text:
    Curtiss-Warner Corporation, complainant, v. Frederick R. Thirkettle et al., defendants.
    [Decided July 27th, 1926.]
    1. An abatement may be allowed on foreclosure of a mortgage where fraud at its inception resulting in an increase in the amount of that mortgage is shown.
    2. Set-off is a purely statutory right and is strictly limited to liquidated damages. Becoupment is a common law right and applies to unliquidated as well as liquidated damages. Counter-claim may include either set-off or recoupment or both.
    3. Where one agrees to sell and convey a corner lot, knowing at the time that the lot described is not a corner lot, and thereafter conveys the lot described and the vendee accepts the deed not knowing that the lot conveyed is an inside lot and not a corner lot, the unperformed part of the executory contract does not merge in the deed.

      4. As a general rule an executed contract supersedes all prior negotiations and agreements, where the last contract covers the whole subject embraced in the prior one.
    5. But where' an executory contract for the sale of land provides for a . series of acts at successive periods, or for distinct and separable acts to be performed simultaneously, the executory contract becomes extinct upon the delivery and acceptance of a deed only as to such of its parts as are covered by the conveyance.

      6. Where a mortgage has been increased in amount by fraud, and the mortgagor continues installment payments thereto after discovery of the fraud, but upon the promise of the mortgagee to make good his fraudulent representations, the mortgagor is not estopped by such payments from setting up that fraud on foreclosure of the mortgage.
    On bill to foreclose. On final hearing.

      Mr. Philip J. Schótland, for the complainant.

      Mr. Israel B. Greene, for the defendants.
   Berry, V. C.

This is a suit to forclose a purchase-money mortgage on which it is admitted there is an unpaid balance of $1,206.50, with interest, from October 24th,' 1922. The defendants set up, by way of counter-claim, their right to an abatement— first, of the sum of $1,000, representing the increased price of the lot purchased on the basis of its being a corner lot, which it was not, and second, of the cost of construction of cement sidewalks and curbs the full length of the lot on the street, which the lot was supposed to abut, but did not.

The original mortgage was in the sum of $2,000, was given to secure a part of the purchase price of the property therein described, and was subject to a first building and loan mortgage of $5,000. In May, 1922, the Philmar Construction Company was engaged in developing a tract of land in East Orange, Few Jersey, and had divided the same into lots and plots and was erecting thereon a large number of houses. These houses were all constructed according to a common plan and were similar in appearance. In the latter part of May, 1922, the defendant was importuned by the company to purchase one of these lots and a house to be erected thereon, and a Mr. Herman, an officer of the company, took the defendants in his automobile to the tract and showed them a house in the course of erection. He offered to sell any lot in the tract, with a house erected thereon according to the plans and specifications, which were exhibited, for the sum of $6,500. The defendants expressed a desire for a corner lot and were shown the lot which they eventually purchased, and were told that it was a corner lot, but that the price of that lot, by reason of its being a corner lot, with a house erected thereon, would be $1,000 more than the other lots, and that the company would sell them that lot with a house erected thereon for $7,500, accept a cash payment of $500, and take the balance of the purchase price in first and second mortgages of $5,000 and $2,000, respectively. The first mortgage was to be a building and loan mortgage to be arranged by ■ the vendor. The defendants desired some changes in the Specifications for the house to be built, and a written contract, providing for the sale of the lot and the building of the house, was entered into between the Philmar Construction Company and these defendants. This contract was dated May 31st, 1922, and the property was therein described as “the premises known and designated as the corner of Tremont avenue and Oak street, and being forty feet on Oak street and one hundred feet on Tremont avenue.” At the date of the contract the tract of land which was being developed was characterized by some of the witnesses as a “dump,” no streets being laid out and improved at that time. The line of Oak street and the line of Tremont avenue to the eastward of Oak street were apparent, because houses had already been constructed, or were in course of construction, on those streets. The line of Tremont avenue to the westward of Oak street, however, was not delineated, as no houses had been erected at that point. The land there was vacant and barren. It was quite apparent, however, that if Tremont avenue were extended to the westward of Oak street, the lot which the defendant purchased would be a comer lot. The changes in the specifications for the house desired by the defendants were finally agreed upon and reduced to writing and made a part of the contract. Philmar Construction Company proceeded with the construction of the house and the defendants took possession of it and moved into it in October of that year, before its final completion. The deed for the lot purchased and the mortgage, which is the subject of this- suit, were dated October 34th, 1933, but executed and delivered December 4th, 1933. The property is correctly described in the deed by metes and bounds without any mention of the lot as a corner lot. The $500 cash payment required by the contract was made by the defendant, $300 on the signing of the contract and $300 on the delivery of the deed. Some time during the following summer, when sidewalks and curbs were being constructed by the city on Oak street, the defendant noticed that this sidewalk and curb extended beyond the point where Tremont avenue, if extended, would intersect the westerly line of Oak street, and called Mr. Herman’s attention to the matter and inquired of him as to whether Tremont avenue was not to be extended beyond Oak street. Mr. Herman referred the defendant to the city engineer, who was present, and the city engineer informed the defendant that the city ordinances did not then provide for the extension of Tremont avenue. Tremont avenue has never been extended, the sidewalks and curbs, which under the terms of the contract were to have been constructed along Tremont avenue at the side of the defendants’ lot, have never been built, and the defendants’ lot is not a corner lot. It is now admitted by ail the parties that there is no present intention or immediate prospect of Tremont avenue being extended so as to make the defendants’ lot a comer lot. There is a sharp conflict in the testimony of the defendants and that of the witnesses Herman and Goldfarb, who were officers of the Philmar Construction Company, and who executed the agreement of sale, with respect to the representations made at or about the time the contract was executed. All of the preliminary arrangements with respect to the sale were conducted by the witness Herman, and he testified that there was never any offer of the house and lot for $6,500, but that the original price was $7,300, afterwards reduced to $7,000, and that $500 was added to the purchase price on account of changes in the specifications of the house. The witness Goldfarb testified that none of the houses and lots in. that tract were sold for less than $6,900, and that at the time of this sale none of them had been sold for less than $7,000. He also testified that there was $500 added to the purchase price on account of the changes in the specifications for the house. Both the defendants, however, testified positively to the offer of other houses and lots for $6,500 and to the addition of $1,000 to that price for the house and lot purchased, because the lot was a corner lot, and also to the fact that no extra compensation was to be added for the changes in the specifications. Their story has the ring of truth, and I am constrained to accept their version as to what happened. In addition to this, it is quite apparent from the negotiations which resulted in the changes in. the specifications that no additional compensation was to be asked for them, because it is admitted that the list of changes was reduced to writing by Mr. Thirkettle and handed to Mr. Herman to submit to Mr. Goldfarb; that some of the suggested changes were O. KTd by Mr. Goldfarb and others refused. If additional compensation was to have been allowed for whatever changes were suggested by the purchaser, there is no apparent reason for Mr. Goldfarb’s refusal to make all the changes suggested. It is admitted by both Herman and Goldfarb that at the time of these negotiations, and at the time the contract was executed, they knew that the lot purchased by the defendants was not a corner lot; that Tremont avenue had not been laid out by the city or dedicated, and that there was no present intention on the part of the city authorities to extend Tremont avenue beyond Oak street. The land which would have been included in Tremont avenue, if extended, was not a part of the Philmar tract and was not owned by that company.' The defendants relied completely upon the representations of the officers of Philmar Construction Company as to the character of the lot purchased, as, from the condition of the land, it is obvious they were obliged to do. There is not the slightest doubt in my mind but that Mr. Herman, in negotiating a contract with the defendants and realizing that they preferred a corner lot, seized upon this fact as an opportunity to boost tbe price of the house and lot, and exacted of the defendants a price $1,000 in excess of what he otherwise would have obtained, and this was done with a complete knowledge of the fact that the lot was not a comer lot; that there was no immediate prospect of its being made a comer lot, and that there would, consequently, be no sidewalks and curbs to construct on Tremont avenue. This conduct of Mr. Herman was approved and acquiesced in by Mr. Goldfarb, when he joined in the contract of sale, and, in my judgment, constituted a fraud on the defendants from which they are entitled to be relieved unless the objections advanced by the complainant against such relief are sound.

At the hearing the question arose as to the difference in the value of the lot purchased by the defendant and the value of the same lot if it had been a corner lot. At that time I was under the impression that the question was of some materiality to this issue, and by consent of counsel the opinion of an expert real estate appraiser was obtained on that question, and he has reported that there was no difference in the value of this lot as a corner lot or as an inside lot at the time of the purchase. This expert also says, however, that corner lots available for commercial or apartment-house sites have an increased value of twenty-five per cent, and upwards over inside lots. The witness Goldfarb testified that this lot, if it were a corner lot, and if Tremont avenue were laid out and improved, would have a value of $1,000 more than inside lots. But, upon reflection, it seems to me that the question as to the actual value of this lot as an inside or comer lot should have very little weight, in view of the fact, as I find it, that the Philmar Construction Company exacted $1,000 more for the lot on the basis of its being a comer lot than it would have required if it had been an inside lot. The right to relief is based, not so much upon the difference in the value of the lot as it is and as it was supposed to be, as upon the misrepresentation which was used as a lever to raise the price on the defendants.

Goldfarb’s statement that the lot with the street built would be worth $1,000 more than inside lots rather confirms, in my mind, the idea that the representation that the lot was worth $1,000 more because it was a corner lot, was made at the time of the negotiations.

It was estimated by the city engineer, who was sworn as a witness on behalf of the defendants, and whose experience and qualifications on this point are unquestioned, that the curbing and sidewalks along the line of the defendants’ lot on Tremont avenue, if extended, would cost $451.74. The complainants claim, however, that the cost would have been very much less, if constructed by the Philmar Construction Company as a part of the general operation. Obviously, as the street was not cut through or laid out at the time this operation was going on, this sidewalk and curb could not have been constructed at that time. It is equally obvious that the city engineer is impartial and disinterested, and I am inclined to accept his estimate of the cost of such construction, based, as it is, upon his wide experience in such matters.

