author: Bentley, V. C.

text:
    Otto Venino, complainant, v. August Naegele and Louise Naegele, defendants.
    [Decided January 29th, 1926.]
    Where a memorandum of a sale of land provided that a “contract to be drawn up and signed within the next few days,” and no contract was so drawn and signed, this language indicates that other features left unsettled are to be settled by further negotiations, and that the bargain is not completely determined between the parties, and therefore a bill for specific performance of the memorandum must be dismissed.
    On bill, &c. On bill for specific performance.

      Mr. J. Emil TPalscheid, for the complainant.

      Mr. Robert Carey, for the defendants.
   Bentley, V. C.

The bill is based upon the following memorandum:

“December 3d, 1923.
Received from Otto Venino, Jr., check for $200 as deposit on purchase by him from us of property at the southwest corner of Hudson avenue and Lewis street, Town of Union, N. J. Plot 75 x 100 feet with a three-story frame building thereon, for the sum of nineteen thousand two hundred and fifty dollars [$19,250]. We will leave a nine thousand dollar first mortgage on the house 147 Hudson avenue for five years at six per cent, interest payable January 1st and July 1st of each year; also a one thousand dollar mortgage on the vacant plot for one year with privilege to pay off at any time. Balance of purchase price to be paid in cash on closing of title which will be on or 'before March 1st, 1924. Contract to be drawn up and signed within the next few days.
August Naegele [Seal],
Louise Naegele [Seal],
Witness
R. H. Pattekson.”

The proofs disclose that on the evening of the date of the foregoing instrument the complainant, accompanied by the subscribing witness thereof, called at the home of the defendants, who are husband and wife, and far advanced in years, and bargained with them for the purchase of the property mentioned in the memorandum. The above paper was then prepared and the signature of the owners secured, but neither of them acknowledged the same. The lack of acknowledgment on the part of the married woman would not cause me any difficulty, in view of the proofs as to what occurred at the time of the negotiations and the decision of the court of errors and appeals in Young v. Paul, 10 N. J. Eq. 401. If the instrument in question were enforceable at all I would not hesitate to decree indemnity from the husband or abatement of the purchase price.

My difficulty grows out of the manifest incompleteness of the instrument upon which the complainant relies. This case must be decided under the rationale of the very recent pronouncement of the court of errors and appeals in Tansey v. Suckoneck, 98 N. J. Eq. 669. In that case the deficiencies in the alleged contract were perhaps a little grosser than in the one sub judice, but several of the missing elements mentioned by the appellate court were of the same variety to be found here. Eor example, the memoranduih in the case at bar concludes with the sentence, “Contract to be drawn up and signed within the next few days.” The court of errors and appeals, in the case just cited, say:

“The basis for decision in the present ease is that the paper is on its face preliminary and not final, and by its very language indicates that other features left unsettled are to be settled by further negotiations, and this requires the application of the well-settled and fundamental rule that to support a decree of specific performance for the sale and purchase of real estate “the bargain must have been completely determined between the parties and its terms definitely ascertained.” * * *

In the document under examination it will have been observed that many of the usual provisions of contracts for the purchase and sale of real estate are omitted. As was pointed out in the opinion in the Tansey Case, it does not disclose what all the terms of the formal agreement were to be; neither does it specify whether or not it was to contain provisions for default of payment of interest and taxes. No mention is made of the character of deed by which the title was to be conveyed. These defects I feel are fatal to the complainant’s suit.

I have read and re-read the elaborate brief submitted by complainant’s counsel, which shows the most careful preparation, and I have reluctantly come to the conclusion that I cannot follow it. I believe that the defendants axe sick of their bargain and are seeking a way out of it, but in 'view of the clear and controlling opinion by which I am guided I feel that the bill must be dismissed. Counsel has cited many authorities to the effect that a memorandum such as the one upon which the bill is based will be deemed to have been a binding contract “whenever the contract appears to have been complete.” With that law there can be no quarrel, but in view of the parallel I have already indicated between the facts in this case and those in Tansey v. Suckoneck, supra, I do not see how I can say that the memorandum contains all the particulars of the transaction that was contemplated by the parties. My disappointment is somewhat tempered by the fact that the complainant is a solicitor and counselor of this court of many years’ standing, who was present and either prepared the memorandum, or supervised its preparation, in person. The rationale of this opinion is not new law, and the courts cannot be blamed if trained members of the bar disregard its decisions, perfectly plain upon their face, in the transaction of their affairs.

I will advise a decree dismissing the bill of complaint, but I will not assist the defendants in compensating their counsel, because of the fact to which allusion has already been made, namely, that they are taking advantage of a highly technical defense to avoid their agreement.


source: Caselaw Access Project

license: Public Domain

text:
    Elizabeth Laune, complainant, v. Robert Chandless et al., defendants.
    [Decided January 22d, 1926.]
    In a suit to enforce a contract of a decedent to make a will in favor of A, where it appears that in 1906 A left her home and took up her residence with the decedent and his wife, who were aged people, and when the. wife died continued to live with and look after the decedent until his death in 19221, and where it also appeared that the decedent in his lifetime entered into a contract with A whereby he bound himself to leave her his property in consideration of her services, and executed a paper purporting to be his last will and testament leaving her all his property in consideration for services rendered in keeping house for him after the death of his wife, which will, however, was not attested by two witnesses and was therefore ineffective as a will, and the contract was further proved by oral testimony, some of which was from disinterested witnesses, and no evidence was produced to the contrary, the complainant has met the unusual burden under which she labored in this peculiar sort of a case, and is entitled to a decree.
    On bill, &c.

      Messrs. Isaacs & Gunther (by Mr. Lionel Isaacs), for the complainant.

      Messrs. Ziegener & Lane (by Mr. August Ziegener), for the defendants.
   Bentley, V. C.

This is a bill to enforce a contract of a decedent to make a will in favor of the complainant.

In the year 1906 the complainant left the home in which she was then living and took np her residence with the decedent, Charles J. Ohandless and his wife, who were aged people at the time, and took upon herself the work of their home. The wife died some time later, and the complainant continued to live with and look after the decedent and his home until his death in the year 1922. Her case is, that in his lifetime he entered into a contract with her whereby he bound himself to leave his property to her, in consideration of her services in caring for him and his home, as already mentioned. In this she is corroborated, first, by the. testimony of other witnesses such as her niece and Eobert M. Souvay, who is not subject to the criticism or bias that might be urged with regard to the testimony of the complainant’s niece. In view of the fact that no evidence was produced by the defendants in contradiction of the foregoing, I would be inclined to hold that the contract had been proved by the witnesses produced in the complainant’s behalf. They presented good appearances, their stories were credible on their respective faces, and while I am not unmindful of the scrutiny with which such testimony is always scanned, the fact remains that contracts of this nature are frequently entered into. But the oral testimony was powerfully corroborated by the production of an instrument purporting to be the last will and testament of the decedent, in which he said, in part: “In consideration for services rendered in keeping house for me since the death of my wife without any compensation,” all his property was given to the complainant. This will, however, was not attested by two witnesses in conformity with the twenty-fourth section of the act entitled “An act concerning wills.” Therefore, of course, the document is ineffective as a will, and, hence, the necessity for this suit. Taken in connection with the many conversations in which the decedent acknowledged the promise that he had made the complainant, it seems to me impossible to come to any other conclusion than that the contract is established, notwithstanding the language contained in Vreeland v. Vreeland, 58 N. J. Eq. 389; Cooper v. Colson, 66 N. J. Eq. 328, and innumerable other cases.

I find it said in complainant’s brief that, at the hearing, I indicated that the language already quoted from the will merely indicated a reason for the generosity of the testator in making the complainant the beneficiary of his estate. I have no memory of saying so, nor can I find any record thereof in the transcript of the testimony with which I have been furnished. It may have been that I gave utterance to some such statement for the purpose of drawing a reply thereto from counsel, but it is ridiculous that I should have made any such absolute decision as the brief says I did, in view of my remark when the will was admitted in evidence, namely: “I will admit it for the reason that.it is, of course, strongly corroborative of the theory of the complainant’s case that there had been a contract to devise.” Certainly, when a party maintains that another agreed to sign a document in .consideration of some definite benefit moving from the latter to the former, it tends to corroborate him when he produces the very instrument in question which, by its terms, declares it to have been done in consideration of the receipt of that benefit. It is true that human ingenuity can devise hypotheses to account for the creation of the instrument by reason of some other motive, but matters of judgment are not formed upon such a basis, as Lord Chancellor Thurlow said in Fox v. Mackreth, 2 Cox 320. By every dictate of reason and common sense it is more likely that the decedent executed what he meant to be a will because he was under moral and legal obligation so to do.

