author: Gkey, Y. C.

text:
    Viola McCormick v. Louise Stephany et al.
    [Filed December 26th, 1900.]
    1. A covenant to convey, when the covenantor “should find a purchaser,” becomes obligatory when the covenantor finds some person who is able and willing to pay the covenantor’s price and to purchase the property.
    2. Mere passing conversations of the covenantee indicating an indisposition to buy, given out in course of consultation with her counsel who-was the covenantor, will not estop the covenantee from enforcing the covenant, when the counsel is not shown to have disclosed to his client the effect of her statement.
    3. A clause in a lease, under seal, giving to the lessee the right to buy the devised premises in a named case, is not a mere option, in the nature of a first invitation to purchase, which, being without consideration, must be accepted in the terms of the offer, and which may be held to be rejected by a counter proposition. Such a clause is a completed purchase of a right to have a conveyance, if the purchaser shall choose to buy upon the terms named. The demand of more than such a contract obliges thecovenantor to convey, should not be held to be a rejection of the privilege • to purchase, enabling the covenantor to retain the consideration paid and to refuse to convey. A subsequent demand in accordance with the covenant is obligatory upon the covenantor.
    4. When a covenant to convey does not entitle the covenantee to a deed' with full covenants, her right to a conveyance will not be defeated because • she demands such a deed, if the covenantor in refusing does not object on ■ that account, and wholly denies the covenantee’s right.
    5. A widow will not be decreed to convey her dower right in aid of her husband’s covenant to convey his lands. Her refusal will not be held to • be fraudulent. Her dower right is her own property. She commits no - fraud when exercising her unlimited right to retain or dispose of her own property,
    6. An agreement that a lessee shall have an option to buy, not specifying what estate shall be bought, is, under the circumstances of this case,. an agreement to convey an estate in fee-simple.
    7. Indemnity against the dower right of a wife will not be decreed unless it is shown that the husband has fraudulently induced the wife to • refuse to release. The reason is that requiring such an indemnity is &■- strain upon the wife’s freedom of choice, as the interests of the husband * would prompt him unduly to influence her action. This reason fails when indemnity is sought, after the husband’s death, against the dower right of a widow, for the heirs who are required to indemnify are not in a position to exercise an undue influence upon the widow.
    Oil bill, answer and cross-bill, supplemental bill, answers and proofs.
    The complainant, in the present condition of the pleadings, appears as executrix of the last will of George McCormick, and •as residuary devisee and legatee under that will. She seeks to obtain a decree for the specific performance of a contract made by August Stephany, in his lifetime, for the conveyance of a hotel property in Atlantic City, known as the “Extra Dry.” Mr. Stephany died intestate. The ■ complainant makes defendants the administratrix of Mr. Stephany and also his widow and children, and, by a recent amendment, the residuary devisees of the fee of George McCormick’s lands are also made parties to this suit. '!
    The contract for conveyance was one of the clauses of a lease of the premises in question, made in June, 1897, by Mr. Stephany to Mr. McCormick. By mistake, certain words were omitted which ought to have been inserted. The completed clause is hereinafter set forth.
    Mr. McCormick entered into possession, and in October, 1897, died testate, during the term, giving all his estate to his widow, the complainant, for life, with full power of disposal, and.a limitation over upon her death to the parties brought in by the recent amendment.
    It is claimed by the complainant that in November, 1897, Mr. Stephany “found a purchaser” for the premises, within the meaning of the phrase used in the lease. The complainant thereupon, on December 22d, 1897, gave written notice to Mr. Stephany that she would exerdse the option to purchase the premises in question for the $12,000, and that sum would be paid on tender of a deed “with full covenants.” On May 18th, 1898, the complainant tendered to Mr. Stephany the purchase-money, $12,000, and demanded a deed “with full covenants free of all encumbrances.” On May 19th, 1898, Mr. Stephany refused to make a deed with full covenants free of all encumbrances to Mrs. McCormick, giving his reason therefor, in a written notice addressed to her, “because you are not entitled to a conveyance of the property above mentioned, either under the 'said lease or under any other covenant.” On June 9th, 1898, Mr. Stephany demanded, in writing, payment of rent, or that complainant quit the premises, and threatened proceedings to dispossess her. A distraint levy appears to have been made the same day for rent claimed to have come due June 1st, 1898. On June ■4th, 1898, the complainant filed her bill against Mr. Stephany alone, praying a decree for specific performance by the delivery to her of a deed “with full covenants” conveying the premises, upon her payment of the $12,000, which she tendered to the defendants, and that the enforcement of the distress and the proceedings to dispossess her might be enjoined.
    Mr. Stephany shortly after died intestate, the defendant Louise Stephany, his widow, was appointed administratrix, &c. He left five children, to whom his estate in the “Extra Dry” descended, subject to the widow’s dower. On July 22d, 1898, the complainant abandoned the first bill against Mr. Stephany and filed a new one (the original bill in this cause), having the same object, against his widow and heirs-at-law. An order to show cause was allowed, and on the coming in of the order the defendants presented affidavits denying the equities set up by the complainant, and raising a number of questions, which were disposed of, and a preliminary injunction was granted. See McCormick v. Stephany, 13 Dick. Ch. 'Rep. 357. In this new bill, filed July 22d, 1898, the complainant prays a decree that the defendants deliver “a good and sufficient deed for the premises” upon payment, &c., and does not ask that the deed shall contain any covenant.
    Since the hearing of the application for the preliminary -injunction the defendants have filed their joint and several answer to the original bill, admitting that Mr. Stephany, in his lifetime, demised the “Extra Dry” to Mr. McCormick, in his lifetime, but denying that it was with the privilege of pur■■chasing during the continuance of the lease for the sum of ■$12,000. They admit that Mr. McCormick continued in possession as tenant under the lease until his death. They deny in detail the allegations of the bill going to show that Mr. Stephany had “found a purchaser” for the premises for the price- of $15,000. They admit service of demands of performance by complainant, and for rent and of notice to quit and the issue of the distress warrant by defendant. They deny that complainant at any time, either before or since Mr. McCormick’s death, “accepted the offer of the option contained in the said lease,” and allege that she has “at all' times waived, refused and rejected the same.” They further answer that Mrs. Stephany has, never agreed to convey her right of dower and has always been unwilling to do so. They further, by cross-bill, set up the mistake in the omission from the lease of the clause relating to the action of the party of the second part on receiving notice, &e., and pray that the lease and agreement for purchase may be reformed by inserting it in its proper place.
    After the opinion reported in 12 Diclc. Gh. Rep. 257 was pronounced, the complainant filed a supplemental bill, reciting the allegations of the original bill, and averring, by way of supplement, that in January, 1898, Mr. Stephany and his wife had mortgaged the “Extra Dry” and also other lands of Mr. Stephany to one Burges, and that Mr. Robert E. Stephany, as solicitor for the mortgagee, had filed a bill in this court to foreclose-that mortgage, and had made Mrs. Stephany a defendant, as doweress; had prosecuted the bill to decree, execution and sale, and that at the sale Mr. Robert E. Stephany, as agent for his mother, had, in her name, purchased all of the mortgaged premises, including the “Extra Dry,” at one bid of $1,100, and that the sale was reported to this court; that afterwards a statement and affidavit was filed to the effect that the bidder was financially unable to pay the purchase-price, and that,' without any order in the cause, all the mortgaged premises, excepting the “Extra Dry,” were re-advertised. The complainant further alleges, in her supplemental bill, that Mr. Robert E. Stephany admitted shortly after the first advertisement that the foreclosure was an amicable one, designed to put the title of all Mr. Stephany’s lands in the name of Mrs. Stephany; that the claim that she was financially unable to pay her bid of $3,100 was false, and that the abandonment of the first sale, which included the “Extra Dry,” and its omission from the second advertisement, was in accordance with a purpose and plan conceived by Mr. Stephany, in his lifetime, and continued by Mrs. Stephany and his heirs since his death, whereby Mrs. Stephany should, by her refusal to convey her dower right in the “Extra Dry” to the complainant, according to the contract, prevent her from securing the benefits of that bargain. The complainant again tenders performance by payment of the agreed price, or to pay $1,100 to Mrs. Stephany, to enable her to complete her purchase and take title to the premises, with a prayer for conveyance without covenants as in the original bill, not only against the heirs, but also against Mrs. Stephany; that the actions of the defendants be declared to be a fraudulent contrivance to keep alive her dower right as against the estate agreed to be conveyed to Mr. McCormick, and that-the heirs be decreed to convey the premises with an indemnity against the dower right.
    To the supplemental bill the defendant Louise Stephany, the doweress, files her separate answer, admitting the mortgage to Burges, and the proceedings in this court to foreclose it; that the other mortgaged premises and the “Extra Dry” were put up at one bid; that Mrs. Stephany bid them in, as stated in the supplemental bill. Her answer declares she has no knowledge of the affidavits for re-sale, and denies the re-advertisement without any order of the court, and recites an order for re-sale, made December 13th, 1898, and alleges that Burges, on December 15th, 1898, released the “Extra Dry” from the lien of his mortgage, and that the sheriff, at the re-sale, excepted the “Extra Dry” and did not sell it. She denies knowledge of any admissions by Mr. Robert E. Stephany as to the object of the first advertised sale, and declares the latter was not, in that matter, her solicitor. She further denies any plan or contrivance to defraud the complainant out of the benefit of the contract of sale.
    The heirs-at-law, by their guardian and the administratrix of Mr. Stephany, file a similar answer. Issue has been joined, and the cause has come to hearing on the merits.

      ili?\ Clarence L. Cole, for the complainant.