The complainant urges the following points against the defendants’ plea for abatement and extinguishment of the mortgage, which is the subject of this foreclosure — ■

1. That there was no fraud in the inception of the mortgage, in that the defendants were not charged anything extra for the lot as a corner.

2. That defendants cannot maintain their counter-claim for sidewalks and curbing because the same is for unliquidated damages.

3. That the defendants cannot maintain their counterclaim on the ground that the lot is not a corner lot, because there is no provision in the executory contract of sale whereby the Philmar Construction Company was bound in the future to make the lot in question a corner lot, and that the executory contract merges in the deed.

4. That the defendants are estopped from setting up their claim in abatement by their laches and conduct in procuring extensions of time and making payments on account of the mortgage without objection.

I will consider these objections in their order.

I.

This objection may be quickly disposed of, as I have already found as a fact that there was a fraudulent representation by the Philmar Construction Company that the lot sold to the defendants was a corner lot, and that $1,000 was added to the purchase price on the basis of its being a corner lot. This resulted in increasing the purchase-money mortgage, which is the subject of this foreclosure, by the amount of $1,000, and clearly, if not barred by the other points raised by complainants, defendants are now entitled to an abatement in the amount of the mortgage to the extent of this overcharge.

The principle that abatement may be allowed on foreclosure of a purchase-money mortgage on account of fraud is well settled. Shannon v. Marselis, 1 N. J. Eq. 413; O’Brien v. Hulfish, 22 N. J. Eq. 472; Dayton v. Mellick, 32 N. J. Eq. 570; on appeal, 34 N. J. Eq. 245; Kuhnen v. Parker, 56 N. J. Eq. 286; Redrow v. Sparks, 76 N. J. Eq. 133; Peterson v. Reid, 76 N. J. Eq. 377; on appeal, 80 N. J. Eq. 450; Hawthorne v. Odenson, 94 N. J. Eq. 588.

In O’Brien v. Hulfish, supra, Chief-Justice Beasley said:

“I think there is no doubt that where a sale of real property is effected by deceit, and a mortgage given for the whole or a part of the purchase-money, relief in equity will be given to the party defrauded in a suit on the mortgage, whenever such course is necessary to reach a just result. Fraud, as a general rule, gives jurisdiction to a court of equity, and there can be no reason why, when the process of foreclosure is being used as a means of giving effect to a deception, such process should not be restrained and controlled as to prevent an injustice.”

And further:

“If it be true, as he asserts, that he has been cheated into an agreement to pay more for the title to this property than it is worth, a court of conscience will mot permit the excess over what is justly due to be exacted.”

In Dayton v. Melliclc, supra, Chancellor Bunyon said:

“Dayton, by means of the misrepresentations of the contents of the farm, was enabled to obtain a mortgage for $572 more than he otherwise would have got, and than, in equity, he ought to have had. He should account for it in this suit.” In the same case, on appeal, Mr. Justice Parker said:

“If a vendor fraudulently represents the number of acres to be greater than the actual number conveyed, and thereby induces the vendee to give more for the tract than he otherwise would, the vendee is entitled to an abatement.”

This same principle applies to any misrepresentation which results in the payment of a higher purchase price than otherwise would be paid. The first point argued, therefore, cannot prevail.

II.

Counsel for complainant cites Corson v. Bailey, 3 N. J. Adv. R. 926, and Mirkin v. Bowker, 133 Atl. Rep. 41, in support of this point. Neither of these cases, however, has any application to the case sub judice. In both of these cases the counter-claim sought to be asserted arose out of transactions wholly independent and having nu relation whatever to the origin of the mortgage therein sought to be foreclosed, and were matters of strict set-off. Counsel for complainant has evidently failed to distinguish between a counter-claim based upon strict set-off and one based upon the right of recoupment. Set-off is a purely statutory right and is strictly limited by the statute to liquidated damages. 4 Comp. Stat. p. 4836; 1 Comp. Stat. p. 433; Roseville Trust Co. v. Barney, 88 N. J. Law 146; reversed, 89 N. J. Law 550, but this principle approved. Norton v. Sinkhorn, 63 N. J. Eq. 313. On the other hand, recoupment is a common law right (24 R. C. L. 793), and applies to unliquidated as well as liquidated damages. Norton v. Sinkhorn, supra. Counter-claim may include either set-off or recoupment or both. In the Sinkhorn Case Chief-Justice Depue said:

“But the defendant’s claim, as set out in the answer, is not a counter-claim for liquidated damages, such as would constitute it a set-off. The claim set out in the answer is for unliquidated damages arising from the failure of the complainant to perform his contract according to its terms. The distinction between a set-off and recoupment is well settled. Recoupment, at common law, was a claim in reduction of the amount due to the party. * * *

“The doctrine of recoupment had been adopted in courts of equity long before it was introduced by statute into the practice of courts of law. * * *

“The principle that lies at the foundation of this doctrine is that the amount which the plaintiff is entitled to recover shall be abated or reduced by reason of his own failure to perform obligations which, by the same contract, devolved upon him, whereby the defendant has sustained damages.

“In substance and effect it may be likened to the reduction of the amount recoverable upon a contract because of a failure of consideration.”

The application of this language to the present issue is obvious. It was a part of the mortgagee’s contract to construct sidewalks and curbs. This part of the contract has never been performed. The cost of such construction was included in the purchase price of the property, and it may be assumed was covered by the mortgage, and an abatement of the amount it would have cost to construct that sidewalk and curb should be allowed. As stated above, the estimate of the cost of those sidewalks and curbs was $451.74. The' mere fact that the damages sought to be set up as an abatement of the mortgage debt in a suit to foreclose the mortgage are unliquidated does not prevent equity from granting the abatement. Coster v. Monroe Manufacturing Co., 2 N. J. Eq. 467; Couse v. Boyles, 4 N. J. Eq. 213; O’Brien v. Hulfish, supra; Kuhnen v. Parker, supra; Peterson v. Reid, supra.

In Peterson v. Reid, supra, the mortgagees had conveyed to the mortgagor certain lowlands of small value and covenanted to fill in the same, and the purchaser gave a mortgage for the price based upon the value of the land filled in. Upon proceedings brought to foreclose the purchase-money mortgage, the defendant sought an abatement from the mortgage debt for the damages sustained by reason of the mortgagee’s failure to carry out this covenant., Vice-Chancellor Stevenson said (at p. 888) :

“If a man conveys a parcel of unimproved land and at the same time covenants to erect a valuable building upon it, and takes back a purchase-money mortgage based on the valuation of the land with the building on it, and then com-' pletely defaults in his covenant to erect the building, is it possible that under any system of jurisprudence in a civilized state he would be permitted to foreclose his purchase-money mortgage for the entire amount, while the unfortunate mortgagor would be left to an action at law for his damages which he might never be able to collect ?”

This case was reversed in the court of errors and appeals (80 N. J. Eq. 450) ou the ground that the defendant, who was an assignee of the original mortgagor, had no standing to ask for an abatement because he bought the premises subject to the mortgage. The latest case affirming the principle referred to by Vice-Chancellor Stevenson in the Peterson Case is that of Holloway v. Hendrick, 98 N. J. Eq. 713, in which the court of errors and appeals affirmed the decision of the court of chancery in the opinion of Vice-Chancellor Fielder, in which he said:

“Finally, the defendants claim that the house which Mountain Lakes, Incorporated, agreed to construct upon the land in question does not conform to the house for which the defendants and Frank Hendrick contracted, and, therefore, the defendants owe nothing on the mortgage. This claim is stated in a nebulous fashion and the evidence does not support it. Had it been established that the house was not constructed according to the contract, and had this been a purchase-money mortgage, the defendants might be entitled to a set-off or to an abatement as against the mortgage debt, but this was not a purchase-money mortgage.”

But in the instant case the mortgage, which is the subject of the foreclosure, is a purchase-money mortgage.

III.

Complainant cites Davis v. Clark, 47 N. J. Law 338, and Long v. Hartwell, 34 N. J, Law 116, in support of this point. Neither of these cases is authority for the propositions for which cited.

In Long v. Hartwell, Mr. Justice Van Syckle said:

“The rule to be deduced from the authorities is, that the executed contract supersedes all prior negotiations and agreements, where the last contract covers the whole subject embraced in the prior one. But where the stipulation is to do a series of acts at successive periods, or distinct and separable acts to be performed simultaneously, the executory contract becomes extinct only as to such of its parts as are covered by the conveyances.”

But the deed which was delivered to the defendants in the instant case was not in performance of the agreement to either convey a corner lot or to build sidewalks and curbs. It is true that the deed conveyed the lot which was purchased, describing it by metes and bounds, but not as a corner; but it, nevertheless, did not convey a corner lot, which is what the vendor agreed to convey. It was, at best, a performance of such part of the contract as it purported to execute, namely, a conveyance of a particular piece of land. As well say that by the delivery of the deed for the lot the agreement to build the house was also executed. The delivery and acceptance of the deed, in pursuance of an executory contract, is, perhaps, prima facie evidence that it expresses the final intention of the parties, but only so far as it purports to carry into effect the executory contract. The cutting through of a street and building of sidewalks and curbs was executory even after the delivery of the deed. That part of the contract remained, and still remains, unfulfilled. There was no more a merger of these covenants in the contract by the delivery of the deed than there was a merger of the agreement to fill in the lowland upon the delivery of the deed in the case of Peterson v. Reid, supra, or than there would have been a merger by the delivery of a deed in the recent case of Holloway v. Hendrick of an agreement to build a house according to certain plans and specifications. In Roberts v. James, 85 Atl. Rep. 244, Mr. Justice Swayze, speaking for the court of errors and appeals, held that a representation by the vendors that they intended to build a railway station and cement walks upon vacant lots entitled the vendees to-avoid the contract where it appeared that the representations were false. The third point advanced by the complainant against defendants’ claim for abatement is untenable.

IY.