It is true that I expressed some doubt at the close of the proofs as to the complainant having sustained the unusual burden under which she labored in this peculiar sort of case. That uncertainty arose, however, from a misconception of the degree of conviction that the surviving party to such a contract must establish in the mind of the court. I had an exaggerated conception of the rule. This woman has met the test enunciated by Chancellor McGill and Mr. Justice Eort in the cases cited. That being so, there is presented the spectacle of a woman fifty years of age who has devoted herself for a period of half a generation in the services of an aged man, and in such a manner that, within two months of his death, he recognized his obligation by preparing an instrument that he intended to operate as a will, to redeem the pledge of so many years’ standing, and to confer upon the complainant the reward she had so richly earned and to which she was so justly entitled.

I have been greatly concerned about the decision of this case. It appeared to me at the close of the final hearing that stronger proof should have been available in the complainant’s behalf, in fact, correspondence has been had with the respective solicitors looking to that end. It appears that no further witnesses are procurable. My ultimate determination is that my first impression was erroneous, and that sufficient has been shown to justify the bill.

It is not denied that such a contract partly performed is enforceable, notwithstanding the statute of frauds, under either of the theories which account for part performance taking an oral contract out of the statute, as discussed in Pom. Bq. Jur. § 1409. Vice-Chancellor Griffin has recently collected some of the authorities to this effect in McNamara v. Bohn, 108 Atl. Rep. 764 Furthermore, I think the rule is well expressed and justified by the authorities cited in 25 R. G. L. 591, where it is shown that execution of a will, in pursuance of such an agreement as the one in this case, takes the contract out of the statute, and where it is further said: “It is immaterial that the instrument executed by the promissor is ineffectual as a will due to informalities in its execution.”

I will advise a decree in accordance with the prayer of the bill.


author: Bentley, v. C.

text:
    Harry Johnson, petitioner, v. Augusta Johnson, defendant.
    [Heard January 12th, 1926.
    Decided January 15, 1926.]
    1. Adultery is a serious charge, to be proved only by strong, clear and cogent evidence, and partakes strongly of the nature of a criminal proceeding and must be proved beyond a reasonable doubt.
    2. Evidence examined, and helé that the allegation of the defendant’s adultery is not established by the proof offered in this case.
    On petition for divorce. On petition for divorce on the ground of adultery.

      Mr. Herman Lipschiiz, for the petitioner.

      Mr. John B. Graf, for the defendant.
   Bentley, v. C.

The parties were married in 1919 and have lived in this state nearly all of their married life and more than the statute requires. They have one daughter, now about six years of age. Their lives appear to have run smoothly until the spring of the year 1924.

In August of 1923, a man named Siegred Olsan, a friend of the petitioner, came to board with the parties, apparently, at the suggestion of the petitioner. During the following winter or early spring the petitioner says that he began to grow suspicious of his wife and Olsan because of her attentions to his personal comforts around the house and some •whisperings that he overheard between them, the substance of which he did not give. In this he is not corroborated. Shortly afterwards his wife refused him the marital rights, and, eventually, confessed to him that all love for him had been dissipated. June 9th, 1924, his wife, without cause, left his home and did not return until the first or second week of the following month. She did, however, on July 1st, intervening, appear against him in the juvenile court for support. At that time strong efforts were made by the attorneys representing the parties to have hex return to her husband. This she refused to do, but did return to him, as just mentioned, at a later date.

The only testimony offered to support any act of adultery alleged in the petition was in the attempt to prove the commission of the offense on July 23d, 1924. On the preceding day she sought her husband’s permission to go out for the evening, whereupon he put her off with some excuse until his return from his work, and, in the meantime, communicated with a private detective and arranged to have her followed. That night she left the home and met Olsan, with whom she proceeded to New York City, where they boarded a passenger boat plying between New York and Atlantic Highlands. The operative who had followed them then returned to the home of the petitioner in Jersey City and acquainted him with what had been observed. The husband and his agent then proceeded to New York to await the arrival of the boat upon its return trip. At about eleven-thirty that night the boat landed, and the defendant and her companion left it arm in arm. They then returned to Jersey City, where they stopped at a Chinese restaurant, apparently for the purpose of securing something to eat.

The petitioner and the detective proceeded in an automobile operated by the latter and took up a position in the vehicle, from which they could watch any approach, not only to the home of the defendant, but to the house in which the alleged particeps criminis had secured a room, he having left the home of the parties when the defendant went away from her husband in the previous month. At.about five minutes after one, on the morning of the 28d of July, the defendant and Olsan were observed to come by a circuitous route to the house in which the latter lived, and enter the front doorway. Thereupon the petitioner went to a telephone to inform the operative’s employer, while the operative maintained a watch upon the doorway. Upon the arrival of the principal detective, he, the petitioner, and a police officer patroling that vicinity, entered the doorway through which their quarry had gone. There is some discrepancy in the testimony as to the layout of the vestibule of this entrance, but not of a nature to discredit the testimony of the petitioner and his witnesses. When they gained entrance they discovered the defendant and her companion iir the hallway, which was dimly illuminated, standing face to face and drawing back somewhat from each other. No conversation of any importance ensued, and the police officer arrested the defendant and Olsan and conveyed them to the nearest police station, where they were interrogated, and, finally, released, after Olsan had convinced the authorities that his home was in the building where he had been found, and that he and the defendant had not been lurking there for the purpose of burglary or thievery.

This completed the petitioner’s proofs. There was no evidence of any expressions of illicit affections, no1 holding of hands, no embraces, no kisses, no improper or indecent personal conduct, and no love letters at any time during the acquaintance of this man and woman. When they were found in the hallway their persons were not in contact, the one with the other, no articles of clothing were disarranged— in fact, even the woman’s hair and hat were not disturbed. The utmost that the paid operative could say against their conduct was that they walked arm in arm and were laughing and talking with great apparent animation and amusement coming to and return from the boat.

Of course, this case falls into the category of those where the petitioner relies upon circumstantial evidence to prove his charge. In this he has failed. The.opportunity to commit adultery on the morning of the 23 d of July was ample, the defendant and Olsan having been alone in the hallway for a period of twenty or twenty-five minutes; but the proofs are utterly lacking to convince any reasonable and impartial man of any criminal desire. That the woman was shockingly indiscreet in entering the hallway of the boardinghouse on a night in the middle of summer, when she could not even advance the excuse of inclemency of weather, is apparent. That her conduct was enough to arouse suspicion in the bosom of any husband is equally certain. But indiscretion is not punishable, and courts of justice do not act upon suspicion. Eor what purpose she entered this building I do not know, but it is certainly not proved that she accomplished her purpose if that purpose was to commit adultery.

Erom the time of the establishment of this court its members and the members of the court of errors and appeals have said and reiterated that adultery is a serious charge, to be proved only by strong, clear and cogent evidence. In Day v. Day, 4 N. J. Eq. 444, the chancellor quotes from the opinion of Lord Stowell in Williams v. Williams, 1 Hagg. Cons. 299:

“The only general rule to be laid down is, that the circumstances must be such as to lead the guarded discretion of a reasonable and just man to the conclusion, for it is not to lead a rash, intemperate judgment, moving upon appearances, that are equally capable of two interpretations.”

To the same effect is Berckmans v. Berckmans, 16 N. J. Eq. 122; affirmed, 17 N. J. Eq. 453. The court of errors and appeals there laid down the rule to be that a charge of adultery in a suit for divorce “partakes strongly of the nature of a criminal proceeding” and must be proved “beyond a reasonable doubt.” These opinions have been followed in innumerable cases, as late as Marchese v. Marchese, 98 N. J. Eq. 379. Reid v. Reid, 17 N. J. Eq. 101, is the same way. Vice-Chancellor Van Fleet reiterated the rule in Culver v. Culver, 38 N. J. Eq. 163. To the same effect are Hurtzig v. Hurtzig, 44 N. J. Eq. 329; affirmed, 45 N. J. Eq. 869; Osborne v. Osborne, 44 N. J. Eq. 257, reversing the decree of this court. There are many other applications of this rule.

It is unquestionably true that the defendant has been guilty of gross indiscretion, which might be otherwise interpreted if she was a woman of education and great refinement (Poynt. M. & D.)} but the utmost proved against her is, that while she was estranged from her husband she clandestinely met her alleged paramour ,and went with him upon an innocent journey to while away a summer evening and enjoy a brief trip upon a passenger steamer, which the proofs disclose contained no sleeping apartments or other private rooms within which adultery might have taken place, and that upon her return she most indelicately entered the common hallway of the boarding-house in which her companion had taken up his residence. These facts are certainly insufficient to convict her of the matrimonial offense of adultery in the early hours of July 33d, 1934 — the only act of adultery upon which proof has been submitted. This woman must be assumed to have been virtuous up to this time. Courts will not suppose that a hitherto chaste woman suddenly turns adulteress in the absence of strong proof. In the case of Alexander v. Alexander, 2 Swab. & T. 95, the full English divorce court refused tp believe those who professed to be eye-witnesses to an adultery committed by the defendant where there was no other evidence of any adulterous desire upon her part. And so, here, I cannot say that the evidence in this case satisfies the rule as to the measure of proof which is to be gathered from the cases already reviewed.

