author: Leaking, Y. C.

text:
    Jacob Polakoff v. Andre Halphen.
    [Submitted January 23d, 1914.
    Determined February 25th, 1914.]
    1. An agreement, not under seal and without consideration, by the owner or tenant of real estate, permitting its use by another, is not operative as a grant, but is a mere license revocable at pleasure, which may afford justification for the licensee’s acts thereunder prior to revocation, but not thereafter.
    2- Where a parol or written license to occupy land has been executed by possession in such manner that its revocation would be a fraud upon the licensee, equity will protect the licensee against a revocation, and preserve his rights under the license.
    3. Evidence, in a suit to restrain the completion of a building on certain land under a license to erect a building thereon, held, to show that the building was being erected in substantial accordance with the agreement of the parties, which contemplated that it should be finished on the inside and occupied jointly by both parties for storage purposes.
    4. Where a written license to erect a building on certain land was silent as to the character of the building, but both parties agreed that its character was stipulated upon, the situation was that of a separate oral agreement, and parol evidence was admissible as to the terms thereof. .
    5. Where defendant erected a, building on certain land under a license from complainant, in accordance with the agreement, except that a stairway was not built as agreed, because the building inspector refused to permit it, which caused little, if any, inconvenience, a court of equity will not recognize an attempted revocation of the license as depriving defendant of his rights thereunder.
    On bill for injunction. Hearing at return of order to show cause.

      Mr. Ulysses G. Styron and Mr. Joseph B. Pershie, for the complainant.

      Messrs. Thompson & Smothers, for the defendant.
   Leaking, Y. C.

Complainant is the lessee oí certain real estate in Atlantic City; his term will expire December 27th, 1914. Defendant is the owner of the reversion through a grant from complainant’s lessor; complainant pays his rent to defendant. The premises, which are admittedly covered by the lease held by complainant, include a store building facing on a street and living rooms above the store, and also a space in the rear of the store which has been vacant until recently. It is that part of the leased premises which is in the rear of the store which occasions the present controversy.

It is conceded that defendant sought permission from complainant to erect a building in the nature of an annex to the store on that part of the leased premises in the rear of the store, and that complainant acceded to defendant’s request.

Defendant has erected the building and it is now completed, except as to its interior. Complainant claims that the building which has been erected by defendant is essentially different from the building which he authorized, and has accordingly revoked his consent. An injunction is now sought by complainant to compel defendant to, stop further work on the building and to prevent its occupancy or use by defendant.

The answer and answering affidavits filed by defendant set forth a copy of a written consent for the erection of the building signed by complainant, and assert that the building in all essential respects conforms to plans agreed upon by complainant and defendant.

The consent for the erection of the building, which was signed by complainant, is as follows:

“Atlantic City, N. J., Dec. 1st, 1913.
“X hereby agree to allow Mr. A. F. Halpheh to build an addition in the rear of my store. '
“J. Polakoff.”

It will thus be perceived that complainant bases his right to relief upon his revocation of the license, whereas defendant contests complainant’s right of revocation.

It may Tbe conceded that an agreement or consent, not under seal and without consideration, of the nature of that above quoted, whereby the owner of real estate, or a tenant as owner of the term, permits its use by another, is not operative as a grant, but is in a court of law regarded as a mere license revocable by the licensor at his pleasure; it may afford a justification for acts done by the licensee pursuant to the license prior to revocation, but not thereafter. Richman v. Baldwin, 21 N. J. Law 395; Hetfield v. Central Railroad Co., 29 N. J. Law 571; Banghart v. Flummerfelt, 43 N. J. Law 28. It will be observed, however, that in each of the cases above cited the suggestion is made that a court of equity may in proper cases relieve against a revocation of a license when it appears that the revocation would be in effect operative as a fraud on the licensee. The following cases in this state define the nature and extent of equitable jurisdiction to relieve against revocations of licenses of the class suggested: Raritan Water Co. v. Veghte, 21 N. J. Eq. 463; East Jersey Iron Co. v. Wright, 32 N. J. Eq. 248; Morton v. Morton, 47 N. J. Eq. 158; Lawrence v. Springer, 49 N. J. Eq. 289; Barbour v. Barbour, 51 N. J. Eq. 267; Berry v. Potter, 52 N. J. Eq. 664; Van Horn v. Clark, 56 N. J. Eq. 476; Hartman v. Powell, 68 N. J. Eq. 293. An examination of these cases will disclose the accepted rule in this state to be that when the agreement or license, whether founded in parol or in writing, is dearly established and includes either express or implied authorization by the licensor for the licensee to oecup3r the land of the licensor, and the license has been executed ]>3r possession in such manner that its revocation would be operative as a fraud upon the licensee, a court of equity will protect the licensee against such a revocation and preserve for the licensee such rights as the licensor expressly or impliedly conferred. This is indeed no more than an equitable application, of the essential principles of estoppel as applied in Short v. Taylor and approved in Lawrence v. Springer, supra, at p. 295.

In the present case a memorandum of the authorization was reduced to writing and signed by the party to be charged; the fifth section of our statute of frauds was to that extent complied with. Indeed the bill filed by the licensor asserts that permission was by him given the defendant to enter upon the land and erect the building thereon, but charges that the building differs from the one authorized. The bill alleges that a two-story building is being erected instead of a one-story building as authorized, and asserts that the additonal story will materially interfere with complainant’s light; complaint is also made that a rear stairway is to be changed in a manner not contemplated and detrimental to complainant. The answer and answering affidavits disclose that the building was completed, except as to its interior finish, when the bill was filed, and that it is a one-story building, and that a second story has at no time been contemplated; that the building as erected is in exact conformity to the plans agreed upon between complainant and defendant except as to the location of the rear stairway to the building occupied by complainant; this stairway could not be placed as planned because of objections made by the building inspector; accordingly the rear stairway leading to complainant’s building has not been disturbed. The controversy therefore resolves itself into one of fact, the dispute being whether the building which has been erected is essentially the building which was authorized by complainant. While complainant might he denied the right of revocation of an executed license in such manner as to work a fraud on defendant, he could not he denied the right to prevent unauthorized acts.

It will he observed that the written authorization is wholly silent touching the kind of a building to he erected by defendant, and both parties agree that their stipulations included that element. The situation thus presented is the existence of a separate oral agreement as to matters touching which the writing is wholly silent and which are not inconsistent with its terms, and it is also obvious that the writing was not intended by the parties to embody the whole agreement. In this situation the court is permitted to consider the evidence offered by the parties touching these details so agreed upon between them. This evidence satisfies me that the building which defendant has erected is substantially and essentially in accordance with the agreement of the parties, and that the agreement contemplated not only the erection of the outside walls and roof of the building but also that it be finished in its interior and occupied jointly by the parties for storage purposes during the remainder of complainant’s term. The refusal of the building inspector to permit the stairway h> he located as planned was through no fault of defendant and can he of but little, if any, inconvenience to complainant. Under these circumstances it is clearly impossible for a court of equity to aid complainant by recognizing his attempted revocation of the license as operative to terminate defendant’s lights to finish and use the building in the manner agreed upon.

No cross-bill has been filed by defendant, and the single question now presented is whether complainant is entitled to an injunction pendente lile to prevent defendant from finishing the interior of the building and using it in the manner stated. I will advise an' order denying a preliminary injunction.


source: Caselaw Access Project

author: Leamistg, Y. C.

license: Public Domain

text:
    Sallie T. Ludlam v. Pennsylvania Realty Company of New Jersey et al.
    [Submitted March 5th, 1914.
    Determined March 5th, 1914.]
    Equity will not entertain a bill to set aside a sale of real estate under process of a law court, unless a deed has been executed, since a law court has a summary jurisdiction • of an equitable nature to prevent its own judgments from being the means of working injustice, which jurisdiction exists until the process has been finally executed.
    On demurrer of defendants Corson and Mason to amended bill. .

      Mr. Matthew Jefferson, for the complainant.

      Mr. James M. JS. Hildreth, for the demurrants.
   Leamistg, Y. C.

At the hearing of a demurrer filed to the original bill it was pointed out that this court will not entertain a bill to set aside a sale of real estate which has been made under process issued by a law court unless a deed has been executed and the legal process lias been thus fully executed. The reason for this rule is that a law court possesses a summary jurisdiction of an equitable nature for the purpose of preventing its own judgments and processes from being the means of working injustice, and this jurisdiction of the law court exists until the process has been finally executed. See Miller v. Barber, 73 N. J. Law 38; Palledino v. Hilpert, 72 N. J. Eq. 270; Marr v. Marr, 73 N. J. Eq. 643 (at p. 654). The demurrer to the original bill was accordingly sustained in part for that reason.

The amended bill, like the original bill, fails to disclose whether the sheriff’s deed has been delivered. As the sheriff is made a party defendant the presumption is that the process has not been fully executed and is still subject to the control of the law court out of which it has issued.

I will advise an order sustaining the demurrer.


author: Teaming, V. C.

text:
    Daniel H. Parks v. Supreme Circle, Brotherhood of America, et al.
    [Submitted February 20th, 1914.
    Determined March 13th, 1914.]
    1. The contract between a mutual benefit association and its members is contained in the fundamental laws of the association, and a power of amendment contained in the charter or by-laws in general terms only contemplates reasonable amendments adopted in furtherance of the contract, and not such as would materially alter its terms.

