text:
    Mary Ida Ivory v. Kate J. Klein, executrix of and trustee under the will of John F. Klein, deceased.
    Where there is an estate for life, and a remainder in fee, and there exists an encumbrance, binding the whole estate on the land, and no special equity exists between the life tenant and the remaindermen, the former is bound to pay the interest accruing upon the encumbrance during the continuance of his estate.
    On appeal from the decree of the Mercer county orphans court, upon the accounting of the respondent executrix.
    John F. Klein, late of Trenton, in this state, died on the 21st of August, 1882, testate, leaving him surviving his widow, Kate J. Klein, and four children — two by a former wife, to wit, Mary Ida Ivory and William F. Klein, the latter of whom died on the 12th of April, 1892, and two by his widow, Kate J. Klein, to wit, Gertrude Klein, at his death nineteen years of age, and Marguerite Klein, then eleven years of age. The last-named child became twenty-one years of age on the 21st of April, 1892.
    The decedent left three parcels of property, all of which were in the city of Trenton, to wit, his residence on Hanover street, with its furniture, business property on State street, and other business property on Greene street. His residence was encumbered by a mortgage for $3,000, held by one Deats; the State street property was encumbered by two mortgages, one for $5,000, held by one Wilson, arid the other for $3,000, held by one Green, and the Greene street property was encumbered by a mortgage for $10,000, held by one Wilkinson. He did not leave any personal estate beyond his household furniture in his dwelling on Hanover street.
    By his will, dated on the 4th of September, 1875, he constituted his wife the executrix thereof, and gave and devised to her, in lieu of dower, his dwelling on Hanover street, with its furniture, in fee. By the same instrument, he provided that the State street property should be sold by the executrix, as soon as conveniently might be, at public sale, to the highest bidder, “ and,” following the language of the will,
    “ that from the proceeds of said sale, all my debts, including all mortgages which may exist on any and every property I may own, be paid off and extinguished ; debts, other than mortgages on other properties, to be paid first, and other mortgages afterwards, if sufficient balance remains for that purpose. If at the time of such sale any of my mortgages are not yet due, and the holder of said mortgage or mortgages refuses to’receive the payment thereof, then and in such case, if such balance remain a sum sufficient to pay the probable indebtedness when the same falls due, it shall be retained by my executrix and invested subject to such payment. The balance of the proceeds of said sale, if any, remaining after the payment of all my debts, book accounts, mortgages and provisions for payment of mortgages as aforesaid, I give and bequeath to my son, William P. Klein, and my daughter, Mary Ida Ivory, to be equally divided between them.”
    He then devised the Greene street property to his wife in trust, using this language:
    “ In trust to the following uses and purposes, that is to say, upon trust to permit and suffer, authorize and empower my wife, Kate J. Klein, to have, take and receive the rents, issues and profits thereof, therefrom to pay for the repairs required on said property and for all public taxes and assessments imposed thereon, and further to meet and pay for the general support and education of herself and our children until the youngest surviving child has arrived at the age of twenty-one years, when and at which time, or as soon thereafter as conveniently may be, to sell the said property at public auction to the highest bidder, and I hereby and herein authorize and empower my executrix to make such sale, and to divide the proceeds thereof among all my children in such manner and in such parts that, by crediting my said two children before named, William P. Klein and Mary Ida Ivory, with the amount, if any, received by them from the proceeds of the sale of the State street property as directed in Item No. 1, all my children shall receive an equal division and share of the total proceeds of the sales of said two properties (the State street and the Greene street-properties aforesaid).”

      He further provided for a trust of a $3,400 mortgage held by him when the will was made, but not existing at his death, in his widow for her benefit for life, the principal at her death to be disposed of by her appointment in her will, and that if his son William should die before distribution should be due to him under the will, that his portion should be divided among the children of the testator surviving at that time. The residue of his estate was devised and bequeated to his wife.
    The executrix proved the will on the 1st of September, 1882, and letters testamentary were issued to her. She then took possession of the three properties, occupying the Hanover street property and receiving the rents of the State and Greene streets properties. From the rent of the State street propérty she paid debts of her husband and interest on the four mortgages mentioned. On the 1st of April, 1884, she sold the State street property for $20,000, and on the 17th of the same month paid to Mr. Wilson $5,138.83, and to Mr. Green $3,118.75, in satisfaction of their respective mortgages. These payments, and the payment of the remainder of her husband’s unsecured debts, left in her hands from the proceeds of the State street property $5,843.37, out of which, on May 10th, 1884, she paid $3,183.32 in satisfaction of the mortgage on the Hanover street property, the fee of which was devised to her. The remainder of the $5,843.37 she retained and expended in the payment of interest from time to time on the $10,000 mortgage on the Greene street property.
    In’ July, 1892, after her youngest child became of age, she sold the Greene street property, subject to the mortgage on it, and received therefrom, as the proceeds of sale, $15,000, out of which she has been allowed credit for further payment of interest on the $10,000 mortgage.
    The income from the Greene street property was used by her in the payment of taxes assessed against that property, for repairs to it and for the support of herself and the support and education of her two children. It was sufficient to have paid for taxes, repairs, interest on the $10,000 mortgage and something towards the support of the widow and her children.

      Upon the accounting of the executrix, the orphans court, by its decree, apportioned the $5,843.37, balance of proceeds from the State street property, between the Hanover street and Greene street mortgages, so that three-thirteenths, or $1,348.49 of that sum, was allowed to the executrix because of the Hanover street mortgage, and ten-thirteenths, or $4,494.88, remained for her to account for. No objection is made to the decree in this respect. The appellant’s sole objection is because the court allowed the executrix some $5,400 interest upon the mortgage on the Greene street property out of the moneys which were realized from the proceeds of the sale of the State street and Greene street properties, her contention being that the interest upon that mortgage should have'been wholly paid from the income of the Greene street property, upon the ground that it was the duty of the life tenants to pay that interest, which is not a charge against the remaindermen, as in effect it is made by the decree of the’ orphans court.

      Mr. James Buchanan, for the appellant.

      Mr. Levi T. Hannum, for the respondent.
   The Ordinary.

In the case of Mosley v. Marshall, 22 N. Y. 200, Judge Denio stated the principle which governs the solution of the question presented, in these words: “ It is a well-established principle that where there is an estate for life and a remainder in feej and there exists an encumbrance, binding the whole estate in the land, and no special equities between the remainderman and the tenant for life can be shown, the latter is bound to pay the interest accruing during the continuance of his estate, and the owner of the future estate is to pay off the principal of the lien.”

In that case the crucial question was, as it is in the case considered, whether the will evinced an intention that the interest upon the mortgage should not be charged to the life tenants, and thus gave a right against the remaindermen.

In the case considered, testator had two children by his first wife, both of full age and emancipated from his control and care, and two children by his second wife, both of whom were under age, and yet needed education and his maintenance.

The scheme of the will was that the testator’s widow, the mother of his infant, dependent children, should take his dwelling on Hanover street, with its furniture, in fee, in lieu of her dower, and in addition thereto should have the income from his $3,400 mortgage for her life; that the State street property should satisfy his debts, including the mortgages on all his properties ; and that the net income of the Greene street property should be devoted to the education and maintenance of his infant children until the youngest should become of age, and, to the end that, through a community of interest, the mother’s home and care might be secured for them; she also, during the minority, was to have the.benefit of this providence.

The other children had passed their minority, presumably having had his care and assistance. If there should be a surplus in value of the State street property, above the payment of debts, those older children were to take that surplus immediately. "When the majority of the youngest surviving child should be reached, that surplus and the proceeds of a sale then to be had of the Greene street property would together be reckoned as a fund for division among the four children, in order to determine how much of the proceeds of the sale of the Greene street property, then in hand to be divided, each would have, the two older children’s share being credited with their receipt, if any, from the proceeds of the State street property.

