text:
    Henry V. Butler and Robert L. Taylor v. Thomas Rogers and others.
    1. As a general rule the court ought not to interfere in cases of nuisance where the injury apprehended is of a character to justify conflicting opinions whether the injury will in fact ever be realized.
    2. It is not for this court to determine whether there has been any irregularity in laying out a street. Such proceedings must stand until set aside by a legal tribunal which has authority to interfere.
    This was a motion for injunction, argued at Newark, August 2d, 1853. The case, as made by the pleadings and proofs, sufficiently appear in the opinion of the Chancellor.

      A. S. Pennington and W. Pennington, for the motion.

      John Hopper and J. P. Bradley, contra.

   The Chancellor.

The defendants deny that the erection of the blacksmith shop as contemplated by them, will be injurious to the complainant’s business. They admit that they intend to erect the shop with the ordinary chimneys. They insist that such chimneys are more convenient for themselves, and are less objectionable to their neighbors, on account of the dust, cinders and soot, than the high chimneys. The only complaint in the bill is, that the dust, cinders and soot from the low chimneys, with a northerly wind, would be thrown into the paper mill, endanger the mill by reason of the sparks, rendering it uncomfortable to the workmen, and blacken and spot the pulp before it is made into paper. The complainants insist that a blacksmith’s shop, constructed in any manner, located as this will be, will be a nuisance to them, and should be prohibited. But they ask, in case the court should not be willing to prohibit the erection altogether, that such restrictions may be put upon the defendants as to compel them to construct their forges with one large chimney.

In the case of Rogers et al. v. Danforth et al., decided in February Term last, (Stn. JR,., p. 289,) the complainants, who were the owners of a cotton mill, filed their bill to enjoin the defendants from erecting, within fifty feet of their mill, a large blacksmith shop with a number of forges, alleging it would be a nuisance and would destroy the complainants’ business.. The defendants, in that case, put themselves upon the ground that they intended to erect their shop with one large chimney, which would be the reservoir for all their fires and forges; that this was the modern improved plan, and that with such a chimney the injurious consequences apprehended would be avoided. There was much evidence in that case, and it was such as induced me, without any hesitation, to refuse the injunction, on the ground that the evidence satisfied me that the high chimney would avoid the mischief apprehended.

In the case now before me, a large number of witnesses have been examined as to the comparative advantages of the high and low chimneys, and I must confess the weight of the evidence is very strongly in favor of the latter. The manner in which this subject has been presented to me in these two cases, warns me of the very great caution to be observed in granting injunctions in cases of mere apprehended mischief, and where there is room for such contrariety of opinion.

These defendants have been carrying on, for the last twenty years, a large manufacturing establishment. In the enlargement of their works, the erection of an additional blacksmith’s shop has become necessary. The place where they contemplate erecting it is not only convenient, but it is the only lot, they allege, that they own in the vicinity suitable for the .purpose. To prohibit its erection altogether would be a serious damage to them. For the court to undertake to decide that they should erect their works in any particular manner, when there is .much conflicting testimony, whether such is the best mode of erecting them, is assuming an unnecessary responsibility.

The defendants were carrying on their business where they now are when the complainants became the proprietors of their mill. The business of the defendants was such as to require forges. In enlarging their works, they ought so to erect them as to do no unnecessary injury to the complainants. The defendants insist they will do the complainants no injury; and they produce before the court the testimony of a large number of witnesses, to show that the apprehensions of the complainants are not well founded. If the evidence before me can be relied upon, the blacksmith’s shop will not be a nuisance. If the evidence were balanced, I should not feel justified in interfering. But it very strongly preponderates in favor of the defendants’ answer. Should, however, the consequences follow, which the complainants apprehend, there is no suggestion in the bill that the defendants are not able to meet any demand that may be made upon them in a legal way for damages. As a general rule, the court ought not to interfere in cases of nuisauoe, where the injury apprehended is of a character to justify conflicting opinions, whether the injury will, in fact, ever be realized.

As a ground for relief, the complainants allege that “ The Society for Establishing Useful Manufactures” were originally the proprietors of all.the water power at Paterson, and have, from time to time, leased or sold mill lots with water power, to divers grantees and lessees, and had, at the date of their lease to the complainants, in all cases, as far as the complainants know and believe, covenants inserted in all their leases and grants, calculated to protect the other lessees and grantees from nuisances, and, among other clauses, inserted covenants restraining their lessees and grantees from erecting forges or furnaces, and that such provision was incorporated in their lease, and that they understood and took their said lease upon the express understanding that such provision was, and would thereafter be incorporated in all the leases and deeds of said society for mill lots, and that the mill lot upon which the blacksmith’s shop is to be erected was, at the date of their lease, leased to one Walker, by the said society, and that there was a provision inserted in the lease to Walker, that no forge or furnace should be erected on said lot.

The counsel for the .complainants did not argue that they could ask the court to interfere, by virtue of the covenant referred to. They insisted it was entitled to the consideration of the court, in viewing the subject upon its general merits. If true that such a covenant was inserted in all the leases, and if the lessees, in observance of it, had erected their works, and if the complainants and defendants, with a mutual understanding that they would regard such covenant, had enlarged and carried on their business, although the one party might have no legal claim against the other, through or upon the covenant, it might have weight with this court on a question for injunction, if, in other respects, the right of the complainants to an injunction was doubtful.

The defendants deny that any covenants of the force and effect stated by the bill were inserted in the leases, and they allege that the Walker lot, on which they propose building, has, since the year 1841, been leased to several tenants, without any restriction whatever. They set up in their answer, and they show by evidence, that they have had within one hundred and fifty feet of the complainants’ mill, ever since its erection, a blacksmith’s shop, and that the complainants themselves have had, and now have within one hundred feet of their mill, a blacksmith’s shop of their own.