      2. When complainant joined a fraternal benefit society, the by-laws provided for a fund from which payments were made to each beneficiary, which fund was created by monthly payments of dues, five per cent, of which was set apart for a reserve fund, and the balance held to meet current monthly death benefits. The reserve fund, like the monthly balance from dues, could only be used to pay death benefits. In 1912 the by-laws were amended by creating two divisions of the membership, division No. 1 including members admitted after March 1st, 1910, when an amendment was adopted graduating dues according to the age, and members admitted prior to that time who elected to become members of that division, while division No. 2 included all members admitted before March 1st, 1910, who declined to become members of division No. 1. The dues of division No. 1 were graduated, while the dues in division No. 2 remained the same as originally. By the amendment the funds were to be divided between the two divisions “in proportion to the duration of membership,” the aggregate years of membership of all members in each division determining its percentage of the fund, and, after such division, each fund was exempted from liability for losses in the other division, and all new members were required to join division No. 1. Enforcement of the amendment was enjoined as against old members, and in 1913 another amendment was adopted providing that the reserve fund should be equitably divided by apportioning it among the whole membership in proportion to their life expectancies, and that the respective parts should remain a separate trust fund for the losses arising in the respective divisions, and the fund of one division should not be liable for losses arising in the other. — Held, that the amendments of 1912 and 1913 violated the contract rights of a member who had joined before March 1st, 1910, so that he could enjoin their enforcement.
    On final hearing on bill for injunction.
    Defendant is a fraternal and beneficial society incorporated under an act entitled “An act to incorporate benevolent and charitable associations,” Revision, approved April 9th, 1875. At the time complainant became a member the by-laws of the society provided for a fund from which payments of $500 should be made to the beneficiary of each deceased member who should be found to be entitled to death benefits at his decease. This fund was to be created and sustained by the monthly payment of dues by each member. Dive per cent, of these monthly dues were to be set apart for a “reserve fund,” and the balance, after deducting a certain percentage for expenses, was to be held to meet current monthly • death benefits. The reserve fund, like the monthly balance from dues, could only be used for the payment of death benefits.

      The clues were fixed by the by-laws at fifty cents per month for each member irrespective of'the age of the member or length of his membership, but could be increased to sixty cents per month under certain specified contingencies.
    March 1st, 1910, a new by-law abolished the flat rate of monthly dues and adopted a schedule of rates- which graduated all dues according to the ages of the members. In practical operation that new by-law required older members to pay more than sixty cents per monih as dues. On a bill filed by a member this court enjoined the enforcement’of the new by-law as violative of the rights of members who had contracted insurance at the old rate. Poole v. Supreme Circle (N. J. Ch.), 85 Atl. Rep. 821. That decree was subsequently affirmed by our court of errors and appeals. 80 N. J. Eq. 259.

    July 31st, 1912, the by-laws were further amended by the creation of two independent divisions — one division, numbered 1, to comprise members who were admitted on and after March 1st, 1910 (the date the former amendment had been adopted), and such members who had been admitted prior to that time and should elect to become members cf that division; the other division, numbered 2, to comprise all other members — that is, all members who had been admitted prior to March 1st, 1910, and who declined to become members of division 1. The dues of members of division 1 were graduated as in the former amendment; in division 2 the dues were unchanged. The moneys from which death benefits were payable — that is, the moneys in the reserve fund and the unexpended death benefit balances which had not been transferred to. the reserve fund, were to be divided between the two divisions “in proportion to the duration of membership” — that is, the aggregate years of membership of all members in each division determined its percentage of the fund, each fund, after division, was exempted from liability for losses arising in the other division; all new members were required to join division 1.
    A bill was then filed in this court by the present complainant to enjoin the enforcement of these by-law amendments of July 31st, 1912. It was in that suit determined that the new by-laws could not be lawfully enforced against the will of complainant. The ground of that decision was that contractual rights of dissenting members who had joined prior to March 1st, 1910, were invaded by allowing other members who had joined prior to that date to transfer their membership to another wholly independent division and withdraw from the funds from which losses were payable a percentage of such funds based upon years of membership. A doubt was also there suggested whether any withdrawal privilege could be lawfully adopted which should be operative to remove any part of such funds from liability for death claims of remaining members. Park v. Supreme Circle, 81 N. J. Eq. 330.

    Thereafter, May 15th, 1913, a further amendment of the bylaws was adopted by which the provision for an apportionment of the funds between the two divisions “in proportion to the duration of membership” was changed to “in proportion to their life expectancy,” and the exemption of funds of each division from liability for losses in the other division was readopted.
    This new amendment is as follows:
    “That the Reserve Fund held by the Supreme Circle shall be equitably divided by apportioning it among the whole membership in proportion to their life expectancy, and that portion set apart for members of Division 1, together with the accumulations that may come to it under these laws, shall be anjl remain a trust fund separate and distinct for losses arising in Division 1; and that portion set apart for members of Division 2, together with the accumulations that may come to it under these laws, shall be and remain a trust fund separate and distinct for losses arising under Division 2; and under no circumstances or at no time shall the trust fund of one division be liable for or be taken to pay losses arising under the other division.”
    It is the validity of these amendments of July 31st, 1912, as modified by this amendment of May 15th, 1913, that the present bill challenges.

      Mr. Oscar B. Bedrow, for the complainant.

      Mr. John F. Earned, for the defendant.
   Teaming, V. C.

The contract between complainant and defendant society is not embodied in a formal written contract similar to a policy of insurance. The contract is to be found in the fundamental laws of the society; and a power of amendment contained in the Charter act or by-law of the society in general terms is to be understood as referring only to reasonable amendments adopted in furtherance of the contract, and not to such as would overthrow it or materially alter its terms. O'Neill v. Supreme Council, 70 N. J. Law 410, 420; Sautter v. Supreme Conclave, 72 N. J. Law 325; Poole v. Supreme Circle (N. J. Ch.), 85 Atl. Rep. 821; S. C. on appeal, 80 N. J. Eq. 259.

An examination of the charter and the by-laws of defendant corporation which existed at the time complainant became a member discloses the contract between the corporation and complainant to have been an engagement on complainant’s part, in common with all other members, to pay dues of fifty cents monthly and under certain contingencies to pay sixty cents monthly, and in consideration of these payments defendant corporation engaged to apply the dues so received in a manner specifically stated in the by-laws, to the end that a fund should be created from which $500 should be paid to the beneficiary of each member at his decease. The application of the dues, as specified in the by-laws, was to be as follows: Five per cent, of the monthly receipts was to be carried to a reserve fund from which no appropriations could be made except for the payments of death benefits ; the remainder of the monthly dues were to meet, so far as sufficient in amount, current monthly obligations maturing through deaths of members, except that on the first day of January of each year an amount equal to five cents per capita for each member on that day was to be deducted from the dues and paid to the general fund to meet current running expenses. The foregoing comprises the essential features of the by-laws which defined ihe mutual engagements between the members and the corporation prior to March 1st, 1910; the remaining by-laws deal with administrative matters incidental to the consummation of the defined scheme. The effect of the amendments to the bylaws which are now called in question is: 1. To leave all members who joined prior to March 1st, 1910, in a class or division by themselves and to permit them to continue to pay dues at the old flat rate and receive death benefits in the amount originally fixed. 2. To prohibit accession of membership to that division after March 1st, 1910. 3. To permit these old members to join the new class or division, should any of them elect to do so. 4. To transfer from the reserve fund and from the other money on hand from which death benefits are payable a percentage of the moneys comprising these funds to a new fund for the benefit of members comprising that class or division. 5. To render the funds of each division, after the transfer, liable only for losses arising by deaths of members in the division in which the deaths occur. Pursuant to that plan a division of the funds was made July 1st, 1913. There were then six thousand four hundred and ninety-one members who joined prior to March 1st, 1910, and who had not consented to transfer their memberships to the new division, and twelve thousand one hundred and eleven members who had either joined subsequent to March 1st, 1910, or had consented to be transferred to the new division; these were classed as members of the new division. The money then on hand which was liable for the payment of death benefits, including the reserve fund, was $57,-438.37. The aggregate life expectancies of the six thousand four hundred and ninety-one members was ascertained to be one hundred and fifty-four thousand seven hundred and thirty-eight 3rears, and like life expectancies of the new members was ascertained to be three hundred and thirteen thousand eight hundred and thirty years. The funds were then divided in proportion to these aggregate expectancies. This division resulted in leaving a fund for the old members of $18,968.34, and for the new members, $38,470.03.

The effect of placing members whose memberships antedate March 1st, 1910, in a division In'- themselves and prohibiting accessions of membership to that division cannot be doubted. Without new members, it is only a question of time when the death benefit funds of that division will become inadequate to pay the losses arising through the death of its members. It is possible that without-an increase of dues that condition would have been ultimately reached even though no changes of the b3r-laws had been made; but the isolation of old members with the prohibition of accessions not only renders the loss of their policies inevitable but speeds the day.