It was the testator’s intention to create three funds — one for the payment of his debts, with a possible surplus for his children, one for his widow in lieu of her dower, and a third to yield support and education for his infant children and their mother in care of them, during their minority, and, in corpus, be preserved for ultimate division among all his. children. He was uncertain as to the sufficiency of the first of these funds. It might be more than enough to pay his debts, and, in that event, he disposed of the surplus of it; yet it might not be enough to pay the debts, and, therefore, he specified a preference of debts to which it should be applied. But, while he established such preference of debts, he failed to specially provide for the disposition of any balance of the fund there might be after payment of the preferred debts, which might be insufficient to fully satisfy the remaining debts, or to provide how those remaining debts should be satisfied. Passing from this fund and that designed for the widow, he creates the third. He put it in trust for years, specifying three purposes to which its income should be devoted— (a) payment for repairs to the property constituting it; (b) payment of taxes and assessments levied on that property, and (c) the support and education of his wife and infant children. A surplus of income was not contemplated. That he expected to realize enough from the sale of the State street property to pay all his debts is indicated by his provision for the disposition of a balance of proceeds of such sale after their payment. It is true that he also contemplated that the proceeds of such sale might not be sufficient to pay his debts. Such contemplation is evidenced by his preference of debts in such contingency. But that such contemplation was regarded by him as a mere possibility, I think, is clearly demonstrated by his neglect to pursue the event of such contingency by specific direction, either concerning the application of any balance there might be of proceeds of sale after the payment of the preferred debts, or concerning the payment of such debts as should not be satisfied, together with the interest thereon.

Wow, it is argued by the respondent that the enumeration in the will of charges upon the income of the Greene street property, for repairs, taxes and assessments, and the support of the widow and younger children, indicate a purpose to exclude any charge upon that income for interest on the mortgage upon that property, or, at least, to postpone it to the full accomplishment of the three purposes expressed. If the will exhibited that the testator had it in mind, that question as to the charge of interest on the mortgage would probably arise, I would, perhaps, because of the importance of specific direction as to the payment of interest, attach greater weight to this argument; but I think that the will evinces that the testator regarded, in the first place, that the insufficiency of the proceeds of the sale of the State street property to pay all his debts was a possibility only, and, in the second place, that his preferment of the unsecured debts made adequate provision for such contingency by leaving his mortgages a charge upon the properties respectively burdened by them.

In view of the whole situation, I do not perceive more reason for holding that the testator’s specification of some charges upon the income of the Greene street property excludes all other charges, thán I do for holding that the testator intended in that specification, but failed, to mention all charges that were necessary to fully protect the corpus.

It appears to me that his object was to devote the net income of a portion of his estate to the assistance of his second family while such assistance should be most needed, and, at the same time, to preserve the corpus for equal distribution among all his children beyond that period, and not to permit a sacrifice of it, and with it a sacrifice of the interests of his elder children, to produce a larger temporary income.

I conclude, therefore, that the will does not signify an intention to give any right to the life tenants which justifies a charge of the interest in question upon the corpus.

The decree of the orphans court will be reversed for correction in this particular, otherwise it was rightly made.


source: Caselaw Access Project

author: Deptte, J.

license: Public Domain

text:
    George G. Green, appellant, v. Edward B. Stone, respondent.
    1. A stipulation in a deed inter partes, that the grantee will assume and pay a debt secured by a mortgage on the premises, for the payment of which the grantor is personally liable, is a contract by the grantee with the grantor for the indemnity of the latter, and the obligation of the grantee to pay the
    mortgage debt enures in equity for the benefit of the mortgagee, and he may enforce it against the grantee to the extent of the unpaid part of the .mortgage debt, after the proceeds of the mortgaged estate have been applied thereon.
    2. The remedy of the mortgagee in equity against t]he grantee for the mortgage debt so assumed is not affected by the acts of 1880 and 1881. Mev. Swp. pp. 489, 490.

      3. In granting relief on the ground of mistake, there is a distinction between the rescission and the reformation of a written instrument. A court of equity may rescind a written contract for a mistake which is unilateral; that is, a mistake on the part of one of the parties only. In such a case, the whole contract is set aside and the parties restored to their original position. There can be no rescission unless the parties can be restored to their original position.
    4. But in the case of the reformation of a contract or deed by altering or expunging some of the terms contained in it on the ground of mistake, the part improperly introduced into it will be altered or expunged and the instrument will stand as reformed. To warrant reformation in the absence of fraud or imposition, there must be a mutual mistake; that is, a mistake shared by both parties.
    5. To justify the reformation of a deed delivered, accepted and acted upon, on the ground that it did not correctly express the agreement made by the parties, the proof must be clear and convincing and upon testimony that is unexceptionable, both with regard to the agreement actually made by the parties and the mutuality of the mistake through which a different agreement was put in the'deed. Until a mistake has been established by such fofce of proof as leaves no rational doubt of the fact, no change in the writing sought to be reformed is entitled to be called a correction.
    6. On a bill filed by a mortgagee to enforce the assumption of the mortgage debt by the grantee of the mortgagor, the defence that the assumption clause was improperly inserted in the deed should be made by a cross-bill, and the grantor, or his personal representatives in case of his death, should be made parties to such cross-bill.
    On appeal from a decree in Green v. Stone, advised by Vice-Chancellor Bird.

      Mr. Austin H. Swaehhamer, for the appellant.

      Mr. John J. CrandaU, for the respondent.
   The opinion of the court was delivered by

Deptte, J.

This is a suit in equity by Green, a mortgagee, against Stone, a purchaser from the mortgagor of a portion of the mortgaged premises, praying a decree that the defendant pay the balance of the mortgage debt remaining unpaid after applying thereto the amount realized from the foreclosure and sale of the mortgaged premises. On final hearing the complainant’s bill was dismissed. From this decree the complainant appealed.

One George S. Beckett was the owner of two tracts of land situate in the county of Gloucester; the one situate in Logan township, containing four hundred and thirty-eight and eighty-one hundredths acres, known as the Middleton farm; the other situate in the township of Harrison. In December, 1885, Beckett gave the complainant a mortgage for $15,000 on both tracts, together with a bond for the payment of the mortgage debt. By a deed of conveyance, dated January 25th, 1893, Beckett conveyed the farm above mentionéd to the defendant. The consideration named in the deed was $16,000, and at the end of the description of the premises and estate conveyed, the deed contained the following clause:

“Subject to the payment of a certain mortgage debt of fifteen thousand dollars, with interest thereon at five per centum per annum, made by said George S. Beckett to George G. Green, covering the property hereby conveyed inter alia, which the said Edward B. Stone hereby assumes and agrees to pay as a part of the consideration hereof.”

The deed was prepared by George H. Barker, a real estate agent and conveyancer, at the request of Beckett, in pursuance of instructions given by him. It was delivered by Beckett to Stone, on the 3d of February, 1893, at the office of Martin "V. Bergen, who was the counsel of Stone, and was placed upon record the same day.

Subsequently, in April, 1894, the complainant filed a bill to foreclose his mortgage. Beckett and wife and Stone were made defendants in the foreclosure suit. A decree of foreclosure and for the sale of the mortgaged premises, including both tracts, was obtained in July, 1894, and the premises were sold by the sheriff, on the 24th of September, 1894, at public auction, by virtue of an execution issued upon the decree, the complainant being the purchaser for a sum which left unpaid a considerable portion of the mortgage debt. This bill was filed to enforce the payment by Stone of such part of the mortgage debt as remained unsatisfied, in compliance with the agreement to assume and pay the mortgage debt contained in his deed.