This case should never have been commenced upon the facts proved, or, rather, assumed to have been proved, for the purposes of this opinion, because many of them might have been disproved had the defendant been called upon to develop her defense. Perhaps the petitioner had ample ground to suspect his wife’s fidelity, but his counsel should have advised him of the weakness of his case, and if there was substance of his suspicions a more patient surveillance would have resulted in more substantial proofs. As Vice-Chancellor Van Fleet said in the Culver Case, supra:

"Adultery is always clandestine; it is generally committed in secret, and it rarely happens that direct proof of the fact can be obtained, but it is also true that parties living in adultery almost always, by their conduct towards each other, so plainly indicate their true relations as to furnish highly satisfactory evidence of their crime.”

So here. If the undoubted pleasure that this man and woman found in each other’s companionship was not the result of innocent causes, the proofs would have then, or within a short time, been at the disposal of the petitioner.

I will advise a decree dismissing the petition, but without prejudice.


text:
    Bessie Gordon and Sadie Hordes, complainants, v. Harold Kaplan et al., defendants.
    [Submitted March 26th, 1924.
    Decided April 14th, 1924.]
    1. One who; undertakes to establish fraud in the purchase and sale of real estate must do so by clear and convincing proof.
    2. Evidence examined, and held that the complainants have failed to prove that the defendant committed the fraud charged.
    On bill, &e.

      Mr. John W. Ochford, for the complainants.

      Messrs. Gross & Gross (Mr. Isaac Gross), for the defendants.
   Bentley, v. C.

The bill in this suit is designed to impress a trust on profits made by the defendants on a resale of real estate purchased by the defendant Lieberfeld from the complainants.

More than a year before the transactions involved the complainants listed their property with a firm of real estate brokers, the members of which are defendants herein, to be sold for $50,000. Later, the son of the complainant Mrs. Gordon was advised by Kaplan that it would be impracticable to secure $50,000, and it was agreed that $45,000 would be accepted. On April 17th, 1923, a contract to convey was drawn up by Gordon and signed by the complainants either that day or the day following, and an important fact in dispute is whether it was signed by the defendant Lieberfeld on April 18th or the 21st of that month. The defendants say that, immediately after signing the contract, Lieberfeld authorized Kaplan to resell, and thereupon, on April 20th, Kaplan offered the property to a man and his wife, named Herold, with whom he had previously transacted some business, and secured from them a deposit of $2,000 to purchase from Lieberfeld for the sum of $50,000. The theory of the complainants is that Kaplan knew at the time he secured the signatures to the first contract that he could provide a purchaser for $5,000 more, and that instead of protecting his principals he entered into a fraudulent conspiracy with Lieberfeld to have the latter secure title and divide with him the profits of their nefarious scheme.

There are some exceedingly suspicious facts connected with the conduct of the defendant Kaplan. Eor example, he originally put forward as the name of the purchaser one Pine, whose place was, subsequently, taken by Lieberfeld; but, it is explained, Pine and Lieberfeld had recently, in a joint adventure, made a profit in some real estate speculation, and Lieberfeld expected Pine to participate in the payment for the property of the complainants, and that the reason Pine’s name was, subsequently, dropped, was his absence on a business trip from his home. Again, it is shown that part of the deposit and purchase price paid by Lieberfeld was advanced by Kaplan; but the explanation of this is that when Lieberfeld explained his inability to finance the purchase from the complainants on account of the absence of Pine, Kaplan, to save the situation, offered to assist him to the extent of the $2,500 that he lacked to make up the necessary amount. In addition, it is strange that Kaplan did not, in a period of more than a year that he had this property for sale, offer it to Herold, and yet within two days, according to his own testimony, of the first contract being signed, he effected a resale to the Herolds whom he knew and with whom he had had previous experience. He also took from Lieberfeld a deposit of a thousand dollars on April 11th, but said nothing about this man, and represented Pine as the prospective purchaser. When facts such as these were brought to the attention of the complainants, it is not surprising that they should have felt that they had been defrauded of the difference realized on the two sales. But the difficulty is that alert as this court will be to prevent one from profiting by his fraudulent conduct, and even though direct evidence is unnecessary to make out the same, and witnesses will not be permitted to take refuge behind ridiculous stories, nevertheless one who undertakes to establish fraud of this character must make it appear by clear and convincing proof. In this case my mind is not so unalterably made up as to meet the above requirements. In other words, the complainants have not sustained the burden of proof.

It has also been attempted to prove that the sale to Herold was initiated prior to the original contract having become a binding instrument. It is not disputed that if Kaplan had completely discharged all of his duty to the complainants and bound a ready, willing and able purchaser to them, that he might immediately thereafter treat for a sale of the same subject-matter on behalf of the purchaser with anyone else. But the complainants say the contract of the parties here was not executed by Lieberfeld at the time Kaplan secured the promise of the Herolds to buy from Lieberfeld. The testimony upon this point from the complainants is not convincing and depends upon the memory purely and simply of a busy lawyer engaged in a great many transactions of a similar nature. On the other hand, there is, besides the testimony of the defendants, the indisputable evidence of Kaplan’s check in the way of deposit to Mrs. Gordon, and deposited in her account in the Commercial Trust Company on April 18th, 1922. From this it would seem more probable that the contract to convey to Lieberfeld was completely executed by the parties two days before the resale to the Herolds.

The testimony of Herold and his family, taken at its face value, would be demonstrative of the most fraudulent practices upon the part of Kaplan. The latter’s alleged slanderous story about Mrs. Gordon’s son’s behavior, together with the disgusting statement charged to have been made by Lieberfeld concerning his relations with Mrs. Gordon and a number of other facts, would stamp these two defendants as the most unscrupulous sort of characters. The attitude of Herold and the powerful motive he had for the deepest animosity against these men would compel any court to be exceedingly cautious in giving effect to his story. I find myself unwilling to give the credence to his story that is necessary to meet and overbear the perfect manner in which the proofs of the defendants match up and are borne out by the documentary evidence in the rather complicated transaction of the parties. It is incredible that in this long course of negotiations there would not have been present, even under the best laid and most carefully earried-out scheme, some slip that would have been fatal to the defendants. The complainants have failed to prove that while still negotiating, and before they were bound by a valid contract to convey to Lieberfeld, Kaplan secretly substituted another purchaser between the complainants and the Herolds.

I will advise a decree dismissing the bill as to all the defendants.


text:
    Alderwin S. Thomas, complainant, v. Cornelius Flanagan and Mary Flanagan, defendants.
    [Decided February 26th, 1926.]
    Where a certificate of acknowledgment of a married woman on a contract for sale of lands does not state that the notary “first made known to her the contents thereof,” the acknowledgment is fatally defective, and cannot be corrected by testimony at the hearing to prove that the statute had been complied with.
    On motion to strike out a bill.

      Mr. Atwood G. Wolf, for the complainant:

      Messrs. Darling, Barnes <& Dowden, for the defendants.
   Bentley, V. C.

On April 3d, 1925, complainant’s assignor entered into a contract to purchase real property. The agreement was reduced to writing, and the complainant seeks specific performance thereof. Two reasons are assigned by the defendants for their motion, one being that the bill alleges upon its face that the defendants have not at any time been ready, willing and able to convey to the complainant. With this I have no difficulty. The defendants seek to draw the conclusion from this language that the complainant means only that the defendants have never been able to make title. That is not so. It means just what it says upon its face, to wit, that whether or not they have ever been able, they have never also been ready and willing to perform their contract. Whether or not they have ever been able and willing, they have never been ready. Eurthermore, it is within the undoubted power of this court to decree specific performance of such a contract with application of the purchase-money to pay the outstanding liens, or require compensation for deficiencies or indemnity. Stein v. Francis, 91 N. J. Eq. 205.

The other objection, while highly technical, is more troublesome. Both of the defendants, who are man and wife, signed the contract, but the certificate of acknowledgment is in the following unsatisfactory form:

“State of New Jersey, County of Hudson, ss.:
Be it remembered that on this 7th day of April, 1925, before me, the subscriber, a notary public of New Jersey, personally appeared Cornelius Flanigan, who, I am satisfied, is the grantor in the within agreement named; and I, having first made known to Mm the contents thereof, and did acknowledge that he signed, sealed and delivered the same as his voluntary act and deed, for the uses and purposes therein expressed:
And the said Miary Flanigan, being by me privately examined, separate and apart from her husband, did further acknowledge that she signed, sealed and delivered the same as her voluntary act and deed, freely, without any fear, threats or compulsion of her said husband.
William Daly,
Notary Public of New Jersey.”