It having been found unlawful, as against these non-assenting old members, for defendant to increase the dues of such, members by the adoption of a by-law graduating dues according to ages of members, the amended by-laws now in question extend to these old members the option to either join the new class and thereby become obliged to pay increased dues or submit to isolation and the consequent certain loss of the measure of indemnity contemplated by their contracts. It seems impossible to distinguish in principle between a bjr-law either increasing dues or reducing the amount of death benefits (both of which have in this state been declared unlawful because violative of rights vested under contracts of this nature) and a by-law the certain operative effect of which is to render the payment of death benefits pursuant to the terms of the contract impossible.

The by-laws of defendant prior to March 1st, 1910, set forth a plan of mutual insurance which included the element of accessions of new members as an integral part of the plan, and its successful operation was well known to be dependent upon such accessions.

In such circumstances, it seems impossible to regard that part of the defiined plan other than as entering into the contract and forming one of its material elements. To that effect is Strauss v. Mutual Reserve Fund Life Association (N. C.), 36 S. E. Rep. 352; S. C. on rehearing, 39 S. E. Rep. 55. It is, however, clear that no injury would be suffered by the old members by reason of the establishment of the new class and prohibition of new members joining the old class if the revenues derived from the dues of members in the new class were not segregated and exempted from liability for losses occurring by death of the old members. It is this segregation of revenues which subjects the isolated class of old members to inevitable and early loss.

But the present amendments to the by-laws go even further than establishing a new class which shall include all new members and enabling the new class thus established to enjoy its own revenues as an independent class. A division i.s made upon an assumed equitable basis of the accumulated reserve fund and all moneys on hand which is subject to the payment of death benefits between the isolated class of old members and the new class which originated March 1st, 1910, and includes as members of the new class all members of the isolated class who have heretofore been transferred to the new class. Separate and independent treasuries are thus established for each class and each treasury is exempted from liability for losses in the other class. There is also established a withdrawal privilege dating from March 1st, 1910, 'whereby the old members in the isolated class have been privileged to withdraw to the new class. Hnder this plan each member of the new class, whether a new member or an old member who has. withdrawn from the old to the new class, has drawn to the treasury of the new class an assumed equitable percentage of the funds which were theretofore liable for all losses. The privilege is also given to other members of the old class to hereafter transfer their memberships to the new class, and in so doing carry with them to the treasury of the new class the assumed equitable share of such transferring members in the funds of the old class. Should it be found that the new members have not taken from the common funds more than their just share, it cannot be overlooked that the plan of division of funds embodies a past and future right of withdrawal of old members from the old to the new class and transfers to the new class a withdrawal value for members so withdrawing. The old by-laws do not contemplate a withdrawal privilege of members, but, on the contrary, contain a provision the observance of which would seem to render a future creation of a withdrawal privilege impossible. That provision is found in section 20 of the by-laws as they existed prior to March 1st, 1910:

“Sec. 20. Five per cent, of the monthly receipts shall be added to the Reserve Fund, the same to be1 deposited in banks or trust companies paying interest, said depositories to be designated by the trustees, or to be invested in such manner as the Supreme Circle may direct. No appropriation shall be made from the Reserve Fund, except for the payment of funeral benefits (now called death benefits) for members, and then only by a vote of the Supreme Circle at an annual or special session.”

This inhibition of appropriations from the reserve fund for any purpose other than the payment of death benefits for members necessarily dedicates that fund to’ that exclusive purpose and use for its members. It may be urged that the privilege now created for members to withdraw or become members of a new division and carry with them to the new division an equitable percentage of this reserve fund is not inconsistent with the spirit of this by-law because the funds thus appropriated are to be used only for payment of death benefits; but it must be observed that the old by-laws deal alone with death benefits which have become payable through deaths of members, and does not contemplate appropriations from the reserve fund for the creation of a new fund to meet possible future losses, or the establishment of a withdrawal privilege for any purpose. The inhibition is against any appropriations from the reserve fund for any purpose except the payment of death benefits for members of the fund.

The inviolability of the contract between a mutual society and its members is illustrated in Doane v. Millville Fire and Marine Insurance Co., 45 N. J. Eq. 274. A bvr-law of that company restricted its liability for fire losses to the revenues of the fire department, and for marine losses to the revenues of the marine department, and the revenues of each department were by the bylaws required to be kept separate.

This by-law was held ineffective as against policyholders whose policies of insurance on their face contemplated an unrestricted liability of the company. As heretofore stated, complainant's contract of insurance is to be found in the provisions of the charter and by-laws already referred to; in my judgment, the amendments to the by-laws here in question cannot be enforced without an unlawful invasion of rights vested in complainant under that contract.

I am obliged to advise an injunction against the enforcement of the amendment herein referred to.


author: Beaming, Y. O. .

text:
    The Fire Association of Philadelphia v. Thomas Wells.
    [Submitted March 19th, 1914.
    Determined March 23d, 1914.]
    1. Where an insurer pays for loss by fire occasioned by the negligence of a railroad company, it becomes entitled to subrogation against the » railroad company by operation of law, and a subrogation receipt or other agreement is unnecessary.
    2. Defendant’s property, which was insured by complainant, was fired by the negligence of a railroad company. After complainant made payment to the amount of the policy and received a written receipt declaring that it should be subrogated to that amount, defendant settled with the railroad company, executing to it a release of all claims. — Held, that as defendant settled the claim without complainant’s knowledge, and did not notify it of the giving of a release which was a prima facie bar, complainant is entitled to hold defendant as trustee for the amount of the loss which it paid. i
    On final hearing. On bill to charge defendant as trustee.
    Defendant was the owner of certain buildings and their contents which have been totally destroyed by fire caused by the negligence of a railroad company. The buildings were protected by fire insurance written by complainant company to the amount of $2,000. After the fire complainant company paid the $2,000 insurance to defendant and received from defendant a receipt for the money, in which receipt defendant formally assigned to complainant his claim against the: railroad company to that amount. Thereafter defendant, without the knowledge of complainant, made a settlement with the railroad company whereby he received from that company $5,000 and executed a general release discharging the railroad company from all liability by reason of the fire.
    Complainant now seeks to recover from defendant its loss of $2,000.

      By way of defence defendant claims that, when he accepted the insurance money and executed the subrogation receipt in. behalf of complainant, he was informed by the agent who paid him the money that he would be privileged to settle with the railroad company for the balance of Ms loss; and also claims that in making his settlement with the railroad company he settled for only the balance of his loss, and at that time apprised the railroad company of the fact that he had received the $2,000 insurance money and had executed a subrogation receipt to complainant insurance company for that amount.

      Messrs. Thompson & Smothers, for the complainant.

      Messrs. Wescott & Weaver, for the defendant.
   Beaming, Y. O. .

It was complainant’s right and privilege to pay to defendant the amount of the insurance, and by that payment to become subrogated to defendant’s claim against the railroad company to the extent of the amount paid. No “subrogation receipt” or other receipt or agreement was necessary; subrogation arose from the act of payment and not from the convention. Monmouth County Fire Insurance Co. v. Hutchinson, 21 N. J. Eq. 107; Weber v. Morris and Essex Railroad Co., 35 N. J. Law 409, 413; Sheld. Subr. § 6. But a writing was executed. That writing was signed by defendant and formally acknowledged by him before a. notary public. It sets forth the payment of the insurance money and assigns to complainant defendant’s claim against the railroad company to the amount of the payment. The receipt does no more than state the exact conditions which would have existed by operation of law without a receipt. Defendant claims that he was induced to accept the insurance money and sign the receipt by a statement of the insurance agent that the paj'ment and receipt would not in any way interfere with defendant collecting the balance of his loss from the railroad company. The writing which was executed is silent touching any such privilege to be extended to defendant, and the agent denies that any such statement was made. But the views which I entertain render it wholly immaterial whether any such statement was made or not.

While defendant claims to have made settlement with the railroad company for only the balance of his claim, and claims to have fully apprised the railroad company of the circumstances that the insurance money had been theretofore paid to him, he in fact executed to the railroad company a written general release of liability from all claims resulting from the fire; in order to procure his own money he consented to formally release the railroad company from its liability to complainant, and did this without the knowledge or consent of complainant. In making that settlement and in executing that instrument defendant was not acting in ignorance of his rights and duties in the slightest degree; the settlement was made under the immediate direction of his counsel. Touching, that settlement his counsel has testified as follows:

“He [defendant] came to my office for the purpose of getting me to go with him to the railroad company. I went. It was stated on that occasion to the railroad’s agents, Mr. Brister, their general agent, being present, and one or two others, that Mr. Wells [defendant] had accepted two thousand dollars from the insurance company and that he had signed subrogation receipts. It was then stated by me to the railroad company what Mr. Wells has testified to here before this court; it was further stated by me to the railroad company that they were running some risk of a law suit in this matter, to which Mr. Brister replied he would take the responsibility of that and take care of it.”