A deed inter partes whereby an estate is conveyed, if accepted by the grantee, is in legal effect the deed of both parties, and a stipulation in such a deed by the grantee that he will assume and pay a debt secured by a mortgage on the premises for the payment of which the grantor is personally liable, is a contract by the grantee with the grantor to pay the mortgage debt, especially where the mortgage debt is computed as part of the consideration money for the conveyance. This contract is with the grantor for his indemnity, and the obligation of the grantee to pay the debt enures in equity for the benefit of the mortgagee, and he may enforce it against the grantee to the extent of the unpaid part of the mortgage debt remaining due after the proceeds of the mortgaged estate have been applied thereon. The principle on which the mortgagee in such cases is entitled to enforce the obligation of the grantee is, that by the acceptance of a deed containing an assumption of the mortgage debt, the grantee becomes the principal debtor — the liability of the grantor as between the parties being that of a surety only; and by a well-settled doctrine of equity the mortgagee as a creditor may, by way of subrogation, have the benefit of all collateral obligations which a person standing in the situation of a surety for another holds for his indemnity. The contract being with the grantor for his indemnity, may be released or discharged by him at any time before the mortgagee proceeds to enforce his fights against the grantee; but if at the time suit is brought by him,

the obligation of the grantee to pay the mortgage debt is in existence undischarged, his remedy against the grantee is complete. Klapworth v. Dressler, 2 Beas. 62; Crowell v. Hospital of St. Barnabas, 12 C. E. Gr. 650 ; Youngs v. Trustees of Public Schools, 4 Stew. Eq. 290 ; Vreeland v. Van Blarcom, 8 Stew. Eq. 530; Sparkman v. Gove, 15 Vr. 252; Keller v. Ashford, 133 U. S. 610, 622, 623; 1 Jones Mort. § 755. All the cases agree that the language contained in this deed creates an obligation on the part of the grantee which the mortgagee may enforce in equity. This remedy of the mortgagee is not affected by the acts of 1880 and 1881. The first section of the act of 1880 regulates simply the form of proceeding in foreclosure suits, and the second and third sections, as amended by the act of 1881, apply to suits at law upon bonds secured by mortgages. Rev. Sup.pp. 489,490. The ancient and familiar doctrine in equity that the creditor shall have the benefit of any obligation or security given by the principal to the surety for the payment of the debt, and the remedy in a court of equity to enforce this equitable doctrine, are not impaired by this legislation. The remedy in equity is independent of the foreclosure suit. Pruden v. Williams, 11 C. E. Gr. 210.

Beckett died in August, 1894, and after the sale of the mortgaged premises under the foreclosure, Stone filed a bill in equity against Beckett’s representatives for the reformation of the deed by eliminating therefrom the covenant of assumption, on the ground that the same was inserted in the deed without his knowledge and by mistake, and that it was not the intention of either of the parties to said deed to have it in the deed. The case was heard by an advisory master on bill, answer and depositions, and the master denied the relief prayed for and advised that the complainant’s bill be dismissed. Upon his advisory opinion a decree was made accordingly. This decree was affirmed by this court. Stone v. Beckett (March Term, 1896). By force of this decree it was adjudged as a finality that the contract of the grantee with the grantor to pay the mortgage debt was a valid and subsisting obligation. Inasmuch as the right of the complainant in this case results from the contract between Stone and Beckett, it would follow as a legal conclusion that the decree in the former suit, if put in evidence, would determine the rights of these parties, unless some independent equity, extraneous of the conduct of the immediate parties to the deed, be made to appear. The record does not disclose that the decree in the former suit was put in evidence in this case. The ease will therefore be examined de novo upon the pleadings and evidence.

The defendant, in his answer, admits that by the deed of January 25th, 1893, Beckett conveyed to him the premises described in the deed. He denies that he accepted the said deed pursuant to any bargain and sale between him and Beckett. He also denies that the said agreement to assume and pay the mortgage was in any form accepted by him, and says neither he nor Beckett ever bargained for such an undertaking, and that he never saw the deed until after the foreclosure suit was begun; that after the process in that suit was served upon him, he inspected the deed for ■ the first time, and until that time he was wholly ignorant of such an undertaking being inserted in the deed. He also alleges in his answer that he took title to the premises for the benefit of one McClung, at the request of Beckett and McClung, and that he held the title as security for the payment to him of $1,000 by McClung, and that McClung was the real purchaser.

The facts connected with this transaction, as stated by the vice-chancellor in his opinion, are briefly these: “ Edward B. Stone, the defendant, was the owner of four houses and lots in Camden which were subject to mortgages, the equity in the four being considered equal to $2,000. One McClung was desirous of becoming the owner of said farm, and not having the cash with which to make the purchase, and knowing that Beckett wanted to sell his farm, and "that Stone was willing to dispose of his houses and lots, adopted the following scheme, with the view of ultimately securing the title in himself, and in so doing to limit the number of conveyances as much as possible. He procured the consent of Stone to make conveyance of his said four lots directly to.Beckett in consideration of Beckett conveying the farm to Stone, instead of having the Stone conveyance first made to himself and then conveying to Beckett, with the express agreement that the $2,000, at which the equity of redemption in the Stone lots was valued, should be paid to Stone by McClung, and that Stone should hold as security therefor the title to the said farm.”

The negotiations which resulted in the exchange of the Camden lots for the Beckett farm were conducted entirely by McClung. The parties met at the office of Martin "V. Bergen February 3d, for the purpose of the delivery of the deeds by the parties, respectively. The persons present on that occasion were Beckett, Stone, McClung and Mr. Bergen, who had been the counsel and adviser of Stone for. many years. Beckett had the deed from him to Stone for the farm executed and acknowledged on the 25th of January, 1893. The deed from Stone to Beckett was prepared in Bergen’s office. Mr. Bergen testified that

“after Beckett brought his deed there and he delivered that deed to Stone and McClung, both were there, and Stone had his deed there, and both lay on the table, and I chucked one to one and one to the other, and then I drew an agreement.”

He also testified that he did not examine the deed — only looked to see if it was acknowledged. The agreement referred to is the agreement between Stone and McClung:

“Agreement entered into this 3d day of February, 1893, between Edward B, Stone, of the city of Camden, N. X, of the first part, and Thomas JE. McClung.' of the second part. (1) It is agreed that the.said party of the first part, for and in consideration of the sum of §2,000, is to convey to the said party of the second part the property conveyed to the said party of the first part by George S. Beckett, by deed dated January 25th, 1892, situated in Logan township, Gloucester county, New Jersey, containing about 438.08 acres. (2) The said agreement is to be carried out within sixty days from the date hereof. (3) The property is to be conveyed subject to the encumbrance thereon, over and above said -§2,000. (4) The conveyance or transfer of said property is to be made to said party of the second part or to such person as he may designate, and for such consideration as he may name. In witness whereof the said parties have hereunto set their hands and seal, the 3d day of February, 1893. Signed and sealed in the presence of Martin Y. Bergen. Edward B. Stone Thomas K. McClung.”

The deed was left with Bergen to be recorded, and was recorded the same day. In virtue of the title conveyed by the deed, possession of the farm was taken immediately, and was held until the foreclosure sale. The property has meanwhile been under the control of McClung exclusively, but his possession and control have been with the acquiescence and consent of Stone, and under the title Stone obtained under the deed. The vice-chancellor, in his opinion, says that, “ so far as Stone was concerned, he was simply an instrument used by McClung to procure the passage of the title to the farm to himself ultimately.” It is not necessary to consider whether McClung practiced any fraud or deception to induce Stone to consent to the arrangement made between them. The problem for judicial decision is how far the arrangement between them can be permitted to affect the rights of Beckett under the contract Stone made with him. This problem must be solved in conformity with legal principles. Beckett took no part in the negotiation of the arrangement between Stone and McClung. He simply agreed to make the deed to Stone, which was eminently proper, inasmuch as the transaction was an exchange for property of which Stone was the owner. Stone testified that he had no acquaintance with Beckett; that before the meeting at Bergen’s office to exchange deeds he had never seen him but once; that Beckett and McClung at that time came to his office, and that he had no conversation with him. That interview manifestly took place after all the negotiations had been concluded, and all that occurred at the time is testified to by Stone, as follows:

“ Mr. McClung introduced me to Mr. Beckett, and Mi-. McClung says, ‘ Ed., Mi-. Beckett will take those properties; ’ and he said, ‘ Will you have the deeds made in this fashion?’ He says, ‘You bring me that deed and I will have the deeds drawn.’ All right; I brought him down the deeds, and they left, and Mr. Beckett asked me how much there was against the property, and I told him. He asked me about the tax, if that is paid, and I told him they were, and that is about all that was said as far as I can recall.”