      Mr. George A. Bourgeois, for the defendants.
   Gkey, Y. C.

There were some preliminary questions as to the construction of the lease which contains the clause giving to McCormick the right to purchase, and also the terms of his will, which were discussed and decided in the previous hearing on the application for the injunction. At the same time the alleged omission from the clause in the lease giving the right to purchase was then disposed of in the preliminary argument and opinion. McCormick v. Stephany, 12 Dick. Ch. Rep. 257. On final hearing it was admitted that in the lease the agreement clause intended to be entered into by the parties, contained the omitted words, and that it should read as follows (the words originally omitted, but now agreed to be supplied, are printed in italics) :

“And it is further agreed by and between the above parties that in case the said party of the first part should find a purchaser for the said premises, then the said party of the second part shall have the option, during the continuance of this lease, to buy of the said party of the first part the said premises for the sum of twelve thousand dollars; and in case the said party of the second part, on receiving notice that the said party of the first part has found a purchaser for the said premises, should refuse to buy the said premises at the price above mentioned, then the said party of the second part, promises and agrees, upon three months’ notice, to quit and yield up the possession of the said premises to the said party of the first part on the first day of June next following the expiration of the said three months’ notice.”

The first question to be now considered is the meaning of the phrase “found a purchaser,” because it was upon this happening that the lessee’s right to buy the property accrued.

The complainant contends that Mr. Stephany “found a purchaser” whenever, in good faith, he came to a position of willingness to sell the premises to some other person who was willing and able to buy. The defendants, on the contrary, insist that he had not “found a purchaser” until he had actually conveyed the premises to some other person.

The obvious intent of the agreement was to give to Mr. MeCormick a preferential right to purchase the premises of which he was in possession, whenever Mr. Stephany should find some person who was willing to pay him his price. In such case it was agreed Mr. McCormick should have the right to buy the property at the price of $12,000. The words were used in the popular sense. The purchaser was the person willing and able to purchase. The other construction would make the agreement to sell to McCormick self-destructive. To contend that McCormick’s right to purchase could only arise when Stephany had already destroyed it by conveying to someone else, is to argue that it was self-defeating from the beginning. But, in the view which this court takes of such transactions, Mr. Stephany had found a purchaser. The documentary proofs conclusively show that on November 15th, 1897, he entered into a written agreement, signed by himself and Mr. C. D. Haines, whereby he agreed to convey the “Extra Dry” to .Mr. Haines for the sum of $15,000; that on November 20th, 1897, Mr. Stephany received, endorsed and collected Mr. Haines’ check for $200, and on the same day gave a receipt for it as “on account of purchase-sum. of the ‘Extra Dr}.’ ’* By these incidents Mr. Haines had, in equity, become the purchaser, and Mr. Stephany the vendor of the premises in question. This construction comports not only with the equitable view of the action of the parties, but with their own actual interest in the premises. Mr. Stephany’s conduct, and also his letters to Mr. Haines’ counsel, show that he regarded his bargain with Haines as a concluded transaction until he afterwards found, shortly before he wrote the letter of December 27th, 1897. that Mrs. McCormick intended to insist on her right to purchase. Then, and to defeat her right to purchase, he proposed to withdraw from his bargain with Mr'. Haines.

It must be held that Mr. Stephany had so “found a purchaser” that the privilege to buy the “Extra Dry” contained in his lease to McCormick might be exercised.

The defendants also insist that Mrs. McCormick abandoned her rights to purchase the “Extra Dry” in a conversation she had with Mr. Stephany, immediately after the probate of Mr. McCormick’s will, October 20th, 1897, in discussing the management of McCormick’s estate, in which she spoke of winding np the business - conducted in the “Extra Dry” because of the state of her health. Mr. Stephany informed her that several persons had applied to purchase the property, and Mrs. McCorhiick said “she wished he would sell it, because it occurred to her that the fixtures, the personal property in the ‘Extra Dry,’ could be sold to better advantage to the person who bought the real estate than to one who had to move out at the expiration of the lease.” This remark is stated to have been made in the course of a conversation wherein Mr. Stephany was, as her counsel, advising Mrs. McCormick as to matters in connection with the management of her late husband’s estate, and it is claimed that Mr. Stephany, in afterwards selling to Haines, acted on this statement, and that Mrs. McCormick is thereby estopped to assert her right to purchase.

Such a casual observation, made in the course of conversation, not directed to or specifically mentioning the privilege of purchase, which it is claimed was thus abandoned, cannot, by mere implication, be held to have had such an important result. There is no proof that Mr. Stephany was led by this remark to suppose Mrs. McCormick had abandoned her right to purchase. It is true that he dealt with Mr. Haines after the conversation with Mrs. McCormick, but this does not show that he so dealt because of that conversation. It is not a case of post hoc ergo propter hoc. On the contrary, Mr. Stephany’s own letters written to Mr. Haines’ counsel, after this conversation, indicate that he had Mrs. McCormick’s right to purchase in memory as an existing right which he feared when he dealt with Haines, but relied on her supposed poverty to prevent her assertion of it. Furthermore, at the time this conversation was had, Mrs. McCormick was consulting Mr. Stephany, as her lawyer, regarding the conduct of the business of settling her husband’s estate, If the effect of her conversation was to take from her an asset of that estate, and to give it to Mr. Stephany, or leave him free so to act as to destroy it for his own advantage, as is now claimed, he was bound to have told her that this would be the result. Mr. Stephany was also one of the executors who had joined in the proof of Mr. McCormick’s ■will.- Occupying these relations to Mr. Stephany, Mrs. McCormick was not dealing with him “at arm’s length,” but in the confidential relation of her counsel and co-executor. If her declarations of abandonment of her privilege of purchase had been even more explicit, the law would not permit Mr. Stephany to take advantage of them to his own profit, unless it should appear that Mrs. McCormick was fully advised of- their operation and effect. No such showing has been made.

The defendants further contend that the clause in the lease giving the right to purchase was a mere option, in the nature of a suggestion or proffer of sale by Mr. Stephany, and that it had no force or effect until it was accepted by the lessee, and could be accepted only on the precise terms of the proffer; that a demand for a conveyance on any other terms was not only a refusal of the privilege of purchase, but operated as a forfeiture of that privilege; that Mrs. McCormick’s demand for a deed with full covenants was a forfeiture of all right under the clause in the lease giving the right to purchase.

Several cases are cited to sustain this contention. Among them, Potts v. Whitehead, 8 C. E. Gr. 512 (Court of Appeals), which does not hold that a demand beyond the contract works a forfeiture. It does affirm the indisputable proposition that an acceptance of an option must meet the proffered contract in every respect, else it is no acceptance. In that case there was a mere offer to sell within a limited time, for which no consideration was paid, and the question turned upon the acceptance,

Lounsbery v. Locander, 10 C. E. Gr. 554 (Court of Appeals), is also cited, but far from sustaining the defendants’ argument, has a tendency to belittle and refute it. In that case the contract “agreed that Locander is to have the refusal of a five-acre lot,” &c., and contained neither specification of the estate in the lots which should be conveyed, nor any provision for covenants. See case, when in this court, 9 C. E. Gr. 419.

The complainant, in the prayer of the bill, demanded a conveyance with covenants, &c., and obtained in this court a decree which required a conveyance with covenants, &c. The court of appeals, although the complainant had persisted in his over ■demand for a deed with covenants np to the point of actual suit and decree, did not hold that his right to a conveyance had been forfeited; on the contrary, it sustained and enforced that right, notwithstanding the over demand for a conveyance with covenants, and sent the cause back to this court for •correction, by striking out the part of the decree directing covenants to be inserted in the conveyance. The court of appeals termed this feature a formal and probably, under the circumstances of this case, purely technical objection.

