States corporation. Whether it did, or did not, it is unnecessary to stop to inquire. If it did not, then plainly it is not entitled to vote upon the stock, for, by the express provision of the Corporation act, owners of stock alone are -entitled to vote upon it at a stockholders’ meeting. The single exception is that declared by section 31 of the Corporation act, of a pledgee of hypothecated stock who has been expressly empowered to vote thereon by the owner. If, on the other hand, by its acquisition of the stock of the United States corporation the International company became the owner of its own stock then held by the United States corporation, its right to vote upon it a't a stockholders’ meeting is prohibited by the thirty-eighth section of the Corporation act (P. L. 1896 p. 290), which is in these words: “Shares of stock of a corporation belonging to said corporation shall not be voted upon directly or indirectly.”

The order appealed from should be affirmed.

For affirmance—The Chief-Justice, Dixon, Garrison,. Garretson, Pitney, Swayze, Bogert, Vredenburgh, Vroom, Green, Gray—11.

For reversal—None.


text:
    Elwood C. Harris et al., receivers, &c., appellants, v. Lena Nevins et al., respondents.
    [Argued March 23d, 1905.
    Decided March 5th, 1906.]
    In the computation of the amount payable upon a mortgage made to a building and loan association by one of its members, and which has become due by reason of the insolvency of the association, the mortgagor is entitled to have credited upon the.principal of the mortgage all sums paid by him as premiums for the loan.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Emery, whose opinion is reported ante p. 183.

      Mr. Frederick F. Guild, for the appellants.

      Mr. William H. Osborne, for the respondents.
   The opinion of the court was delivered by

Gummere, Chief-Justice.

The bill in this case was filed by the receiver of a building and loan association, which had become insolvent, for the foreclosure of a mortgage given by members of the association to secure a loan made by it to them.

The vice-chancellor held that the effect of the insolvency was to render the mortgage debt due forthwith, notwithstanding that by the terms of the mortgage the debt was not to become due and payable until the maturity of the shares of the'association which were held by the borrowers. He further held that in ascertaining the amount due upon the mortgage the defendants were entitled to have deducted from the principal sum the moneys paid by them as premiums for the loan, but not dues paid by them as members of the association.

From so much of the decree as directs the premiums paid by the defendants to be deducted from the principal of tire mortgage, the receiver appeals.

In holding that the defendants were entitled to credit for all premiums paid by them, the vice-chancellor followed the rule laid down by Vice-Chancellor Reed, in Weir v. Granite State Provident Association, 56 N. J. Eq. (11 Dick.) 234, considering himself bound by that decision, but intimated that if the question was one of first impression in the court of chancery he would be inclined to adopt the rule laid down by Judge Grosscup, in Towle v. American Building Loan, &c., Society, 61 Fed. Rep. 446, namely, that the borrowing member is entitled to be credited only with so much of the premiums paid by him (if any) as have not yet been earned — that is, the proportion which a withdrawing member would be entitled to. The case referred to received consideration by Vice-Chancellor Reed in the Weir Case, and the rule therein adopted was rejected by him as being less equitable than that which he made the basis of his own decision. I concur in that view. The rule of the Weir Case comes nearer, in my opinion, to doing exact justice between the borrowing and non-borrowing members of an association of this kind which has become insolvent than any other rule which I have seen suggested in judicial decisions or by text-writers. I conclude, therefore, that the decree appealed from should be affirmed for the reasons expressed in Weir v. Granite State Provident Association.

For affirmance—The Chiee-Justice, Garrison, Fort, Bogert, Vredenburgh, Vroom—6.

For reversal—Dixon, Garretson, Pitney, Swayze, Green—5.