Chapter 37 of the laws of 1918 provide that no estate of a married woman of lands in this state shall pass by her deed or conveyance without a previous acknowledgment before an appropriate officer, “such officer being satisfied she is the person named in such deed or conveyance and having first'made known to her the contents thereof, and a certificate thereof written on, or under, or annexed to the said deed or conveyance, and signed by the officer before whom it was made.” Comparing the language of the certificate with that of the statute, it will be seen that while the acknowledgment of the husband was unexceptionable the certificate of the acknowledgment of the wife is defective, in that it does not state that the notary “first made known to her the contents thereof.” This I consider to be fatal. I agree thoroughly with counsel for complainant that a substantial compliance with the act is sufficient. Meeks v. Bickford, 95 N. J. Eq. 177; affirmed on that ground in 96 N. J. Eq. 321. This, however, is not a virtual compliance with the requirements of the act, but, on the contrary, is a distinct omission to certify one of the vital provisions thereof. Neither can I agree with counsel that the omission may be corrected by evidence at the final hearing. It will have been observed that the legislature has required that a certificate of the publication of the contents of the contract shall have been made and attached to the instrument. In Koperski v. Wira, 97 N. J. Eq. 88. Vice-Chancellor Griffin said that testimony could not be substituted at the final hearing to prove that the statute had been complied with at the time of execution. It is argued that that case is distinguishable from the one at bar, because in the former there had been no certificate attached to the contract of any kind, either good or defective. This makes m> difference, because every necessary provision of the statute must be complied with in the certificate (not, I agree, in any precise or predetermined form but in substance), and the failure to do so as to any one of the requirements is a fatal omission that cannot be supplied at the hearing. As to this, there was no certificate. I think there is sufficient in the acknowledgment to show that the notary was satisfied that the woman was the person named in the contract, but that does not cure the other defect. None of the authorities cited by complainant’s counsel • support the contention that this defense is not fatal. They do hold that inadvertent mistakes in a word, grammatical construction or typographical error can be explained. They do not in any way indicate that failure to certify a fact, which the legislature has required shall be certified upon the instrument itself, or a document attached thereto, is of no moment. This clear requirement is of the very essence of the intention of the legislature, and its absence renders the attempt to take acknowledgment of the wife a nullity.

Complainant’s counsel seeks to invoke the maxim of clean hands. That rule is applicable only to the conduct of the actor. Pom. Eq. Jur. § 897. These defendants did not “come” into court, they were brought in.

This case is typical of so many caused by the present rising market in real estate, and I regret that I consider the defect to be fatal. I labored under the misapprehension that the entire title was in the husband, and had contemplated decreeing specific performance upon his part, with abatement or security. I find that to be impracticable, however, because the defendants hold by the entirety.

I will advise an order striking out the bill of complaint, for the reason I have explained.


text:
    Andrew McKlosky et al., complainants, v. Michael Kobylarz, defendant.
    [Submitted February 17th, 1926.
    Decided February 24th, 1926.
    Filed March o, 1926.]
    Evidence examined, and held that the deed in question, absolute on its face, was in reality a mortgage, and upon payment of the amount due thereon the complainants are entitled to have it declared of no effect as a deed.
    On bill to declare a deed, absolute on its face, a mortgage.

      Mr. Jacio Binzler, for the complainants.

      Mr. Vincent J. Paterno, for the defendant.
   Bentley, V. C.

. The complainants are husband and wife,. He is in his seventieth year and she is in the fifties. They are illiterate people, the husband having been a laborer all his life. He was born in that part of Austria which is now called Czechoslovakia, and is of an intellectual standing that might be assumed from these facts. The defendant is a man in the prime of life, of keen mind, good address, and engaged in the real estate and insurance business. The complainants had succeeded in accumulating sufficient funds and credit to embark upon the construction of a small two-family house upon a tract of land in a suburb named Wallington, fifty by one hundred feet in dimension. After the work had proceeded substantially they found themselves lacking, to the extent of about $1,500, the funds necessary for the completion thereof, and applied to the defendant, who advanced them that sum. He thereupon took from them, not the usual mortgage, but a deed dated October 30th, 1923, with a defeasance clause reading as follows:

“This deed is given as security of (sic) fifteen hundred ($1,500) dollars, to be paid in installments of not less than one hundred dollars every three months, with interest, on unpaid balances.”

There is considerable discrepancy as to the amount received by the defendant in pursuance of the foregoing, but it is admitted that little was paid and a gross default by the complainants. In this state of affairs the defendant, the following spring, was made a defendant in a suit to foreclose the-right of redemption under a tax lien. At that time the complainants were also in default on the payments due under a prior mortgage held by the building and loan association; taxes were in arrears, and repairs necessary for the preservation of the premises. To protect his previous investment of $1,500 the defendant discharged these indebtedness and then took another deed from the complainants, dated May 23d, 1924. This was an absolute conveyance of all the right, title and interest of the complainants in and to the above premises. Simultaneously therewith, all of the parties executed a paper called an agreement which, after reciting a description of the property and the above defaults, provided that if the defendant should sell the property within six months from that date any excess in the selling price above the moneys advanced and to be advanced by him should be paid to the complainants. No such sale was made within the time limited, and the defendant now claims the property as his own, free of any right or claim of the complainants.

I do not think he should be permitted to do so. In the first place, while it is not free of difficulty, I am inclined to believe that the complainants did not realize what they were doing when the second deed was executed. They are each unable to read, which, of course, forms an exception to the rule that one will not ordinarily be permitted to prove that he did not understand what appears over his signature. There are a number of reasons for my rather inclining to this belief. The case is replete with perjury, and I am convinced that each party was prepared to testify to anything if it would help his case. But the boldest and clearest instance of lying upon the witness-stand that I have ever known was the case of the witness Halka, the only one produced by the defendant to corroborate his story. The defendant says that after the delivery of the second deed he entered into an agreement of landlord and tenant with the complainants, under which they were to pay him the sum of $20 a month as rent. This is denied by the complainants. Halka testified to one single fact, which was that, at a date grossly at variance with the defendant’s testimony, he had heard the defendant ask the male complainant for a' monthly installment of rent, to which the latter replied that he had no money with which to make payment. When hotly pressed by complainant’s counsel on cross-examination, this man presented every evidence of being a perjurer. Finally, he exploded in a blasphemous ejaculation, for which I would have committed him had it not been clear that he was a man of foreign origin, unfamiliar with our practices and customs, to whom language of the kind he used is a normal part of his vocabulary; but his objection to having his story tested, his physical twisting and turning on the stand, the reddening of his face to the hair line, his attempts to fence, his delays in answering, and his hesitation when I asked him if he was telling the truth, all stamp him as a liar and cannot be accounted for on the score of honest nervousness.

It is true that a reputable member of the bar testified that he had explained to the complainants the contents of the documents which lie at the bottom of this case, as well as the consequences thereof. I have no doubt that he undertook to do so in accordance with the duties of his office, but I have great doubt that he accomplished his purpose. In the first place, he is a busy lawyer now attempting to recall exactly what he did at a time, nearly two years ago, in the performance of a routine duty that I suppose it is fair to assume he has discharged on more than a thousand occasions. Besides, he testified, himself and wanted it to be perfectly clear that he did not represent any of the parties, but was told by them what they wished to effectuate, and merely acted as the scrivener under whose direction the instruments were prepared and witnessed and took the acknowledgment of the parties. From this very fact I draw the conclusion that he was rather irritated, and would, naturally, he desirous of having the transaction completed and the participants therein out of his office. Furthermore, I do not believe that his memory is very clear, because, as it appeared to me in the court room, he nowhere in his direct or cross-examination clearly and specifically testified to having explained to the complainants the result and consequences of their acts. It was not until I pressed the subject home so as to make him realize the absence of it that he definitely and unmistakably told of doing any mofe than to take the acknowledgment in a perfunctory manner. For this I do not blame him, because it is entirely probable, as the proofs indicate, that the defendant shrewdly explained the transaction as he wished it to be, in the presence of the illiterate complainants, and the master quite naturally assumed that it was well understood and required nothing more than the usual explanation that the instrument was a deed conveying certain property for the nominal consideration of one dollar. Another significant feature is, that he testified to actions upon the part of the parties while in his office a few days before that would have been sufficient to have irritated any lawyer to the point where he would desire nothing so much as to be rid of them.

But irrespective of where the truth lies, this transaction cannot stand. It is a typical case for the interposition of this court. The parties dealt with each other in a more or less fiduciary relation, according to the testimony for the complainants. They relied upon the defendant. They were old and entering upon the age of senility, while he was young and vigorous in body and mind. They were intensely ignorant. He displayed evidence of a considerable training, as he glibly spoke of “the twenty days within which to file an answer,” and other ordinary expressions use frequently by lawyers that showed considerable knowledge of legal subjects. But, above all, there was that indefinable influence of the creditor over a debtor described by Professor Pomeroy in section 1193 of his work on Equity Jurisprudence, and in the foot-note and cases appended.

In the last place, the defendant had advanced money for the preservation of the complainant’s property, and for this he was entitled to security, but to nothing more, unless it is-clearly shown that it was so understood and agreed between the parties. The original relations between them were those of mortgagor and mortgagee, and under the proofs in this case there has not been enough established by the defendant to defeat the doctrine so zealously enforced in this court, which is sometimes expressed in the phrase, “Once a mortgage always a mortgage.”