Nothing was done at that interview tending in the slightest degree to influence Stone to make the indiscreet arrangement he made with McClung. Nor is there any proof that Beckett had knowledge of the personal transactions between McClung and Stone. The only evidence touching that subject is the fact that Beckett was present at Bergen’s office when the agreement between McClung and Stone was prepared and read, and it does not appear that he gave such attention to the paper, which did not concern him, as to become informed of its contents. All that Bergen testified to. was that Beckett was there while I fixed the matter up, and they signed the agreement, and they all went out together. That is all I know about it.” Nor was there anything in the paper that would excite suspicion of wrong. The agreement was simply for an option to McClung to purchase the property within a limited time for the sum of $2,000, subject to the encumbrances. On this evidence the vice-chancellor concludes that it would be highly inequitable to enforce against Stone the claim for a deficiency. In this view as a basis of judicial decision I cannot concur. It was competent for Stone to take the place of McClung as the contracting party to oblige the latter, and so far as Beckett was concerned, Stone voluntarily became the contracting party by accepting the deed to him as grantee containing a covenant that, as part of the consideration of the conveyance, he would assume and pay the mortgage on both tracts. The legal'effect of such a covenant is not changed by the fact that the remedy upon it is sought in a court of equity. The covenant has the same efficacy in a court of equity as in a court of law, unless it be set aside or avoided on some one of the grounds on which a court of equity may annul or reform a deed —fraud or mistake.

There is no proof to sustain an allegation of fraud. It is conceded that the mortgage debt upon both tracts was comprised in the consideration for the conveyance. Stone testified that McClung told him that he was paying $21,900 for the property. To make up that sum the whole mortgage debt was required to be included. The covenant to assume and pay the entire mortgage debt is full and specific, more so than is usual, and is contained in that part of the deed in which such covenants are usually placed. Beckett gave the deed into the hands of Mr. Bergen, who was an experienced lawyer, and had been the counsel and adviser of Stone for many years. Both McClung and Stone knew of the mortgage on the farm and the amount of it, and that the mortgage debt was part of the consideration of the conveyance. If either Bergen or Stone or McClung had exercised ordinary care, the presence of the covenant in the deed would have been discovered.

Nor is there such proof in the case as would justify the reformation of the deed on the ground of mistake. Courts of equity may grant relief on the ground of mistake, by rescinding the entire contract or reforming it, but such relief will not be granted in case of a deed, unless upon proof that is entirely satisfactory and convincing. In granting relief on the ground of mistake, there is a distinction between the rescission and the reformation of a written instrument. A court of equity may rescind a contract for a mistake which is unilateral — that is, a mistake on the part of one of the parties only. In such a case, the whole contract is set aside, and the parties restored to their original position. But in the case of the reformation of a contract or deed by altering or expunging some of the terms contained in it on the ground of mistake, the part improperly introduced into it will be altered or expunged, and the instrument will stand as reformed. To warrant reformation there must be a mutual mistake — that is, a mistake shared in by both parties. Paget v. Marshall, 28 Ch. Div. 255; 2 Pom. Eq. § 870. Consequently, no relief can be granted for a mistake which is unilateral after the position of the parties has been changed so that the former state of things cannot be restored. Pollock Cont. 541. The deed was delivered and accepted, and possession taken and held under it until the entire estate was divested by a sale in the foreclosure suit. The defendant, in his answer, admits that he became aware of this covenant shortly after process was served upon him in the foreclosure proceeding. No efforts were made to rescind the conveyance by restoring the title to Beckett, and, at this time, restoration of Beckett to his original position has become impossible, and relief by the way of rescission could not be-granted even if the proof of unilateral mistake were entirely satisfactory and convincing.

Under the circumstances, the only relief that can be considered is by way of reformation, by expunging the contract of assumption on the ground that it was inserted in the deed by the mistake of the parties mutually. The vice-chancellor disposes of this aspect of the case on the authority of Bull v. Titsworth, 2 Stew. Eq. 73. The other cases cited in the opinion under this head are not relevant to this precise subject. In Bull v. Titsworth the chancellor found as a fact that the assumption of the mortgage was not part of the agreement made on the purchase of the property, and that the defendant, when he accepted the deed, was not aware that it. contained the clause. The assumption clause was not in that part of the deed in -which such an agreement was usually written — at the end of the description of the premises — but was inserted among the covenants by the grantor, and at the end of the description of the property the statement was that the property was conveyed subject to the mortgage. It also appears by the chancellor’s opinion, that when the defendant discovered the covenant, he sought to rescind the contract on that account, and offered to surrender the deed to the grantor on receiving back a railroad bond of $1,000, which he had given as the consideration for it; and when the grantor stated that he was unable to return the bond to him, he offered to surrender the deed on the receipt of $50, which offer the grantor declined. The defendant had acted promptly, and had done all that was necessary to effect a rescission and restore to the grantor the title he had conveyed. The chancellor’s opinion does not sustain the reporter’s head-note. The case is not authority for the position that a deed will be reformed for a unilateral mistake where there has been no rescission of the entire transaction.

The doctrine that a contract or deed will not be reformed for mistake, in the absence of fraud or imposition, unless the mistake was mutual, that is, reciprocal and common to both parties, where each alike was under the same misconception as to the terms of the written instrument, is the settled doctrine of courts of equity. This doctrine is accurately stated by Mr. Kerr in this language:

There can be no rectification if the mistake be not mutual or common to all parties to tbe instrument, or if one of the parties knew of the mistake at the time he executed the deed. Where one party only has been under a mistake, while the other, without fraud, knew what the character of the deed was, and intended that it should be, the court cannot interfere, for otherwise it would be forcing on the latter a contract he never entered into, or depriving him of a benefit he had bona fide acquired by an executed deed. Rectification can only be had where both parties have executed an instrument under a common mistake and have done what neither of them intended. A mistake on one side may be a ground for rescinding but not for correcting or rectifying an agreement.” JBTerr Fr. (2d ed.) 498.

The doctrine is stated by Chief-Justice Spencer in this language: “ It is-not enough in cases of this kind to show-the sense and intention of one of the parties to the contract; it must be shown, incontrovertible, that the sense and intention of the other party concurred in it; in other words, it must be proved that they both understood the contract, as it is alleged it ought to have been, and as in fact it was, but for the mistake. It would be the height of injustice to alter a contract on the ground of mistake, where the mistake arises from misconception by one of the parties in consequence of his imperfect explanation of his intentions. To make a contract, it is requisite that the minds of the contracting parties agree on the act to be done; if one party agrees to a contract under particular modifications, and the other party agrees to it under different modifications, it is evident there is no contract between them. If it be clearly shown that the intention of one of the parties is mistaken and misrepresented by the written contract, that cannot avail unless it further be shown that the other party agreed to it in the same -way, and that the intention of both of them was, by mistake, misrepresented by the written contract.” Lyman v. United Insurance Co., 17 Johns. 377.

Equally explicit is the language of Chief-Justice Ames, in Diman v. Providence R. R. Co., 5 R. I. 130, 135, where he said: “ If the court were to reform the writing to make it accord with the intent of one party only to the agreement, who avers and proves that he signed it as it was written by mistake, when it accurately expressed the agreement as understood by the other party, the writing, when so altered, would be just as far from expressing the agreement as it was before, and the court would be engaged in the singular office of doing right to one party at the cost of a precisely equal wrong to the other.”