There is nothing in the testimony which indicates any laches, estoppel or waiver on the part of the defendants. The facts rrrged in support of this contention are that, after the defendant discovered that his lot was not a corner lot, he continued making installment payments on the mortgage and delayed his claim to an abatement to the point of waiver, and that he is thereby estopped from now asserting the claim for abatement. It is true that the defendant learned in 1923 that his lot was not a corner lot, but it appears that he was subsequently assured by Mr. Herman or Mr. Goldfarb, or both, that Tremont avenue would be cut through and his lot made a corner lot. It is also apparent that defendant continued his complaints to both these witnesses right up to within a short time before the filing of the bill, and that he was repeatedly assured by one or both that he would receive what he bought. His continuing to pay installments due on the mortgage under these circumstances does not bar him from now asserting this claim. It is not suggested that the complainant has been placed in any worse position because of these pajonents by defendant, and the evidence demonstrates that it has not. The position of the defendants, however, has been considerably changed by reason of the wrongdoing of the Philmar Construction Company, because, relying upon the representations that the lot was a corner lot, they proceeded to, and did, make valuable improvements on the property, and this has changed their position so that they are not now obliged to rescind their contract.

The present suit is instituted by the assignee of the Phil-mar Construction Company. The Philmar Construction Company now being out of existence, the complainant has taken over, at least, to a large extent, the assets of the mortgagee, Mr. Goldfarb, who was the person most interested in the Philmar Construction Company, is also an officer and stockholder in the complainant company. He had full knowledge of the whole transaction of which this mortgage was a part, and that knowledge will be imputed to the complainant-assignee.

Eor the reasons herein expressed, I will advise a decree in favor of the defendants, and as it appears that the amount of the abatement to which the defendants are entitled is, at least, equal to the amount due on the mortgage, the decree will provide that that mortgage be surrendered for cancellation, and that the excess of the abatement allowed, if any, be paid to the defendants by the complainant, with costs.


source: Caselaw Access Project

author: Berry, V. C.

license: Public Domain

text:
    Eastern Sash and Door Company, a corporation, complainant, v. Joe Meister, Dora Meister, Joseph Cohen and Samuel Scheckner, defendants.
    [Decided September 17th, 1926.]
    1. On motion to strike out a bill of complaint for lack of equity, all its material allegations are admitted for the purpose of the motion.
    2. All conveyances made with a fraudulent intent to hinder or delay some creditor, either existing or subsequent, in the collection of his just claim, are fraudulent and void as to any creditor thus hindered or delayed under the statute. 2 Comp. Stat. p. 2618 § 12.

      3. Neither the existence of a debt nor the existence of the attacking creditor, at the date of the conveyance complained of, is a prerequisite to equitable relief at the suit of a subsequent creditor. Nor is it necessary to such relief that the attacking creditor should have been in actual contemplation of the grantor at the time of the conveyance. It is sufficient if the conveyance was made with the intent to.defraud some creditor, either existing or subsequent.
    On bill, &c. On motion to strike out bill of complaint.

      Mr. Maurice 8. Maurer, for the complainant.

      Mr. Henry T. Davimos, for the defendants.
   Berry, V. C.

This bill seeks to set aside as fraudulent a conveyance made by the defendant Joe Meister to the defendant Joseph Cohen, and a conveyance from Joseph Cohen to the defendant Dora Meister. The bill alleges that in November, 1920, the defendant Joe Meister was seized of certain lands described in the bill, and on that date conveyed the same without consideration to Joseph Cohen; that on January 10th, 1921, Joseph Cohen conveyed the same property, without consideration, to the defendant Dora Meister, and that this conveyance “was made for the purpose of making Joe Meister judgment proof against Eastern Sash and Door Company, and for the purpose of defrauding the said Eastern' Sash and Door Company and any and all other subsequent creditors of the said Meister.” The bill alleges business relations between the defendant Joe Meister and the complainant in December, 1924, and the subsequent entry of judgments in 1926 at the suit of complainant against Joe Meister, the issuance of executions on these judgments and their return unsatisfied. An affidavit submitted on behalf of the defendant on this motion shows that the complainant, Eastern Sash and Door Company, was incorporated on March 20th, 1923. Complainant insists that the bill is maintainable on authority of Washington National Bank v. Beatty, 77 N. J. Eq. 252, and later cases following the leading case cited. Defendant also rests his motion on that decision. The rule of law applicable to fraudulent conveyances as interpreted by that case is undoubtedly the law of this state. The facts in the ITashmgton National Bank Case axe closely analogous to those in the instant case. There the bank was organized five years, and the judgment was obtained twelve years, after the conveyances complained of, but the court held those facts no bar to relief. So, here, the fact that the complainant corporation was not incorporated until three years after the date of the conveyances which are attacked, and judgments obtained six years thereafter, would not bar the complainant from relief if otherwise within the rule of the leading case. Judge Dill, speaking for the court of errors and appeals in that case, at -pages 335, 356, said:

“The true rule is that when a conveyance is attacked by a subsequent creditor, the question to be determined is whether the conveyance was fraudulent.

“The question is the same when attacked by an existing creditor, the only difference is the method of proof. When an existing creditor attacks the conveyance, and shows that his debt was incurred before, and was existing at the time when the conveyance was made, the law, without further proof, raises a conclusive presumption of fraud so far as that creditor is concerned.

“When, however, the conveyance is attacked by a subsequent creditor, he must prove fraud as a fact — that is, ‘an actual fraudulent intent to defraud some creditor.’ By some creditor is meant any creditor, either existing at the time when the conveyance is made or subsequently. If this be shown, the conveyance is proven to be fraudulent, and it may be set aside at the instance of any class of creditors, without regard to the time when the debt came into existence.”

% * # $ $ # # *

“It was necessary for the bank, as a subsequent creditor, to prove — first, a voluntary conveyance; second, an existing creditor or other person having a lawful claim or debt within the meaning of the statute; third, an actual intent on the part of the defendant by means of the deed to delay or hinder some creditor, existing or subsequent.”

It was then held that the bank was not entitled to relief because it could not show the existence of any lawful claim or debt within the meaning of the statute at the time of the transfer. It is argued, therefore, in support of this motion, that as there is not even an allegation in the bill of the existence of a debt at the time of the conveyances which are here sought to be set aside, no right to equitable relief appears, and that the bill should be stricken out. I am unable to see any sound reason why a conveyance made with fraudulent intent and design, and by which a subsequent creditor is hindered in the collection of his just claim, is any the less fraudulent as to the subsequent creditor if the fraud-doer had no creditor at the time of the transfer than if he had. Nor do I believe that the court of errors and appeals, in the leading case cited, either limited or intended to limit the application of the rule and statute to cases where a debt was shown to exist at the time of the conveyance, as suggested by counsel for defendant. The right to relief in the Washington Bank Case was based upon the existence of a lawful claim or debt at the time of the conveyance, and no other ground of fraud was suggested. What the court there held was that, as the basis of fraud Was not established, relief grounded on fraud could not be granted. It was not, in my judgment, intended to lay down an inflexible rule that the existence of a debt at the time of the conveyance complained of should be a prerequisite to relief, and this thought is emphasized by the fact that in the Washington Bank Case no reference was made by the court to the earlier case of Hildebrand v. Willig, 64. N. J. Eq. in which Vice-Chancellor Grey held that where a grantor, in anticipation of his entering upon a new business, conveyed land to a grantee for • the purpose of preventing its application to the payment of the grantor’s possible debts in case financial misfortune should result from the Venture, the conveyance was obnoxious to the statute of frauds, as made with an intent to hinder creditors. That was a suit brought by the heirs of the grantor to set aside a conveyance made in contemplation of financial misfortune which did not occur. There were neither existing nor subsequent creditors, but as the conveyance was conceived and born in fraud, the court held that as to the fraud intender, and those standing in his place, it was immaterial whether or not the fraudulent intent was accomplished. ■ This was on the principle that parties to an illegal contract will not be relieved of the consequences of their unlawful acts. The law will leave them where it finds them. The rule of law and the statute involved in the instant case are the very foundation of that decision. The ijiiquity inhibited by the statute (2 Comp. Stat. p\ 2618 § 12) is the conveyance with fraudulent intent, and conveyances thus made are void as against all creditors, prior or subsequent, whose just debts are hindered or defeated. On this motion all material allegations of the bill must be taken as admitted, and this includes the allegation of fraudulent intent as to the complainant and hindrance in the collection of its just debt. The motion will therefore be denied.


author: Walker, Ordinary.

text:
    Newton A. K. Bugbee, comptroller of the treasury, petitioner, v. Frank Van Cleve, defendant.
    [Decided October 4th, 1926.]
    1. Our Collateral Inheritance Tax act (P. L. 1894 p. 818) was copied from a similar act of the State of New York. P. L. 1885 ch. 488. Thereafter the surrogate’s court (1890) and the supreme court (1907) construed the liability of an executor for the non-payment of a tax assessed under their act to be a personal liability, although, in terms, liability only was imposed. 'Our statute, like that of New York, imposed liability only without enacting that it should be personal liability. Held, (1) that the same construction should be given by this court to our act as that given by the courts of New York to the same section of their act, and (2) that an executor is personally liable under our act for payment of a transfer tax assessed under its provisions and not paid by him, and that such liability is not limited to his representative capacity only and to the extent of assets which came to his possession.
    2. Whenever, after a cause is submitted on final hearing, one of the parties departs this life, the decree to be rendered may be entered nuno pro tunc as of the time of the argument, to avoid the necessity of revivor and substitution of parties on the record.
    3. The Collateral Inheritance Tax act of 1894 (P. L. p. S18 § 15) and the Transfer Tax act of 1909 (P. L. p. 525 § 20) provide that the ordinary shall have jurisdiction to hear and determine all questions in relation to any tax levied under the provisions of that act. Held, that any proceeding before the ordinary under either or both acts, is one in the prerogative court, of which he is the judge, although in such cases he sits as a statutory magistrate or agent whose decrees are subject to review on certiorari instead of by appeal.
    4. While the prerogative court is neither a court of law nor equity, its proceedings are more nearly assimilated to those obtaining in the court of chancery than in the common law courts.
    5. The rule in equity applying to the joinder or non-joinder of parties obtains in the prerogative, court, and the beneficiaries in remainder, although they would be proper parties, are not necessary parties, and their non-joinder does not operate to defeat or abate the pending cause.
    On application to compel the payment of a transfer inheritance tax, with interest, personally and out of his own funds, by the executor of the estate of John Van Riper, deceased.