I am not entirely clear as to the relation that the amount advanced by the defendant bore to the value of the premises on May 23d, 1924. The complainants produced a witness who testified to a value of $10,000 as of that date. The defendant, himself, testified to a value of about $8,000. I was poorly impressed by them, both as expert witnesses on value of real property and as lay witnesses. The defendant waa vitally interested, besides being unable to give reasons for his opinion, and the other did not seem to have any clear idea of the advance in values during the last two years. There was a building and loan mortgage upon the premises to secure the repayment of a loan of $6,000, which had been reduced, as I recall the meager testimony on the subject, to about $4,000 or $4,500. In addition, the defendant was entitled to- recover his loan of $1,500 and an unascertained sum, being the aggregate of those charges he had to pay after the making of what has been called the second deed. His testimony is that the last-mentioned amount now approximates $1,300, but must have been very considerably less. But, in any event, unless the complainants secure relief, and assuming even the valuation placed upon the premises by the defendant, he would profit at the expense of the former to a sum of at least upwards of a thousand dollars, and this I consider to be sufficient to cause this court to act, in view of the deplorable circumstances of the complaining parties.

If counsel for the complainants apprehends that any amendment is necessary to mold the pleadings to the theory followed on the final hearing, an order will he made to do so.

The complainants tendering themselves willing to redeem their land hy fully reimbursing the defendant, I will refer the matter to a master for the purpose of stating an account.


text:
    William H. Beattle, trustee under the last will and testament of Robert Beattle, 1st, deceased, complainant, v. Josephine B. Gedney et al., defendants.
    [Filed March 22d, 1926.]
    1. Under ordinary circumstances dividends on the stock of a corporation belong to the person entitled to the shares to which they are credited at the time the same are declared, but where there is a life interest in the stock, with remainder over, the life tenant is entitled to the enjoyment or disposition of his share of the company’s profits made and declared during the time that the income from the stock was his.
    2. Where a dividend was declared during the lifetime of a life tenant, out of the earnings of the company for the previous year, but was payable in installments three months apart, and after receiving the first installment the life tenant died, the estate of the life tenant is entitled to receive the future installments as they become payable.
    On bill, &c.

      Mr. William, I. Lewis, for the complainant.

      Mr. Frederick Beggs, for the defendant Charles G. Beattie et al.

      Mr. Henry H. Snedeker, for the defendants Agnes Beattie and Josephine B. Gedney.
   Bentley, V. C.

The bill in this suit is filed by a trustee to obtain the advice and direction of the court.

In his lifetime, Robert Beattie executed his last will and testatment containing the following paragraph:

“Fourth. I give my executors hereinafter named three hundred and fifty [350] shares of the stock of the Beattie Manufacturing Cbmpany in trust to pay the income and dividends thereof from the time of my death to my daughter, Catharine Dixon, for her life, and on her death I give the said shares to her issue, if any, and if none, then to her heirs-at-law, to be divided among such heirs in the same proportions as real estate of which she might die seized would descend.”

The executors named in the will have all died, and the trust in the foregoing paragraph has been carried on by the complainant, who was duly appointed.

On January 38th, 1934, the directors of the Beattie Manufacturing Company declared a dividend by adopting the following resolution:

“Resolved, That a dividend of 150% on the capital stock of this company be declared out of the earnings of the year 1923, payable as follows:
37% on February 1st, 1924;
37% on May 1st, 1924;
87% on August 1st, 1924;
37% on November 1st, 1924,
to stockholders of record at the close of business on the day preceding each of the aforesaid dates, respectively, and that the residue of the accumulated profits of the company 'be reserved as working capital.”

The first installment of dividends was paid to the complainant and by him turned over to Catharine Dixon, the beneficiary. On March 13th, and before any of the three remaining installments were payable, Catharine Dixon died, without ever having had any issue, but leaving a will which has been admitted to probate in the place of her domicile. By the terms of this will she made certain small bequests, and then gave, devised and bequeathed all the residue of her estate to her sisters, the defendants Agnes E. Beattie and Josephine B. Gedney.

By an interlocutory decree in this cause the trustee has received instructions as to the distribution of the three humdred and fifty shares of stock, and there is left for determination the single question as to his duty in the distribution of those installments of dividends that came into his hands after the death of Mrs. Dixon. Those defendants named as residuary legatees maintain that the funds in the hands of the complainant became a part of the estate of Mrs. Dixon, who will be referred to as the life tenant, while the rest of the life tenant’s heirs-at-law say that any dividends paid after her death form no part of her estate, but become, in equity, the property of the holders of the shares of stock at the time of the death of the life tenant.

Under ordinary circumstances, it is elementary that dividends belong to him entitled to the shares to which they are credited at the time the same are declared; but when the right to enjoy the income thereof has been separated from the ownership, problems arise as to the respective rights thereby created that have caused difficulties which have greatly perplexed the courts. In Day v. Faulks, 81 N. J. Eq. 173, Mr. Justice Swayze said:

“The difficulties which courts of the highest standing have found in apportioning a stock dividend applies with increased force against a life tenant to the whole.”

Eour distinct rules for the decision of such questions are now recognized by as many classes of jurisdictions. Three of them are clearly arbitrary, and adopted for the convenience of the trustees in the discharge of their duties and the court who instruct them in their duties. The fourth one is known as the Pennsylvania rule, and was enunciated in Barp’s Appeal, 28 Pa. 868. Brieflly stated, that rule is that, in a contest between a life tenant and remaindermen over a stock dividend, the remaindermen will be entitled to so much thereof as was earned and accumulated - by the company before the life estate commenced, and that portion of it, if any, will belong to the life tenant, which was earned thereafter. The rule was adopted by our court of errors and appeals in Lang v. Lang’s Executor, 57 N. J. Eq. 325, and has been followed ever since. In the opinion in Barp’s Appeal, supra, it is declared that, in the case of ordinary cash dividends as distinguished from extraordinary dividends, no great injustice can be done in following the rule of judicial convenience that apportionment is forbidden. This exception to the rule in Barp’s Appeal is unequivocally departed from in; the Lang Case, supra. That point was not before our court,-1 realize, in that case, because it is specifically determined, that t.he dividend with which the court was there dealing was.not an ordinary declaration. But there can be no question that that court was pronouncing its mature opinion in(1tlip matter,- .and that such would be its decision in any such case involving even an ordinary dividend. The court even went-to .the length of evolving a method of apportionment. In. .short, the court of errors and appeals clearly considered the equitable situation and declined to adopt a rule that would satisfy the convenience of courts and trustees at the expanse of. doing justice between parties. There was not a dissenting.vote in the reversal of the decision in this court, an.fi. -it se.eins a clear intimation by judicial dictum of the views of that- court. Moreover^ it would seem that the soundness..of this, rule ought to be apparent upon slight consideration. One whose capital is invested in a share of stock, so that he is deprived of the present use of his money, is entitled, as,.,a matter of justice, to all beneficial increases that accrue-.- It.is true that the welfare of the corporation, and, consequently, that of the shareholder, would be impaired if he was entitled literally to collect his share of the profits in all. events and instantly upon their being earned, and, therefore, the company is empowered to provide for periodic or occasional dividends to be declared in the sound discretion of. the directors. It is also necessary, to avoid confusion and establish a wise regulation, that the company may determine who shall enjoy its dividends according as the stock is owned upon a certain day and to provide, for the payment of annual or other dividends in installments. All these provisions of th<e law. are for the common good of the corporation and all who have invested in its securities, but they do not affect the truth of the statement that one is entitled to the enjoyment or disposition of his share of the company’s profits made during the time that the stock is his. This is the underlying principle adopted by the court of last resort of this state.

In Lang v. Lang’s Executors, supra, a testator bequeathed certain shares of stock in trust to pay the entire income thereof to his son, and, at the latter’s death to distribute the corpus to his children. A large cash dividend upon this stock was paid over to the trustee and he sought instructions. The important fact was that the dividend was out of the earnings of the company for its fiscal year during which the testator died, and the decision was that the life tenant was entitled to so much of the profits during the preceding fiscal year as accrued after his father’s death, while that portion which had been earned before the testator’s death became a part of his estate, and, in the absence of proof to the contrary, the court assumed that the year’s surplus had been made uniformly day by day. Now, it may be said that the court of errors and appeals in the Lang Case was dealing with a situation that had arisen at the beginning of the trust, while in the case at bar the problem arises out of a consideration of conditions at the termination thereof. But that cannot affect the application of the rule. The resolution above set out discloses that every cent out of which the dividend was made was earned and saved during the preceding year, while the life tenant was entitled to the dividends. Consequently, when the requisite amount of those earnings were appropriated and set aside by declaring the dividend on January 28th, 1924, her right became absolute and vested. Had she lived, and that valid resolution has been rescinded, she would have been entitled to have recovered a judgment against the company therefor. King v. Paterson and Hudson River Railroad Co., 29 N. J. Law 50L She might have assigned her right and her assignee could have collected. The action of the board of directors in declaring the dividend severed "all communities of interest in relation to such dividend as between the stockholders themselves and between the stockholders and the corporation. * * * The right of a party to whom the dividend is payable is recognized as a separate and independent right, which may be enforced as against the corporation.” King v. Paterson and Hudson River Railroad Co., supra. In short, it created a relation of creditor and debtor.