The case upon which the defendants’ counsel most confidently Telied to sustain his contention that Mrs. McCormick had, by ■demanding a deed with covenants, forfeited her right to a convej'ance is Weaver v. Burr, 31 W. 7a. 736 (Supreme Court of Appeals of West Virginia, December 15th, 1888). In that ■case the foundation of the decision is the court’s declaration that “it is now well settled that where the promise on the part •of the proposer to continue the oiler for a specified time is made without consideration, it is nudum pactum, and may be withdrawn at any time, provided such restriction be communicated to the other party before he has accepted the same, for ■until the proposal is accepted there is no contract,” &c., citing Bish. Cont. §§ 77, 79; Benj. Sales § 41, &c. And on this predicate the court held a mere invitation by letter to purchase within a named time not to have been accepted within the time named, but to have been rejected by an attempted acceptance stating a new condition. But the principal ease and all its citations will be found to be instances where the proposer, without consideration moving, makes an offer specifying terms of sale, which the receiver of the offer does not accept, but answers by a counter proposal. In such case there never was an agreement, on the contrary the counter proposition was equivalent to a refusal. Hyde v. Wrench, S BeUv. SS6. But this principle, .and the line of cases which supports it, have no application in the present cause where a valuable consideration has moved. The agreement to sell was contained in a lease of the premises,, .and in such cases the payment of the rent is held to be applicable as consideration for the agreement to convey at the named jprice. See decisions cited in McCormick v. Stephany, 12 Dick. Ch. Rep. 262, and in Waters v. Bew, 7 Dick. Ch. Rep. 790. Such an agreement to convey is not a mere unaccepted proffer based upon no consideration, as is a letter offering to sell, nor is it a naked promise to sell at a price within a limited time. It is a completed purchase of a right to have a conveyance if the purchaser shall choose to buy upon the terms named. Page v. Martin, 1 Dick. Ch. Rep. 585 (Court of Appeals). In such case there is no question of the arrival of the parties at a common intent. They have already made a contract upon consideration paid, by which the owner is bound to convey whenever the condition happens, and the making of a counter proposal to him does not enable him to retain the consideration paid and to declare the contract forfeited. If the transaction was a mere proffer, it might be withdrawn before acceptance, but when it was a contract for consideration paid, the party obligated to sell, if required, could not withdraw pending acceptance.

The real inquiry in such cases is, has the lessee within the time specified demanded performance ? There is no denial that Mrs. McCormick has demanded performance during the term of the lease,'but it is said she defeated her demand when she asked a deed with full covenants, which the contract did not require the owner to give. Mr. Stephany did not refuse compliance on this account, but in writing explicitly denied Mrs. McCormick’s right to any conveyance of the premises. He had, previously to her demand, attempted to declare the lease under which Mrs. McCormick asserted her right to purchase to be void.

At everjr stage of the case he, in his lifetime, and the defendants since his death, have refused to convey. Mr. Stephany, in writing to Mrs. McCormick, refused her a deed and stated his reason to be “because you are not entitled to. a conveyance of the property above mentioned, either under the lease or under any other contract.” The defendants, by their answer in this cause, take the same position. That is their present contention in argument. At no time has the refusal to convey turned upon the demand for a deed with covenants. That is an afterthought excuse. In Scott v. Shiner, 12 C. E. Gr. 187, in a like case the defendant was not permitted to escape performance by setting up as an excuse an over demand by the complainant -for a deed with covenants, when at the time of the demand, the. defendant made no objection on this account, but had totally denied the complainant’s right. Lounsbery v. Locander, ubi suprashows how little weight the court of appeals gave to such a technical excuse for the non-performance of the contract. Both of these eases were based upon mere options given, as distinguished from conditional contracts entered into, upon consideration paid. The cause under examination is in the latter class, in which an over demand, as above shown, cannot be held to release the owner from his obligation. The cases cited are, therefore, even more favorable to the complainant’s contention that this objection is purely technical and not to be favored.

It remains on this branch of the case only to inquire whether the complainant has, in accordance with the condition of the contract, demanded performance.

That she tendered $12,000, the contract price, is admitted. She did ask a deed with covenants, but, as above stated, this over demand did not defeat her right. Besides her formal demand, in writing, the complainant has filed her bill in this case on the 22d day of July, 1898, during the term of her lease as required by the contract, and by this bill asks a decree for a conveyance, and makes no mention of arty requirement of covenants. In view of the continuous and absolute denial by Mr. Stephany, and by his representatives who succeed him, that the complainant has any right whatever to any conveyance, either with or without covenants, the filing of her bill praying a conveyance without mention of covenants, is of itself a demand for a deed, sufficient to satisfy the terms of the contract.

The complainant, by the supplemental bill, alleges that Mr. Stephany in his lifetime, and -his heirs since his death, have planned and contrived with Mrs. Stephany to deprive the complainant of the benefit of her bargain for the purchase by arranging that Mrs. Stephany should refuse to convey her dower right.

The complainant claims a decree for a conveyance not only of the fee of which Mr. Stephany died seized, but also of Mrs. Stephany’s dower right, or else indemnity at the expense of the heirs against the assertion of that right.

So far as fire prayer of the bill seeks to compel a conveyance of the widow’s dower right as an incident to a decree for the performance of an agreement to convey made only by the husband, it must be refused. Mr. Stephany, in his lifetime, had no power either by immediate action or by contract for future action to affect his wife’s dower right. She can retain that against his heirs, his devisees, or even his creditors. His covenantee in a contract for conveyance has no better standing. Nor can any fraud be imputed to Mrs. Stephany because of her refusal to convey her dower right. She is in no way bound to convey. She may convey or refuse to convey, either with or without reason. Her dower right is her property, oves which the complainant, without Mrs. Stephany’s own consent, neither has, nor can acquire, any control. She commits no fraud by her exercise of her unlimited right. In Young v. Paul, 2 Stock. 408, Chancellor Williamson found as a fact that the husband had agreed to convey, and that his wife, though not a party to the contract, had expressed her assent to it; that the husband in afterwards refusing to convey, had acted in bad faith, so that the wife’s unwillingness to execute a deed was more in compliance with his wishes than with her own unrestrained judgment, yet the chancellor declared, after a careful examination of all the authorities, that he would dismiss the bill rather than decree the wife to join in the deed. The court of appeals affirmed the decree. Id. 414. The courts uniformly refuse to decree that the wife shall join in a deed to enforce performance of the husband’s contract to convey.

The other prayer of the bill that the complainant may have indemnity against the wife’s claim of dower, involves an inquiry into the nature of the contract to convey, the impediments to its full execution, and the remedies which may be afforded in ease it be found that exact compliance with its obligations is impossible. The first point to be determined on this branch of the case is whether, by the terms of his contract, Mr. Stephany undertook to convey a fee-simple estate.

The clause whereby Mr. Stephany agrees that Mr. McCormick shall have the right to buy, does not specify what estate shall be conveyed nor the character of the title by which it shall pass. In cases such as this, where there is an undoubted undertaking to convey, but no definite mention of the estate to be conveyed, the parties must be decreed to have dealt with the premises according to the usual and ordinary meaning in which their language, when applied to the circumstances of the ease, would be understood. At the time of the making of the agreement, Mr. McCormick was in the exclusive possession of the premises under his lease from Stephany. The agreement was, that if Stephany found a purchaser, McCormick should have, during the continuance of the Tease, the option to buy at the price of $12,000. To buy a house for $12,000, in ordinary parlance, means that for the $12,000 the purchaser should -become the absolute owner of the house, not of a part interest in it, nor subject to some unmentioned superior charge, which might exceed the whole purchase price. It is a fair construction of the terms of the contract to hold that Mr. Stephany intended to sell and Mr.' McCormick expected to purchase such an absolute interest in the premises. In no other way could Mr. McCormick protect the good will of the business which he had' there built up (annual sales of which are proven to have-amounted to $45,000), or secure to himself the benefits of the improvements which he had made to the premises at his own expense. I refer to the painting, papering, remodeling of floors and interior work done by Mr. McCormick, which savor of the realty. So also the fittings and fixtures of the saloon, which cost Mr. McCormick a large sum of money, would realize but a small amount as removable fixtures. All these substantial interests could only be protected by an agreement that Mr. McCormick should purchase a fee. Both parties acted in making the agreement with this situation of affairs in their knowledge and consideration.