      Mr. Sdtoard L. Katzenbach, attorney-general, for the applicant.

      Mr. Garret Van Oleve, for the defendant.
   Walker, Ordinary.

John G. Van Riper, a resident of Passaic county, died testate on March 18th, 1906. By his last will the residue of his estate, real and personal, was devised and bequeathed to his executor, .Prank Van Cleve, in trust, nevertheless, to pay the income therefrom to the decedent’s sister, Getty Anna Christy, for the term of her natural life, and upon her death to pay a certain legacy to a grandniece, and to divide the residue equally between certain grandnieces and a grandnephew.

Under the provisions of. P. L. 189 ^ p. 818, a collateral inheritance tax was charged against the interests in remainder, after deducting the life estate of Getty Anna Christy, and that tax was assessed, in accordance with the provisions of the act, at the sum of $383.35, notice of which was forwarded by the comptroller to the executor, which tax, under P. L. 1908 p. 128, was not payable until the death of Gtetty Anna Christy, which occurred on January 19th, 1912. Following her death, Mr. Van Cleve made application for a bill, showing the amount of collateral inheritance tax chargeable against the estate, and such a bill was forwarded to him with a statement thereon that if the tax were not paid within thirty dajrs of the death of the life tenant, interest would be added at the rate of ten per cent, per annum- from that date until the date of payment. The executor, however, did not pay the bill.

The question is, whether the executor, Mr. Van Cleve, is. personally liable to pay this tax or whether he is liable only in his representative capacity as executor, to the extent of assets which came to his hands, which are still liable in the hands of the distributees — remaindermen.

The comptroller insists that personal liability of Mr. Van Cleve is definitely established by sections 1, 6 and 8 of the act of 1894, supra-, the pertinent parts of which are as follows :

“Section 1 (subjects tbe estate to a tax to be paid to the state treasurer), and' provides that all administrators, emecutors and trustees shall he liable for any and all such tames until the same shall have been paid as thereafter directed.”
“Section 6 (enacts that the executor, administrator or trustee shall collect the tax, &e.), and provides that he shall not deliver or be compelled to deliver any specific legacy or property subject to tarn to any person until he shall have collected the tam thereon.” “Section S (enacts that such officer shall pay any tax retained by him within thirty days thereafter to the state treasurer, and that the receipt therefor, signed by the treasurer and countersigned by the comptroller, shall be a proper voucher in the settlement of his accounts), and provides 'that any executor, administrator or trustee shall not be entitled to credit i/n his accounts nor be discharged frftm liability for such tax unless he shall produce a receipt so countersigned by the comptroller, or a copy thereof certified by him.”

Counsel for Mr. Van Olere contends that although our statute provides that the executor shall be liable, in no place does it show that the executor shall he personally liable, and urges that section 1, paragraph 4 of the Transfer Inheritance Tax act of 1909 (P. L. p. 825) shows a contrary intent. That statute enacts that all taxes imposed shall be paid to the state treasurer, and that all administrators, executors, trustees, grantees, donees or vendees shall be personally liable for any or all such taxes until the same have been paid as thereinafter directed, for which an action of debt shall be in the name of the State of New Jersey. The provision thereinafter enacted for the liability of executors is to be found in section 2, which enacts that where property is devised or bequeathed in remainder, that the tax on the life estate shall be immediately levied and assessed, and the tax on the remainder shall be levied and assessed immediately also, but shall not become due or payable until the time when the remaindermen shall become entitled to' the actual possession and enjoyment of such property, and if not paid within thirty days, interest at the rate of ten per cent, per annum shall he charged and collected from the time when the tax becomes due and payable; that if the property passing to remaindermen shall be personal property, snch remainder-men or the executor or trustee of the estate shall give bond to the State of New Jersey, conditioned to pay said tax and any interest which may fall dne thereon, and any executor or trustee who shall assign or deliver to any such remaindermen any personal property liable to tax under the act, unless bond be given as specified, or said tax be paid, shall be personally liable for said tax and all interest thereon, &c.

It is true that the act of 1894 does not, in terms, impose personal liability upon the executor, while the act of 1909 does. However, there is nothing apparent on the face of the act of 1909 which indicates a legislative purpose to impose a penalty not contained in the earlier act. Besides, the decision of the New York courts both In re Vanderbilt’s Estate and In re Strang, infra, construing the New York act of 1885, from which our act of 1894 was copied, as imposing personal liability upon executors, when, in terms, that act, like our own, did not visit such penalty, would indicate that our legislature, in passing our act of 1909, concluded to write into it a provision arising out of the construction of the New York act by the New York courts.

It is conceded that there is no decision 'in this state upon the particular question now before the court. But there is no dispute but that our Collateral Inheritance Tax act of 1894 is substantially a copy of that of the State of New York of 1885. And the courts of New York halve decided a similar question under their act, as just mentioned above.

In re Vanderbilt’s Estate (1890), 10 N. Y. Supp. 239, Surrogate Ransom held that the laws of New York, 1885, chapter 183, section 1, provides that the executor shall be liable for legacy taxes until they have been paid. Section 6 requires the executor to deduct the tax from any money in his possession before paying legacies therewith, and that he shall not he compelled to deliver any specific legacy until he has collected the tax thereon. Section 8 provides that the executor shall not he discharged from liability for the tax until he shall produce the comptroller’s receipt therefor, and he held that the executor is personally liable for the payment of the tax, and that he must account therefor on the final settlement and adjustment of the estate.

In re Strang (1907), 102 N. Y. Supp. 1062, was an appeal from the surrogate’s court, and Mr. Justice Woodward, speaking for the supreme court (at p. 1063), construing an amendment of 1887 to chapter 483 of the laws of New York, 1885, said that it provides that it shall be the duty of executors, administrators or trustees of an estate within the terms of the act to report in writing to the treasurer or comptroller of the county within six months of assuming office, so that the provision for holding such administrators, executors or trustees liable for the tax is in the nature of a penalty for not discharging a duty demanded of them by the law. And (at p. 1064) that executors, trustees and administrators are presumed, iike other people, to know the law, and they have no right to permit the property on which the state has a lien to pass out of their possession or control until that lien has been discharged; that the property comes into their possession subject to this lien; that it is made their duty to call the attention of the public officials to the fact that they have tire estate in their possession, and that it is subject, to the tax, and until this duty is discharged and the state has been paid this tax as the compensation which it exacts for permitting the devolution of the estate, there is no one who can give a good title to the property, and this much of the law is known to the beneficiaries and to all persons interested, so that there can be no such thing as a vested interest in an estate, no matter how completely it may have been distributed.

In Clay v. Edwards, 84 N. J. Law 221, it was decided that a question arising for the first time in this state out of a provision of an act which was taken from a statute of a sister state and construed by her courts, such construction is entitled to great weight and will be followed, unless it is contrary to some declared legislative policy of this state.

In Hopper v. Edwards, 88 N. J. Law 471, it was decided that where the legislature enacts a provision taken from a statute of another state, in which the language of the act has received a settled construction, it is presumed to have intended that such provision should be understood and applied in accordance with that construction.

in re Christie’s Estate, 87 N. J. Eq. 303, Vice-Chancellor Backes observed (at p. 304), that as our Transfer Inheritance Tax act was copied from the statute of Hew York, it will be presumed that the judicial construction there given to the latter was adopted by our legislature.

This rule is subject to the qualification that where the language of a New Jersey statute is clear and unambiguous, the courts of this state will not go back of the language of the statute and consider the construction placed upon a similar statute by a foreign jurisdiction, especially when there is a difference in the construction in courts of sister states. Torrence v. Edwards, 89 N. J. Law 507, 510. But the language of our statute is not clear and unambiguous, as it would be if it said that the executor shall be liable only to the extent of assets of the estate in his hands, or that he should be personally liable. On the contrary, it only says the executor shall be liable, the ambiguity or uncertainty of meaning being, whether the liability is to be representative, that is, to the extent of assets, or personal, that is, extending to his own individual estate.

As the Now York Inheritance Tax act of 1885 was construed in the surrogate’s court (1890) and in the supreme court (1907), as imposing a personal liability upon the executor, instead of a representative one, to the extent of assets for the payment for such tax, and as our act of 1894 does not, in clear and unambiguous language, provide a representative, instead of personal, liability, I regal’d it as my duty to adopt their construction and apply it to our act and hold that an executor is personally liable, provided, of course, that he had assets sufficient to pay and discharge the tax; and especial^' so, as such liability is apparent upon a rational construction of our act, irrespective of the decisions of the courts of New York.

Counsel for the defendant asserts that this action is brought and prosecuted under P. L. 1.894 p. 816 § 16, which provides that the citation shall cite the persons interested in the property liable to the tax to appear before the ordinary, &c., and this he contends in conjunction with section 2 of the same act, which provides that the tax prescribed by it on the remainder shall be immediately due and payable to the treasurer of the state, together “with interest thereon, and shall be and remain a lien on said propert until the same is paid, and that as the remaindermen have not been brought in with the executor, the proceeding is defective for want of proper parties.