It is argued that the life tenant was only entitled to the dividends in question until the time of her death, and instantly thereafter “any dividends paid * * are the property of those who are her heirs-at-law.” This, however, begs' the question. If it be intended that the testator meant any such thing, the answer is that he did not say so. He did not say that any dividend paid by the company after the death of the life beneficiary should belong to her heirs-at-law. He ordered his executors to pay all dividends to her “for her life.” What dividends ? Clearly those declared out of earnings after his death and declared during her life. There is a presumption that the instrument was framed with an appreciation of the legal intent of the language used, and its meaning is as above set forth. It is within the realm of possibility, and may be that, if the creator of this trust could-be revived, he would declare it his wish that all the heirs-at-law should enjoy the dividends now in the hands of the complainant instead of its being distributed between only two of that class. But this is idle speculation, and is more than overborne by the policy which has been adopted in this jurisdiction.

Neither can I follow counsel in his argument as to the effect of the language of the resolution, which says that payment should be made “to stockholders of record at the close of business on the day preceding” each of the dates upon which the installments were to be paid. That provision did not affect the title of the life tenant to the payments. It only deferred them for the benefit and convenience of the company. The dividend payments were due to her, although not payable until future dates. This is so elementary as to require no citation. I have never known it to be said that one who has a vested right in property, which was' not to be enjoyed until a future date, may not dispose of it by assignment, will, or otherwise. A vested remainder will immediately occur to anyone as a typical illustration.

Section 3729 of Fletcher’s Cyclopedia is quoted by the heirs-at-law to show that an executor “is clearly entitled to dividends declared” during the lifetime of the person entitled to the dividends for life. That is exactly what is now being decided in a case where the earnings out of which the dividend is declared were acquired by the corporation during the term of the life interest as would almost invariably be the fact, except, perhaps, in some instance where the life tenant had enjoyed his right for only a short period of time, and the dividend was made out of profits that had accrued prior thereto.

I will advise a decree instructing the complainant to deliver the dividends remaining in his hands to the personal representatives of Mrs. Dixon. Parenthetically, I might say that it is of no moment, so far as I can see, in which manner her name is spelt.


text:
    Solomon Alterac, complainant, v. Marie Bushko, by her next friend, John Bushko, and John Bushko, individually, defendants.
    Filed March 17th, 1926.]
    1. The court of chancery has no jurisdiction over an application to reform a bail bond given in a suit at law on a capias ad respondendum.

    2. A mistake in a legal sense is the doing of an act under an erroneous conviction, which act, but for such conviction, would not have been done.
    8. If the complainant was misinformed as to the legal effect of the bond he executed, the defendants were not to blame therefor, and should not suffer by reason of it.

      On bill to reform a bond.

      Messrs. Feld, Weiss & Feld, for the complainant.

      Messrs. Feder & Binder, for the defendants.
   Bentley, V. C.

One Supkowitch committed a rape upon the infant defendant Marie Bushko, and was apprehended pursuant to a writ of capias ad respondendum. One of the supreme court commissioners held him to bail in the sum of $750. Thereupon he, with the complainant as surety, executed a bond pursuant to the statute, and was released. In accordance with the sixty-ninth section of the Practice act the penalty in the bond was fixed at double the amount for which the defendant had been held to bail, or $1,500. The complainant says that he was informed by the commissioner who took the acknowledgment to the recognizance that he would only be held liable for the amount in which the defendant in the action at law had been held to bail, and that such was his own mistaken belief. He, therefore, prays that the bond be reformed so as to read: that he and the said Supkowitch are bound unto the defendants in the penal sum of $1,500, conditioned that if a judgment should be entered against the defendant Supkowitch, and the latter failed to answer to the plaintiffs in the action at law, then the complainant to pay the sum of $750, otherwise the said bond to be void and of no effect.

In the first place, this court is without jurisdiction, because there is an adequate remedy at law. In Simmons ads. Kelly, 39 N. J. Law 488, it is pointed out by the supreme court that "the defendant in a bail bond has never been obliged to go to a court of equity, but has always found protection in a court of law.” It is further pointed out that replevin bonds and those to insure appearance have always been excepted out of the statutes applying to other bonds with special conditions,” "for the very reason that courts of law afford relief in proceedings under them.”

It also appears that the proper practice upon a breach of such a bond is to enter judgment against the surety for the full amount of the penalty, and then to have the actual damages assessed by the court or its clerk if they are represented by a readily-determinable sum. If, upon the contrary, it requires assessment by some other means, a writ of inquiry is directed to the sheriff who impanels a jury and takes their verdict. Simmons ads. Kelly, supra; Peacock v. Haney, 37 N. J. Law 179; Graecen v. Allen, 14 N. J. Law 74.

The mistake upon which the complainant relies is hot one against which he may properly be relieved in this court. Upon his solemn assurance that he would secure the defehdants to the extent of the penalty expressed in his bond, the man primarily liable for the outrageous offense against this girl has been permitted his liberty and made such use' of it that he is no longer within the jurisdiction of the court that fixed her damages or amenable to its process. Without going into a discussion of the rather recondite doctrine of mistake, the complainant’s equitable position is not sufficiently strong to warrant relief at the expense of the defendants. Vice-Chancellor Van Fleet, in Cummins v. Bulgin, 37 N. J. Eq. 476, said: “A mistake, in a legal sense, may be defined to be.the doing of an act under an erroneous conviction, which' act, but for such conviction, would not have been done.” Nowhere does the complainant say that he would have strangled'if he' had understood the additional $750 of liability. ’ " '• '

It is argued that the sixty-ninth section of the Practice act requires double indemnity only for the purpose of ini suring liability of the bail for a sum sufficient to pay the amount in which the principal is held'to bail, with the addition of enough to cover costs and interest. I can see nothing in the act to make it so appear. It would seem far more likely that it was intended to reach a situation such as the present case, where the subsequent verdict is substantially more than the amount named in the order holding to bail. It is fair to assume that the average supreme court commissioner would take into consideration the fact that a defendant has not yet had an opportunity to be heard in his defense, and, where his liberty is involved, will not fix bail in a sum so high as would be named if his conviction is assured. Eurthermore, the very language of the recognizance in this case should have been sufficient to have apprised the complainant of -his -possible liability1" thereunder. After acknowledging, in the-form provided by the statute, that he owed unto the defendants the sum of $1,500, it is said to be upon condition that if Supkowitch “shall be condemned in this action at the suit of Marie- Bushko, by her -next friend, John Bushko, and John Bushko, individually, plaintiffs, he shall pay the costs and condemnation of the court or render himself into the custody of the sheriff of the said county for the same, or if he fails so to do, that the said Solomon Alterac will pay the <cosls and condemnation for him or render him into the custody of the sheriff of the said county.” Not a word is said therein to limit the amount of liability to the sum of $750, o'r any other sum except 'the amount of the penalty, which is the amount demanded by the defendants. If the complainant was misinformed as to the legal effect of the bond he executed, he does not pretend that the defendants were to blame in any way therefor. As between his loss and many times that amount, which falls upon the defendants by reason of the absconding of Supkowitch, there is no comparison, and, for the reasons I have indicated, this court should not extend its protection to him, even if the jurisdictional question was not involved.

I will advise an order discharging the order to show cause and dissolving the restraint contained therein.


text:
    Peter E. Leddy Post, No. 19, of the American Legion, and Frederick A. McKenzie Post, No. 165, of the American Legion, complainants, v. William G. Roberts et al., defendants.
    [Submitted September 18th, 1923.
    Decided April 11th, 1924.]
    2. The duty of applying the funds in hand rests upon the court, which may not delegate its duties. It cannot exercise arbitrary discretion, but must apply the fund to a cognate or similar purpose, as nearly like the original scheme as can be devised.
    1. Where a bill alleges that a large sum of money was collected by various association for the purpose of providing the men in the military and naval service of the country, and especially those from the locality where the money was raised, with comfort, aid and assistance to their mental, moral and physical welfare, in ways not attended to by the national government, and to render like service to dependent members of their respective families, and a sum of money remains in the hands of the treasurer of the fund, and peace having been declared and the objects of this charity having been discharged from such service, the purposes for which the collection was made can no longer be carried out, such a trust is not repugnant to the statute of frauds, and it would seem that it is appropriate that the doctrine of cy pres should be adopted.
    3. It would not be in accordance with the original pui’pose of the gifts to build a i-ecreational hall with the funds in hand, but it would ■substantially do so if the principal were invested for a period of five years, and the interest used for present and other needs that may ai’ise in that period for the assistance of the object of the original trust.
    On bill, &c.

      Mr. Aaron A. Melniker, for the complainants.

      Messrs. Ziegener & Lane and Messrs. Lazarus, Brenner & Vickers, for the defendants.
   Bentley, V. C.