Under -these circumstances and with, full appreciation of the fact that complainant was the equitable owner of a part of his claim against the railroad company, defendant executed a formal instrument releasing the’ railroad company from all liability for the losses occasioned by the fire, and now seeks to repudiate the terms and appropriate effect of his own deliberative written instrument, and to hold against the terms of his own declarations by the claim that he informed the railroad company that he had assigned a part of his claim to complainant and in fact made settlement of the balance only. It must be assumed that, under the circumstances narrated, some purpose existed for the execution of an instrument which in terms released complainant’s claim, for, as already stated, defendant knew that he had no right to release complainant’s claim without first receiving from the railroad company for complainant complainant’s money; whatever that purpose may have been, the legal effect of the act was to place in the hands of the railroad company an instrument which was operative as a bar to complainant’s recovery of its claim against the railroad company unless complainant should be able to establish •as a fact, to the satisfaction of a jury in an action against the railroad company, ihat prior to the execution of that instrument the railroad company had been apprised of complainant’s rights. It thus appears that defendant not only had no right to execute the release of complainant’s claim, but necessarily knew that he had no such right, and under .the circumstances of the settlement, as disclosed by the testimony of his counsel, necessarily knew that the release which he executed was operative as a prvma fade bar to complainant’s right of recovery against the railroad company. It may well be doubted whether a person who has sustained a loss and’who holds partial indemnity from a company entitled to be subrogated to the amount of the indemnity, is privileged, as against the indemnifying company, to malee a compromise settlement with a company who is primarily liable for the whole loss, without the knowledge or co-operation of the indemnifying company. Commercial Union Assurance Co. v. Lister, L. R. 9 Ch. App. Cas. 483. But it is entirely clear that the owner of the legal title to the two concurrent claims in making such settlement without the knowledge or co-operation of the indemnifying company, whether the settlement should be of the whole claim or only of that part in excess of the amount of the indemnity, assumes the burden of equitable duties to the indemnifying company which are at least co-extensive with all rights which the indemnifying company could assert or preserve if present and participating in the settlement. In such circumstances the execution of a release of complainant’s claim was not only a breach of the trust assumed and a substantial injury to the enforcement of complainant’s rights, but plainly imposed upon defendant a further duty to apprise complainant of his acts in the premises to the end that the prima fade bar to complainant’s recovery which, he had wrongfully created could be removed. That duty was not performed and the statute has now run. In executing the general release under the circumstances stated, defendant has equitably denied himself the defence that he settled for only the balance of his loss.

I am convinced that defendant’s conduct in making settlement with the railroad company without the knowledge or cooperation of complainant, and in executing a general release to the railroad company in consideration of the money by him received at that settlement without apprising complainant of the facts which he now asserts, is operative to render him presently liable to complainant in this suit for that part of the loss paid by .complainant. I will advise a decree to that! effect.


author: Teaming, Y. C.

text:
    Fire Association of Philadelphia v. Robert V. Schellenger.
    [Heard and tentatively determined March 31st, 1914.]
    1. An insurance against loss by fire is an indemnity which the assured holds, and, when the insurance company pays the insured the amount for which it was liable, the insurer becomes subrogated to any rights, of the insured as against a third person to the amount of the payment.
    2. An insured sustained a loss by fire which was only partially covered by insurance. He collected the amount of the policy, and sued a railroad and recovered a judgment for $6,000, which was compromised for $3,000. — Held, that the insured held the $3,000 in trust for the insurance company, to the extent of the amount of the policy paid, as the insurance company became the equitable assignee of the right of action against the railroad, the legal title remaining in the insured, and the insured could not compromise without the consent of the company.
    3. An insurance company after paying a fire loss has a right of subrogation, regardless of whether there is a subrogation clause in the policy, because the insurance is an indemnity, and the primary liability is upon the one who wrongfully occasions the loss.

      On bill, &c. On final hearing.

      Messrs. French £ Richards, for the complainant.

      Mr. William O. French, for the defendant.
   Teaming, Y. C.

(orally).

In a case of this nature one’s sympathiesinaturally go out to a defendant who has suffered a loss and who has made a settlement with the company that wrongfully occasioned the loss under the possible assumption that he was receiving only the balance of his claim — that is, the amount of his loss in excess of the amount of insurance he had already received. In such case a court naturally, and I think appropriately, seeks to ascertain, if possible, some theory upon which relief against a claim of this nature can be properly based; and if I thought that by further consideration of this case my present views touching the law that controls the rights of the parties would be by any possibility modified, I -would take the case under advisement; but the law is so well established, and the rights and duties of the respective parties are so plain, that it does not seem to me that it would be advantageous for me to take the case under advisement or give it further consideration. I will, for that reason, dispose of it at this time.

There are no material facts which are in dispute.' The de^ fendant, Mr. Schellenger, was owner of a certain building and machinery which were covered by a policy of insurance written by the complainant company to the amount of $3,000, $2,500 of which was on the building and $500 of which was upon the machinery. It is admitted that a loss occurred by fire on Eovember 14th, 1911. Thereafter complainant company made payment to the defendant of the amount for which it was then ascertained that complainant was liable under its policy, namely, $2,855. The loss which defendant had suffered had apparently included property which was not covered by the insurance, and the property which was covered by insurance was not totally destroyed, so-that $2,855 was determined upon as the amount payable under the insurance policy. Thereafter a suit was brought by the defendant against a railroad company for the recovery of the damages occasioned by the lire, it being claimed in that suit that the railroad compan)’ had wrongfully and through its negligence destroyed the property of defendant. That suit came to trial January 7th and 8th, 1913, and on the latter date a verdict was rendered in favor of plaintiff in that snit, the defendant in this suit, of $6,000. Subsequently, on the 21st day of January, 1913, a judgment on that verdict was entered in the supreme court against the railroad company and in favor of the present defendant. Thereafter a rule to show cause for a new trial was allowed by the judge who presided at the trial of that ease, which rule enabled the railroad company to procure a review of the proceedings in the supreme court, and, subsequently, on February 21st, 1913, the defendant and the railroad company made a compromise settlement whereby the railroad company paid to the defendant $3,000 in full settlement of his claim and in consideration of that payment defendant executed to the railroad company a release, a general release of all liability for all losses or damages occasioned by that fire, and canceled the judgment which had been entered of record. These facts, as already stated, axe not in dispute.

Under these circumstances there cannot be the slightest doubt touching the law. When the Insurance company paid to the defendant the amount for which it was liable under its policy of insurance the insurance company by the settled law of the land became subrogated to the rights of the assured to the amount of that payment. An insurance against loss by fire is an indemnity which the assured holds, and when the insurer pays that indemnity to the assured the assured becomes a trustee of the insurer to the amount of that payment in the event of its future collection by the assured from a person primarily liable for the loss. The company primarily liable for the loss here in question, was the railroad company, and the indemnity obligation of the insurance company was a secondary liability, so when the loss should be paid by the railroad company to the assured he would of necessity become trustee for the insurance company to the amount that the insurance company had paid under its policy of insurance.

After payment of a loss of this nature is made by an insurance company the insurance company thereby occupies the position of an equitable assignee of the rights of the assured to the extent of the payment; the legal title to the entire claim against the railroad company remains in the assured, but the equitable title to the amount of the insurance paid is in the insurance company, so that when the assured brings a suit against the railroad company the fact that lie has received payment of the amount for which the insurance company was liable cannot be utilized by the railroad company as a defence or partial abatement against the claim; therefore, any recovery which is had against the railroad company by the defendant in such a suit is not affected by the fact that the insurance has been paid prior to that time.

In this case the transcript of the proceedings in the law court has been by consent received in evidence, and it there appears that at the trial, -when the judge was called upon to charge the jury touching the liability of the defendant, the matter of insurance was adverted to by the judge in his charge, and the jury was told that the question of insurance did not enter into the question of recovery. In the trial of that case the fact of insurance had appeared, although ordinarily it is not a matter that counsel is even permitted to refer to.

In that case, however, it appears from the transcript of the proceedings at the trial that the defendant railroad company had made a claim that in the proof of loss before the insurance company Mr. Schellenger, the present defendant, had made a claim of loss less in amount than he made in the suit against the railroad company, and his proof of loss against the insurance company had been offered in evidence by the railroad company to affect his testimony touching the total amount of loss which he in that suit claimed he had suffered, and the court charged the jury that they could consider the affidavit that Mr. Schellenger had made in his proof of loss against tire insurance company so far as it affected his credibility or affected his testimony as a witness, but that the fact of insurance was of no concern in the case excepting for that purpose and that the jury should consider it for that purpose alone.

After an insurance company lias paid the amount of its indemnity obligation in a case of this nature they are powerless up to a certain stage to do anything toward collecting the money which they have paid from a railroad company who may be liable for the loss. Any suit that is brought must be in the name of the assured. The railroad company is entitled to be protected against two suits. The assured cannot sue for the balance which is due to him over and above the insurance, and the insurance company bring another simultaneous suit in the name of the assured for the amount of insurance which has been paid. The railroad company is entitled to protection against the claim being split and two independent suits prosecuted, although the rights of the insurance company and the assured are essentially independent rights. By the mere fact of payment there is, in operation of law, equitably assigned to the insurance company a portion of the claim equal to the amount of insurance money paid. So, the insurance company is powerless, and when in such circumstances the assured brings suit against a railroad company for a loss occasioned by its negligence the suit necessarily infcludes, and must include, and the suit br'ought by defendant did include, the amount that the insurance company would be entitled ’to receive back by reason of insurance which it had paid. The verdict in this case clearly included that amount. The verdict was the full amount of the claim of $6,000, and it is not claimed by anyone that the loss was $6,000 plus the $2,855 which the insurance company had already paid.