The cases to the same effect are numerous. Many of them will be found in the following citations: 2 Lead. Cas. Eq. (4th ed.) 979, 980, 981; American note to Worlam v. Hearn, 15 Am. & Eng. Encycl. L. 639 tit. “Mistake;” 1 Sugd. V. & P. (14th ed.) 243, and note; Fowler v. Fowler, 4 De G. & J. 250, 264, and note; Paulison v. Van Iderstine, 1 Stew. Eq. 306, 310; Morris v. Penrose, 11 Stew. Eq. 629, 630; Henderson v. Stokes, 15 Stew. Eq. 586, 589.

The negotiations for the. exchange of the two properties were had between McClung and Beckett, and were oral. No agreement in writing preceded the making of the deed. Beckett died before the commencement of this litigation, and the only evidence that the agreement made verbally was different in any respect from that set out in the deed is the testimony of McClung. Barker, who drew the deed, and is an intelligent and disinterested witness, testified that the deed was prepared in conformity with Beckett’s instructions. Barker and Livermore both testify that McClung saw the deed while it was in Barker’s office, and was made aware that the assumption clause was in it. Barker’s testimony is that McClung came to his office and said that the deed would not do; that the purchaser objected to that clause, and wanted another deed prepared; that he (Barker) told McClung that Mr. Beckett could not make a deed without that in it. Livermore, who is the private secretary of the mortgagee, testified that he met McClung at Barker’s office on another occasion before the deed was delivered, and that he and McClung read the deed over and read the assumption clause, and that McClung asked him whether that would compel Stone to pay the mortgage. MeClung’s testimony is in conflict with the testimony of Barker and Livermore in several matters most material in this controversy. To justify the reformation of a deed executed, delivered, accepted and acted upon, on the ground that it did not correctly express the agreement made by the parties, the proof must be clear and convincing, and upon testimony that is unexceptionable, both with regard to the agreement actually made by the parties and the mutuality of the mistake through which a different agreement was put in the deed. In Rowley v. Flannelly, 3 Stew. Eq. 612, 614, Vice-Chancellor Van Fleet says: “ When the evidence, in demonstration of mistake, is doubtful or equivocal, or strongly contradicted, so that it is impossible for the mind to reach a strong conviction as to the truth, the court will not change what is written. * * * Until a mistake has been established by such force of proof as leaves no rational doubt of the fact, no change in the writing sought to be reformed is entitled to be called a correction.”

The rule of evidence, with respect to the character and degree of proof exacted, in order to substitute another contract in the place of that contained in a written instrument, as stated by Vice-Chancellor Van Fleet, has frequently been declared and adopted. 1 Story Eq. Jur. § 157; Cummins v. Bulgin, 10 Stew. Eq. 476; Henderson v. Stokes, 15 Stew. Eq. 586, 588; Hupsch v. Resch, 18 Stew. Eq. 657, 662. A considerable number of cases to the same effect are cited in 15 Am. & Eng. Encycl. L. 650. The testimony produced by the defendant in this case falls far short of the standard of proof required to expunge from the deed the covenant in question.

In Vreeland v. Van Blarcom, 8 Stew. Eq. 530, 531, cited in the opinion below, the defendant for many years had been mentally an imbecile. One Geroe had charge of his affairs as agent and qwas'i'-guardian. As such he negotiated an exchange of properties, and caused to be inserted in the deed to the defendant an agreement to assume a mortgage which Geroe himself held. This agreement was placed in the deed without the knowledge or authority of the defendant and without its being required by the grantor. This court vacated the agreement to assume, on the ground that Geroe could not insert such a stipulation in the deed for his personal benefit without the authority of his principal. ■ That decision would be controlling as between McClung and Stone. The facts in the case disclose its inapplicability to this controversy as between the parties to this suit. McClung was not owner of the mortgage now in question, nor was he in this transaction the agent of the mortgagee. He derived no benefit to himself personally by the assumption of the payment of the mortgage by Stone.

The decree should be reversed, and a decree entered in conformity with the prayer of the bill.

The defence was made by answer only. It should have been mads by way of a cross-bill. Miller v. Gregory, 1 C. E. Gr. 274; French v. Griffen, 3 C. E. Gr. 279; Graham v. Berryman, 4 C. E. Gr. 29; Rosenkrans v. Snover, 4 C. E. Gr. 420; O’Brien v. Hulfish, 7 C. E. Gr. 471, 475; Allen v. Roll, 10 C. E. Gr. 164, 165. And all persons who were interested should have been made parties to the cross-bill. When the object of a cross-bill is affirmative relief, such as would be obtained by the reformation of a deed, in aid of a defence to the suit, persons not parties to the original bill, who are necessary parties to the relief sought, may be made parties to the cross-bill. Brandon Manufacturing Co. v. Prime, 14 Blatchf. 372; 5 Encycl. Pl. & Pr. 650. In Randolph v. Wilson, 11 Stew. Eq. 28, Chancellor Runyon said that the defence that an assumption clause was inserted in a deed by mistake should regularly be set up by cross-bill, but that the court had entertained it when set up by answer without a cross-bill when the matter could be satisfactorily tried without a cross-bill. In this case the defence should have been set up by way of a cross-bill, and the representatives of Beckett should have been made parties to it. That two litigations resulted in two decisions of the chancery court, the one directly opposite to the other, upon the same facts and depending upon a liability identically the same, indicates that those rules of practice by which a court of equity seeks to dispose of the entire litigation in one suit whenever it is practicable to' do so, should have been conformed to in this case. No objection was made to the mode in which the defence was set up in this suit, and reference to it has been only to exclude an inference that it is approved by this court.

For reversal — The Chief-Justice, Depue, Dixon, Garrison, Gujimere, Lippincott, Ludlow, Magie, Van Syckel, Barkalow, Bogart, Nixon — 12.

For affirmance — None.


author: Dixon, J.

text:
    Richard Warren, appellant, v. Joseph E. Tynan, respondent.
    1. At a sheriff’s sale of land, complainant and defendant jointly bid in the property and each paid one-half of the price. Afterwards, they orally agreed that the sheriff should convey the property to the defendant alone and that he should hold it for the equal benefit of himself and the complainant, and such conveyance was accordingly made. — Held, that the complainant had a resulting trust in the land arising out of the payment of half the price, and not an express trust depending on the oral agreement.
    2. A resulting trust is not converted into an express trust by being set forth fully by the trustee in his answer in chancery.
    3. A resulting trust founded on parol may be rebutted, put down or discharged by parol.
    On appeal from a decree advised by Vice-Chancellor Green, whose opinion is reported in Tynan v. Warren, 8 JDich. Ch. Rep. 313.

      Mr. Michael Dunn and Mr. Eugene Stevenson, for the appellant.

      Mr. George S. Hilton, for the respondent.
   The opinion of the court was delivered by

Dixon, J.

The bill in this case was filed to establish a trust in a certain house and lot situate in Paterson. The facts, scarcely disputed, are that in November, 1878, the complainant and defendant ■jointly bid in the property at a sheriff’s sale and each paid one-half' of the purchase-monej’'; that they thereupon agreed that the sheriff should convey the property to the defendant alone and that he should hold it for the joint and equal benefit of himself and the complainant; that the conveyance was so made; that in the early part of 1881, after the defendant had prepared a deed for conveying to the complainant an undivided half of the property, an oral agreement was entered into between the parties, by which the defendant assumed sole liability for certain obligations previously resting upon both, and the complainant relinquished all interest which he had in the property; that the deed prepared was thereupon, by direction of both parties, destroyed, and thereafter the defendant paid the assumed obligations and acted as sole and undisputed owner of the property until the year 1892, when the bill was filed.

On this state of facts the learned vice-chancellor before whom the cause was tried, decided that the trust created in 1878 was express; that it was sufficiently manifested by the defendant’s answer, and that it could not be, and therefore was not, relinquished by the parol agreement made in 1881.

We are constrained to dissent from the opinion that the trust was express.