Under such circumstances, I do not see that the complainants can claim any benefit from the covenants, even if they were of the character alleged in the bill.

There is another ground upon which the court is asked to interefere. It is alleged that the defendants are erecting their shop on a public street, and that, by so doing, they are bringing their building nearer to the complainants' mill than they have any right. In answer to this allegation, the defendants say that the street was laid out by the public authority of the city of Paterson, and they produce the record.

The complainants reply that the street was irregularly laid out, and that it was done without first vacating the old road. It is not for this court to determine whether there has been any irregularity in laying out the street. The proceedings were by a competent authority and will stand until set aside by a higher legal tribunal, who has authority to interfere.

The motion for injunction is denied, with costs.

Cited in Ross v. Butler, 4 C. E. Gr. 305.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    Obadiah Herbert v. Rebecca Scofield and others.
    1. The acknowledgment of the receipt of the consideration money in a deed is prima facie evidence that the consideration is paid. But it is not conclusive. The grantor may show that the consideration was other than a moneyed consideration, or if a moneyed consideration, that in whole or in part it was unpaid.
    2. The acknowledgment of payment in a deed is a receipt for the consideration money, and if the grantor impeaches that receipt it must be clearly made out to the satisfaction of the tribunal to which an appeal is made for redress.
    3. Where a complainant comes into court with a sworn bill, and it turns out upon investigation of the case that the bill has been framed with skill and care to avoid an impression which would be made by an ingenuous statement of the case, the complainant assumes a position in the court which deprives him of the benefit of doubts which might otherwise be resolved in his favor.
    4. A disingenuous bill which is sworn to, is quite as obnoxious to the censure of the court as a disingenuous answer.
    On bill and cross-bill.

      Mr. J. Vandyke, for Obadiah Herbert, complainant in original bill.

      Mr. J. Scudder, for Rebecca Scofield, complainant in cross-bill.

      Mr. W. Halsted, for Hiram S. Parsons.
   The Chancellor.

Obadiah Herbert filed his bill on a mortgage which had been executed to him by Rebecca Scofield. There is no dispute as to the rights of the complainant in the original bill. The controversy is between Rebecca Scofield and Hiram S. Parsons, under the cross-bill.

The case made by the cross-bill is this: That on the 30th of May, 1842, Obadiah Herbert, to secure a debt of $2,000, which he owed Jane Kirkpatrick, executed to her his bond and mortgaged the lands in controversy.

On the first of August, 1842, Herbert conveyed the mortgaged premises to Josiah Bennet. On the 11th of December, 1843, Josiah Bennet conveyed to Jacob C. Bennet, and on the 12th of April, 1848, Jacob C. Bennet conveyed to Rebecca Scofield.

The consideration of the conveyance to Rebecca Scofield was §3000. She paid one thousand dollars down. By an agreement entered into between herself, her grantor, and Obadiah Herbert, she gave her bond to Obadiah Herbert in the penal sum of §4000, conditioned to pay to Jane Kirkpatrick the said bond, to secure §2000 which she held against Obadiah Herbert.

On the 5th of April, 1849, Rebecca Scofield conveyed part of the lands to Hiram S. Parsons for the consideration of §2500. The cross-bill alleges that §1500 of this consideration money was paid in cash, at the time of the delivery of the deed, and that the balance, which was §1000, Hiram S. Parsons agreed to pay to Obadiah Herbert, in satisfaction of so much of the Jane Kirkpatrick bond and mortgage, and that he has not paid the thousand dollars, and refuses to do so.

The cross-bill prays that Rebecca Scofield may be decreed to have a lien on that part of the premises held by Hiram 8. Parsons, for the thousand dollars, as the balance of the purchase money due her, and that it may be first sold to raise the money necessary to pay off the bond and mortgage of Obadiah Herbert.

There is no difficulty as to the law applicable to the case. If one thousand dollars of the purchase money agreed to be paid by Hiram 8. Parsons remains unpaid, Rebecca Scofield has an equitable lien upon the premises for the money. Sugden 352, 353; Chapman v. Tanner, 1 Vern. 267; Pollexsen v. Moore, 5 Atk. 272 ; Story’s Eq. P., § 1217, and note (4); Warner v. Van Alstyne, 3 Paige 515; 7 Wheaton 46.

The deed expresses the consideration to be twenty-five hundred dollars in money, the receipt of which is thereby acknowledged. This is prima facie evidence that the consideration money was paid. But it is not conclusive. The grantor may show that the consideration was other than a moneyed consideration, or if a moneyed consideration, that in whole or in part it is unpaid. As to the extent a party may-go in impeaching the consideration, the eases are conflicting, but thus far I think it is settled by the weight of authorities. McCrea v. Purmort, 16 Wend. 460; Wilkinson v. Scott, 17 Mass. 249, and cases there cited.

The acknowledgment of payment in the deed is a receipt for the consideration money, and if the grantee impeaches that receipt, it must be clearly made out to the satisfaction of the tribunal to which an appeal is made for redress.

The allegation of the complainant in the cross-bill is that the consideration was $2500, as expressed in the deed — that $1500 was paid in cash, and the balance of one thousand dollars Hiram S. Parsons agreed to pay to Obadiah Herbert, on a bond and mortgage of two thousand dollars which he held against the complainant. The defendant denies he made any such agreement, and the complainant has not made it out satisfactorily by proof. As evidence of the agreement, the bill charges that Hiram S. Parsons made one payment of interest on the one thousand dollars to Herbert, and that he offered to pay him the principal. This the answer denies. The testimony of Herbert would seem to sustain these allegations of the bill. But the witness does not speak with much certainty, and the explanations made by Charles B. Parsons, a witness on the part of the defendant, impairs very much the force of Herbert’s evidence. Charles B. Parsons says his father lent the money to Chauncy Parsons to pay the interest, Herbert says both Hiram S. Parsons and complainant were there — that the interest was paid on the $2000 — he cannot tell who paid it, but he understood the interest was paid between them. As to the offer to pay one-half the bond, Herbert does not fix with certainty the time when the offer was made. In explanation of this circumstance, Charles B. Parsons, while he also proves that the offer was made, makes it to have been before the deed was delivered, and before the settlement as to the consideration.