How, when the assured assumed, without the knowledge or consent of the insurance company, to make a compromise settlement of the judgment entered on that verdict, he necessarily assumed to settle the claim of the insurance company. The insurance company had an interest in that judgment to the extent of the amount of money which it had paid, and the assured had no right to make any settlement or satisfaction of’that judgment, or to give a general release, or to discharge the lien of thé judgment, without the co-operation, or at least .an opportunity of cooperation, upon the part of the insurance company in that settlement. If he did so in the absence of knowledge or co-operation upon the part of the insurance company he necessarily assumed the liability to repay to the insurance company the amount that' had been paid to him. It was the clear duty of the defendant, Mr. Schellenger, if he sought to make a compromise settlement of that judgment, to apprise the insurance company of the fact and procure a participation by the insurance company in that settlement, for the insurance company had rights in that judgment as well established and as well settled and as clearly defined as he had; he held the judgment in trust for the benefit of the insurance company to the amount that the insurance company had paid, and as such trustee made this settlement and discharged the judgment at a time when the statute had run against the claim, and he is now called upon by the insurance company to answer and there is no way, in my judgment, in which he can escape liability.

It 'is impossible to escape a feeling of regret that this defendant is now called upon to refund to this insurance company the money which he has received from it, for he may have made settlement in the belief that no such liability existed, but, under the circumstances of this case, it is impossible to find ground of relief.

Counsel has urged that the subrogation clause in the policy of insurance contains language indicating that the insurance company must make claim of loss through negligence of some third person before it is entitled to the right of subrogation. That is not a proper construction of the clause. These clauses are uniformly treated as securing to an insurance company a right of subrogation in cases of this nature, and the right would exist, as I understand the law, without any subrogation clause in the policy of insurance. It arises from the fact that the insurance is an indemnity and that the primary liability is upon the person who wrongfully occasions the loss — m a case of this nature, the railroad company.

I am so firmly convinced that the complainant is entitled to a decree for the amount of insurance that I cannot feel it proper-to take the ease under advisement. If, however, counsel for the defendant feels that lie could, by submitting a brief, bring to my attention some authority or some argument (hat lias not. already been presented, or some view that f hare been unable to antieipate in the remarks which I have made, I will be very glad to extend that opportunity and give full and careful consideration to any brief that may be filed; but should such a brief be filed a copy must be first served upon counsel for the complainant in order that he may reply to it. Unless counsel for the defendant desires to present authorities or a supplemental argument through a brief, I will advise a decree of the nature indicated by the remarks which 1 have made.


text:
    Mary J. Robinson v. Samuel D. Robinson.
    [Submitted January 22d, 1914.
    Determined April 8th, 1914.]
    1. Where the parties to a marriage celebrated the same in ignorance of an existing impediment, their apparent matrimonial cohabitation after the removal of the impediment will be regarded as carrying into effect their original purpose.
    2. A decree of divorce will not be granted where the establishment of some essential element necessary to the relief sought depends upon the uncorroborated testimony of the petitioner.
    3. The corroboration of the testimony of the petitioner on some matter essential to a decree of divorce need not be by other witnesses, but may be furnished by surrounding circumstances.
    4. In a suit for divorce, where it appeared that the petitioner married defendant before the decree divorcing her from her former husband had been signed by the chancellor, .evidence held to show that the parties intended a valid marriage, and matrimonially cohabited after the signing of the decree.
    5. Before the decree granting her a divorce from her former husband had been signed by the chancellor-, the petitioner celebrated a marriage with defendant, and, after the signing of the decree, the parties cohabited as husband and wife. — Held, that the rule that, in civil suits for criminal conversation and criminal prosecutions for polygamy, cohabitation and reputation will not establish the fact of marriage, does not apply in a subsequent suit by defendant for divorce from her second husband on the ground of adultery, his adultery being of the most clandestine nature.
    6. Judicial action cannot be predicated upon a presumption wholly repelled by the evidence.
    On final hearing on petition for divorce.

      Mr. Townsend Godfrey, for the petitioner.

      Mr. Ulysses G. Styron, for the defendant.
   Leaking, Y. C.

A brief statement of the facts of this case, as they appeared at the hearing of a petition for alimony pendente lite, will be found in 88 Atl. Rep. 951. The date of the ceremonial marriage of the parties is there erroneously stated to have been July 15th, 1902; the correct date is June 15th, 1902. At final hearing the evidence conclusively established that defendant had committed adultery shortly prior to the institution of this suit as charged in the original petition. Complainant is entitled to a decree of divorce and alimony unless it shall be here ascertained that defendant is not her lawful husband.

At final hearing it was established that at the time of the ceremonial marriage between petitioner and defendant petitioner was a married woman, as her decree of divorce against her former husband was not signed by the chancellor until twenty-three days after her ceremonial marriage to defendant. Her testimony, however, was to the effect that at the time of her ceremonial marriage to defendant she believed that her divorce had been granted and that she was then free to marry defendant and that she accordingly married him in entire good faith. Petitioner’s testimony fully convinces me that at the time of her ceremonial marriage to defendant she fully believed that she had then been divorced from her former husband and that she entered into that marriage contract with defendant in that belief and without an existing doubt in her mind touching its validity and binding force, and that she first learned that her divorce was in fact signed at a later date when that fact was made the basis of a defence in this suit ten years later. If this conviction which her testimony has made upon my mind can be properly made a finding of fact in this suit, petitioner -will thereby become entitled to the relief which she now seeks, for, as stated in Collins v. Voorhees, 47 N. J. Eq. 555, when the parties have intended marriage, being ignorant of an existing impediment, their cohabitation apparently matrimonial, subsequent to the removal of the impediment, may lie regarded as “the carrying into effect by the parties of their original purpose.”

But some difficulty arises in making the finding of fact above referred to by reason of the existence of a principle of law which has been uniformly recognized by the courts of this state to the effect that a decree of divorce will not be granted where the establishment of some .essential element necessary to the relief sought depends upon the uncorroborated testimony of the petitioner. There is no testimony in this case, other than that of petitioner, to the effect that she originally entered into the contract of marriage with defendant in the belief that her divorce from her former husband had been granted and that she was free to lawfully marry defendant. From the nature of the case there can be none, for her mental attitude is known to her alone, and her solicitor who procured the divorce and from whom she claims to have been led to believe that her divorce had been granted has long since died. Such corroboration of her testimony touching her belief and purpose as exists is necessarily to be found in the circumstances surrounding the occurrence. But it is not necessary that corroboration should be supplied by the testimony of other witnesses. Surrounding circumstances, adequately established, may be of a nature to fully supply the office of corroboration which the law requires in matrimonial cases. That circumstances may be made the basis of corroborative evidence is clearly disclosed in Foote v. Foote, 71 N. J. Eq. 273, 280. Indeed the issue of marriage is not infrequently dominated by presumptions arising from circumstances.

The following facts and circumstances in this case are fully established by evidence other than the testimony of petitioner: Her petition for divorce from her former husband was filed January 21st, 1901, or about one and one-half years before Her ceremonial marriage to defendant. Defendant supplied the money to enable petitioner to procure her divorce to the end that petitioner and defendant could marry when the divorce should have been granted. The files of that, suit have been received in evidence and disclose that the testimony of petitioner and her other witnesses was taken before the master to whom the case had been referred April 12th, 1902. The master’s report advising a divorce bears date May 16th, 1902, and was filed May 19th, 1902. The adequacy of proofs made before the master sufficiently appears from the fact that a divorce was granted on those proofs. The final payment of the charges of petitioner’s solicitor for her services in procuring the divorce was made May IStli, 1902 (a month after the testimony was taken), and that pajmient was made by a check drawn by the present defendant; that check has been received in evidence and bears the endorsement of the solicitor of petitioner. During the period that the divorce suit was pending and for a considerable time prior thereto, defendant boarded at petitioner’s home; and the divorce suit was obviously brought and the money necessary for its prosecution supplied by defendant to enable the parties to marry when the impediment which they were mutually seeking to remove should have been removed. Petitioner is an illiterate woman! who can neither read nor write. It thus appears that more than a month before petitioner and defendant celebrated their marriage adequate testimony to support a divorce had been concluded, and nothing had occurred to change the mutual purpose of the parties to remove the impediment to their marriage before marrying. They mutually desired to marry and mutually realized the necessity for the removal of the impediment before they could lawfully marry, and for the accomplishment of their lawful purpose petitioner had supplied all the necessary testimony and defendant had supplied all the necessary money. Under these circumstances it becomes practically impossible to believe that petitioner, without any possible -reason for change of purpose of plan, determined to deceive defendant and celebrate a marriage which she knew to be unlawful and void, and to that end falsely stated to defendant that she wa-s then free to marry. From her viewpoint of illiteracy the case had been tried and finished and she may well have understood some general statement of her solicitor to the effect that there remained nothing more for her to do as meaning that she was then free to marry. It is not probable that her solicitor told her that her divorce had been granted, but it seems impossible to escape the conviction that such was her belief.