It is to be observed that the statute makes the estate, and also the executor, liable to the tax. If the beneficiaries were brought in as parties, because interested as parties, the state could, nevertheless, elect to make the money out of the executor. Therefore, it is not perceived how the executor is injured by the non-joinder of parties who would also be liable if the state chose so to make them. Of course, in a case where an executor himself had nothing the state could make the tax money out of the estate passing to the beneficiaries. But where the executor is a man of substance, as in this case, and the state chooses to pursue him for the tax for which he is personally Halle, he cannot escape responsibility or stall the proceedings by asserting that others are liable if the state chose to pursue them. The doctrine is that an objection for want of proper parties, taken at the hearing of a bill in equity, will not prevail unless such parties are necessary to the final determination of the case. Van Doren v. Robinson, 16 N. J. Eq. 256. It cannot be plausibly suggested that the remaindermen, beneficiaries in this estate, are proper parties whose presence before the court is necessary to the final determination of the case between the state and the executor. Commenting upon parties, Vice-Chancellor Pitney in Fletcher v. Newark Tel. Co., 55 N. J. Eq. 47, quoted the definition of another judge (at p. 52) : “The general doctrine in relation to parties in equity is often stated to be that all persons interested in the subject-matter of the suit should be made plaintiffs or defendants. This statement is too broad. It would be more accurate to say, persons interested in the object of the suit must be made parties — that is, persons who are parties to the interest involved in the issue, and who must necessarily be affected by the decree.” Judged by this test the remaindermen are not necessary parties to this suit. They are not interested in the olject to be attained, namely, the visitation upon the executor of his personal liability under the act. They are interested, to be sure, in having the state recover and collect from the executor the amount of the tax, they being liable only in the event that it could not be so collected, and then only to the extent of their legacies.

In re Cassidy's Will, 80 N. J. Eq. 163, Chancellor Pitney held that the orphans court partakes of the powers of the court of chancery and prerogative jurisdiction. And I held, In re Merrill, 88 N. J. Eq. 261 (at p. 281), that while the prerogative court is neither a court of law nor equity, its proceedings, nevertheless, are more generally assimilated to those obtaining in the court of chancery than in the common law courts.

It seems to me, and I so hold, that the rule in equity applying to the joinder or non-joinder of parties, obtains in the prerogative court. Therefore, upon this score the beneficiaries in remainder, although they would be proper parties, are not necessary parties, and their non-joinde^ does not operate to defeat or abate the comptroller’s proceeding i'n this cause.

The result reached is that the comptroller is entitled to a decree against the defendant for the amount of the tax, with interest and costs.

This cause was submitted on March 16th last, since which time Mr. Van Cleve, the defendant, has departed this life. In this situation, and to aivoid the necessity of revivor and substitution of parties on a record, the law very wisely provides that the decree to be rendered on this hearing may be entered nunc pro lunc as of the time of the submission of the cause. Dan. Oh. PI. & Pr. {6th Am. ed.) *1017; 21 C. J. 662.

Where a party dies after his cause is finally submitted for decision, the court has the power to enter the decree as of the term when, in the lifetime of the party, the cause, after argument, was finally submitted for decision. Mitchell v. Overman, 103 U. S. 62; 26 L. Ed. 369. Where a defendant dies after trial and argument, a decree may be entered mmc protunc. Molineaux v. Raynolds, 55 N. J. Eq. 187. The same doctrine is held in Burnham v. Dalling, 16 N. J. Eq. 310; Benson v. Woolverton, 16 N. J, Eq. 110 (bottom of p. 111); Clark, v. Van Cleef, 75 N. J. Eq. 152, 157.

'The petition of the comptroller, the answer of the defendant, and other papers filed in this cause, are entitled "Before the Ordinary.” They should have been entitled "New Jersey Prerogative Court.” The Collateral Inheritance Tax act of 1894 (P. L. p. 818 § 15) provides that the ordinary, and the orphans court in certain cases, shall have jurisdiction to hear and determine all questions in relation to the tax arising under the provisions of that act. And the Transfer Inheritance Tax act of 1909 (P. L. p. 825) provides^ in section 18, that any person dissatisfied with an appraisement or assessment made by the comptroller may appeal therefrom to the ordinary; section 20 enacts that the ordinary shall have jurisdiction to hear and determine all questions in relation to any tax levied under the provisions of that act; section 21 enacts that if it shall appear to the comptroller that any tax which has accrued under the act has not been paid, he shall report such fact in writing to the register of the prerogative court, and said register shall issue a citation to the persons interested in the properly liable to tax to appear before the ordinary and show cause why such tax should not be paid; service of citation and subsequent proceedings to conform to the practice prevailing in the prerogative court, and section 22 provides that whenever the comptroller shall have reason to believe that any tax is due and unpaid he shall notify the attorney-general in writing, and the attorney-general, if he have probable cause to believe the tax to be due and unpaid, shall prosecute the proceedings before the ordinary provided for in section 21. Proceedings by the state under sections 21 and 22 are the converse of the proceedings under section 18 by the party interested in the property assessed.

In re Dittmans Executors, 87 N. J. Eq. 297, Vice-Chancellor Lewis held that an appeal to the ordinary under P. L. 1909 § 18, is an appeal to the prerogative cowt because the ordinary is the judge of that court and the proceedings are in that court; that it seemed that appeal to the ordinary under the act made him a statutory tribunal, and that an appeal from a decree of the prerogative court in a case under that act is reviewable by certiorari in the supreme court and not by appeal to the court of errors and appeals. And after-wards the latter court, speaking by Chief-Justice Gummere, In re Roebling’s Estate, 91 N. J. Eq. 72 (at p. 75), held) that that case, involving as it did a matter of taxation, was reviewable by certiorari only, notwithstanding the fact that the legislative agency (prerogative court) created for the purpose of primary review of the action of the tax assessor was a court of record whose orders and decrees, accordingly, are reviewable only by an appeal to that court — court of errors and appeals. Therefore, on the authority both of this court and the court of errors and appeals, the proceeding before me is one in the prerogative court, although that court acts in the given case as a legislative agent, and the judge thereof is a statutory magistrate.

Let a decree be entered in the prerogative court for the comptroller against the defendant, for the amount of the tax with interest and costs nunc pro .tunc as of the date when this cause was argued and submitted. The other papers will be amended by similarly entitling them in this court.


author: Lewis, Vice-Ordinary.

text:
    In the matter of the appeal of Maude Bell et al., from the decree of distribution of the orphans court of Bergen county, in the matter of the estate of Isabella S. Johnson, deceased.
    [Decided May 28th, 1926.]
    1. Where a mother died leaving all her property to a son, who had predeceased her, she, therefore, died intestate and her property passed to 'her next of kin, the children of two deceased sisters, under P. L. 1918 oh. 63.

    2. In re Messier, 97 N. J. Bq. 271, followed.

      Mr. Robert Carey, for the appellant Maude Bell.

      Messrs. Fish & Fish, of counsel with the appellant the Trust Company of New Jersey, assignee of John T. Minugh.

      Messrs. Rmyon & Johnson, of counsel with the respondent, Sadie D. Pumyea.
   Lewis, Vice-Ordinary.

This is an appeal of Maude Bell and the Trust Company of New Jersey, assignee of John T. Minugh, from the decree of distribution in the orphans court of Bergen county in the matter of the estate of Isabella S. Johnson.

The facts are not in dispute.

Isabella S. Johnson died in Englewood, Bergen county, New Jersey, on February 17th, 1924. Her husband had predeceased her and she never remarried. She had five children, four of whom died in infancy, the eldest of the four being nine years of age,at the time of death.- One son, Harrison T. Johnson, lived until February 16th, 1924, predeceasing his mother by but a few hours. Isabella S. Johnson left a will in which she devised and bequeathed all her real and personal estate to her son, Harrison T. Johnson, but he predeceased her, and being unmarried at the time of his death the bequests and devises in his favor in his mother’s will lapsed. Isabella S. Johnson, therefore, died intestate, leaving as her nearest next of kin children of two deceased sisters, namely, Sadie D. Pumyea, a child of Mary D. Foulds, a deceased sister of the said Isabella S. Johnson, and Maude Bell and John T. Minugh, children of Amelia Minugh, a deceased sister of Isabella S. Johnson. The- section of the statute of distributions covering the distribution in this case are subsections 3 and 4 of section 169, chapter 63 of the laws of 1918. The above subsections have been construed by the late Vice-Ordinary John E. Foster, in the appeal of Messier, 97 N. J. Eq. 271, affirming a decree of distribution made by the orphans court of Monmouth county. The parties in the case before me are children of deceased sisters of Isabella S. Johnson, and are in the same degree of relationship'as the parties in the Messier Oase, except that in, the Messier Case the parties were children of deceased sisters of the half blood, whereas in the case at bar the parties are children of deceased sisters of the whole blood, bnt in the distribution of personal property the half blood participates equally with the whole blood.

I shall follow the views of the learned vice-ordinary in the Messier Case.

The decree is affirmed.


text:
    In the matter of the appeal of Maude Bell et al., from the decree of distribution of the orphans court of Bergen county, in the matter of the estate of Harrison T. Johnson, deceased.
    [Decided May 28th, 1926.]
    1. Where a son’s personal estate passed to Ms mother, who died a few hours later than her son, leaving a will bequeathing all her property to her son, who had died before her, the son’s estate passed to the next of kin of the mother, being representatives of deceased sisters of the mother, under P. L, 1918 oh. 63.

    2. In re Messier, 91 N. J. Bq. 271, followed.

      Mr. Robert Carey, for the appellant Maude Bell.

      Messrs. Fish & Fish, of counsel with the appellant the Trust Company of Hew Jersey, assignee of John T. Minugh.

      Messrs. Runyon & Johnson, of counsel with the respondent, Sadie D. Pumyea.
   Lewis, Vice-Ordinary.

This is an appeal of Maude Bell and the Trust Company of Hew Jersey, assignee of John T. Minugh, from the decree of distribution in the orphans court of. Bergen county in the matter of the estate of Harrison T. Johnson.

The facts are not in dispute.