But still, although the complainant does not show that one thousand dollars was, by agreement, to be paid on the Herbert mortgage, if the proof was satisfactory that any certain portion of the purchase money remained unpaid, it would be an equitable lien on the premises, and the complainant would be entitled to relief.

But the proof must be satisfactory. If it leaves the matter doubtful, the acknowledgment in the deed is a protection to the grantee.

I must confess the pleadings and the evidence leave it very doubtful whether all the purchase money has been paid. The conviction produced upon my mind is rather that it has not all been paid. And yet, I do not see my way clear to afford the complainant any relief. He does not make out a clear case, and no one can say, with any certainty, as to the amount, if any, remaining unpaid.

The case is embarrassed by the bill. It is an injunction bill, and is sworn to. The complainant should have stated her case with accuracy. She has not done so. Where a complainant comes into court with a sworn bill, and it turns out, upon investigation of the case, that the bill has been framed with skill and care, to avoid an impression which would be made, by an ingenuous statement of the case, the complainant assumes a position in the court which deprives him of the benefit of doubts, which might otherwise be resolved in his favor. A disingenuous bill which is sworn to, is quite as obnoxious to the censure of the court, as a disingenuous answer.

It is manifest that the impression intended to be made by the bill was that at or about the time of the execution of the deed, the sum of fifteen hundred dollars was paid in cash and at the same time the understanding had as to the manner in which the balance was to be paid. The answer denies this was so, and a careful examination of the bill will show that this denial may be reconciled with the statements of the bill in this particular.

The bill states that Parsons agreed to pay the complainant for the premises the sum of two thousand five hundred, dollars. That the sum of one thousand five hundred dollars, it was agreed, should be paid in cash, and the balance applied on the Herbert mortgage. Then, in a subsequent part of the bill it is stated, “that the said deed.was received by the said Hiram S. Parsons, upon the terms and conditions last aforesaid.” And again, “that the said Hiram S. Parsons, at or about the time he received the deed, paid to the complainant the sum of one thousand five hundred dollars, as he agreed to do as before stated.”

The defendant, by his answer alleges that he paid of the consideration money two thousand dollars,'by giving credit for that sum to Chauncey Parsons, the son-in-law of the complainant; and that he paid the balance of five hundred dollars at a future day. I am well satisfied from the whole case, that neither the statement of the bill, or the answer, is to be relied upon, as to this part of the transaction. The defendant has shown, by every witness he examined, that very little, if any reliance, is to be placed upon his answer.

As the defendant admits that at the time the deed was delivered, there was five hundred dollars of the consideration unpaid; and has thereby shown, that although the acknowledgment in the deed is for two thousand five hundred dollars, only two thousand dollars was actually paid. I should have been inclined to have declared the five hundred dollars a lien on the premises, was I not satisfied of the want of ingenuousness in the complainant in presenting her case in her bill.

As to her holding the property to protect it from Chauncey Parson’s creditors, I think nothing of that. There is no evidence to warrant • the charge. But it is very plain, from the whole case, that the arrangement for the payment of the consideration money was not as stated in the bill, and that Chauncey Parsons had some connection with this part of the transaction, which the complainant, for some reason, has suppressed.

There is a mystery in the matter which I cannot unravel. My conclusion is, the complainant has not proved her case. I feel justified, however, in dismissing the cross-bill without costs.

The complainant in the original bill must take a decree for a sale of the mortgaged premises — to sell, first, the part owned by Rebecca Scofield, and to raise any balance out of the part owned by Hiram S. Parsons, but no other costs than those of the complainant, Obadiah Herbert, to be raised out of the mortgaged premises.


text:
    The New England Manufacturing Company v. Frederick A. Vandyke, Jr., et al.
    1. Subscribers to tbe stock of a manufacturing company put in at a valuation, as assets of the company, a cotton mill, &c., receive the stock of the company therefor, and dispose of the same as their own. The company take possession of the mill, and use it for several years; no conveyance, by deed, is made to them, a mere memorandum of the transaction being made on the journal of the treasurer.
    2. Held, that when the consideration for the property was received, its former owners became mere trustees of the company, and held the title for the company. Any conveyance made by them subsequent to that transaction, though for a full consideration to a grantee with notice, would be void against the company.
    3. A judgment creditor, at best, stands in no better situation than such a grantee.
    4. Although books of a company are not evidence against third persons, a memorandum in writing, made by an agent of the parties, and at their request, is evidence for and against them, and for and against all persons claiming under them.

      C. S. Green and P. D. Vroom, for complainants.

      W. Halsted, for defendants.
   The Chancellor.

David S. Brown and William R. Hanson were seized in fee, in their own right, of a certain mill site, together with a cotton mill erected thereon, and the machinery and fixtures necessary for the use of the mill. “ The New England Manufacturing Company of South Trenton,” was incorporated by an act of the legislature of this state, on the 4th of March, 1842. Their capital stock consisted of one hundred and twenty-eight shares of five hundred dollars each. Brown and Hanson each subscribed for sixty-two shares of the stock, the par value of which was sixty-two thousand dollars. To pay for this stock, they put in, as assets of the company, the said cotton mill, machinery, &c., at the valuation of sixty-two thousand dollars. This was the manner in which the company was organized. Brown and Hanson took and disposed of the stock as their own. Directors were appointed. The company took possession of the mill and its appurtenances and carried on business for several years. Vo conveyance by deed was made to the company for the property which represented the stock. A mere entry or memorandum of the transaction was made by the book-keeper in a book of the company called the journal of the treasurer’s book, and also in the book of minutes.