As already stated the testimony of petitioner carried conviction of its honesty. Inaccuracies appear in her testimony but not to a greater extent than may be reasonably expected in view of the period of time to which it referred, and I am fully convinced that she married defendant in good faith believing that she was at the time free to lawfully many him, and I, am satisfied that the circumstances surrounding and precedent to the occurrence are adequate to supply the necessary corroboration of her testimony to that effect.

I think it should be also observed that the present case differs in another important aspect from the case of Collins v. Voorhess,. supra. In the opinion filed in that case it is stated that it was found as a fact that the husband “'knew that he had no legal power or right to contract this second marriage, that he was aware that the divorce fraudulently obtained by him was a nullity; what he did consent to was to deceive the so-called second wife,, and to live with her with the appearance of being married toiler.-” In the present case at the time the parties formally celebrated their marriage, the divorce suit which had been instituted to enable them to- become husband and wife had been prosecuted to its practical conclusion and only awaited the signature of the chancellor to the final decree. Should it be here-ascertained that petitioner’s present testimony to the effect that she then believed she was free to marry defendant is insufficiently corroborated to warrant an affirmative finding of that fact, it is yet clear that a finding that she then knew she was not free to marry defendant cannot be justified, and it is entirely certain that both parties then desired to marry and that their mutual desire to be husband and wife continued thereafter fox-a period of ten years, and that both parties at the time of their ceremonial marriage necessarily knew that the divorce would soon be granted whether or not either of them then knew it had not in fact been granted. In such circumstances the presumption of continuous meretricious purpose, which was under the facts necessarily made the basis of the decision in Collins v. Voorhees, supra, finds but feeble if any support in either reason or authority. The authorities applicable to this aspect of the case are reviewed in 1 Bish. Mar., D. & S. §§ 960-976. The test which the learned author adopts as sustained by the weight of authority is whether the parties desire marriage. In Collins v. Voorhees, supra, it was found that the husband did not desire marriage and could not have desired marriage at any time because he knew that his divorce was fraudulent and void, and that his real desire was to live in illicit relations with the woman with whom he cohabited; whereas in the present case the evidence renders it clear that both parties at all times during the ten years of their cohabitation desired marriage. At section 970 the rule is stated in 1 Bisk., supra, as follows:

“If the parties desire marriage, and do what they can to render their union matrimonial, yet one of them is under disability — as, where there is a prior marriage undissolved — their cohabitation, thus matrimonially meant, will in matter of law make them husband and wife from the moment when the disability is removed; and it is immaterial whether they know of its existence, or its removal, or not, nor is this a question of evidence. This doctrine is overlooked in some of the cases, but it is abundantly sustained by others, and the reasoning on which it rests is conclusive.”

Where at the time of a ceremonial marriage an impediment to a lawful marriage in fact exists the burden in a suit of this nature may be appropriately said to rest upon the party who was thus incapacitated to establish good faith by evidence adequately corroborated; but when it appears, as it appears in the present case, that the disability was in process of removal by the concurrent efforts of the parties for the sole purpose of. enabling them to become husband and wife, and the removal of the disability was accomplished shortly after their ceremonial marriage as the result and necessary consequence of their prior concurrent efforts, and after such removal of the disability the parties continue to cohabit and make themselves known to the world as husband and wife for a period of ten years, there flows from their conduct such an obvious purpose and desire to be husband and wife as to clearly overcome any inference of meretricious purpose on the part of either that may, in other circumstances, appropriately arise from the fact that at the time of the ceremonial marriage an impediment to marriage existed with knowledge of which one or both of the ¡parties were chargeable. The language of Chief-Justice Hemphill touching presumptions flowing from conduct matrimonial, in Yates v. Houston, 3 Tex. 433, 450, referred to in 1 Bish. M., D. é S. § 966, is, in this connection, well worthy of consideration. He says: “But admitting that their original intercourse was illicit with knowledge of both parties, it would be urging the presumption to an unreasonable extent to suppose that the unlawful character of the connection was unsusceptible of change, and that, when all legal disabilities had ceased to operate, the}r would voluntarily decline all the honors, advantages, and rights of matrimony, and prefer an association disgraceful to both parties, but peculiarly degrading to the female, and which inflicted upon their innocent offspring the stigma and penalties of illegitimacy. Let it be admitted that this woman had knowingly wandered from the paths of virtue, and that in the weakness of human frailty she had originally yielded to the arts and seductions of the deceased, yet. the conclusion does not necessarily follow that the latter would be unwilling to repair, as far as possible, the wrongs he had inflicted, or that the former would of choice continue in a position so humiliating. * * * The judgment which would presumo that erring humanity would not repent and -reform is too harsh to have a place in any beneficial system of law, and we cannot yield our assent to any such doctrine.”

I am convinced that at the time of the ceremonial marriage between petitioner and defendant both believed that no impediment existed to their lawful marriage. But if, perchance, petitioner may have known at that time that her divorce had not been granted, I am equally convinced that the evidence in this case sufficiently discloses that subsequent to the removal of that disability the parties cohabited with mutual purpose and intent to be husband and wife and made themselves known to the world as such.

In ascertaining the marriage of petitioner and defendant sufficiently established by the evidence in this case I have not overlooked the fact that in civil suits for criminal conversation and in criminal prosecutions for polygamy, cohabitation and repute are deemed insufficient to establish the fact of marriage; and it may be also conceded that in some circumstances this may be the rule in a suit for divorce upon the ground of adultery. See 1 Bish. M., D. S S. §§ 10%6, 103-8. The reason for this rule appears to be that the second cohabitation carries with it presumptions similar to the former cohabitation and repute and thereby weakens the force of the presumptions relied upon. But the present case is exceptional in its nature and is fraught with circumstances which render any presumption of innocence in the second .cohabitation wholly impossible. An affidavit filed by defendant to resist an order for alimony pendente lite sets forth that at the time of the ceremonial marriage he believed that the divorce of petitioner had been granted and that he first learned to the contrary subsequent to the filing of the petition for divorce herein. By his own sworn statement it is thus disclosed that at the time he had sexual intercourse with the co-respondent in this suit he believed that he was the lawful husband of petitioner. The evidence which has been introduced to establish defendant’s adultery also discloses that at the time of his adultery he was still living with petitioner as her husband and that his sexual intercourse with co-respondent was of the most clandestine nature and under circumstances which wholly negative -the idea of innocence upon his part. Any suggestion of a presumption of either innocence or matrimonial intent upon the part of defendant in connection with his intercourse with co-respondent, under the circumstances stated, may be appropriately characterized as a rank absurdity, and the weakening or neutralizing influence or effect of such a presumption,, which in certain classes of cases has been recognized, is here wholly absent. It is impossible to predicate judicial action upon a presumption which is wholly repelled by the evidence.

■ I will advise a decree of divorce nisi, and will ascertain the amount of alimony at the signing of the decree.


author: Leaming, V. C.

text:
    Eleanor Gertrude Riebenack v. Hazel M. Crockett et al.
    [Submitted February 9th, 1914.
    Determined April 8th, 1914.]
    1. That a buyer of personal property from an insolvent debtor permits the latter to remain in possession for a season does not render the transaction void per se as a conveyance in fraud of creditors, but such possession is regarded only as a badge of fraud, to be considered in connection with the other circumstances in determining the good faith of the transfer.
    2. In order that a transfer of personal property by an insolvent debtor to his creditor, not followed by an immediate change of possession, shall be valid as against the debtor’s other creditors, it must be based on a good consideration, and must be made in good faith.
    3. Where a creditor of an insolvent, knowing that a purchase of certain of the debtor’s personal property and a credit of the price on the debt was the only way he would be able to get anything, made the purchase, and, in order to do so, agreed that the debtor might retain possession for a season, without any actual fraudulent intent on the part of the purchaser, the transfer was not fraudulent as against the debtor’s other creditors.
    On final hearing on bill to set aside bill of sale.

      Mr. TJlysses G. Styron, for the complainant.

      Messrs. Garrison ,& Voorhees, for the defendants.
   Leaming, V. C.

I regret that I am unable to accept as true the testimony of Miss Crockett or Miss Armitage. While the purchase of the property on South Carolina avenue was made in the name of Miss Crockett I am unable to believe that the purchase was made solely in her interest. It is reasonably apparent that some secret agreement existed between her and Miss Armitage touching the benefits to flow from the purchase of that property which both have concealed at the hearing. Their inability to give convincing testimony touching facts which should have been within the knowledge of both of them, had the transaction been as they claimed, almost destroys the value of all of their testimony. About all that Miss Crockett appeared to know was that she purchased the property on the “second mortgage plan;” she did not eyen know that she received on the second mortgage enough money to enable her to make the $5,000 cash payment to her vendor and to retain for her own use a surplus, and yet in fact she received from the second mortgagee $1,217 as such surplus. Her testimony touching her lease to Miss Armitage disclosed that she did not even know what rent had been paid under that iease. All this might have been explained by the fact that Miss Armitage was the moving spirit in management; but Miss Armitage’s apparent knowledge of these matters was no less incomplete and inaccurate. It seems impossible to escape the conviction that some undisclosed secret agreement in fact existed between these two ladies. The truth probably is that the purchase was in the nature of a joint enterprise which was managed by Miss Armitage in the name of Miss Crockett.