At the time when the agreement, which is supposed to have created an express trust, was made, neither party had any legal title to the property, but each, by his bid and payment of one-half of the price, had become entitled to a resulting trust in an undivided half of the property, subject to compliance with the conditions of the sheriff’s sale. The agreement thereupon made, with regard to the transfer and tenure of the legal title, was simply an explicit provision for the maintenance of the complainant’s pre-existing equitable estate. It was not intended to change the nature of that estate or to vest in him any interest in the estate which the defendant then possessed or could in equitable contemplation then acquire. It was merely a mutual recognition of the rights which, by operation of law, belonged to the complainant and would continue to be his after the conveyance of the legal title to the defendant.

Nor do the statements in the answer transform the original resulting trust into an express trust. Such statements are not regarded as the declaration or creation of a trust, which the general principles of equity require; they are only the manifestation and proof of a trust, which the statute of frauds renders necessary in certain cases. The character of the trust, as an express or implied one, depends not on the manner in which its existence is proved after it has been created, but on the nature of the facts which brought it into being. If a defendant, by setting forth fully in his answer the relations between himself and his cestui que trust, could convert a parol resulting trust into an express trust, then this startling consequence would seem to follow, that by interposing the statute of frauds as a bar to the enforcement of the trust, he might, according to a rule of equity pleading, defeat a trust to which, but for his answer, the statute would not have applied.

We think the trust iu this case was always a resulting trust.

Such a trust, founded on parol, may be rebutted, put down or discharged by parol. Botsford v. Burr, 2 Johns. Ch. 405; Livermore v. Aldrich, 5 Cush. (Mass.) 431; Dean v. Dean, 1 Stock. 435, 431; Peer v. Peer, 3 Stock. 432. Therefore, in the present case, the trust arising in 1878 was completely discharged by the contract made between the parties in 1881.

.. But the complainant insists that afterwards the contract of 1881 was, by mutual consent, rescinded. We are not satisfied that such a rescission is proved; but, if it were, it is difficult to see how that could support the bill of complaint. The rescission by mutual consent would only be a new agreement, and not being accompanied by any facts out of which a trust would result, and not being itself evidenced in writing so as to form the basis of an enforceable express trust, it could not affect the defendant’s legal title.

Without adverting to the laches of the complainant, we are of opinion that the decree in his.favor should be reversed, and his bill dismissed.

Bor reversal — The Chief-Justice, Depue, Dixon, Garrison, Lippincott, Ludlow, Mague, Van Syckel, Bog-ert, Barkalow, Nixon — 11.

Bor affirmance — None.


text:
    Joseph A. Porter, appellant, v. Martin V. Bergen, respondent.
    Where the relation of lawyer and client exists, and the lawyer receives from, his client security for his compensation, the burden of proving the fairness of the transaction is upon the lawyer, and the security will be suffered to stand only for the amount shown to be justly due upon it.
    On appeal from a decree advised by Vice-Chancellor Pitney.

      Mr. Henry M. Snyder, Jr., for the appellant.

      Mr. Herbert A. Drake, for the respondent.
   The opinion of the court was delivered by

Dixon, J.

By the decree below, dated January 4th, 1895, the defendant was adjudged to hold the premises described in the bill in trust for the complainant, subject to any moneys due the defendant on settlement of the account between the parties, and a reference was ordered to a: master to state the account, in which he was directed to allow the defendant $1,000 as counsel fee for services rendered by him to the complainant. The master reported March 14th, 1895, and each party filed exceptions. On hearing the exceptions, the court credited the defendant with several sums, the allowance of which and of the $1,000 fee forms the ground of the present appeal.

The complainant was treasurer of the city of Camden from 1878 to 1881, and then was discovered to be a defaulter in that office. Thereupon he applied to the defendant, a member of the bar, for advice and aid. Subsequently he transferred most of his property to the defendant, and on that transfer the trust in this case was based.,

The services for which the so-called counsel fee was allowed were not those of a counselor-at-law distinctively, but were such as any lawyer would be able to render with the view of saving his client from the consequences of his wrongdoing.

We have searched the case in vain for evidence which would justify so large a fee. Even if it be conceded that the- complainant agreed to the charge, yet a court of equity would not sanction it except upon proof of its perfect fairness. Brown v. Bulkley, 1 McCart. 451; Schomp v. Schenck, 11 Vr. 195, 200.

The propriety of applying this doctrine in the present instance is demonstrated by the defendant’s reply to the question, Did he [the complainant] make any objection to your charging $1,000 at that time ? No, sir; he would have given me almost anything at that time, I think; he was in a tight place, and he knew it.”

Let this item be reduced to $250.

The loan of $75, allowed upon the hearing, was made long before the transactions out of which the present trust arose, and seems to be in no way connected therewith. It should be disallowed.

The loan of $50, likewise allowed, was made by defendant’s brother, and has no place in this accounting. It should be disallowed.

The commission of $50, allowed on the sale of No. 528 Cooper street, should be disallowed, because it appears that the defendant never had title to that property and had nothing to do with selling it.

In other particulars the decree is not objectionable.

Let the decree be modified in accordance with the foregoing directions.

For reversal — The Chief-Justice, Depue, Dixon, Garrison, Gummere, Lippincott, Ludlow, Magie, Van Syokel, Bark alow, Bogart, Nixon — 12.

For affirmance — None.


text:
    Wallace Lippincott and Nathan S. Read, appellants, v. Henry Bechtold et al., respondents.
    1. A decree of the orphans court allowing an executor’s account, made after due publication, will, even though irregular, cast upon those who seek to impugn the account collaterally, the burden of proving its incorrectness.
    2. Residuary legatees are not wronged by a transfer to the testator’s widow of personal property which does not appear to be in excess of her rights under the will.
    3. A large number of lots were conveyed to three executors in satisfaction of a debt due to the testator. On some of the lots one of the executors had a mortgage which he afterwards foreclosed, buying in the lots at a fair price.— Held, that he did not hold the title as trustee for the testator’s estate.
    4. An exception to an item in an account stated by a master in chancery was sustained, and the account was sent back to the master for modification. He again reported the item as at first stated, but reported the facts on which the modification could be made. — Held, that the item might be corrected without further formal exception.
    On appeal from a decree, in Bechtold v. Read et al, advised by Vice-Chancellor Bird.

      Mr. Edwin Robert Walker, Mr. Garret D. W. Vroom and Mr. Mayne (of Philadelphia), for the respondents.

      Mr. Charles E. Hendrickson, for Lippincott.

      Mr. Walter A. Barrows, for Read.
   The opinion of the court was delivered by

Dixon, J.

These appeals, one by Wallace Lippincott and the other by Nathan S. Read, bring up a decree in chancery, made on exceptions to a master’s report which stated the account of each appellant as an executor and trustee under the will of Samuel Bechtold, Jr., who died in Burlington county, November 18th, 1869. It will suffice for us to indicate our views on those matters wherein we differ from the learned vice-chancellor who advised the decree.

First, in Lippineott’s appeal.

With regard to the bond and mortgage given to the testator by Nathan S. Read, for $7,400, the facts seem to be that, early in 1870, the executors endeavored to sell the bond and mortgage, and at length made an agreement with John R. Weeks, representing the Mutual Benefit Life Insurance Company, to sell them to that company for $5,000; that the executors thereafter signed, sealed and acknowledged a proper assignment, and handed it to Nathan S. Read for delivery to the company on payment of the price; that Read met Weeks and delivered him the assignment, receiving therefor Weeks’ personal check for $5,000, payable to Read’s order, and also, at Weeks’ request, endorsing and returning to Weeks a similar check for $2,400; that subsequently Read endorsed the $5,000 check and delivered it to Lippincott. It also appears that the company had previously given to Weeks its check for $7,400, to be used in payment for the bond and mortgage, but it is not asserted that Lippincott had any notice of this fact or of the $2,400 check, or any reason to suppose that the company had been willing to pay more than $5,000 for the security. In 1885, Lippincott, on citation, filed an account as executor in the orphans court of Burlington county, in which he prayed credit for the difference between the inventoried valuation. of the bond and mortgage and $5,000, and that account after due publication was allowed by the court. Although, under section 104 of the Orphans Court act, the allowance was irregular, because the account showed a balance due the. accountant and had not been reported to the court at a previous term, yet the decree of allowance is not void, but operates to cast upon those who would impugn the account collaterally the burden of proving its incorrectness. The evidence in this case does not satisfy us that- Lippincott failed to exercise due ca,re, prudence and fidelity in this transaction, and therefore the decree charging him with more than the $5,000 which he received should be reversed.