On the seventh day of February, 1851, Frederick A. Vandyke, Jr., one of the defendants, recovered a judgment in the Supreme Court against William R. Hanson, the other defendant, and one Albert F. Hanson, for a large sum of money, upon which judgment an execution was issued and placed in the hands of the sheriff with orders to levy upon and sell all the right and interest of Hanson in the said mill and premises. Upon the sheriff’s advertising the property under the execution, the complainants exhibited their bill. They pray that Hanson may be decreed to make and execute, and procure to be made and executed to them a deed of conveyance for all his right, title and interest in the said property; that he be restrained from conveying, mortgaging and encumbering it; that Vandyke and the sheriff be restrained from further proceeding under the judgment and execution, and that the complainants may have such other relief as may be necessary.

Vandyke does not stand in a position to defend himself, upon the ground that he is a bona fide judgment creditor without notice. It is therefore unnecessary to consider whether such a plea would avail him in this case. He > and Hanson have each of them put in an answer to the bill. Both answers admit, substantially, the important facts which must control the decision of the case. It is evident, from their answers, that Vandyke, long before he recovered his judgment, knew of the transaction between Brown, Hanson and the company. He supposed that in pursuance of the understanding between the parties, the property had actually been transferred by deed to the company. Before he recovered his judgment, he filed a bill of complaint in this court, under oath, in which he alleged that such conveyance had been made. He discovered that he was mistaken as to that fact, and then attempted to reach the property by means of a judgment against Hanson. He now insists he is not chargeable with notice, because the information he had was erroneous. It was that the legal title was in the company, when, in point of fact, it was in. Brown and Hanson. The point is, did he know that the company had paid Brown and Hansom a full consideration for this property. It is evident that he did from his own answer. But his counsel insisted in argument that by the stock transaction between Brown, Hanson and the company, the company acquired no interest in the property.

It is shown by the books of the company that Brown and Hanson received one hundred and twenty-four shares of stock between them, and that they received it as the consideration' for the mill and appurtenances. It is objected that the books of the company are not evidence against third persons. Admitting the position in all its extent, the evidence is not admitted as the books of the company. It was a memorandum in writing made by an agent of the parties, and at their request, and in that view, it is evidence for and against them, and for and against all persons claiming under them. Brown and Hanson disposed of their stock and never paid for it in any other way; and the stock thus received by Hanson, Vandyke now holds and claims as his own. The company took possession of the mill, repaired it, and paid the taxes and used it as their own. It was through mere carelessness that the deed was not executed.

When Brown and Hanson received the stock as consideration for the property under the agreement, they became mere trustees of the company and held the title for the company. Any conveyance made by them subsequent to that transaction, though for a full consideration to a grantee with notice, would be void against the company. A judgment creditor, at best, stands in no better situation than such a grantee. Such is the position of the complainant.

The legal title to the property is in Brown and Hanson. The complainants have a right to call upon them for a conveyance. It is proper that the court should interfere and prevent the further embarrassment of the title by proceedings under the judgment. But a final decree cannot now be made. David S. Brown is a necessary party to the suit. There are many obvious reasons why the court ought not to decree a conveyance by one of these trustees without having the other before it. The reason given by the bill for not bringing Brown in, that Brown is willing to convey, is not sufficient. I cannot take the mere allegation of the complainants for the truth. When brought before the court, Brown may repent of his willingness, and may give good reasons why the complainants should not have the title which is in his co-trustee, until the accounts between them are settled.

The complainants are at liberty to amend their bill, without costs.


author: Haines, J.

text:
    James M. Redmond, appellant, and Philemon Dickerson, who sues for the use, &c., and others, respondents.
    1. The directors of an incorporated company cannot speculate with the funds or credit of the company, and appropriate to themselves the profit of such speculation. They cannot, in making sales or purchases for the company, take advantage of their position as directors, and either directly or indirectly speculate upon the company,
    2. If such a transaction has involved a complainant in a lawsuit, there is no propriety in his appealing to a court of conscience to give him redress, which he is not entitled to by the strict rules of the common law.
    3. Although a demurrer admits all the facts alleged in the bill, where a bill alleged as a fact, that a check was paid, and then proceeded to detail the manner and circumstances of its payment, and the circumstances appealed to, to show its payment, did not establish the fact. It was held that the allegation amounted to nothing.
    The bill alleges that the Boudinot Manufacturing Company was incorporated on the 12l.h day of February, 1835, with a capital stock not to exceed $200,000, to be divided into shares of one hundred dollars each, and that so soon as the sum of ten thousand dollars of such capital- should be paid in, or received satisfactorily, the said company were authorized to commence operations under their charter; that soon after the charter was granted, three hundred shares of the stock were subscribed and paid up in full to their par value of one hundred dollars per share; that the company commenced business operations; that in the year 1843 they became unable, for want of funds, to proceed, and accordingly suspended their business; that during that year, James M. Redmond, the complainant, made an agreement with Philemon Dickerson, John C. Benson, and Samuel G. Wheeler to purchase and divide equally among themselves the capital stock of the said company, with the intention of renewing business; that in pursuance of said agreement, Redmond purchased one hundred and twenty-six shares, Dickerson ninety-one shares, Benson five shares, and Wheeler five shares, making, in all, two hundred and twenty-seven shares, in which they were all equally interested, leaving seventy-three shares outstanding, and which were owned by Alfred Stoutenburgh and Edward Laffan; that a meeting of the stockholders was then called, at which the directors severally resigned their offices, and the complainant, together with the said Dickerson, Benson, Wheeler, and John M. Gould (to whom Mr. Dickerson had transferred one share of stock to qualify him) were elected directors; Philemon Dickerson was chosen president, Benson agent, and Samuel G. Wheeler commission merchant of the company, all to act without compensation; that the complainant and his partners in the stock, as before mentioned, then offered to Stoutenburgh and Laffan to advance funds with them in proportion to the shares they respectively held, to enable the company to re-commence business; that Stoutenburgh and Laffan refusing, the complainant and his said partners made application to the legislature for a supplement to the charter of the company, and which was passed March 4th, 1844, by which supplement the company were authorized to increase the par value of their shares from one hundred to one hundred and fifty dollars each; that the directors called