As between the present complainant and defendant Steelman, who was the innocent and pronounced victim in the purchase, all this would be measurably immaterial in determining his status as a purchaser of the furniture, but for the fact that he admittedly agreed, at the time of the purchase of the furniture, to allow the furniture to remain for the use of Miss Armitage for a period of time. If this entire enterprise was the joint adventure of Miss Crockett and Miss Armitage, it may be urged that allowing the furniture to remain for the use of Miss Armitage was, in force and effect, the same as allowing it to remain for the use of Miss Crockett, the apparent vendor. Indeed the correspondence between defendant Steelman and Miss Armitage may well be regarded as affording notice to the former of some mutual interest or rights of these two ladies.

Section 11 of our statute of frauds (2 Comp. Stcot. p. 2617) provides that every conveyance or transfer of goods, chattels or things in action made in trust for the use of the person making the same, shall be void as against creditors, and the following section renders conveyances or transfers of real estate or chattels void if made with intent to hinder, delay or defraud creditors. Under these provisions it has been frequently held by the courts in England and in this country that the law does not permit a debtor, in failing circumstances, to sell his land or chattels and make an absolute conveyance thereof by instrument without reservations, and at the same time reserve to himself the right to possess or occupy the land or chattel for a limited time, for his own benefit. In such circumstances it is held that the reservation of the right of possession is inconsistent with the terms of the conveyance and must be regarded as a secret trust in favor of the grantor even though a full consideration is paid by the purchaser and no trust or fraud is in fact intended. Such conveyances are therefore held to he absolutely void under the statute referred to. This is the view presently entertained by our federal supreme court, and is stated in Lukins v. Aird, 6 Wall. 78, as follows:

“It is not important to inquire, whether, as a matter of fact, the defendant had a purpose to defraud the creditors of Aird, for the fraud in this case is an inference of law, on which the court is as much bound to pronounce the conveyances in question void as to creditors, as if the fraudulent intent were directly proved. There is no necessity of any general discussion of the provisions of the statutes of Elizabeth, concerning fraudulent and voluntary conveyances, as this suit is within narrow limits, and the principle on which we rest our decision too well settled for controversy. The law will not permit a debtor in failing circumstances to sell his land, convey it by deed, without reservations, and yet secretly reserve to himself the right to possess and occupy it for a limited time, for his own benefit. Wooten v. Clark, 23 Miss. 75; Arthur v. Com. & R. R. Bk., 9 Sm. & M. 394; Towle v. Hoit, 14 N. H. 61; Paul v. Crooker, 8 N. H. 288; Smith v. Lowell, 6 N. H. 67. Such a transfer may be upon a valuable consideration, but it lacks the element of good faith; for while it professes to be an absolute conveyance on its face, there is a concealed agreement between the parties to it, inconsistent with its terms, securing a benefit to the grantor, at the expense of those he owes. A trust, thus secretly created, whether so intended or not, is a fraud on creditors, because it places beyond their reach a valuable right — the right of possession — and gives to the debtor the beneficial enjoyment of what rightfully belongs to his creditors.”

But although this view is adopted in Scott v. Hartman, 26 N. J. Eq. 89, 92, it cannot be here accepted at this time. In Muchmore v. Budd, 53 N. J. Law 369, 390 et seq., our court of appeals has adopted the view that the circumstances referred to should not be deemed adequate to render .such a transfer void per se, but should be regarded as only a badge of fraud to be considered in connection with other circumstances of the case in determining the good faith of the conveyance or transfer.

Two elements must concur to render such a conveyance valid as against creditors. It must be made upon good consideration and must be bona fide. Sayre v. Fredericks, 16 N. J. Eq. 205, 209. In the present case it cannot be doubted that the conveyance was made upon a good consideration. Defendant Steelman was a creditor to an amount far in excess of the value of the goods purchased by him, and I am unable to doubt the truth of his testimony to the effect that he had become satisfied that the purchase of the furniture afforded him his only opportunity to get anything, and that he in fact made the purchase and gave a credit for the full value of the goods purchased. When the conveyance is not voluntary, but is upon an adequate consideration, the rule is that in order to overthrow it, a fraudulent intent must be made to appear. Haston v. Castner, 31 N. J. Eq. 697, 705. And to this rule must be added the further requirement that it must also appear not only that the fraudulent intent existed upon the part of the vendor but such intent must have been participated in by the vendee or he must have been cognizant of or chargeable with knowledge of the unlawful motive of his vendor, when he accepted the conveyance. Roe v. Moore, 35 N. J. Eq. 526; Muirheid v. Smith, Ibid. 303, 308; Mechanics National Bank v. Northrup, 22 N. J. Eq. 58, 60. It is difficult to escape the conviction that the im~ polling motive of Miss Crockett in making tlic conveyance in question was the opportunity thereby afforded to secure the use of the chattels .for a period of time for herself or for her associates in the general enterprise, and defendant Steelman undoubtedly knew of his debtor’s financial distress; but I am unable to reach the conclusion that he transcended his lights as a creditor under the circumstances then existing. His impelling motive and sole aim was to get what he could on account of his claim. It was his debtor’s right to prefer her creditor and it was the creditor’s right to seek and accept preferment — Roe v. Moore, supra (at p. 527) — and in the absence of any motive or purpose other than to collect a portion of the money due him he was within his rights. The consent to allow the goods purchased to remain on the premises for a time is, as already stated, primarily a badge of fraud, but does not in itself constitute fraud, and the evidence • satisfies me that his only reason for granting that privilege is found in the circumstance that it did not inconvenience him and rendered the accomplishment of his primary purpose more easy; I am fully satisfied that the idea or motive of extending to his debtor a means of enjoying a valuable right at the expense or detriment of other creditors was not entertained by him; such purpose may have been entertained by the debtor, but was not, in my judgment, shared by him. My views touching the difference in the position of a creditor seeking to collect his money, and that of a purchaser who has no existing interest to protect, are fully stated in Atlantic Refining Co. v. Stokes, 77 N. J. Eq. 119, and need not be here restated.

I am obliged to advise a decree dismissing the bill.


author: Leamihg, V. C.

text:
    Mary A. Wootton and Henry J. Dynes v. Michael Seltzer et al.
    [Submitted January 6th, 1914.
    Determined May 8th, 1914.]
    1. A sealed agreement, stating a consideration of one dollar and the discontinuance of a litigation pending between the parties, rested upon a sufficient consideration to support the restrictive covenants therein contained, aside from the consideration imported by the seals of the parties.
    2. The record of an agreement or covenant relating to building restrictions, and purporting to bind heirs and assignees, afforded notice of its terms to the covenantor’s successors in title, and a deed in the chain of title from the covenantor, made subject to such building restrictions as appeared of record, was also notice of such agreement or covenant.
    ■ 3. A purchaser of land may enforce against his vendor a covenant of the vendor not to build upon his remaining land, except as specified in the covenant, provided the restriction so imposed does not contravene principles of public policy, and it is not necessary to its enforcement that such a covenant be embodied in or form a part of a deed of conveyance from the covenantor to the covenantee.
    4. An agreement or covenant between two property owners to restrict buildings to a certain line, expressly made to bind their heirs and assigns, was enforceable by a purchaser from one party against a purchaser from the other party, with notice of the agreement, it being unnecessary to regard such covenants as creating easements, but the equitable right to enforcement is ti-ansferable as a part of the land to which it is attached and enforceable upon the equitable principle of preventing one having knowledge of the just rights of another from defeating such rights.
    5. A restrictive covenant of a purchaser for the benefit of remaining land of his vendor is enforceable by a purchaser from the vendor of the land, for the benefit of which the covenant was made, against a purchaser of the restricted land, chargeable with notice of the covenant.
    On final hearing on bill for injunction to restrain violation of restrictive building- covenants.

      Mr. Harry Wootton, for the complainant Mary A. Wootton.

      Messrs. Wilson é Carr, for the complainant Henry J. Dynes.

      Messrs. Bourgeois .rf Coulomb, for the defendants.
   Leamihg, V. C.

I think it unnecessary to here consider whether complainant is entitled to the relief sought for the protection and enforcement of a general building or development scheme, for I am convinced that complainant is entitled to enforce against defendants the express covenants made by defendants’ predecessor in title with complainant’s predecessor in title in an agreement dated May 12th, 1899.

On May 12th, 1899, while a suit was pending in this court by the .Absequan Hotel Company, complainant’s predecessor in title, against -James B. Reilly, defendants’ predecessor in title, and the common grantor of the respective parties to this present suit, which former suit was to prevent Reilly from erecting buildings at the very spot where the present defendants have, during the pendency of this suit, erected a building, a compromise settlement was made and reduced to writing and executed by the respective parties and acknowledged by them and duly recorded. By that instrument the complainant hotel company allowed the defendant to maintain the buildings then on the controverted twenty-feet, strip for a period of one year from that date, and defendant agreed to remove the buildings on one month’s notice after the expiration of one year. The agreement, after reciting, among other things, that defendant Reilly had theretofore covenanted with complainant hotel company that the land now in question should not have erected thereon any building nearer than twenty feet from the front property line of St. Charles Place, concluded as follows:

“It being expressly agreed and understood that said covenants and restrictions as hereinabove recited are binding in all things upon the parties hereto, their heirs and assigns, and upon the land apd premises hereinabove described.”