The following items—

“ 1870.
“May 7. Judgment, Newell Fay v. Yan Arsdale...' §1,265 00
“May 10. Judgment, Newell Fay v. Van Arsdale... 1,591 75
“Aug. 10. Judgment, O. A. Pulte........................ 831 31
“1871.
“Sept. 12. S. T. Leeds, sheriff.............................. 50 00”

all appear in the account allowed by the orphans court, in December, 1885. The credits in that account were not attacked by the bill of complaint, and they were admitted by the complainants’ counsel in the taking of testimony. The evidence shows that the largest of these items was intended to include a judgment obtained by one Schneider against the testator and paid by Lippincott, but with this correction the amounts do not seem to be wrong. The decree reducing them should be reversed.

Second, in Bead’s appeal.

The testator, in his lifetime, had owned a large number of vacant lots, and had conveyed them to various persons, taking in return bonds and mortgages for the entire consideration. After his death, these persons reconveyed the lots to the executors, in satisfaction of the bpnds and mortgages. Afterwards, some of these lots were transferred by the executors through one Hartley to the testator’s widow. The testator’s will gave to his widow his homestead during her life, “ besides her right of dower in all of ’my personal and real estate.” The lots above mentioned represented the testator’s personal estate, and do not appear to have exceeded the value of the widow’s “dower” therein. We think, therefore, that the complainants, who are only residuary legatees and devisees, were not wronged by the transfer. The decree charging any of the executors with these Hartley lots should be reversed.

Of the lots conveyed to the executors as above mentioned in satisfaction of mortgages, one hundred and nine, conveyed by one Burke, were subject to a mortgage which the testator had assigned to Hath an S. Bead. Afterwards, Bead foreclosed this mortgage, and bought in the lots. It does not appear that they were worth more than the face of the mortgage. That the mortgage had been duly assigned by the testator to Read is admitted by a written stipulation filed in the cause, and we therefore see no reason to question his title to the lots. The decree charging him as trustee for the complainants is reversed.

The testator’s will contains the following clause:

“I give and devise unto the children of my brother William, sister Mary, sister Sarah, sister Margaret, brother John and brother Henry, and Nathan S. Bead and his wife, Mary, each of them share and share alike, the residue of my property, both real and personal.”

The vice-chancellor interpreted this clause as giving shares, not to Mr. and Mrs. Read, but to their children in common with the children of the brothers and sisters named. This, we think, is erroneous. The conjunction “and” between “brother John” and brother Henry ” indicates the closing of the class of persons whose children are to take, and then other persons, Nathan S. Read and Mary, his wife, are designated to take in common with the children before mentioned. This interpretation is much strengthened by the facts that Mrs. Read was an adopted daughter of the testator, who was otherwise childless, and, although she and Mr. Read had been married ten years at the date of the will, they had had no children up to the time of the testator’s death.

It being conceded that the children of the brothers and sisters named numbered fifteen, the residue of the estate should be divided into seventeenths, of which Mr. and Mrs. Read are each entitled to one.

The other matters discussed, by counsel have been carefully examined by the court, but we have not found sufficient reason for disturbing the conclusions of the vice-chancellor.

It may be worth while to say that, although the decree corrects the master’s final report in respect to the Gaskill lots', without any exception having been taken thereto, yet the master’s first report on that subject was excepted to by the complainants, and the exception was sustained, and the master directed to modify his report. For what he deemed good reason, he did not do so in stating the account, but he reported the facts according to which the modification could be made. Under these circumstances, we think, it was proper to correct the report without further exception, so as to make the final decree consistent with the prior order.

Let the decree of the court of chancery be modified in accordance with the views above expressed.

For reversal — The Chief-Justice, Depue, Dixon, Garrison, Gummere, Ludlow, Mag-ie, Van Syckel, Barkalow, Bogert, Nixon — 11.

For affirmance — None.


text:
    The Mayor and Council of the Borough of Rutherford, appellants, v. Martha B. Alyea et al., respondents.
    1. A multifarious bill may, at an early stage of the cause, be dismissed by the court of its own motion.
    2. Except for some special reason, the court of chancery will not interfere with the ordinary jurisdiction of the probate courts in the settlement of the accounts of executors and administrators.
    S. A bill for an account will not be retained when it shows on its face that the complainant is informed of all the items, of the account, and no relief is prayed with reference to the balance.
    4. A creditor of a deceased person cannot maintain a bill to set aside as fraudulent a conveyance of the decedent’s lands, when the bill shows that the personal property of the deceased is ample to.pay his debts.
    5. A creditor at large of a deceased person, who has not presented his claim to the personal representative under the statute, cannot maintain a bill in equity to set aside as fraudulent a conveyance of the decedent’s lands.
    On appeal from a decree advised by Vice-Chancellor Emery, whose opinion is reported in Borough of Butherford v. Alyea, 8 Dick. Ch. Rep. 580.

      Mr. Anderson Price, for the appellant.

      Mr. Addison Ely, for the respondents.
   The opinion of the court was delivered by

Dixon, J.

The present appeal questions the correctness of an order sustaining the bill of complaint against the demurrer of Martha B. Alyea and Garrabrant R. Alyea.

The bill alleges that Thomas W. Alyea was collector of taxes in the borough of Rutherford until his death, in September, 1893; that while in office he delivered to Garrabrant, as his agent, certain moneys and securities belonging to the borough; that on his death Martha became his executrix and chief legatee and devisee; that Garrabrant was appointed collector of the borough to succeed Thomas; that Thomas was a defaulter in office, and died owing the borough a large sum of money; that Martha has not accounted as executrix of Thomas; that she has made voluntary transfers of some personal property left by him, and has made a fraudulent conveyance of some of his real estate to Garrabrant, her husband, and thereupon the bill prays, or seems to pray, that Martha may account as executrix; that Garrabrant may account, both as agent of Thomas and as collector of the borough, and that the conveyance to Garrabrant may be set aside.

The multifarious character of the bill, even after being stripped of the matters against other defendants, which were eliminated in the court below, is manifest. The account of the executrix has not the least connection with the account of the collector, and Martha is not charged with the slightest duty touching the official conduct of her husband. Although the demurrer does not set up this ground of complaint, yet, the attention of the court being drawn to the matter at this eai’ly stage of the cause, it would be in entire accord with equitable principles for the court, of its own motion, to stop proceedings on a bill so framed.

A further examination will, we think, show that for other reasons the bill should not be entertained.

First, with regard to an accounting by the executrix. The bill does not aim to draw into the court of chancery the general settlement of the decedent’s estate; it is concerned only with the payment of the complainant’s claim. While the court of chancery has concurrent jurisdiction with the probate courts in the settlement of the accounts of executors and administrators, yet it will not interfere with the ordinary jurisdiction of those courts except for some special cause. Frey v. Demarest, 1 C. E. Gr. 236. The present bill suggests no special’cause for the intervention of a court of equity, but, on the contrary, indicates that the account is one which may be readily adjusted in the orphans court.

Second, as to the accounts of Garrabrant W. Alyea. The bill admits that he had paid into the borough treasury everything which he had received as agent of Thomas, so that nothing remains to be litigated on that score. As collector, he is alleged in the bill to owe to the borough a balance of $1,718.30, but the items on both sides of the account producing that balance are precisely set forth in the bill, so that no discovery is required, and no decree whatever is prayed for with respect to the balance. An ordinary action for money had and received would seem to afford the complainant an ample remedy.