The bill recites that the complainants are local posts of the American legion, a corporation formed under an act of the national congress, membership in which is open to all men and women of the United States who served in the military or naval forces thereof during the great war. That the complainants are the only such posts located in city of Bayonne of this state. That in the month of November, 1918, and prior to the armistice, which brought hostilities to an end on the 11th day of that month, a voluntary committee of the city of Bayonne carried on a collection among the citizens thereof, whereby there was collected the sum of $257,000. That through the agency of the Young Men’s Christian Association, the Young Women’s Christian Association, the American Library Association, the Knights of Columbus, the Salvation Army, the Jewish Welfare Board and the War Camp Community Service, all of which are joined as defendants, the purpose of the collection aforesaid was to provide the men in the military and naval services of this country, and especially those from Bayonne, with comforts, aid and assistance to their mental, moral and physical welfare, in ways not attended to by the national government, or in addition thereto, and to render like service to the dependent members of the respective families of the various men in such military and naval service. That of the said sum of money there remains in the hands of the defendant Roberts, who was the treasurer charged with the duty of disbursing such money, a balance amounting.to $50,000. That peace having been declared and the objects of this charity having been discharged from such service, the purposes for which the collection was made can no longer be carried out, the said Roberts declaring that he can no longer, for the reasons mentioned, make any payments out of such fund.

The bill then sets out the aims, objects and purposes of the American Legion, the membership of the same, and the many activities of the association, among which may be mentioned the hospitalization and vocational training of disabled veterans, and the assisting of such veterans in having their claims properly presented and passed upon. That there are several hundred former soldiers and sailors of the late war in the city of Bayonne who are suffering from injuries and disease contracted in such service, who are not receiving proper care and are without means to secure it for themselves, as well as dependents of other of its citizens who were killed in the late war, and which dependents are in need of financial aid.

The hill further alleges that the complainant posts are the organizations best fitted, by reason of their membership and purposes, to carry into effect the beneficences that were contemplated by those who collected the funds in question and the contributors who patriotically gave thereunto. That there is also in the city of Bayonne the Joyee-Herbert Post, No. 226, of the Veterans of Eoreign Wars, another national military order in which only honorably-discharged members of the military force of this country are eligible who have served in war in some foreign country, and that like claims are made by it as those made by the complainants in their bill.

The bill prays that the defendant Eoberts may be decreed to pay the balance of the said fund so remaining in his hands, with all accumulations of interest thereon, to the complainants, or some other person, for such purposes as may be decreed. The defendants moved to strike out the bill, on the ground that the facts are insufficient to show complainants’ right thereto and want of equity.

The complainants say that this fund constitutes a public or charitable trust to which should be applied the doctrine of cy pres. So far as I am able to make out from what was said for the defendants, I apprehend their position to be that this principle is never applied except in cases where a trust is testamentary in its origin. This cannot possibly be so, no matter how frequently that may be the manner of creation, because it is not so indicated in any of the definitions, and is completely met by the opinion of the court of errors and appeals in the leading ease of Mackenzie v. Trustees of the Presbytery of Jersey City, 67 N. J. Eq. 652, where the trust was created by deed.

While I know of no instance where an accumulation of funds, with a history similar to that of the one in question, has been brought to the attention of any court for .a like determination, yet it seems to me that the position of the complainants is sound as to the main features thereof:

“Charitable trusts include all gifts in trust for religious and educational purposes in their ever-varying diversity; all gifts for the relief and comfort of the poor, the sick and the afflicted, and all the gifts for the public convenience, benefit, utility or ornament, in whatever manner the donors desire to have them applied.” Perry Trusts § 687.
“But there are eases in which courts, in the strict discharge of their judicial duty, may well apply a fund devoted to a particular charity to a cognate purpose, to prevent a failure of justice, and to prpteet trustees in applying moneys in their hands to some useful purpose.” Perry Trusts § 78.
“Where there is an intention exhibited to devote the gift to charity, and no object is mentioned, or the particular object fails, the court will execute the trust ey pres, and will apply the fund to some charitable pur-poses, similar to those [if any] mentioned by the donor.” Pom. Eq. Jur. § 1027.

“(1) A charity, in its legal sense, may be more fully defined as a gift, to be applied, consistently with existing laws, for the benefit of an indefinite number of persons, either * * * by relieving their bodies from disease, suffering or constraint, * * * or otherwise lessening the burden of government.” 96 Mass. 539 (at p. 566.)

This definition was adopted by the court of errors and appeals in Mackenzie v. Trustees of the Presbytery of Jersey Oily, supra. That the doctrine obtains in this state wi' appear from: Mackenzie v. Trustees, &c., supra; Brown v. Condit, 70 N. J. Eq. 440, although in that cas> it was not applied; Rector, &c., of St. James Church v. Wilson, 82 N. J. Eq. 546; Vineland Trust Co. v. Westendorf, 86 N. J. Eq. 343. In this case the trust not being illegal, merely for charitable uses, and the trustee having no further right, as he conceives, to disburse it, there is no sound reason that it should remain dormant, and, for the reasons expressed in all the authorities, among which I have cited some, there ought to be some use to which it can be put that will carry out the intentions of the donors as nearly as possible. Those donors could not be found, as many of them contributed on the streets by depositing greater or lesser sums of money in currency.

Not only may it be said that this money was raised for the “relief and comfort of the poor, the sick and the afflicted,” but it was, in the highest degree, for the “public convenience.” It has become a maxim of modern warfare that no longer is it carried on between the armies alone of the combatant states, but that it has developed into a contest of the entire populations of the warring countries. It is the Napoleonic conception of a nation in arms.

Such a trust is not repugnant to the statute of frauds, because that applied only to trusts in lands 'and not personality. Kimball v. Morton, 5 N. J. Eq. 26; Hopper v. Holmes, 11 N. J. Eq. 122; Sayre v. Frederick, 16 N. J. Eq. 205.

Mr. Roberts now finds himself with this money in his possession, and, under the circumstances, with no way of being relieved thereof unless by the aid of this court, and I am credibly informed will be very much pleased if such a result-can be accomplished, it would seem that, under the circumstances, it is appropriate that the doctrine of cy pres should be adopted.

I will hear counsel as to the scheme that should be adopted to carry the foregoing into effect.

SUPPLEMENTAL OPINION.

After a careful consideration of the reports made by a majority of the trustees as well as by the dissenting member thereof, I have become convinced that the scheme proposed by the majority presents the greater wisdom. That scheme succinctly stated is, the investment of the principal amounting to $50,504.45 for a period of five years, during which no disbursements shall be made therefrom, but leaving the accrued interest of $6,390.54 (and interest to accrue in the future) for present and other needs that may arise within the said space of time for the assistance of the objects of the original trust. The other plan advocated embraces the building of a memorial building for recreational and other purposes, in the interest of the veterans of the world war.

It should be borne in mind, first, .that the duty of applying the funds in hand rests upon the court, which may not delegate its duties, but must, in the final analysis, bear the responsibility for its decision, even though it has sought and earnestly considered the very valuable assistance that the trustees have rendered. Secondly, it must be remembered that it is not within the province of this court to use an arbitrary discretion for the purpose of putting the subject-matter of the trust to 'the highest possible use conceivable. Charities, 5 B. C. L. § 10.4 et seq. On the other hand, the duty is to apply the fund to a cognate or similar purpose, as nearly like the original scheme as can be devised. With this thought in mind it should not be lost sight of that the court is, to a large extent, bound by what has been properly proven in the case. It is true that in the dissenting report many statements are made of the purposes originally comprehended in the trust and the personal opinions of individuals and organizations who gave a proper and lively interest in the matter. As to the latter, I feel that the opinions expressed represent the personal wishes of the individuals and organizations expressing them, without any appreciation of what my duties are. I do not, as I have just intimated, sit in a charitable capacity, but judicial, exclusively.

So far as the statements made in the minority report of the purpose of the donors of the fund, it -is only necessary to point out that there is no proof thereof, while the only cognizable proof in the proceeding is contained in the bill of complaint. The bill points out that the purpose was to provide the men in the military and naval services of this country, and,, especially, those from Bayonne, with comfort, aid and assistance to their mental, moral and physical welfare, by means not attended to by the national government or in addition thereto, and also to render like services to the dependent members of the respective families of the various men in such services. This statement has never been denied, and, as counsel well know, these facts are the only ones that are sufficiently before me. Consequently, if these were the purposes to be subserved by the expenditure of the fund, I feel that like services, and not a recreational hall, are the nearest approach that can be conceived to which the revenue of the fund now remaining may be put. It may be that there are at this time no proper citizens of Bayonne in a position requiring any help other than that which may be secured by recourse to the veterans’ bureau under the appropriate acts of congress. But I do not know it, since no evidence has been produced upon that score to which I am permitted to give effect. But even so, as time goes on and men and women grow older, new conditionns are almost certain to arise that cannot be foreseen by the exercise of ordinary human intelligence: Then, I think, will appear the’ wisdom of the far-sighted members of the trustees who will have kept in hand the principal of this fund, to be devoted to the amelioration of the condition of the individuals affected, under the supervision of the court. Bayonpe will exist for a long time to come, and real service can be rendered to its worthy veterans in the future, when they will far more require assistance than while now in the heyday of their manhood.