The terms of this agreement are clear and explicit. It imposes upon Reilly, as owner of the land then owned by him and noAAr owned by defendants, an obligation to refrain from the erection of any building in disregard of the twenty-feet building line for the protection of which a suit, was then pending, and defines the stipulation as binding on the respective parties and their heirs and assigns and upon tne land referred to. It was precisely that right for Avliich the suit thou pending Avas brought, and by reason of the engagements made by Reilly in that agreement the then pending suit against Beilly Avas discontinued and a concession made by the complainant, therein (the present complainant’s grantor), to the effect that for one year complainant would not disturb the buildings Avhich Avere then located in violation of the defined building line. The agreement is sealed and the consideration stated in the agreement is “one dollar and the discontinuance of said proceedings.” That Avas clearly a sufficient consideration to support the covenant aside from the consideration imported by the seals of the parties. But by reading the entire agreement it will adequately appear by the recitations that •the covenant there made by Beilly to preserve the tAvent3r-feet building line was a re-engagement on his part to faithfully perform an engagement of the same nature which he had thereto-? fore made Avith the complainant hotel company, or in behalf of complainant’s land, at the time he had conveyed to the complainant hotel company lands on the same street. These prior engagements of Beilly, as recited in the agreement, do not purport to be in the exact language contained in the prior .deed from Beilly to the complainant hotel company. But, .in the deed to the complainant hotel company, folloAving the covenant touching the twent3r-feet building line, the following language appears:

“It being the purpose of this restriction to preserve an open space for view and air of twenty feet in width between the northerly line of the land above described and the Atlantic ocean,”

and in a prior deed made to Wootton Beilly had expressly coaunanted to insert a coA enant protecting the building line in all subsequent deeds made by him. It thus appears that Avhile the deed to the complainant hotel company contained no clause Avherein Reilly expressly eoA7enanted to insert similar covenants in all subsequent deeds, it did contain a clause stating that the twenty-feet open strip was to extend to the ocean. The restatement of the original covenants in the agreement of 1899 may therefore be appropriately regarded as a statement of their substance as the parties originally intended and understood them, and they thus appear to be a reasonably accurate statement of them as they existed in the deed from Reilly to the complainant hotel company. If. any doubt could be said to have theretofore existed as to whether the clause m the deed from Reilly to the hotel company which declared the purpose of the restriction to be to preserve the open space twenty feet wide to the ocean was an engagement upon the part of Reilly to keep- it open, that doubt was fully removed by the terms of the agreement of 1899.

The present complainant is now tire owner of the land which was owned by the complainant hotel company in the former suit, this bill having been heretofore dismissed as to complainant Wootton. The present defendants are now the owners of the very land to which the agreement of 1899 related, and its record has afforded them with notice of its terms. It also appears that one of the deeds in the chain of title from Reilly to defendants contains the following: “Subject to- * * * such boardwalk and park easements and building restrictions as appear of record.” This recitation also charges defendants with notice of the covenants in the agreement of Reilly already referred to.

There-appears to be no doubt of the right of a vendee of land to enforce against his vendor a covenant of the vendor that he will not build upon his remaining land except in a manner specified in the covenant, providing the building restriction thus im-' posed is not of a nature to contravene principles of public policy. Brewer v. Marshall, 19 N. J. Eq. 537. Nor does it seem essential to the -enforcement of such a covenant that it be embodied in or form a part of a deed of conveyance from the covenantor to the covenantee. Kirkpatrick v. Peshine, 24 N. J. Eq. 206. And no satisfactory reason can be assigned why a mutual agreement between two property owners on a given street for the purpose of establishing or maintaining a building line wherein the parties engage to bind themselves and their land to the observance of the building line should not be enforceable in a court of equity against either at the instance of the other. And when such agreements are expressly made to hind the parties and their heirs and assigns the equitable right -to the enforcement of the agreement by a purchaser from one party against a purchaser from the other partjr with notice of-the agreement would necessarily exist. It is unnecessary to regal’d such covenants as creative of easements; the equitable right to enforce the covenant is transferable as a part of the land to which it is attached (Coudert v. Sayre, 46 N. J. Eq. 386, 393, 395) and may be enforced upon the equitable principle of preventing one having knowledge pf the just rights of another from defeating such rights. Brewer v. Marshall, 19 N. J. Eq. 537, 543; Nicoll v. Flenning, L. R. 19 Ch. Div. 258, 266.

There can be little, if any, difference in principle between a restrictive covenant made by a vendee for the benefit of remaining land of his vendor, and one made by a vendor touching his remaining land for the benefit of his vendee. Both are held to be enforceable by a purchaser of the land for the benefit of which ihe covenant has been made against a purchaser of the restricted land who is chargeable with notice of. the covenant. As to the former class see Coudert v. Sayre, 46 N. J. Eq. 386; DeGrey v. Monmouth Beach, 50 N. J. Eq. 329; Hayes v. Waverley and Passaic Railroad Co., 51 N. J. Eq. 345, 348; Roberts v. Scull, 58 N. J. Eq. 396; Hemsley v. Marlborough Hotel Co., 62 N. J. Eq. 164; S. C. affirmed, 63 N. J. Eq. 804; McNichol v. Townsend, 73 N. J. Eq. 276; Bowen v. Smith, 76 N. J. Eq. 456; Sailer v. Podolski, 82 N. J. Eq. 459. As to the latter class see Brewer v. Marshall, 19 N. J. Eq. 537; Coudert v. Sayre, supra (at p. 391); Kirkpatrick v. Peshine, 24 N. J. Eq. 206 (an agreement by a vendor with his vendee made after sale of the land); Leaver v. Gorman, 73 N. J. Eq. 129, 131; Hyman v. Tash, 71 Atl. Rep. 742, 744; Watertown v. Cowen, 4 Paige Ch. 510; Mann v. Stephens, 15 Sim. 377.

It is urged that, complainant has violated the covenant by at times placing screens under the porch of his building and thereby obstructing the view over the twenty-feet building line, and cannot, in'consequence, be heard to complain of defendants’ violation of the covenant. 1 am unable to find that the covenant has been violated by complainant. ■

An application of complainant for a preliminary injunction on the present bill was refused ; but in the opinion then filed it was stated that should defendants erect their proposed building on the restricted territory during the pendency of the suit, they would do so at their peril, and the bill could, in such event, command mandatory relief if sustained at final hearing. The building has, notwithstanding, been erected pending the suit, and I will, accordingly, advise a mandatory injunction for the removal of such parts of the building as have been erected within twenty feet of the property line of St. Charles Place. Only porches and bay windows constructed in accordance with the provisions of the restrictive covenant can be permitted within the restricted territory.


author: Beaming, Y. C.

text:
    Charles B. Hatch v. Clara Mae Hatch.
    [ Submitted February 24th, 1914.
    Determined February 26th, 1914.]
    In a suit for divorce on the ground of desertion, where the parties have been separated for over two years, and during that entire period the husband has been a resident of this state in the very place where the separation occurred, no suit has been commenced by the wife asking for his support, and no new need or changed condition of the wife is shown to have arisen, alimony pendente Ute should not be granted, in the absence of a reasonably clear showing that the husband has in fact been the deserter, or unless some satisfactory reason is given for the failure of the wife to earlier seek the relief to which she would have been entitled had her husband in fact been the deserting party.
    On petition for divorce. Hearing on petition of defendant for alimony pendente lite.

      Mr. David O. Watkins, for the petitioner and cross-defendant.

      Mr. William Ham's, for the defendant and cross-petitioner.
   Beaming, Y. C.

Both parties seek a divorce; both allege desertion for two years last past. The only difference in the present mutual desires of the parties is that one wants a divorce with and the other without alimony. The affidavits filed by the respective parties demonstrate nothing. Every material averment made by either is denied by the other; they even disagree as to whether, during a specific period within the two years of alleged desertion, they engaged in sexual intercourse. It is clearly impossible to ascertain the truth from these affidavits.

The obligation of a husband to support his wife may be said to presumptively continue as long as the marital relation continues. But where, as here, the parties have been separated for over two years, and during that entire period the husband has been a resident of this state in the very place where the separation occurred, and no suit has been during that period filed by the wife asking for his support, and no newr need or changed condition of the wife is shown to have arisen, I am convinced that an order for alimony pendente lite should not be made in the absence of a reasonably clear showing that the husband has in fact been the deserter, or some satisfactory reason given for the failure of tire wife to earlier seek the relief to which she would have been entitled had her husband in fact been the deserting party.

A final hearing can be had at an early date and the truth can be then more accurately ascertained; if then found just the order for alimony can be made to run from this date; but on the present record. I am unwilling, to advise an order for alimon3r pendente lite. A counsel fee has already been awarded the wife.