Harrison T. Johnson died in Englewood, Bergen county, on Eebruary 16th, 1934, intestate and unmarried, leaving him surviving as his only next of kin his mother, Isabella S. Johnson, who inherits his personal estate under the statute of distribution, and left no brothers or sisters, nor the legal representatives of deceased brothers or sisters. His father, Peter S. Johnson, had predeceased him by many years. Under the statute the decedent’s personal estate, therefore, passed to his mother, Isabella S. Johnson. The latter died on February 17th, 1924, a few hours after the death of Harrison T. Johnson. Isabella S. Johnson left a will wherein she bequeathed her entire estate to her son, Harrison T. Johnson. The personal property of which Harrison T. Johnson died possessed and which went to his mother, Isabella S. Johnson, passed, by reason of lapsing of the provisions in her will, upon her death, to her nearest next of kin, being the representatives of deceased sisters of Isabella S. Johnson, deceased, viz., Sadie D. Pumyea, a child of Mary D. Foulds, a deceased sister of said Isabella S. Johnson, and Maude Bell and John T. Minugh, children of Amelia Minugh, a deceased sister of said Isabella S. Johnson. All of these are over the age of twenty-one years. The distribution of the estate of Isabella S. Johnson is governed by subsections 3 and 4, section 169 of the statute of distributions, being chapter 63 of the laws of 1918. The above sections have been construed by the late Yice-Ordinary Foster in a decision handed down by him on December 26th, 1924, in the appeal of Messier, 97 N. J. Eq. 271, affirming a decree of distribution made by the orphans court of Monmouth county. The parties in the case before me are children of the deceased sisters of Isabella S. Johnson, and are in the same degree of relationship as the parties in the Messier Gase, except that in the Messier Gase the parties were children of deceased sisters of half blood, whereas in the case at bar the parties are children of deceased sisters of the whole blood, but in the distribution of personal property the half blood participates equally with the whole blood.

I shall follow the views of the learned vice-ordinary in the Messier Gase.

The decree is affirmed.


author: Gummerre, Chief-Justice.

text:
    William E. Mount v. Charles T. E. Matthews and Bessie L. Lester.
    [Decided May 17th, 1926.]
    1. Section 82 of the Chancery act, providing a fine not exceeding $50 for contempt, applies only in cases where the proceeding for contempt is instituted for the purpose of affording relief inter partes, and to compel obedience to an enforceable order of the court. It has no relevancy where the proceeding is strictly punitive in character, and is instituted for the sole purpose of punishing a person guilty of contemptuous conduct with respect to the authority and dignity of the court.
    On appeal from an order of the court of chancery.

      Mr. Charles JS. Goolc, for the appellants.

      Mr. Howard 8. Higginson, for the respondent.
   The opinion of the court was delivered hy

Gummerre, Chief-Justice.

This appeal is taken from an order of the court of chancery, made in a proceeding instituted by the respondent, the purpose of which was to obtain an adjudication' that the appellants were guilty of contempt in purposely and deliberately disobeying a prior order of that tribunal.

An examination of the ease discloses the following situation. Mount, the respondent, in January, 1925, recovered a judgment against the appellant Matthews. Prior to its recovery, however, Matthews made and executed to the appellant Lester a chattel mortgage covering all of his personal property, the alleged purpose of which was to secure to her a debt of $2,010.97, due to her for services rendered by her •to him. Upon the entry of his judgment the respondent caused an execution to he issued thereon and a levy to be made upon the property covered by the chattel mortgage. He then filed a bill in chancery attacldng the bona fides of the mortgage, and seeking to have it declared invalid as against his^ judgment. In the meantime, Mrs. Lester, the mortgagee, had advertised the sale under her mortgage of the property covered thereby, the date fixed for the holding thereof being the day after the filing of the bill of complaint. In this situation, the court of chancery made an order restraining the sale until the further action of the court, and a copy of this order was served on each of the appellants prior to the hour fixed for the sale. In disregard of its terms, Mrs. Lester held the sale, under the advice of Matthews, and thereupon the proceedings now under review was instituted. At the termination of the hearing had thereon the court adjudged the appellants guilty of contempt, and made an order imposing upon Mrs. Lester, as a punishment for her contumacious conduct, a fine of $100, and upon Matthews, for his contempt, a fine of $200. The order also directed Mrs. Lester to account to the respondent for all of the proceeds of the sale received by her in excess of the amount required to satisfy the mortgage.

The first ground upon which we are asked to reverse the order under review is that the action of the court in imposing the fines of $100 and $200 was ultra vires and in violation of section 82 of the Chancery act. The provision of that section is as follows:

“To enforce obedience to the process, rules and orders of the court of chancery, where any person shall be in contempt * * * he shall, for every such contempt, and before he he released or discharged from the same, pay to the clerk in chancery, for the use of this state, a sum not exceeding $50 as a fine for the said contempt ; and the said person, being in court upon process of contempt, shall stand committed and remain in close custody until the said process, rule or order shall be obeyed and performed, and said fine so imposed for such contempt, with the costs, be fully paid.”

But, as pointed out by this court in the case of Frank v. Herold, 64. N. J. Eq. 372, this statutory provision is applicable only in cases where the proceeding for contempt is instituted for the purpose of affording relief inter partes; i. e., to 'compel obedience to an enforceable order of the court. It has no relevancy where the proceeding is strictly punitive in character; in other words, is instituted for the sole purpose of punishing a person guilty of contemptuous conduct with respect to the authority and dignity of the court. That the present proceeding is of the latter character is made manifest by the fact that obedience to the order which was violated ceased to be possible as soon as the violation occurred. Under the principle of the case cited, the punishment prescribed by the order now under review was a lawful exercise of the power inherent in the court of chancery.

It is further argued that the defendant Matthews could not possibly be adjudged in contempt, because the sale forbidden by the order was not made by him, hut by the mortgagee. He, however, was a party to the litigation in which the restraining order was made. It applied to him as well as to Mrs. Lester, and the proofs showed that it was largely by reason of his advice that it was violated by her. In this situation the court was entirely justified in punishing him.

Counsel for the appellants, although admitting in his brief that the court was justified in requiring the defendant-mortgagee to account to the respondent for the surplus moneys derived from the chattel mortgage sale, contends that there was error in not excepting from such accounting the sum of $200, which, it is asserted, are moneys belonging to Matthews and free from any claim of the respondent, by reason of the fact that Matthews is a married man, having a family, and is a resident of this state; and also contends that the court further erred in not reserving from the accounting the sum of $319.81, which, he asserts, was the amount of a tax which had been assessed upon and levied against the mortgaged property. The complete answer to these contentions is that there was no proof before the court of chancery that Matthews was a married man, and no legal evidence that a tax had been assessed against and levied upon the mortgaged property.

Lastly, it is argued (although the power of the court to direct the accounting is admitted, as has been stated) that the order therefor should not be enforced, for the reason that to do so would be to determine the very question involved in the litigation over the validity of the chattel mortgage. We are unable to perceive the force of this suggestion. The moneys involved in the accounting are the surplus moneys .remaining from the proceeds of the sale after the satisfying of the mortgage. Mrs. Lester is permitted for the present to retain so much of the moneys resulting from that sale as will pay her debt. Whether she is legally entitled to continue to retain these moneys is the question involved, in the main litigation, and the solution of which depends on whether or not the making of the mortgage was a fraud upon the respondent, to which she was a party. Clearly, she has no claim whatever to retain possession of the surplus money remaining in her hands in excess of the amount necessary to satisfy her mortgage, and she holds it in trust either for • the respondent or for her mortgagor, Matthews.

The order under review will be affirmed.

For affirmance — The Chibe-Justice, Trenchaed, Parker, Minturn, Kalis oh, Black, EAtzenbach, Campbell, White, Gardner, Van Buskirk, McGlennon, Kays, Heteield, JJ. 14.

For reversal — Hone.


author: Parker, J.

text:
    Thomas H. Wight, respondent, v. Board of Education of the Town of Westfield et al., appellants.
    [Argued October 26th, 1925.
    Decided May 17th, 1926.]
    1. The question raised in this case, as to when, if ever, title vested under a certain deed, held, not within the jurisdiction of a court of equity.
    2. The question raised in this case, as to the validity of certain assessments for public improvements, held, not within the jurisdiction of a court of equity.
    3. The Transfer of Causes act (P. L. 1912 p. IfFt; P. L. 1915 p. 89), held unavailable, because impossible of application with any beneficial result, under the circumstances of the case.
    On appeal from interlocutory order advised by Vice-Chancellor Church, denying a motion to strike out the bill of complaint.

      Mr. William M. Beard, for the appellant board of education.

      Mr. Paul Q. Oliver, for the appellant town of Westfield.

      Mr. Lloyd Thompson, for the appellant Clark Lands Holding Company.

      Mr. Bari A. Merrill, for the respondent.
   The opinion of the court was delivered by

Parker, J.

The bill in this cause is attempted to be based upon the soi-disant “Uniform Declaratory Judgments act” of 1924. P. L. ¶. SIB. The specific prayers of the bill are two — first, that the court of chancery adjudge and decree when, if ever, title to the lands described in a deed of the Clark Lands Holding Company, dated April 6th, 1923, vested in the board of education of Westfield; secondly, that the court of chancery adjudge and decree “what rights and liabilities, if any, attach to complainant and all others similarly situated, with respect to the improvement assessments referred to on” a certain referendum ballot voted at a special school meeting of the town of Westfied, held on October 30th, 1924. There was a motion to strike out the bill on a number of grounds, particularly that tlie matters raised by the bill were not within equitable cognizance, and that the act of 1924, for various reasons, is unconstitutional and therefore inoperative. The vice-chancellor, in a short memorandum, decided that the act was not shown to be unconstitutional, and held the bill without deciding whether the case was one solely for the courts of law to decide.

The first question was manifestly one to be determined by a court of law, as no feature of equitable cognizance was involved. The bill sets up that in February, 1923, at the annual school meeting, it was voted to purchase the lands described in the deed; that on April 6th, 1923, the Clark Lands Holding Company executed and acknowledged said deed, but inserted therein clauses subjecting the land to assessments and to the easement of one-half of a public street; that an April 9th the board of education borrowed on a temporary loan certificate the sum of $25,000 which was paid for the land to the holding company and the deed delivered, the money being applied to pay off an existing mortgage, and that the attorney-general (at some time not stated) declared that some attempted authorization by the meeting of February 13th, 1933, to issue bonds to acquire the property, was invalid. (There is no other mention of this in the bill.)