I will advise an order in accordance with the recommendations of the majority members of the trustees.


text:
    Paragon Distributing Corporation, complainant, v. Paragon Laboratories, Incorporated, a corporation, et al., defendants.
    [Submitted May 21st, 1925.
    Decided May 22d, 1925.]
    1. The sole object of an interlocutory injunction is to preserve the subject in controversy in its then condition, and not to determine in advance the final disposition of a meritorious contest.
    2. Where the bill and affidavits make out a ease where irreparable injury would result if the injunction is not issued, and the answering affidavits do not confute the allegations of the bill, an injunction will be gz-azzted.
    On motion for preliminary injunction.

      Messrs. Ziegener & Lane, for the complainant.

      Messrs. Perlcins & Drewin, for the defendants.
   Bentley, V. C.

The complainant files its bill to restrain the breach of a contract.

On May 19th, 1924, the complainant entered into a contract with the defendant-corporation (which will hereinafter be called the manufacturer to distinguish it from the individual defendants), but which, upon its face, bears date the 24th of that month, wherein and whereby it was agreed, among other things, that the complainant would advertise and stimulate the sale of the manufacturer’s product consisting of hair dye, and in. return the manufacturer agreed to give an exclusive sales agency throughout almost the entire world to the complainant. The other defendants are two young men who have discovered a formula for making the hair dye mentioned and who operate through the manufacturer as a close corporation. The bill sets forth that they-had not been successful in establishing their business, and -that this was the reason for the contract out of which this litigation grows. During a period of four months prior to the .establishing of the relations by the parties, the manufacturer had sold, on an average, about five hundred boxes of hair dye per month. During the period in which the contract was in force the number of sales grew to an average of two thousand seven hundred and seventy-two per month. At the end of that period, or, to be exact, on April 7th, the manufacturer sent a letter to the complainant which, after notifying the latter that it had been guilty of various breaches, notified ft that the contract was at an end. Since that time the manufacturer has been dealing directly with customers who previously dealt through the complainant. It has, by reason of saving the complainant’s profit, quoted lower prices to those who were formerly the complainant’s customers, and thus it is clear that if it continues to do so until final hearing, irreparable injury will result to the complainant if eventually successful in this suit, because it is self-evident that the latter cannot then expect its old customers to continue to purchase the manufacturer’s hair dye at a higher price than they will have then been used to paying.

There are four points raised by the defendants which require particular attention — (1) that there was no mutuality, because the complainant had not been incorporated at the. time the contract was executed by the two companies; (2) .that the contract is inequitable, in that the complainant takes all and gives nothing; (3) because the complainant broke its contract prior to notice of cancellation by the manufacturer, and, therefore, does not come into court with clean hands, and (4) that it operates as an unreasonable restraint of trade.'

I do not think it can be said that there was no corporation in existence when the contract was executed, the certificate being filed on April 21st, 1925. It is true that there was no corporation de jure, but sufficient had been done to establish one de facto: Three things only are necessary to establish the latter sort of corporation — first, a valid law under which such a corporation might be incorporated; secondly, a Iona fide attempt to organize under such a law, and three, an actual exercise of the corporate powers. 7 B. O. L. 61. All of these elements were present. In addition, while the manual labor of executing the contract was performed just two days before the filing of the certificate of incorporation in the office of the secretary of state, the instrument was held in escrow by a member of the New York bar, as he swears, and the acknowledgment not taken until April 24th, the day after a certified copy was filed in the office of the county clerk of Newr York county, and not delivered to the parties until more than a month thereafter. So, that at the time of delivery and at the time of the taking of the acknowledgments, the complainant-corporation was complete, under the laws of the state of its domicile. So far as any irregularity in the taking of acknowledgment is concerned, contrary to the New York penal code, the punishment, therefore, may be left to the authorities of that state, but do not impair the validity of the instrument for the purpose of this motion.

• Upon the argument, counsel for the defendants created some suspicion that the contract was so unilateral and devoid of consideration as to render it one that this court would refuse to enforce. A careful reading of the terms of the contract dispels this doubt. It is clear, as already said, that it appeared to the defendants as if increased revenues could be obtained by dividing the work of production from that of selling, and placing upon the shoulders of the complainant the latter labor. That this was so appears, I think, by a comparison of the sales made before and after the parties entered into this partnership. It is true that great powers were established for the benefit of the complainant, but, I think, not unreasonably so. The hair dye was manufactured under a secret process known only to the officers of the manufacturer, and, therefore, it was highly important to the complainant that no loophole should be left whereby the manufacturer might safely pass the secret information on to someone else and make the rights of the complainant nugatory in its contract. Complainant’s attorney would have been grossly derelict in his duty if he had failed to provide all reasonable safeguards against loss to a client who was embarking in a business dependent upon a commodity that could be produced by no one except the other party to the compact. It is pointed out on behalf of the defendants that the contract made it the duty of the manufacturer to deposit with a trustee or depository a copy of the secret process in a sealed envelope, with directions to the depository to deliver the same to the principal executive officer or manager of the manufacturer in the event of the absence from their place .of business of both the inventors for a period of sixty days. This was clearly necessary if the business of the complainant was not to be terminated for lack of the commodity in which it dealt. It is also pointed out that the secret was to become the property of the complainant in the event of the manufacturer being adjudicated a bankrupt; having a receiver appointed of its property and assets; if an attachment, execution or other summary process should be issued against it and not vacated within three days by the filing of a proper bond, or if a judgment should be entered against it and remained unsatisfied for a period of ten days. Bearing in mind what I have already said, namely, that the complainant was dealing in a commodity which it was helpless' to procure except from the manufacturer under this secret process, I do not feel that I can say that these conditions were unreasonable. Upon a complete reading of the instrument it appears to me to be a fair one, provided the manufacturer knew what it was signing. The bulk of the covenants are in favor of the complainant it is true, but' the complainant, on the other hand, obligates itself enough to make it impossible for me to say that there is any such inadequacy of consideration as should shock the conscience of the chancellor, and especially when there is kept in mind the utter dependence of the complainant upon the integrity of the manufacturer.

Keither can it be said that the proofs of the manufacturer disclose a breach of the contract by the complainant prior to April 7th, 1925. The affidavits are not specific enough to meet the allegations of the bill and the replying affidavits. And, in that connection, it should not be passed, without comment, that nearly all of the proofs submitted viciously disregard our rule against including in the affidavits arguments or reasons which are perfectly proper to be given by counsel on the argument of the motion. It is also true that many of the affidavits are couched in conclusions rather than facts. I realize that New York counsel, familiar with a different practice, have been engaged in the preparation for this motion, but that does not relieve the local solicitors of the responsibility of supervising these matters. To return to the lack of specific allegations, it is only necessary to point out that in the answering affidavit of the defendant Kirkpatrick, in which he says:

“Specific instances have been found in which the distributing corporation billed the product at $2.50 per box and received payment on these basis, and payment was made to the Paragon Laboratories, Incorporated, at the rate of $2 per box.”

Not one word is said by him as to what these “specific instances” were or the source of his information concerning them. On the other hand, the replying affidavits most carefully point out the answers to certain alleged discrepancies described in the affidavit of the defendant Brown, and there are annexed to the same a tabulated statement of payments that completely overthrow the proofs of the defendant in this respect. I realize that I have not the full account before me, and that the final hearing may completely justify the defendants, but this is in the realm of conjecture, and counsel do not require to be told that I cannot decide the question at issue upon any such basis.

Lastly, is the objection that the contract is an unreasonable covenant in restraint of trade ? If it was, that would be decisive. Mandeville v. Harman, 42 N. J. Eq. 185. But this is not a contract in restraint of trade. It is one creating an unlimited sales agency and is not illegal. Reeves v. Decorah Farmers Co-operative Society (Iowa), 140 N. W. Rep. 844 An unreasonable contract in restraint of trade is repugnant to the policy of our law because it stifles competition, and is therefore injurious to the public. There is no combination here to prevent the sale, but, rather, to increase the sale of hair dye to the public, and neither is there anything to-show a vicious effort to increase the price to the purchasing public. Nor am I prepared to say that hair dye is a matter of prime necessity or even so useful as to require great protection from the courts, although it has been earnestly argued that, under the prevailing mode, “hair has gone out and dye has come in.”'

In the decision whether to grant an interlocutory injunction or not, it should be remembered that “the sole object is to preserve the subject in controversy in its then condition.” High Inj. § A The court does not undertake to determine in advance the final disposition of the meritoriohs contest. The purpose of the writ, as distinguished from a perpetual injunction, is that it shall preserve the status quo pending final hearing. Ibid. § 5a. In the present application the complainant- has fairly made out its rights under the contracts of April 24th, 1924, and is entitled to have them preserved until the suit is concluded.

Some mention was made of an early date for the final hearing, but, upon further consideration, I have determined that there is no exigency that will require dispensing with the orderly steps in a cause. The parties have been operating under the contract for almost a year; it was entered into by persons sui juris and without any fraud, and a continuation of the relations for a short time further cannot he injurious.