      in an installment of ten dollars on each share, to be paid in on the first day of June then next ensuing ; that, before the passage of the resolution to call in this installment, the complainant and his associates, Dickerson, Benson, and 'Wheeler, had made a contract with one Hamilton Gay for a large lot of cotton machinery, at a price of eighteen thousand eight hundred dollars, to be delivered on or before the tenth day of the same month of June aforesaid, at which time they were bound to pay six thousand eight hundred dollars on account of said contract, and to secure the payment of the balance, twelve, thousand dollars, by a mortgage on said machinery, and which machinery had been purchased with the intention of having the same conveyed to the company as soon as the same could safely and properly be done, and which could not be until Stoutenburgh and Laffan either paid up their installments, or their stock was declared forfeited ; that Stoutenburgh and Laffan did not pay the ten per cent, called in, and on the sixth of the same month of June aforesaid, by a resolution of the directors, their stock was declared forfeited ; that, on the said sixth of June, the complainant, in order to comply with the terms of the said act, made and delivered to the directors his check, as follows : “ Cashier of the Bank of New York, pay to the order of P. Dickerson, president of the Boudinot Manufacturing Company, Twelve Hundred and Sixty Dollars,” which sum was the amount of the installment of ten per cent, on the one hundred and twenty-six shares standing in his name as before mentioned; and each of his associates gave some check or memorandum in writing, for the ten per cent, on the shares standing in their names respectively ; that, at that time, the complainant owned but one-quarter of the two hundred and twenty-seven shares purchased as before mentioned ; that the checks were given as mere memoranda, to remain until the complainant and his said associates should transfer to the said company the said machinery purchased of Hamilton Gay, and that it was expressly agreed by the said company that the said checks should be canceled upon such transfers being made; that, at the same meeting of the directors, after the shares of Stoutenburgh and Laffan had been declared forfeited, the said company, according to the original understanding of the parties, resolved to purchase of the complainant and his associates (being the same persons as the company) the said machinery for the sum of twenty-eight thousand eight hundred dollars ; that the said company assumed the payment of the encumbrance on the machinery of twelve thousand dollars, and ordered their president and secretary to issue one hundred and fifty-two-shares of the capital stock at their par value of one hundred and ten dollars a share, amounting to the sum of sixteen thousand seven hundred and twenty dollars, the balance due the complainant and his associates within eighty dollars ? that, soon after the said meeting, the said complainant and his associates paid, and secured to be paid to the said Gay, from their own funds and credits, each one equal quarter payt of the said sum of six thousand eight hundred dollars ; took a conveyance of the machinery and gave a mortgage thereon for the said* $12,000, and forthwith conveyed the said machinery to the company, it never having been in the possession of the complainant or his associates; that there was no entry made on the books of the transaction, and that the one hundred and fifty-two shares of stock were not issued; that, in the fall of the year, the said complainant and Dickerson ascertained the affairs of the company to be involved in obscurity, and the books of the company to be loosely kept, whereupon the company came to a settlement with Wheeler, and the complainant purchased all Wheeler’s stock and interest j that the accounts were then adjusted, and a receipt given to Wheeler in full, in which adjustment no account or charge of the check in question was made against the complainant; that, on thé first of March, 1845, the complainant, Dickerson, and Benson, settled up all the affairs of the company, adjusted the accounts, and opened new books; which accounts so opened, set forth the actual state of the debts and credits of the company with the complainant and his associates, and all other persons, so far as the, names could be ascertained; that, by these books and accounts, it appears that the capital stock of the said company was valued at four hundred and seventy-nine shares, at one hundred and ten dollars per share, and it was declared that the same was paid up in full by the machinery, valued at fifty-two thousand six hundred and ninety dollars, and the complainant and his partners were credited upon the second books with the full par value of the stock, and were not charged with the said checks; that about the first September, 1845, the complainant negotiated with John Wood and Nathaniel S. Merritt for the sale of his stock, and exhibited to them a balance sheet from these books, and sold them his stock upon this exhibit, and that they purchased no check or claim against him ; that the check was filed away among canceled papers of the company, was found by Wood and Merritt, or their agents, and in 1849 a suit was commenced on this check against the complainant, in the name of Philemon Dickerson, president, for the use of the Boudinot Manufacturing Company, who used the name of Philemon Dickerson, as president; that on the 16th of June, 1849, upon a bill exhibited in the court by one of the creditors of the company,» under the act entitled “An act to prevent fraud by Incorporated Companies,” an injunction was issued against the company, and William Gledhill and Halmagh Van Winkle were appointed receivers; that at the instigation of the stockholders of the said company, the said receivers are now prosecuting the said suit upon the said chock.
    The prayer of the bill is, that the receivers may be decreed to deliver up to the complainant his said check, and the same be declared paid and satisfied; that the said Philemon Dickerson, John C. Benson and Samuel G. Wheeler may be decreed to be partners with the complainant in the transaction referred to, and liable to contribute to the expenses of the said suit at law, as well as their proportion of the sum, if any, found due on the check, and that the receivers may be enjoined from proceeding any further with the said suit at law.