Just what there is in all this for a court of equity to consider, we are at a loss to imagine. What questions do arise are of purely legal cognizance. The vesting of title normally depends on delivery, and that is peculiarly a legal question. Woodward v. Woodward, 8 N. J. Eq. 127.

The same proposition holds true of the other question propounded by the bill, viz., what are the rights and liabilities of complainant and other interested but unnamed parties, touching certain assessments mentioned on a ballot of a special meeting October 30th, 1934. We need not stop to extract the allegations of the bill in detail on this point. Suffice it to say that certain improvements were directed to be made and assessments therefor ordered, partly or wholly against the school property. The question is as to their legal validity, and if there is any class of questions peculiarly for the examination of the supreme court by certiorari, it is the class that embraces disputes of this character. It is urged that the assessments are wholly void, for lack of any jurisdiction whatever to make them, and Bogert v. Elizabeth, 27 N. J. Eq. 568, is relied on. That was a bill to quiet title as against a sale for unpaid assessments that were constitutionally void. In the case at bar the point made is that the lands which the municipality has undertaken to assess are school lands, and for that reason not liable to assessment for public improvements. If this were obvious, as the constitutional matter was in the Bogert Case, or even well settled by decision, the doctrine of the Bogert Case might perhaps be applicable; as to this we express no opinion. But it is neither well settled, nor to us obvious. In fact, it is not obvious to complainant, who comes to the court of chancery for its opinion on the subject. After careful independent research we find only one case in this state ev.en germane to the question, viz., Green v. Hotaling, 44 N. J. Law 347, affirmed in this court, 46 N. J. Law 207, and holding that on a joint enterprise of Jersey City and Hoboken for the building of a sewer, lands of the city of Jersey City were not liable to assessment. This case is not cited in the brief; jn fact, no authority is cited on the point from this or any other jurisdiction, nor is any statute invoked; but the best respondent can say is that the attorney-general of this state has advised the state board of education that school lands are not liable to local assessment. His opinion, were it before ,us, would be considered with the greatest respect, but it is Uot laid before us, or even quoted, and the very fact that he was called on for an opinion argues that the point is open to debate, and so we find it in other jurisdictions. 28 Cyc. Ill7. It follows that the complainant is asking the opinion of the court of chancery on a municipal question peculiarly within the province of the supreme court.

It seems to be quite plain, therefore, that assuming everything for the Declaratory Judgments act that is claimed for it, on which phase of the case we here express no opinion, .no question of equitable cognizance was presented by the bill. In a proper case, the Transfer of Causes act (P. L. 1912 p. 417; P. L. 1915 p. 89) might well apply, but the diversity of the questions raised in this case, and the lack of clarity in their presentation, make it in our judgment impossible ,to direct a transfer, to a court of law with any practical efficacy, so that the only proper course is to reverse the order .appealed, and direct the court below to dismiss the bill, with costs.

For affirmance — None.

For reversal — The Ohiee-Justice, Teenchaed, Paekee, Mintuen, Kalisch, Black, Katzenbach, Campbell, White, Gaednee, Yan Buskiek, McGlennon, Kays, Heteield, JJ. 14.


text:
    Samuel B. Feld, complainant-appellant, v. Reuben B. Kantrowitz, Rose Zucker et al., defendants-respondents.
    [Argued October 30th, 1925.
    Decided March 26th, 1926.]
    1. It is the general rule in chancery that when the equity of the complainant is fully and explicitly denied 'by the answer and affidavits, a preliminary injunction is not proper.
    2. A preliminary injunction should never be granted unless the act threatened to be done will inflict an irreparable injury on the complainant.
    3. When a complainant has filed his bill asserting equitable rights in real estate, and has lodged' the statutory notice of the pendency of the suit in the proper office, he is sufficiently protected against alienation of the subject-matter, as the decree will bind alienees as well as parties to the suit, and in such case an injunction against alienation, in the absence of special circumstances, is properly denied.
    On appeal from order advised by Vice-Chancellor Bentley, whose opinions are reported in 98 N. J. Pq. 167; 99 N. J. Pq. 706.

      Mr. Peter J. McGinnis, for the appellant.

      Mr. Jacob L. Neumm and Mr. Lionel P. Kristeller, for the respondent Rose Zucker.
   The opinion of the court was delivered by

Parker, J.

The precise question to be determined on this, appeal is whether the learned vice-chancellor erred in refusing an injunction pending final hearing, and in vacating an ad interim, restraint awarded when the bill was filed, upon the coming in of answers and answering affidavits. As will appear by a reading of his opinion, the general case made by the bill of complaint was that the complainant, Feld, was the owner of a one-sixth undivided interest in a contract to purchase real estate, but that his interest was not manifested on the face' of the contract or of record, and that ostensibly defendant Kantrowitz was the sole contraetee and had undertaken to sell the whole contract to Mrs. Zucker, another defendant, who had bought it and paid for it. The bill charged that Mrs. Zucker then knew of complainant’s interest, and if slie did not actually know it, she was charged with such knowledge by reason of complainant’s occupancy of a part of the building described in the contract. The prayer was for an injunction against proceeding further under the contract and especially against closing title until complainant’s claim was adjudicated, and for a decree establishing his undivided interest in the transaction. A notice of Us pendens, fully stating the claims of the bill and prescribing the property affected, was duly lodged in the proper office pursuant to the statute (Comp. Stat. p. 8175), and thereby any subsequent purchasers were subjected to the ultimate adjudication of complainant’s claim, and would buy into the matter at their peril. Haughwout v. Pomeroy, 22 N. J. Eq. 531; Dunning v. Crane, 61 N. J. Eq. 634.

The question of continuing or dissolving the preliminary restraint was heard in the usual manner on affidavits and counter affidavits. ■ One of these is by defendant Kantrowitz, and specifically asserts that he was the sole party interested in the contract at the beginning and thereafter, and that he never made any assignment of it, or of any interest therein, to any person except Rose Zucker. In short, it specifically traverses the fundamental allegations of the bill, and this calls for the application of the well-settled general rule that when, by the answer and affidavits, the material facts in the bill upon which the complainant’s equity depends are met by a full, explicit and circumstantial denial under oath, a preliminary injunction should not be granted. Ye Olde Staten Island Dyers and Cleaners v. Barrett Nephews & Co., 98 N. J. Eq. 702; Brunnetto v. Montclair, 87 N. J. Eq. 338; Schlemm v. Whittle, 86 N. J. Eq. 415; Meyer v. Somerville Water Co., 79 N. J. Eq. 613; Citizens’ Coach Co. v. Camden H. R. Co., 29 N. J. Eq. 299. On this theory, therefore, the preliminary injunction was properly denied and the stay properly vacated.

The order appealed is further supported by another rule, also laid down in the Citizens’ Coach, Co. Case, and in full vigor at this time, viz., that to justify a preliminary injunction it must appear that its denial threatens an irreparable injury to complainant. Kearny v. Bayonne, 92 N. J. Eq. 627. Nothing of the sort appears in this case. Complainant has filed his bill, made all interested persons parties, and the suit is planted firmly on the ground of the doctrine of Us penclens by the filing of the statutory notice. Consequently, the decision on final hearing in this cause will be "binding, not only on the litigant parties, but also upon those who acquire title from them during the pendency of the suit.” Haughwout v. Murphy, 22 N. J. Eq. 531; Mabee v. Mabee, 85 N. J. Eq. 353, 357; Murray v. Ballou, 1 Johns. Ch. 566, 576. Several philosophical reasons for the doctrine are advanced (88 C. J. 6, et seq.), but whatever the reason, as Professor Pomeroy observes: “The result is the same; an alienee of the subject-matter from either party during the pendency of the suit takes it subject to the rights of the other party involved in the controversy, and is bound by the decree or judgment finally rendered.” 1 Pom. Eq. Jur. § 683. Consequently, as soon as complainant filed his bill and put his notice on record, he was amply protected against any transfer of the interest claimed by him to lona jide purchasers or others, and his decree, should he have one, would be as binding on them as on the original defendants.

For these reasons, and without going into the general merits of the litigation, we conclude that the order appealed should be affirmed.

For affirmance — Ti-ie Chief-Justice, Trenchard, Parker, Mixteen, Kams oh, Black, Katzenbaci-i, Campbell, Gardner, Van Bus kirk, McGlennon, Kays, PIeteield, JJ. 13.

For reversal- — None.


author: Minturn, J.

text:
    Fort Lee Transportation Company, complainant-appellee, v. Borough of Edgewater, defendant-appellant.
    [Argued February term, 1926.
    Decided May 17, 1926.]
    1. Where the statutes provide that a motor bus, commonly called a jitney, cannot be operated wholly or partly along any street in a city until the owner or owners thereof shall obtain the consent of the board or body having control of public streets, and also provide that the municipality shall have power to make, enforce, amend or repeal ordinances to license and regulate auto buses commonly called jitneys, and the owners and drivers of all such vehicles, and to fix fees for such licenses, and to prohibit the operation of all such vehicles in the public streets or places of such municipality, unless such ordinances are complied with, whether such auto buses, commonly called jitneys, are operated over routes wholly or partly within the limits of such municipality, and the municipality passed an ordinance prohibiting the operation of jitneys on its streets unless the owner or lessee shall have procured a license for the purpose, and paid the necessary fee therefor, an organization called a “club,” whose object was to obtain facilities for a better means of transportation for residents and employes of concerns doing business in the municipality, and to finance the plan each member should pay ten cents per month for dues, and a tax of ninety cents a week for twelve rides a week, the tax to be used as compensation for a common carrier for hiring two buses which were to be operated from outside the municipality to a terminus in the municipality, and to stop nowhere else in the municipality, such buses or jitneys are subject to the terms of the ordinances of the municipality, and cannot lawfully _ be operated without complying' with the provisions of the ordinance.
    2. Making use of the public highways in a borough as a via media to reach the prescribed destination is sufficient to justify the claim of operation within the limits of the borough.
    On appeal from an order of the court of chancery.