It is conceded that a contract giving a right to purchase, is obligatory upon the vendor to convey some estate in the premises, and if the estate to be conveyed is not held to be a fee, it is very difficult to select the particular estate which is agreed to be conveyed. It could hardly be limited to the estate which* the proposed vendor had in the premises (which might be an undivided share, a term of years, an estate for life, or some inferior holding), unless the particular estate which the vendor held was brought to the attention of the parties, and that they dealt with reference to that interest. There is no more reason to hold that a general agreement to convey is limited to that unmentioned estate which the vendor had to sell, than there is to hold that it extended to the unmentioned estate which the vendee expected to buy. If the agreement does not specify the estate to be conveyed and there is no other evidence which defines it, the only reasonable construction which can be given to it is that it undertakes to convey a fee. It must either be held to be a contract to convey an unlimited estate, or the court must, without expression of the parties, select the limitations and force them into the contract.

In England, where a defendant agreed to sell without naming what estate he would convey, Ms undertaking was held by Lord Abinger and Barons Parke and Alderson to be for the conveyance of a fee. Hughes v. Parker, 8 Mees. & W. 243.

In Hawralty v. Warren, 3 C. E. Gr. 127, Chancellor Zabrisbie held that the words “shall have the privilege of purchasing, although- not so comprehensive as a positive agreement to convey, which is settled to mean (when not qualified by word or circumstances) to convey a fee, yet are sufficient in equity to entitle the complainant to a conveyance of all the estate at the time of the contract.” The learned chancellor declined to decide whether the italicized words would be sufficient to compel the. defendant to procure a good title, or make eonrpensation for encumbrance. The reason for his refusal was that in that case the complainant required a marketable title, and offered to take that only, and as the wife refused to release her dower •a marketable title could not be given. It is somewhat difficult to draw any distinction as to the estate which is agreed to be passed, between two contracts, in' one of which A agrees that he will convey to B, and in the other, that B may purchase from him. In both there is an undertaking to convey. In neither is there any specificatiomof the estate to be transmitted.

The performance of either contract would seem to call for a conveyance of an unlimited estate.

In New Barbadoes v. Vreeland, 3 Gr. Ch. 162, the agreeaneait was to grant the lands and to execute sufficient deed for the same, and it was held that the parties could have contemplated nothing short of a conveyance.in fee. In Lounsbery v. Locander, 10 C. E. Gr. 557, the agreement was that Locander should ‘ffiave the refusal of a five-acre lot.” It was held by the court of appeals (at pp. 557, 558) that the circumstances attending the making of the contract, the price agreed to be paid, &c., indicated that the agreement was a contract to convey a title in fee clear of encumbrance, &c.

In the case in hand, all the incidents attendant upon the transaction tend to show that Mr. McCormick expected to purchase and Mr. Stephany intended to convey a fee. Mr. McCormicks interest in the good will of the place in which he had built up a valuable trade, and his expenditures oar permanent improvements and fixtures required such an estate. Mr. Stephany fixed the price at $13,000, and his letters indicate that he had in mind no limitation of the estate to be conveyed. He evidently esteemed his agreement with Mr. McCormick to be of the same effect as that which he made with Haines. Both were intended to pass an absolute interest in the whole property. Such a construction of their contract accords with the irsual mode of dealing with such properties, with the common understanding of such words in agreements for coaaveyance, and with the action of the parties in this case. When the contract was made neither party doubted, nor had any reason to doubt, that when the time came to carry it into effect, Mrs. Stephany woiald release her dower. The proof indicates that she would in fact have released it if Mr. Stephany had desired her to do so, and that her uaiwillingness to release to Mrs. McCormick arose subsequently to the making of the McCormick agreeanent, because Mr. Haines had offered a larger price for the property.

Under all the circumstances attending the making of the contract to convey to Mr. McCormick it must be held to be an uaadertaking to convey a fee-simple estate.

The defendants contend that they are unable to convey such an estate, because Mrs. Stephany’s dower right is outstanding and superior to their title; that she is not bound by the coaatract, and refuses to release. As above shown, no decree can be made requiring Mrs. Stephany to release her dower.

The complainant further insists that if she cannot have a decree for the conveyance of Mrs. Stephany’s dower right, she may have one for indemnity against it.

There is no question that, in a proper ease, this court, in enforcing the specific performance of a contract to convey lands, can decree that the purchase-money be used to pay outstanding liens required by the contract to be satisfied to clear the title; or may, if necessary, direct compensation to be made for any portion of the lands agreed to be conveyed, to which the vendor is unable to make title, or Grder indemnity to be given against the assertion of outstanding liens or charges which cannot be satisfied. Fry Spec. Perf. 1228 el seq.; 1 Pom. Eq. Jur. § 287, note 8; Young v. Paul, ubi supra, .and cases there cited. These remedies are incident to the enforcement of the contract to convey, and are to be used with circumspection, according to-the requirements of each particular ease.

An exception has been made, in this state, with respect to-the protection which, on specific performance, will be given a vendee against a wife’s inchoate right of dower. All the cases appear to agree that indemnity against this claim will not be decreed unless it be shown that the husband has fraudulently induced the wife to refuse to release. Young v. Paul, 2 Stock. 401, in both this court and the court of appeals, where the whole-subject is most instructively discussed; Hawralty v. Warren, 3 C. E. Gr. 124; Reilly v. Smith, 10 C. E. Gr. 158.

The principle upon which these cases rest is that the wife, in the enjoyment of her dower right, is a free agent; she cannot be compelled to release. If the husband be decreed to-obtain her release, it would be an interference with her freedom of choice. Indemnity against her dower right was refused for the kindred reason that this would put her under the strain of his influence to force her to release, in order that he might be ■ relieved from the indemnity. Where, as in Young v. Paul, it was shown that the wife had assented to the contract to convey, though she did not sign it, and that the husband had fraudulently induced her to refuse to release her dower right, indemnity was allowed, upon the assumption that her husband was preventing' her from removing the cloud on the title, and he might, therefore, justly be ordered to secure the vendee .against it. This exception to the rule that a vendor who contracts to convey a complete title, will, when the circumstances of the ease justify it, be ordered to indemnify against a claim which cannot be discharged, though enforced in this state, has not been accepted in many other states. The reasonableness and justice of the exception, under modern conditions, has recently been doubted in our own state. Borden v. Curtis, 3 Dick. Ch. Rep. 129.

The force which is to be given to the line of cases referred to applies, however, only when the complainant asks that indemnity be given by a husband against the assertion of the inchoate dower of the wife while both are living. An indemnity thus given, while the relation of marriage continues, might subject the wife to some danger of compulsion on the part of her husband, seeking to relieve himself from the indemnity. But where indemnity is asked after the husband’s death, and his compulsion of the widow is impossible, the reasons for refusing indemnity disappear. The widow’s dower is unaffected by the decree, and the peculiar relationship of husband and wife having terminated, indemnity may be required of the heirs against the assertion of the dower right, without subjecting the widow to any undue influence tending to overcome her free will.

A decree indemnifying the complainant against the assertion of Mrs. Stephany’s dower right appears, under the circumstances of this case, to. be the only mode in which the complainant can be secured in the enjoyment of the benefits of the contract to convey. Mrs. Stephany’s declared objection to the McCormick contract is that the price was too low, and it is quite evident that she is using her position of advantage to secure for her children a higher price, despite her husband’s agreement to sell at the lower one. The law cannot compel her to convey her interest, and will at all times protect it. Her children, however, stand in the place of their father, who contracted to sell the property and to pass an absolute estate, at a named price. They, ought not to be permitted, by’ their mother’s interposition, to obtain an advantage which deprives Mr. McCormick’s estate of all the benefits of his bargain, and defeats his just expectation that he was, by it, saving the good will of the business which he had built up and the value of the improvements which he had put upon the property.

This conclusion renders it unnecessary to examine that phase of the case in which the complainant alleges, and seeks to prove, that Mrs. Stephany was induced to refuse to release her dower by the fraudulent persuasion of her husband in his lifetime, and of his heirs since his death.