      On the 18th day of May, 1860, the Chancellor made an order for the injunction according to the. prayer of the bill.
    On the 17th September, 1850, Philemon Dickerson, who sues for the use of “ The Boudinot Manufacturing Company,” William Gledhill and Halmagh Yan Winkle, receivers for the creditors and stockholdérs of “ The Boudinot Manufacturing Company,” by their solicitor, filed their joint and several demurrer to the bill.
    On the same day, John C. Benson, by John M. Gould, his solicitor, filed his several answer. And on the 13th December, 1850, Philemon Dickerson, by John M. Gould, his solicitor, filed his several answer.
    The Chancelloe. Upon the argument of this demurrer it was insisted—
    First. That there is no equity in the complainant’s bill.
    Second. That John C. Benson and Samuel G. Wheeler are not proper parties to the suit.
    It is manifest this bill cannot be sustained without the court’s giving its sanction to the transaction between the complainant and his associates, in reference to the machinery purchased of Hamilton Gay.
    There were three hundred shares of the stock of “The Boudinot Manufacturing Company” issued, and they were paid up in full. The par value being one hundred dollars per share, the capital paid in amounted to thirty thousand dollars.
    The complainant, together with Philemon Dickerson, John C. Benson' and Samuel G. Wheeler purchased all the stock issued, except seventy-three shares. They were elected directors of the company in connection with John M. Gould, to whom one share had been transferred, to qualify him to act as director. Having procured a supplement to the original act of incorporation authorizing an increase of the par value of the shares from one hundred to one hundred and fifty dollars each; in pursuance of this supplemental act, the directors, on the 5th of September, 1844, called in an instalment of ten per cent, on each share of the capital stock issued, to be paid on or before the 1st day of June then next. Before this resolution was adopted, the complainant and Dickerson, Benson, and Wheeler had made the contract with Hamilton Gay for the machinery. They were to pay for it the sum of eighteen thousand eight hundred dollars, of which sum six thousand eight hundred dollars was to be cash, and the balance, twelve thousand dollars, to be secured by a mortgage on the machinery. When they made this contract, they constituted a majority of the board of directors, there being but five directors, and the fifth one, John M. Gould, qualified to act by holding one share of stock, of which they were the owners, and which they had transferred to him to make him eligible as a director.
    There was some disagreement on the argument, whether or not it appeared, by the bill, that at the time of making the contract in question, the complainant and his associates were directors of the company. But I think this is very clear from the order of the transactions set forth in the bill, and that the complainant did not intend to conceal or question this fact.
    At the time this contract was made with Gay, there was an understanding between the complainant, and Dickerson, Benson, and Wheeler, as associates, and the same individuals, as directors of the company, that they should purchase this machinery for the company. The installment was to be paid in on the 1st of June, and the machinery was to be delivered on the 6th of June. It was not to be delivered until the 6 th, lest, as the bill alleges, the stockholders who should not have paid up their installments, might derive some benefit from the purchase. It was purchased by the complainant and his associates, as the bill states, with the intention of having the same conveyed to the company as soon as it could be safely and properly done. On the 6th of June, when the difficulty apprehended was removed by the forfeiture of Stoutenburgh and Laffan’s stock, the directors passed a resolution “ according to the original understanding of the parties,” that the company should purchase the machinery of the said associates for the sum of twenty-eight thousand eight hundred dollars.
    The machinery was then transferred to the company, without ever having been in the possession of the complainant or of his associates.
    Thus the complainant, and the three directors who were associated with him, made a profit out of the company of ten thousand dollars.
    According to the complainant’s own statement, they did not risk one farthing .in the transaction. They bought the machinery for the company, and had it depreciated on their hands, in the interval between the purchase and the delivery, the loss would have been sustained by the company, and not by them. They were but the agents of the company, and carried on the negotiation in their own names, merely for the purpose mentioned in the bill, to prevent defaulting stockholders from deriving any benefit from it, if they should make default in not paying up their installments.
    Is it lawful for the directors of an incorporated company thus to speculate out of the company in the purchase or sale of materials which are essential to carry on its business operations ?
    This company was incorporated “ for the purpose .of manufacturing cotton, woolen, hemp, or silk, and generally all articles manufactured from all or either of these articles, in their several and various branches.’' It was necessary for them to procure a mill and machinery to carry on their business. Now if, after the capital had been paid in, the individuals composing the first board of directors had purchased the machinery for eighteen thousand eight hundred dollars, and then transferred it to the company for the consideration of twenty-eight thpusand eight hundred dollars, making a speculation for themselves of a profit of ten thousand dollars, would the transaction be one which, if brought before a court of equity, ought to receive its sanction? Would the court aid the individuals composing the direction in reaping the fruits of such an arrangement?
    But this view of the case was combatted with great earnestness and ability by the complainant’s counsel. He insisted that the transaction was no injury to any one — that these directors, themselves owning all the stock, no one else was interested or could lose by it.
    If these individuals did not anticipate a profit in some way, it is difficult to conceive why they should have put the machinery in at an advance of ten thousand dollars. If they did expect a profit, it was to be made out of some other persons than themselves.
    But were not the public interested ? Why did the charter require a certain amount of money to be paid in, as capital, upon which the company were to do business ? Was it not for the protection of the public, with whom the company were to obtain credit, and to deal ? And did it make no difference to the public whether the capital was bona fide paid in, or was represented by machinery valued at an extravagant price? The company, in payment for this machinery, issued one hundred and fifty-two shares of stock. Had this stock been paid for in money, they would have realized sixteen thousand seven hundred and twenty dollars • and, instead of having a mortgage upon their machinery of twelve thousand dollars, they would have incurred an outstanding debt of but two thousand and eighty dollars. The company had been unsuccessful in business, and had become so embarrassed as to render it necessary to resort to legislative aid, in order to furnish a new capital, that they might resume business. Was not the important trust committed to these directors to manage this capital, as well for the protection of the public as for the profit of the stockholders ? Hid it make no difference, though these directors were the sole stockholders, whether that capital was improvidently diminished, or safely guarded and preserved, as a fund, for the future operations of the company? Was it not a breach of trust, for the directors so to speculate on that capital for their individual benefit, as to lessen the security which the legislature had intended to provide for the protection of their dealers and the business community ? The consequences are before us. The company is now insolvent, and its creditors are ten thousand dollars worse off on account of this' speculation.
    The directors of an incorporated company cannot speculate with the funds or credit of the company, and appropriate to themselves the profits of such speculations. They cannot, in making sales or purchases for the company, take advantage of their position as directors, and either directly or indirectly speculate upon the company. If they are the only persons interested as stockholders, yet, if such speculations impair the capital stock, and have a tendency to substitute a fictitious for a real capital, such transactions are opposed to the policy of their act of incorporation, and cannot, in any manner, be countenanced by a court of equity.
    There is no reason given in. the bill, showing the least propriety why the complainant and his associates should derive from the purchase of this machinery a profit of ten thousand dollars. They assumed no responsibilities, or ran no risks, for which this profit could be fairly considered a just compensation. If the transaction has involved the complainant in a lawsuit, there is no propriety in his appealing to a court of conscience to give him redress, which he is not entitled to by the strict rules of the common law.
    But, if I am wrong in the view I have taken, and if the transaction referred to will stand the test of law and equity, I think it is plain, from the facts stated in the bill, that the check of twelve hundred and sixty dollars has never been paid, nor bona fide satisfied.
    I would here remark that the complainant’s counsel is undoubtedly correct in his position that the demurrer admits all the facts alleged in the bill, and there is no room left for conjecture or mere' inference. But though the bill alleges it as a fact, that the check was paid, and then proceeds to detail the manner and the circumstances of its payment, if those circumstances appealed to to show its payment, do not establish the fact, the allegation amounts to nothing.
    Without any conjecture, or any argument to the facts, it appears to me the statements of the bill show, most conclusively, that the check in question has never been paid.