      Messrs. Wright, Vanderburgh & McCarthy, for the defendant t-appellant.

      Mr. George L. Record, for the complainant-appellee.
   The opinion of the court was delivered by

Minturn, J.

When it became manifest that the automobile had superseded the horse as the motive power in the community, and that such vehicles were increasing not only in popular favor, but as necessary instrumentalities of trade and business, the states quite generally realized the necessity for reasonable regulations in the interest of the safety and lives of the people, as well as in view of the vast financial outlays, which annually were required to maintain the highways upon which such vehicles operated, and under this conception of public necessity and expediency, the Motor Vehicle act was passed, vesting the power of regulation and administration in a motor vehicle inspector. This was followed by the so-called Kates act (P. L. .1916 ch. 186), which prescribed the method of operation of motor buses, commonly called jitneys, “wholly or partly along any street,” in cities. Under its provisions no such vehicle can be operated “until the owner or owners thereof shall obtain the consent of the board or body having control of public streets.” Subsequently, the necessity for extending the beneficence of this legislation to all municipalities was made apparent, and chapter 89 of the laws of 1920 was enacted, which extended to every municipality the power “to make, enforce, amend or repeal ordinances to license and regulate auto buses commonly called jitneys, and the owners and drivers of all such vehicles, and to fix the fees for such licenses, and to prohibit the operation of all such' vehicles in the public streets or places of such municipality, unless such ordinances are complied with, whether such auto buses, ■commonly called jitneys, are operated over routes wholly or partly within the territorial limits of such municipality.”

In pursuance of this legislation, the borough of Edgewater passed an ordinance on May 2d, 1922, providing, inter alia, that no auto bus or buses commonly called jitneys shall be operated in any of the public streets or places in the borough of Edgewater, “unless the owner or lessee shall have procured a license for the purpose, and paid the necessary fee therefor.” The application for a license, after due consideration, at the next meeting of the borough council, may be granted with ox without modifications, if, in the judgment of the council, “it is proper for the good government, order and protection of persons and property, and for the preservation of the public health and safety of the borough of Edgewater and its inhabitants.”

Among the conditions to be complied with by the petitioner, as a condition precedent to the granting of the license, is the filing of an agreement to comply with the requirements of the ordinance, and its supplements and amendments, and the filing of an insurance policy by a duly-authorized company in the sum of $5,000, insuring the owner against losses sustained by him bjr reason of operation. There shall also be filed with the clerk, a power of attorney, thereby constituting him the attorney in fact for the purpose of service of judicial process, in any action against the owner of the bus; as well as a schedule showing “the regular stopping places for taking on and letting off passengers within the borough, and the time when such bus or buses will arrive at such stopping points, a statement of the route to be traveled, and a schedule showing the time of leaving their respective termini.” Other details and requirements controlling the modus opemndi of the vehicles within the borough are prescribed in various sections of the ordinance, having for their ultimate purpose the safety, comfort and convenience of the public against unrestricted and unregulated automobile traffic upon the streets of the borough.

At this juncture an organization was conceived and formed known as the “West Fort Lee Workers’ Club,” the object of which, as expressed in its minutes, was “to obtain facilities for a better means of transportation for residents and employes of concerns doing business in the borough of Fort Lee.” To finance the plain it was determined that each member should pay ten cents per month fox dues, and to sustain a tax of ninety cents a week for twelve rides a week, one ticket being used for each fare, the tax to be used as compensation for the hiring of two buses from the complainant, which were to be operated between West Port Lee, over a road in Edge-water, to a point near the shore front of the Hudson river, in that borough, where the passengers were to be discharged, upon complainant’s property, near the Edgewater ferry.

These buses were to operate between five-thirty a. m. to eight n. m., covering what is generally termed the business or rush hours. This service was declared to be for members only, as well as for their families, and the vehicles were to stop nowhere within the borders of the borough to take on or let off passengers, excepting at the terminus near the ferry. Each member, at an early session, by resolution, was entreated to bring in at least two new members. By-laws were adopted which extended the scope of membership from the units of the borough to “any person residing or being employed in Bergen county,” who, upon payment of the weekly dues and the tax of ninety cents a week, shall be entitled “to twelve rides a week on any conveyance which the club may contract for, for their transportation.”

The Port Lee Transportation Company confirmed this working arrangement, and the complainant thereafter proceeded to operate under it, without taking out a license therefor in accordance with the provisions of the borough ordinances. While so operating, the buses were stopped, the drivers arrested and convicted before the recorder of the borough for violating the provisions of the ordinance, in failing to take out a license. This bill was thereafter filed to enjoin the borough from interfering with the operation of the buses, and an injunction to that effect was ordered by the learned vice-chancellor, and from that determination this appeal has been taken.

Learned counsel for the complainant, in his brief, narrows the issue involved to the simple inquiry, ^whether the said buses come under the provisions of the borough ordinances,” and insists that the buses are not jitneys as defined in the ordinance, because they do not transact a jitney busi■ness in Edgewater, or, as he contends, “anywhere:” In limine, therefore, it becomes important as in a logical sylr logism, to accurately define the verbal terms, and to assist in so doing it may be helpful to inquire what the particular nature, character and cognomen of complainant’s business may be, in order to distinguish it from the legislative definition of an auto bus, i. e., “any automobile or motor bus, commonly called jitney, engaged in the business of carrying passengers for hire.” P. L. 1916 eh. 136. Generically speaking, similar definitions of a jitney are accepted by lexicographers, i. e., “a motor vehicle that carries passengers for a small fare.” Funic & Wagnalh, 623.

That this complainant is comprehended within the definition must be obvious, if we apply the equitable consideration that the substance of the thing and not the mere color or form which it assumes or invokes, for the manifest purpose of evading regulation, must be kept conspicuously in view.

So impressed was the learned vice-chancellor with the artificial character of the “club” device that he declared: “I am inclined to the belief that the organization of a ‘club’ is merely for the purpose of defeating the application of the borough ordinance,” thus furnishing, one might say, a sufficiently cogent basis for declaring the complainant a joint adventurer in an enterprise avowedly designed to transgress the law, in which light it cannot be said to possess hands entirely immaculate.

The baneful effect of such a system of boycotting, if indulged by the community constituting the county, according to occupations, professions and trades, must necessarily lead to the practical abolition of all reasonable fiscal regulations, in the interest of order and economy; and an order or trade councils or clubs claiming exemption from the law may thus be logically operated as imperium in imperio, and, in effect, constituted as a substitute for local self-government.

It can make no reasonable difference in legislative contemplation whether the transportation factor which operates these buses be an individual or a club; whether the fares be collected by an intermediary called a club, which eventually delivers them to the ■ carrier, or whether the latter collects them per capita en route from the passengers. In any event the vehicles are operated for hire upon the public street, and, ipso [acto, become subject to the regulatory provisions of the law. Regulation and control in operation over the roads of the municipalities, manifestly, was the legislative conception of its delegation of power to the local municipal bodies, and that purpose can be subserved only by the reasonable exercise of the licensing power thus conferred, whether the operating factor be an ordinary jitnejr motor bus, collecting fares at intervals within the borough, or a motor club, collecting fares in bulk outside the borough. In any event, making use of the public highways as via media to reach the prescribed destination is sufficient to justify the claim of operation within the limits of the borough.

The supreme court in the City of Bridgeton, v. Zellers, 124 Atl. Rep. 520, affirmed by this court in 127 Atl. Rep. 924, in passing upon the contention that the bus operator took on no passengers within the borough in its through transit, characterized the argument as frivolous; and while the contention may possess some force as against an attempt to collect a tax for revenue purposes, from a duly licensed carrier, passing through the borough from an adjoining municipality to a designated terminus in another municipality, it can have no application as against mere local regulatory legislation, based upon a specific delegation of the police power for the purpose. Cary v. North Plainfield, 49 N. J. Law 111; North Hudson Co. v. Hoboken, 41 N. J. Law 71.

These subjects have been considered in extenso, because the briefs thus deal with them, but, while treated incidentally, they are not made ratio decidendi in the opinion of the learned vice-chancellor, who bases his disposition of the cause entirely upon the question of want of “operation” entirely within the borough, so that he declares “it does not seem that it was intended that a license should be required to permit a bus to use the public streets for transportation from a point without the municipality to private property within the same where no unusual servitude was imposed upon the public way.”

The difficulty in accepting this reasoning arises, primarily, from .the fact that the legislature has expressly declared its purpose to delegate the power of regulation in any event to the municipality. Thus, in the act of 1916, page 283, the first section of the act defining jitney buses, provides for the acceptance of passengers “either at the termini” or at points along the route, and in the next section inhibits the operation of such bus upon the public streets whether such bus be operated “wholly or partly” within the city, until a license shall have been duly procured. This legislation was followed by the laws of 1920, page 182, which, obviously, was intended to extend to all municipalities the powers and provisions of the act of 1916, which were expressly limited to cities, and therein it is prescribed that the provisions of such ordinances shall be applicable to such vehicles, “whether such auto buses, commonly called jitneys, are operated over routes wholly or partly within the territorial limits of such municipality.”

To emphasize this construction, as it were, the present legislature enacted chapters 144 and 146 of the laws of 1926, which leave no doubt as to the legislative intent.

Manifestly, therefore, if this species of transportation may be denominated a “servitude” upon the highway, the legislature has expressly recognized and prescribed its modus operandd, and in the public interest has delegated to the municipality the power to circumscribe and license its use.

The decree appealed from will therefore be reversed.

For affirmance — None.

For reversal — -Ti-ie Chief-Justice, Trenchard, Parker, Mint crh, Kalis oh, Black, Katzenbach, Campbell, White, Gardner, Van Buskirk, McGlennon, Kays, Hetfield, JJ. 14.