I will advise a decree for the specific performance of the contract as above indicated, and that an indemnity be given against the assertion of the wife’s dower right by making, as part of the purchase-money, a mortgage upon the premises, to be executed bj the complainant to the holders of the title, in such an amount and with such conditions to indemnify and save harmless against the assertion of the dower right, and as to the pajunent of principal and interest, as a master (conforming as nearly as possible to the rules and practice of this court in ascertaining the value of such a dower right) may, upon hearing the parties, report to be equitable and just.


source: Caselaw Access Project

author: Gkey, V. C.

license: Public Domain

text:
    Benjamin C. Beideman et al. v. Samuel W. Sparks et al.
    [Filed January 10th, 1901.]
    1. Where by a will there is a devise of title to a trustee to hold and invest the estate for the benefit of a wife during her natural life, with a remainder, giving the balance of the estate, upon the death of the wife, to the testator’s children, and the widow refuses to accept the provisions ior her benefit, her refusal defeats the trust created for her, and the time t>f enjoyment of the gift over to the children is accelerated, and they become at once entitled to possession under their remainder.

      2. Equitable estates are in this court dealt with as legal estates, subject to the same incidents and consequences as, under the circumstances, attend upon similar estates at law.
    , 3. Where the parties entitled under a will to the whole beneficial interest in an estate all join in an election to receive it as land rather than as money, and no superior equity appears, a trustee who holds the estate solely for the purposes of division will be decreed to convey to the beneficiaries as land, according to their interest under the will.
    On demurrer to bill.
    Tliis cause is presented by a demurrer to the complainant's bill. All well-pleaded facts set up in the bill of complaint are therefore admitted to be true.
    It appears by the bill that the complainants are all of the next of kin and heirs-at-law and ultimate devisees and legatees of Benjamin C. Beideman, deceased, who died on the 29th day of September, 1898, testate, leaving him surviving Ms widow, Ruthanna, and his children, the complainants. His will was proven in Camden county surrogate's office, and is set forth in full. The following is a copy:
    “In the name of God, amen—I, Benjamin C. Beideman, of the township of Stockton, county of Camden, and State of New Jersey, being of sound mind, memory and understanding, for which blessing I thank God, do make and publish this, my last will and testament, in manner following, that is to say:

      “Imprimis. It is my will and I do order my executors, hereinafter named, to pay all my just debts as soon as convenient after my decease.

      “Item. I give, devise and bequeath unto my trustee, hereinafter named, all my estate, real, personal or mixed, wheresoever situate, with full and explicit authority and power to sell and dispose of the same or any part of the same as to him may seem meet and proper, and to make and execute such conveyance or conveyances as may be necessary, and I do hereby ratify and confirm the same.

      “Item. I direct my trustee to invest as he shall think proper all or any • of the money arising from the sale of any of my estate, and to pay the interest accruing therefrom as well as rents unto my beloved wife Ruthanna - during her life.

      “Item. It is my will that my said trustee shall serve as such during the natural life of my said wife, Ruthanna -, and at her decease to divide equally among all my children the balance of my entire estate, provided, however, that if there be any matter or things unsettled in my estate, then it is my will that such trustee shall continue his services until such matters are settled satisfactorily to his judgment, but it is my desire that so much of my estate as can be settled as my trustee may think proper to be settled, shall be settled after the decease of my said wife. It is also my desire that my trustee shall sign all assignments, releases or other papers of such nature, whenever he finds it necessary so to do.

      “Item. In case any of my children shall die, leaving them surviving* minor children, I' direct my trustee to pay to such minors such sum or sums of money as in his opinion should be paid for their education and support, all which to be deducted from my sons’ or daughters’ share, whose children they shall be.

      “Item. It is my will that my son Richard Cooper Beideman shall have the option to take the farm whereon he now lives, near Westville, if he so desires, and that the same shall be valued at nine thousand dollars, and the sum of nine thousand dollars shall be deducted from his share when settlement shall be made by my trustee, provided, nevertheless, that the said farm shall remain a part of my estate during the natural life of my said wife.
    “I hereby nominate, constitute and appoint Samuel W. Sparks, of the City of Camden, my trustee, with full power as aforesaid.
    “I hereby nominate, constitute and appoint my three sons, Benjamin M. Beideman, Isaac W. Beideman and Richard Cooper Beideman, executors-of this my last will and testament, to settle my debts and so forth, do-such necessary things, but not to conflict with the duties I have herein-before laid out for .my said trustee.
    “In witness whereof, I have hereunto set my hand and seal this twenty-third day of April, Anno Domini, eighteen hundred and ninety-eight.
    “BENJAMIN C. BEIDEMAN.” [l. s.j.

    .; It further appears by the bill that Ruthanna Beideman, the widpw of the testator, survived him, and that she signed and filed in Chthden county surrogate’s office her dissent and refusal to accept any devise, legacy or trust provided for her in her husbands will.
    ■ The bill of complaint insists that the sole object of the will was to devise the income of the estate to the widow during her natural; life and the balance of the estate to the children at-her death in fee; that the widow’s refusal to accept this gift and, dissent from taking under the will has terminated the-trust, leaving no further duty for the trustee to perform; that the complainants have notified the trustee of this termination of ¡the trust, but that he, notwithstanding, contends that he remains trustee, and claims his right to act as such.
    • The bill makes the trustee and also the widow defendants, and prays a decree that the trust has terminated, and that the-trustee'shall convey the legal title of the trust estate to the complainants, wbo are devisees and legatees in remainder under the will.
    The trustee demurs to the bill, because, he alleges, it states no case entitling complainants to either discovery or relief.

      Mr. George II. -Peirce and Mr. David J. Pancoast, for the demurrants.

      Mr. John F. Flamed, for the complainants.
   Gkey, V. C.

The obvious and expressed intent of the testator was that all his property, ieal and personal, should be enjoyed by his widow during her natural life, and that at her death it should be equally divided among his children, the complainants.-

The trust and the vesting of the title in the trustee, the provision that he shall invest the money arising from sale of the estate, and that he shall pay over the interest and also the rents to the widow, and the direction that he “shall serve as such [trustee] during the natural life of my said wife, Ruthanna,” are all of them prescriptions of the mode in which the dominant purpose of the testator to provide for the widow shall be effected.

The whole scheme of the will contemplates the payment of the income from the estate to the widow through the method of the trust. It is a fixed rule that equity will not suffer a trust to be defeated for want of a trustee, but it is equally well settled that there can be no trustee unless there be a trust to be executed.

The widow in this case has refused to accept the gift which the testator sought to bestow upon her by his will. Irrespective of her dissent as doweress from its provisions, she cannot, upon general principles, be compelled to be the recipient of a gift which she refuses to accept. The bill shows that the trustee has been notified of the widow’s refusal. The counsel for the trustee, during the argument, contended that in the present status of the estate, the duty of the trustee to pay the income of the estate became obligatory only on the death of the widow, and that -her declination of the testator’s proffered gift did not in any way accelerate the possessory rights of the children, who are, under the will, ultimate legatees and devisees of the estate. The effect of such a construction of the will and of the duty of the trustee would be to allow him to take the whole estate and receive all the income during the life of the widow, paying it to no one.

The case of Reeves v. Troth, very recently decided by Vice-Chancellor Reed, but not reported, is cited to support the claim that the refusal of a wife to accept a legacy is not equivalent to her death. In that cáse there was no refusal to accept the gift. The question there was whether, under .the phrasing of Edward Burroughs will (which is wholly different from that under consideration), his widow, who had accepted a gift by will of the free use of a dwelling-house, had lost her right by going out of actual possession. The doctrine laid down in that case has no application here.

The will passed the legal title to the estate to the trustee during the life of the widow, with power of sale, but plainly, in order that the title and power of sale might be used for the more convenient administration of the estate in raising an income for the benefit of the widow. The whole will indicates that the testator contemplated and intended that at the termination of the interest of his wife in the estate, which he supposed would continue during her natural life, the trust should terminate, and his children should instantly come into the enjoyment of all the benefits. He intended no intervening period, during which the trustee would receive all the income and pay it out to no one.

The widow’s refusal to accept the gift to her has defeated the testator’s purpose. There is no trust for the trustee to execute, and therefore no reason why the estate should remain in his hands and control, against the plain intention of the testator, and contrary to the unanimous wish of all those who remain interested in the estate. Their time of enjoyment of the remainder devised by them, has, by the refusal of the life estate by the widow, been accelerated, and they are presently entitled to it.

The incident which, calls for the appilication of this principle is not of frequent occurrence, but the doctrine was accepted law three hundred years ago. In Shelley’s Case, 1 Golee 98 b; it was declared that “under a limitation of a use, or a devise to A for life, remainder to B if A renounces, the remainder vests immediately.” In Fuller v. Fuller, Cro. Eliz. *423, it was held that “the devise being void to the first [devisee], it is as it had never been made; so it is if the first devisees refuse, he in remainder shall have it presently.” In Newis v. Lark, 2 Plowd. *414, the rule is thus stated: “If land is devised in tail, remainder in tail, and the first devisee disagrees, he in remainder shall have it.”