      The complainant had standing in his name one hundred and twenty-six shares of stock when the installment of ten per cent, was paid in. He gave this check of twelve hundred and sixty dollars to pay the installments on these shares.
    His associates gave their checks respectively for the amount of the ten per cent, on the shares standing in their respective names. The amount of shares standing in the name of the complainant and his associates was two hundred and twenty-seven : the sum total of the checks was two thousand two hundred and seventy dollars.
    The machinery was sold to the company for the sum of twenty-eight thousand eight hundred dollars. The company assumed the mortgage of twelve thousand dollars, leaving due to the complainants and his associates, sixteen thousand eight hundred dollars. To pay this balance of sixteen thousand eight hundred dollars, the directors, in the language of the bill, “ ordered the president and secretary to issue one hundred and fifty-two shares of the capital stock, which, at their par value of one hundred and ten dollars, amounted to the balance due your orator and his associates within eighty dollars.” The shares were not then transferred, but credit was given for them afterwards, and it is admitted that the complainant and his associates received them.
    In this transaction and in this way the bill alleges the checks wore paid. And yet it is admitted that all the company owed the associates was sixteen thousand eight hundred dollars, and that the one hundred and fifty-two shares of stock — par value, sixteen thousand seven hundred and twenty dollars — paid the sum due to within eighty dollars. The accounts then stood thus : The complainant and his associates owed the company two thousand two hundred and seventy dollars on their checks, and sixteen thousand seven hundred and twenty dollars for one hundred and fifty-two shares of stock, making a total of eighteen thousand nine hundred and ninety dollars. The company owed them sixteen thousand eight hundred dollars for the machinery, leaving a balance due the company of two thousand one hundred and ninety dollars.

      How, then, was the check of one thousand two hundred and sixty dollars paid in this negotiation ? There is no other way in which it is alleged to have been paid. How was it carried into this account? What had the check to do with the account ?
    It is true the bill alleges that the check was given as a mere memorandum, to be delivered up when the machinery was transferred to the company ; that after the transfer, the directors considered the check paid ; that through inadvertence it was-not delivered to the complainant, but was filed away with the canceled papers of the company; that some months after, when the accounts were made up, the check was not carried into them as a debt due the company. But is not all this accounted for from the confused manner in which, as the complainants themselves say, the accounts were kept ? Again, it is alleged that subsequently, “ an account of the capital stock was made, (called a stock ledger,) at which time, and by reference to such books, it appears that the capital stock of said company was valued at four hundred and seven'ty-nine shares, at one hundred and ten dollars per share, and it was declared that the same was paid up in full by the machinery, valued at fifty-two thousand six hundred and ninety dollars.” The bill has before undertaken to give us' an account of the number of shares issued, and of the particular manner in which they were paid. It tells us that three hundred shares were originally issued, of which the complainant and his associates became the owners of two hundred and twenty-seven. The remaining seventy-three shares of this three hundred were forfeited. One hundred and fifty-two more shares were issued for the machinery. This makes the whole stock, including the seventy-three forfeited shares, four hundred and fifty-two shares. And yet this stock ledger declares there are four hundred and seventy-nine shares of stock. And it declares, too, that one hundred and ten dollars per share was paid on them, when the ten per cent, was, in fact, never paid on the seventy-three shares; and it is unaccounted for how the twenty-nine additional shares got afloat. The complainant does not allege this amount of stock was issued, or ever paid for. He only states that, when the accounts were finally made up by a “ competent accountant ” employed for the purpose, that the “ stock ledger ” showed this statement.
    All these allegations and statements go only to show that there was an understanding that the check should be considered paid. At the same time they establish, beyond controversy, that the complainant has received from the company a full consideration for the check, and, at best, has never paid upon it but eighty dollars.
    I think there is no equity in the bill entitling the complainant to the interposition of this court.
    I deem it unnecessary to examine the other question submitted on the argument — whether John C. Benson and Samuel G. Wheeler are necessary parties to this suit ?
    A technical difficulty was suggested upon the pleadings.
    Philemon Dickerson answered the bill, and, it is insisted, it was irregular for him, after filing an- answer, to join in a demurrer with the receivers.
    The suit at law is in the name of Philemon Dickerson, who sues for the use of “ The Boudinot Manufacturing Company
    The bill prays for an injunction against Philemon. Dickerson, as trustee, and it likewise makes him a party, in his individual capacity, and calls upon him, as a partner in the transaction with the complainant, to contribute, if it should be decreed against the complainant that there is anything due upon the check.
    The answer filed by Philemon Dickerson is in his individual capacity, and it was proper for him to answer, as the bill implicates him in the whole transaction.
    The demurrer is the joint and several demurrer of Philemon Dickerson, who sues, &c., and the receivers.
    If there was really any informality, the court would order the name of Philemon Dickerson to be stricken from the demurrer, and would not permit the rights of the receivers to be prejudiced by any mere technical difficulty in the pleadings.