Third, concerning the setting aside of the alleged fraudulent conveyance of the decedent’s lands, there are at least two obstacles in the complainant’s path. In the first place, the decedent’s personal property is the primary fund for the payment of his debts, and according to the bill the personal property amounts to $5,276.49, while the only debt is that due to the complainant, $3,290.15; so that there appears to be no occasion for a resort to real property. In the second place, it is not averred that the complainant’s claim has been either reduced to judgment or presented to the executrix under the statute, so as to bring it within the rule laid down in Haston v. Castner, 4 Stew. Eq. 697. The decision in Merchants’ Transportation Co. v. Borland, 8 Dick. Ch. Rep. 282, is cited to support the contention that a mere creditor at large may pursue the real estate of his deceased debtor fraudulently conveyed. But the opinion of the learned vice-chancellor in that case does not go so far; he only held that a judgment recovered in a sister state, being, under the federal constitution, as conclusive as if recovered here, would sustain such a pursuit in equity. The complainant is simply a creditor at large. •

On the whole, we think this bill is not so framed as to entitle the complainant to any relief, and should be dismissed.

For reversal — The Chief-Justice, Depue, Dixon, Garrison, Gummere, Lippincott, Ludlow, Magie, Yan Syckel, Barkalow, Bogert, Nixon — 12.

For affirmance — None.


author: Mag-ie, J.

text:
    Christine Meyers, appellant, v. Kate Schumann, respondent.
    1. On December 30th, 1887, George Meyers procured from the Equitable Life Assurance Society, a policy insuring his life for §2,000, and payable at his death to his executors, administrators or assigns. On May 18th, 1888, he assigned his interest in the policy to Mrs. Schumann, who had no insurable interest in his life, and delivered the assignment and policy to her, she assuming payment of subsequent premiums. On November 10th, 1894, he assigned his interest in the policy to Christine Meyers, and died November 25th, 1894. Mrs. Meyers afterwards filed a bill against Mrs. Schumann, who held possession of the policy, and the Equitable Life Assurance Society. Upon an order in the cause {SI Atl. Rep. 460) the society paid into court the §2,000, and the cause proceeded to final hearing upon the respective claims of Mrs. Meyers and Mrs. Schumann, as if they had been ordered to interplead. It was contended that the policy, when assigned to Mrs. Schumann, who had no insurable interest in Meyers’ life, became a wagering contract and void.- — Held, that it was unnecessary to determine the important questions thus presented, for, if the contention is tenable, it would only afford a defence to the Equitable Society, and as that society, by paying the money into court, has recognized its contract as enforceable, the defence has been waived.
    2. The doctrine enunciated by the supreme court, in Trenton Mutual Life Insurance Co. v. Johnson, 4 Zab. 576, and Vivar v. Supreme Lodge. 23 Vr. 455, has never been considered or jn-onounced upon by this court.

      On appeal from a decree advised by Vice-Chancellor Pitney.

      Mr. John J. Crandall, for appellant.

      Mr. Clarence L. Cole, for respondent.
   The opinion of the court was delivered by

Mag-ie, J.

The contest at the final hearing in the court of chancery was between Christine Meyers, the appellant, who was the complainant below, and Kate Schumann, the respondent, who was one of the defendants below. The dispute related to the right of the respective parties to the sum of $2,000, which was claimed by each and which had been paid into court, in pursuance of leave granted by an order in the cause, by the Equitable Life Assurance Society of the United States, which was the other defendant below. The society paid that sum as the amount due upon a policy of insurance issued by it upon the life-of George Meyers, who died November 25th, 1894. The order permitted the payment into court for the purpose of having the rights of the two claimants there litigated and determined.

Some preliminary questions had been raised in the court of chancery respecting the jurisdiction of that court over the case made by the bill, and respecting the proper practice in paying money into court under such circumstances. They were disposed of upon the opinion of Vice-Chancellor Green, which is reported in 31 Atl. Rep. 460. There was no appeal from the orders made therein, and those questions have not been presented or considered on this appeal. After the payment of the money into court, the cause proceeded between Mrs. Meyers and Mrs. Schumann as if they had been ordered to interplead and litigate their respective claims. It was brought to hearing and decided upon that issue, and this appeal must be treated as requiring a review of that decision only.

The claim of Mrs. Meyers, as shown by her bill, was by virtue of an assignment in writing to her of the said policy of life insurance, which assignment was made by George Meyers and dated November 10th, 1894, the policy being payable to his executors, administrators or assigns. The policy itself was not delivered to her, being then in the possession of Mrs. Schumann.

The claim of Mrs. Schumann, as shown by her answer, rested upon an assignment in writing to her of the same policy, made by George Meyers and dated May 18th, 1888, accompanied with delivery of the policy to her.

The cause was brought to final hearing before Vice-Chancellor Pitney, who advised a decree dismissing Mrs. Meyers’ bill with costs, and directing the money in court to be paid to Mrs. Schumann. Mrs. Meyers’ appeal questions the propriety of that decree.

Upon the trial it appeared that Mrs. Schumann had no such relations with George Meyers as would give her what is called an insurable interest in his life. By her testimony it appeared that Meyers had paid the first premium at the issuing of the policy and had then assigned .and delivered it to her as a gift, she agreeing to pay premiums subsequently falling due. This testimony was not contradicted. She also testified that, although Meyers had sometimes paid subsequent premiums, yet that such payments had been made to accommodate her and she had always repaid him such advances. There was evidence tending to cast doubt on the question whether such advances had all been repaid.

Upon these facts it was contended below, and has been contended here, that, as Mrs. Schumann had no insurable interest in the life of George Meyers, an assignment to her of a life insurance policy on his life, the subsequent premiums on which she was to pay, introduced an illegal element into the transaction, and that she could not enforce the contract of insurance on his life, because it became in her hands a. wagering contract and was void, either because of the prohibitions of our laws or because against public policy.

The learned vice-chancellor thus dealt with the contention : In the first place he deemed himself bound by the decisions of the supreme court in Trenton Mutual Life Insurance Co. v. Johnson, 4 Zab. 576, and in Vivar v. Supreme Lodge &c., 33 Vr. 455, to hold that, in this state, a policy of insurance taken out by one upon the life of another, in whose life the policyholder has no insurable interest, will not be void either as prohibited by our laws or as opposed to public policy. In the second place, he held that a policy taken out by one upon his own life and payable to his representatives or assigns was not a wagering contract, and, as I understand it, could not become so by an assignment to one having no insurable interest in the life, although the latter assumed the payment of future assessments. Lastly, he held that such an objection, to the contract could only be made by the Equitable Assurance Society, the insurer, and that, as it had recognized the contract as valid and paid the money into court, the objection had been waived and could not be interposed by Mrs. Meyers.

IVe think the conclusion of the vice-chancellor is amply supported upon the ground last stated. If it be conceded that an illegal element entered into this transaction, it is obvious that the fact furnished a defence to the party upon whom the contract was sought to be enforced. When that party submitted to the obligation of the contract and paid the money into court, the defence was effectually waived. The contract was purged of any such illegality and its proceeds could be contested for by these parties without reference to the contract.

It is therefore unnecessary to consider the first two grounds on which the vice-chancellor placed his conclusion. The questions dealt with and decided in the two cases in the supreme court referred to by him, have never before been presented to this court. They are of the highest importance and ought not to be passed upon unless it is necessary to do so.

The assignment of the policy to Mrs. Schumann was found below to have been a complete gift from Meyers to her. In that conclusion we concur, and it results that it passed to her the right to the money in court paid upon that policy. Meyers’ subsequent assignment to Mrs. Meyers passed to her no interest in the policy or its proceeds, for after the gift to Mrs. Schumann he had no interest in it to convey.

The decree must be affirmed.

For affirmance — The Chief-Justice, Depue, Dixon, Garrison, Gummere, Lippincott, Ludlow, Magie, Van Syckel, Barkalow, Bogart, Nixon — 12.

For reversal — None.