That the legal title stands in the trustee does not prevent the application of the rule, where no further duty is charged upon the trustee than that of turning over the trust estate to the remainderman. In this court equitable estates are dealt with as legal estates, and are subject to the same incidents and consequences as, under like circumstances, attend upon similar estates at law. Cushing v. Blake, 3 Stew. Eq. 695; Martling v. Martling, 10 Dick. Ch. Rep. 781, both in the court of appeals.

The remaindermen, by the refusal of the widow, have become presently entitled to their interest in the estate. Nothing appears in the bill of complaint which shows that there is any reason for continuing the trust for any longer period than that within the consideration of the testator, namely, the time when the wife’s interest ceased. So far as the face of the bill shows, the trustee has no other duty than to deliver the estate to the remaindermen. The trustee has, it is time, a power of sale, but the will does not order him to exercise it, and the intent of the testator appears to have been, as above stated, that the power, if exercised, should be used to raise money to be invested by the trustee to produce an income for the widow. That object has been defeated by the refusal of the widow. The trustee is directed, at the decease of the wife, to divide equally among all the children the balance of the estate. The testator, as above shown, considered that this division would be made immediately that the wife’s estate ceased. She having refused the gift to her for life, those in remainder shall have it presently. There is a reference in the will to the continuance of the trustee’s services if, at the time of the wife’s death, there be anything ■unsettled. If this provision has any significance, there is nothing in the bill of' complaint to show that anything remains unsettled which can require a continuance of the trust.

The title to the testator’s lands and personalty is, by the will, vested in the trustee. His holding is now solely for the complainants, who are, as residuary legatees and devisees, the equitable owners of the whole estate. They are also the heirs-at-law of the testator. They all agree that they elect to take the title to the estate, rather than a sale or a division by the trustee. Ho conversion has actually been made. On the face of the bill nothing is stated which should prevent them from having their election. By the bill they all ask that the trustee may be directed to convey to them the legal title which he holds solely for their benefit. This is their equitable right. Story Eq. Jur. § 798; Gest v. Flock, 1 Gr. Ch. 115; Fluke v. Fluke, 1 C. E. Gr. 480. The trustee cannot, where there is no order to convert, defeat the election of the beneficiaries to take their gift as lánd. Howell v. Tomkins, 15 Stew. Eq. 310.

' The bill of complaint appears to state a case which entitles the complainants to the relief that they ask. The demurrer should be overruled, with costs.


author: Geev, Y. 0.

text:
    John Schlagenhauf v. George H. Craven et al.
    [Filed January 10th, 1901.]
    If an open creditor’s bill be filed by one creditor having a judgment, and the defendants, before any other creditor enters judgment or becomes a party to the suit, satisfy the complainant’s claim and costs, and give notice of motion to dismiss the bill, they are entitled to dismiss, although after the giving of such notice other creditors may have entered judgment and been admitted as complainants.

      On bill, &c. On motion to dismiss bill.
    This- is a creditor’s bill, filed by the complainant, in “behalf of himself and such other creditors as shall come in and join in this bill and contribute their share of the costs.”
    It alleges that the defendant Craven, before he got legal title to a certain lot near Haddonfield, in Camden county, caused a costly house to be erected thereon and then obtained title to be conveyed on December 28th, 1899, to his wife and by her to one Cohen, who, the bill alleges, holds the property in trust for the defendant Cráven. The complainant recovered judgment against Craven, which he caused to be docketed on August 23d, 1900, and execution to be issued to the sheriff of Camden county. He charges that the conveyances above recited were made without consideration, fraudulent and void, because intended to hinder and defeat Craven’s creditors. The bill prays discovery that the defendant may be decreed to pay the complainant’s judgment, &c.; that the alleged fraudulent deed may be set aside and declared null; that said lands may be sold'clear of the fraudulent deeds, and the proceeds or such part as may be necessary may be applied to the payment of the complainant’s judgment and that the complainant may have further relief.
    The only defendants are Craven and his wife and Cohen.
    The bill was filed August 30th, 1900. On September 1st, 1900, the sheriff was paid the full amount due on the complainant’s judgment, execution and costs; the execution was returned satisfied, and the judgment was canceled of record. On the 4th day of the same month tender of the costs in this suit, as taxed by the clerk, was made to the complainant’s solicitor notifying him that the judgment of the complainant had been satisfied, which tender the complainant’s solicitor did not accept. On the 5th day of September the complainant’s solicitor was notified of an application to be made to the chancellor on the 11th of that month by defendants to dismiss the •complainant’s bill on payment of taxed costs because the eom■plainant’s claim had been fully satisfied.
    On September 7th, 1900, after the complainant’s judgment had been fully paid and satisfied of record, and tender made to his solicitor of payment in full of his costs in this cause, the complainant’s solicitor filed several petitions of other creditors of the defendant Craven, asking that they might be admitted as parties complainant in this cause. These applications were purely ex parte, no notice of any kind having been given to the defendants. Nothing in the petitions disclosed to the court that, before the time when the petitions were filed, the whole claim of the original complainant had been fully satisfied, his judgment canceled of record and his costs tendered.
    On these ex parte petitions, orders were made admitting the petitioners as complainants in this cause, the solicitor of complainant endorsing on the orders his consent thereto.
    When the defendants’ solicitor, pursuant to his notice, moved, on September 11th, that the original complainant’s bill be dismissed because his claims had been satisfied and costs tendered, he was opposed by the solicitor of the complainant, on the ground that new complainants, whose claims were wholly unsatisfied, were now parties to the bill, and that the bill must be retained for their benefit. »

      Mr. George II. Peirce, for the'complainant.

      Mr. George A. Vroom, for the defendants.
   Geev, Y. 0.

There can be no question that the defendants, when they paid the original complainant’s claim and tendered his costs to his-solicitor, were, at that time, entitled to have the bill of complaint dismissed. The satisfaction of the complainant’s claim left nothing in this court in this cause upon which, under any circumstances, there could be any further litigation. Nothing remained to be done but to make an order dismissing the cause, which was a mere formal recognition of the fact that this suit had ended. The defendants gave notice of an application to-the court for such an order formally dismissing the bill. They were then entitled to such an order. Afterwards, new parties-applied, without notice to defendants, to be admitted as complainants, and without disclosure to the court of the fact that the defendants, by paying the claim of the original complainant, had theretofore settled the cause. The question presented by the defendants’ notice to dismiss the bill is, were they entitled to an order of dismissal at the time they gave the notice? Equity looks upon that as done which of right ought to have been done. In analogy to this maxim, the. defendants, having been entitled to the order of dismissal when they gave notice of their motion for it, ought not to be defeated of their right by the subsequent ex parte action of strangers to the suit. Eor though the bill of complaint is an open bill, for all creditors who should join in the suit and agree to pay expenses, the new complainants had not, when the original complainant’s claim .was satisfied and notice given of application to dismiss the bill, established their rights as creditors by recovering any judgment against the defendant Graven. To allow them the status of complainants in a cause which had, in fact, been settled before they had any judgment, might work great injustice. The defendants may have conveyed the lands for consideration without notice. They may have obtained the money to satisfy the complainant’s claim by an assurance, true at the time, that no other judgments were then asserted against them, and that they could lawfully convey or mortgage the lands in dispute to secure advances.

It is difficult to determine what status the new complainants can secure in a bill of complaint in which there is neither allegation of their claims, nor even mention of their names. Their own petitions show that, when the bill was filed, they had no judgments, and could not then have been parties, and therefore cannot be held to have been within the class for whom the bill was held open, unless it be accepted that creditors, whose claims have not been established by judgments or some other lien, may come into this court as complainants. The contrary has been the rule of this court. The court of appeals, in Haston v. Castner, 4 Stew. Eq. 698, declared that it could not be denied that the creditor must first-have established his claim. Chancellor Runyon, in Haggerty v. Nixon, 11 C. E. Gr. 42, refused relief to such a general creditor when joined with a judgment creditor as complainant.

The defendant is entitled, upon payment of the taxed costs of the complainant into court, to have an order dismissing the bill of complaint. The defendant is allowed the costs of his motion.


author: Grey, V. C.

text:
    William O. Garrison v. James Borio et al.
    [Filed January 16th, 1901.]
    1. The court of chancery is the proper forum for proceedings under the Lien act of March 30th, 1892 (Gen. Stat. p. 2078), to secure the payment of laborers, &c., furnishing materials and doing work on public improvements.
    2. When the complainant files his claim asserting as against one of the defendants a claim for more money than is found to be due from that defendant, the complainant does not thereby forfeit his light to establish his lien on the fund for such sum as is actually due him from such defendant.
    3. Under the Lien act of March 30th, 1892, persons who have furnished material or done woi’k on the public improvement, under agreement with a subcontractor, may assert a lien on the contract price.
    4. If at the time when such lien is filed nothing remains owing to the subcontractor, the lien attaches upon no part of the contract price.
    5. No personal judgments will be given in a suit brought under the above statute in this court to enforce liens upon the contract price.
    On bill, &c. On final hearing.

      Mr. Walter II. Bacon, for the complainant and for Smith Tomlin, agent, one of the defendants, who files a cross-bill.

      Mr. William A. Logue and Mr. Clement II. Sinniclcson, for the defendant Burd P. Evans.

      Mr. Samuel II. Richards and Mr. Thomas E. French, for the defendant Tony Stelacio.

      Mr. Samuel Iredell, for the board of chosen freeholders of Cumberland county.
   Grey, V. C.

(orally).

I. can dispose of this case now. I have heard, with attention, the testimony and the arguments of counsel, and find no need for further consideration of the matters submitted, save as to the part which may be sent to a master.

This bill is filed under the Lien act of March 30th, 1892 (Gen. Stat. ¶. 2078), to secure the payment of laborers, &c., furnishing materials and doing work on public improvements, &c.

The complainant alleges that he supplied building stone used for the construction of the foundation of an insane asylum in Cumberland county; that he furnished this material to Borio and Stelacio, subcontractors, who had agreed with Burd P. Evans (the original contractor with the board of freeholders for the whole work) to do the foundation stone work and furnish material therefor.

The work ivas begun and had made some progress when, on or about May 5th, 1899, Borio ran away, with a considerable payment of money made to him on account’ of his firm. This incident was the occasion of most of the subsequent difficulties. Stelacio, who theretofore had not been actively engaged in the erection of the asylum, came to Bridgeton, after a few days, and proceeded with, the mason work. Stelacio continued at the work, Garrison continuing to supply stone, until some time in June, 1899, when Stelacio surrendered because he was unable to complete it. About July 9th, 1899, Evans, the original contractor, himself undertook to finish the work left undone by Stelacio, and the complainant thereafter furnished material to Evans until the foundation walls were completed.

The whole dispute in this ease turns upon the claim of the complainant for payment for the materials, mostly foundation stone, supplied by him and used in the asylum building. The differences raise questions both of law and of fact. The complainant files his bill under the statute of March 30th, 1892 (Gen. Slab. p. 2078), contending, first, that Evans, the original contractor, guaranteed the payment of the price for the stone furnished by the complainant to Borio and Stelacio; second, that, under the above-named statute, the complainant has a lien for the price of the material furnished to Borio and Stelacio upon all that part of the contract price which is still unpaid by the board of freeholders to Evans, and third, that he has a lien upon that fund for the price of the material furnished to Evans, iafter Borio and Stelacio had abandoned their contract.

The defendant Evans denies liability of any sort whatever, as guarantor, or under any lien, for the debt of Borio and Stelacio. He admits liability for the material furnished to himself after they had abandoned the work, but denies the complainant’s right to a lien, because, he says, he has claimed more than is due. Evans also Contends that the statute does not authorize Garrison to lien upon the original contract price for the debt owing him by Borio and Stelacio; and he disputes the quantity of stone claimed to have been delivered by the complainant, and pays into court the amount which he admits to. be due from him.

There is another small claim for digging, &c., set up by the defendant Smith Tomlin, which is also alleged to be a lien under the statute quoted. The dispute regarding this Tomlin matter is principally as to the quantity of work which should be paid for by way of lien.

All of the contracts are in writing, except the alleged guarantee of Evans to pay Borio and Stelacio’s debt. Garrison testifies that this was by parol assurance, claimed to have been made at the time when Garrison (the complainant) and Borio and Stelacio made their agreement. As to the written contracts, their terms are so definitely expressed that their meaning can be readily ascertained by mere reference to the contracts themselves. The nature of the case is such that there should be a reference to a master to ascertain and report the precise amount due and lienable. At the present time I will only dispose of such questions of law and fact as may aid the master in giving definite shape to his report.

I find as an established fact that the contract for furnishing stone, &c., for the foundation wall, originally made between Garrison (the complainant) and Borio and Stelaeio, was between those parties and none other; that -from the beginning of the building to the time Borio ran away, in May, 1899, and thence until Evans actually undertook to complete Borio and Stelacio’s contract, on or about July 8th, 1899, all of the stone delivered at the asylum by Garrison was furnished under his contract with Borio and Stelaeio, except a small portion for which Evans gave a written order; that the defendant Evans did not, in fact, guarantee the payment by Borio and Stelaeio, or by Stelaeio, of either the whole or any part of their debt to Garrison.

These findings of fact make it unnecessary to consider the ■effect of the statute of frauds upon the alleged parol guaranty by Evans of the payment by Borio and Stelaeio of their debt to Garrison. Evans’ liability for material which should have been furnished by Borio and Stelaeio began when Garrison, about July 9th, 1899, received from Evans a letter telling him that he (Evans) would go on with the work, and directing Garrison thereafter to furnish stone to him.

The contract between Garrison and Borio and Stelaeio provides for the delivery of the stone “at the site of the asylum.” Delivery there, in the absence of express agreement otherwise, passed the title to the delivered stone to Borio and Stelaeio. If any remained on the ground,'when Evans undertook the completion of the contract, it was the stone of Borio and Stelaeio, and not of Garrison, and must be accounted for to them, and not to him. Their failure to pay for the stone did not remit the title to it to Garrison.

I also find as a fact that all of the money due from Evans to ■Borio and Stelaeio for work done and materials furnished by them, under their contract with Evans, was, by the latter, paid to them, or by Evans expended for them in furnishing the work and material which they, had agreed to supply by that contract, and that this was so disbursed by Evans before the lien was filed, on December 6th, 1899, in this matter by the complainant.

I am free to say that, after'the most careful attention to the ■evidence, while it is quite clear that the portion of the stone furnished by Garrison to Evans was' used in the building, I am quite unable to fix, with certainty, the point of separation between that portion of the stone furnished' by Garrison which he delivered to Borio and Stelacio,. and that subsequently delivered to Evans on the latter’s personal undertaking of the contract. Consequently, it is difficult to calculate the quantity furnished to Evans, and to compute the price to be paid, and thus fix the balance which is owing by Evans to Garrison. Eor this reason I propose (unless the parties can themselves come to an agreement as to the amount) to refer the matter and all the testimony here taken to a master for further inquiry. There was also some proof of special orders for particular items of material given in writing by Mr. Evans.

I will make an order advising a reference to a master to-ascertain and report upon these matters, allowing the parties,, if they desire, to make additional proofs on these points—that is, the quantity of work and labor done and material furnished by Mr. Garrison to and fox Mr. Burd P. Evans for the purpose-of building the asylum, ordered in writing by Mr. Evans, or delivered at the asylum after the date when Mr. Evans- personally undertook the completion of the contract previously made between himself and Borio and Stelacio, and finally abandoned by them in June, 1899.

A very interesting and forcible argument has been made hereupon several points of law, which should be now determined.

The answer of the defendant Evans asserts that the complainant has an adequate remedy at law, but the court of appeals, in Delafield Construction Co. v. Sayre, 31 Vr. 449, held that this court was the proper forum in which to enforce the statutory remedy under the act of March 30th, 1892.

The counsel for Mr. Evans also insists that the complainant-has forfeited his remedy by lien, by claiming from Mr. Evans-payment for that portion of the complainant’s claim which is-owing for material furnished to Borio and Stelacio, and in support of this view cites the case of Reeves v. Elmendorf, 9 Vr. 125, as in point, and contends that the complainant’s bill, even if there be an existing lienable debt due him from Mr. Evans-for part of the money claimed, should be dismissed because of the complainant’s demand of more than is- due him.

The rule declared in Reeves v. Elmendorf is based upon the provisions of the third section of the old Mechanics’ Lien act, which require that the amount demanded of the contractor should be the amount due, and the owner, under the terms of that act, must be notified to retain this amount and no greater sum, and seems to have been enforced only when claims are made under that act. In Delaware, Lackawanna and Western Railroad Co. v. Oxford Iron Co., 6 Stew. Eq. 203, this court held the rule not applicable to the claim of laborers for wages set up under the sixty-third section of the Corporation act. In the very recent case of Camden Iron Works v. Camden, 15 Dick. Ch. Rep. 211, which was a claim filed and sought to be enforced under the same act of 1892 now before me in this cause, Vice-Chancellor Reed held that if it was shown there was a fraudulent purpose to impound a sum larger than that which was definitely known to be due the claimant, the court would refuse its assistance to such a fraud; but that where the course of the cause indicated that the party and his counsel deemed the larger claim, as asserted, to be worthy of submission to judicial determination, the fact that it was found to be partially invalid did not brand the whole claim as fraudulent and discharge the lien. I shall follow this method of enforcing the provisions of the act of 1892.

It is quite evident that the complainant’s (Garrison) action in insisting that Mr. Evans is responsible for the moneys due Garrison under his agreement with Borio and Stelacio, is the result of the advice of counsel that his claim ágainst Evans, as a guarantor of the Borio and Stelacio debt, was a disputable matter, worthy to be submitted to this court for adjudication. I find that is a mistaken contention, but, if it is a mistake, it is not one which would justify the court in refusing to entertain that portion of the claim against Evans which is admittedly due. This debt of Evans to Garrison for the stone expressly ordered by the former, is admitted by Evans himself to be within the purview of this statute. Evans has himself 'come into court and here tendered the amount which he admits is due to Garrison. There is some testimony which indicates a disposition, on the complainant’s part, to color the proofs to establish Mr. Evans’ liability for the Borio and Stelacio debt, but I do not think it sufficient to justify the refusal of relief on that part of his claim which is separable and admittedly due from Evans. The complainant’s over demand is probably not in the amount claimed, but in his assertion that Mr. Evans is debtor not only for his own, but also for the Borio and Stelacio debt. It is probable that the total sum claimed by Garrison for the material furnished is due him. His error is in his contention that Evans owes it all. I find against him on this point, but hold that the setting up of the claim and failure to establish it does not justify a forfeiture of his right to enforce his lien on the admitted debt of Evans to him.

The counsel for Mr..Evans insists that the statute must be construed to limit the lien to persons in privity with the original contractor who agrees to build, and that the debt of a contractor in the third degree, in which class he places Garrison (that is, one who contracts not with the original contractor, but with his subcontractor), cannot be enforced under the act of 1892, now under consideration, and he claims that the principles applied by the court of errors in Carlisle v. Knapp, 22 Vr. 329, should govern this case also. That decision was made under the Mechanics’ Lien act, and held that the third section of that act afforded no remedy to one who supplies materials to a subcontractor. The decision depends upon the peculiar provisions of the statute which is expounded. That act limits the right to impound the contract price to those in immediate privity with the contractor. It does not provide, as does the act of 1892, now under consideration (see section 8), for what is practically an interpleader suit, bringing all claimants into court and fixing, by judicial decree, the amounts severally due to all persons who furnish materials used in the building. The title of the act of 1892 declares it to be an act to secure the payment of “persons employed upon or furnishing materials towards the performing of any work in public improvements,” &e. The scope of the act, thus defined by its title, is quite wide enough to include all classes of persons who do work or furnish materials, whether for the original contractor or for any subcontractor however remote from him.

The first section is quite as broad in declaring the extent of the lien as is the title in declaring the object of the act. It enacts that any person who, as laborer, mechanic, merchant, &c., in conformity with the terms of any contract for a public improvement, made between any person and any municipality, performs labor or furnishes material toward the performance of any such contract, shall, on complying with the second section of the act, have a lien upon the moneys in the control of the said municipality, due or to grow due under such contract, these liens may become absolute to the extent of the amount due or to grow due on the contract, in favor of every person who shall be employed or furnish materials to the person with whom the contract with the municipality is made or the subcontractor of the said person.

The counsel for the defendant Evans insists that this section gives the lien in favor of but two classes of persons—first, those who may be employed to furnish work or material to the original contractor, and secondly, in favor of the subcontractor of the original contractor. In my view this construction departs from the fair meaning of the words used. The context of the section appears to declare a lien in favor of every person (observe their class is not defined) who is employed to furnish work or material either to^the original contractor or to the subcontractor of the original contractor.

This construction of section 1 accords with the object of the act as declared by its title, and secures payment of the claims of all persons of the classes recited in the title. The first section creates a preferred claim in favor of those who are employed to furnish work or material either to the contractor or to the subcontractor, and charges it, by the mode provided in the statute, upon the amount due or to grow due on the contract with the municipality. The second section prescribed the incidents of the claim. The fifth section declares the time when this preferred claim shall attach as a lien, and limits the extent of it to the liability of the contractor for the claim preferred—that is, the unpaid contract price is, when notice of the claim is filed, charged with a lien for the price of materials furnished by any person, but the extent of the lien is the liability of the contractor to pay the claim to which the statute gives a preference. Take this case as an illustration, the claim of Garrison for material furnished to the subcontractors, Borio and Stelacio, would, under the statute, be a preferred claim upon the fund consisting of the contract price unpaid to Evans. The lien attaches at the date of the filing of the claim, and to the extent of Evans' liability then existing for that claim, not by any contract on Evans’ part to pay it, hut because it has been preferred by the statute. The preferred claim referred to in the fifth section is the right to be paid for the stone furnished to the building. It is given to Garrison- by the statute. Evans accepted his contract with the municipality, subject 'to the preference given such claims under existing law. But Evans having, by his contract with Borio and Stelacio, been entitled to pay them for the very materials for furnishing which the claim is made by Garrison, and having actually fully paid them before any lien notice was actually filed by Garrison, has no further liability for this statutory preferred claim, nor can the contract price unpaid to him by the municipality be held to pay it. In short, my view of the true construction of the statute is that the statute will support a lien for material furnished to a subcontractor and used in the building, but when the original contractor, at a time when no lien notice wasym file, has once paid a subcontractor for materials furnished and used in the building' under a contract, he has discharged the-unpaid contract price from liability to lien for those materials, and he cannot be compelled to pay over again for the same materials. The stone furnished by Mr. Garrison to Borio and Stelacio had been paid for to them by Evans long before Mr. Garrison- filed his lien notice. This is, in substance, the construction given by the supreme court of New York to the same statute. In Brainard v. County of Kings, 84 Hun 290, the creditors of a subcontractor filed a lien for. work performed by them for the subcontractor. It was held that they must show that the contractor was indebted.to the subcontractor in some amount and.that this amount was the extent of their lien. “ If it appeared there was no such indebtedness of the contractor to the subcontractor, the creditors of the latter could have no lien.

It should be noticed that the seventh and eighth sections of the statute of 1892 provide for a proceeding to enforce the lien against the fund which is in the nature of an .interpleader, and recognize the possibility of parties to such a suit “against whom no personal claim is made.” So section 8 provides that the court, on the suit for the enforcement of the lien, shall determine the amount due from the contractor to the respective claimants. This does not refer to amounts due under the personal agreements of the contractor, but to what is due under the preferred claims given by the statute on the fund.

It has been declared by the court of errors, in Delafield v. Sayre, 31 Vr. 449 that there should be no personal judgment in suits on these liens.

I will dispose of this matter as follows: Unless, before February 11th, 1901, the parties shall agree upon the amount due the complainant, I will then advise a reference to a master to ascertain and report the amount due from the board of chosen freeholders of the county of Cumberland to Burd P. Evans remaining unpaid December 6th, 1899, and also what sum is due, or to grow due, to the said complainant from the defendant Burd P. Evans, under the findings expressed in this opinion, for work and labor done and material furnished by the said complainant to the said asylum, at the request of the defendant Evans, specifying the quantity of work and material and the price thereof, and allowing credit for all payments made thereon, stating the account, and ascertaining the balance of money due to the said complainant in that behalf.

I do also find as an established fact that the defendant Burd P. Evans is indebted to the defendant Smith Tomlin, agent, for work and labor done by him, on Evans’ order, on the said asylum building for a balance amounting to the sum of $28.50, with interest thereon, from June 13th, 1899, to March 2d, 1900, to be added.

The master shall be guided by the opinion pronounced in this case. The admissions in the pleadings, and the testimony received in this case, may be used before the said master, and such additional testimony, on the matter referred, as either party may submit. The master may apply for further instructions if necessary. Questions of. cost- to any of the parties and all further equity are reserved until the coming-in of the master’s report, or until final decree, if the parties agree as to the amount due Mr. Garrison.