      But I do not see that there is any obstacle to deciding the case upon the demurrer as it stands.
    Let the complainant’s bill be dismissed, with costs.

      Wm. L. Dayton, for appellant.

      Asa Whitehead, for respondents.
   The opinion of the court was delivered by

Haines, J.

. The appellant filed his bill of complaint in the Court of Chancery, alleging that “ The Boudinot Manufacturing Company,” which was chartered on the 12th of February, 1835, with a capital not to exceed two hundred thousand dollars, divided into shares of one hundred dollars each, was organized upon a capital of thirty thousand dollars, subscribed and paid for three hundred shares of the stock. That the company, after some years, suspended operations for want of funds, and that the complainant, with Philemon Dickerson, Samuel G. Wheeler, and John C. Benson, in the year 1843, agreed to become partners in the purchase of the capital stock of the company, with the intention of putting the same into operation. That the complainant, accordingly, purchased one hundred and twenty-six shares, Philemon Dickerson ninety-one shares, and Wheeler and Benson each five shares, and held them in trust each for the other. The remaining seventy-three shares were held by Stoutenburgh and Laffan, who refused to sell them.' Mr. Dickerson transferred one share to John M. Gould, for the purpose of making him eligible as a director.

A meeting of the stockholders was then called, and the complainant, with Messrs. Dickerson, Wheeler, Benson, and Gould, elected directors.

The affairs of the company being embarrassed, and large sums of money being required to pay the debts and to put the machinery in condition, for operation to advantage, the complainant and his associates agreed to advance a sum of money sufficient for the purpose, if Stoutenburgh and Laffa'n would pay their proportion towards it, but they refused to advance any more money, or to sell their stock for any reasonable sum.

The associates, for the purpose of relieving themselves of this embarrassment, applied to the legislature and procured the passage of a supplement to the charter of the company. By this supplement they were authorized to increase the capital stock to three hundred thousand dollars, to be divided into shares of one hundred and fifty dollars each, and to demand from the stockholders an additional sum of fifty dollars on each share already subscribed for, by installments of ten dollars per share, on thirty days’ notice. The penalty for neglect of payment was the forfeiture of the stock.

The directors having, by a formal resolution, accepted the supplement, resolved to call in an installment of ten dollars on each share, payable on or before the first day of June then next, and gave the notice required.

Stoutenburgh and Laffan neglected to pay the installment, and the directors, on the sixth day of June,, declared their seventy-three shares to be forfeited to the company.

At the same time the complainant, on payment of the installment due upon the shares standing in his name, gave his check on the Bank of Hew York for twelve hundred and sixty dollars, payable to the order of Philemon Dickerson, president of the Boudinot Manufacturing Company, and each of the other associates gave some check or memorandum in writing for the installments due upon the shares held by them respectively. These checks, the complainant alleges, were given as their memoranda, to remain until they could transfer to the company certain machinery which they had purchased of one Hamilton Gay for sixteen thousand eight hundred dollars.

The company, then, in pursuance of the original understanding of the parties, agreed to purchase of the associates that machinery for twenty-six thousand eight hundred dollars, being an advance of ten thousand dollars upon their purchase of Mr. Gay.- In payment of this machinery, the company gave a mortgage upon it for twelve thousand dollars, and issued to the associates one hundred and fifty-two shares of the capital stock, which, at its par value of one hundred and ten dollars, amounted to the balance due them within the sum of eighty dollars.

The complainant, after this, purchased the interest of Wheeler, and, in September, 1845, Wood and Merritt purchased of the complainant all his interest in the company, after a balance sheet had been furnished to them, exhibiting the affairs of the corporation, but in which no mention was made of the check. It is alleged that it was understood by the directors that the check and memoranda given for the installments were paid off in the negotiation of the machinery, and were filed away among the canceled papers.

Wood and Merritt having become the owners of all the stock and effects of the company, brought an action at law upon the cheek, in the name of Philemon Dickerson, president of the Boudinot Manufacturing Company. After the commencement of that suit, certain creditors of the company procured an injunction, restraining them from the exercise of their corporate powers, and the appointment of receivers, who are prosecuting the action.

The bill in this cause was filed to stay the proceedings at law, and for specific and general relief.' An injunction was issued, and Messrs. Dickerson and Benson have filed their several answers. A general demurrer to the bill was filed on behalf of the receivers. The Chancellor, after argument, sustained the demurrer, and dismissed the bill.

From this decree the complainant appeals to this court, and the question is whether the demurrer was properly sustained..

The gravamen of the bill is that the complainant is sued at law against equity and good conscience. To maintain this position, it is insisted 2 First. That the check was given as a mere memorandum, to remain until the machinery should be transferred to the company, and that it was agreed by the company that it should be canceled upon such transfer being made.

The directors, in this matter, were proceeding under the authority of the supplement to their charter. That act authorized them to demand from the stockholders the additional sum of fifty dollars on each share of the capital stock already subscribed, not exceeding ten dollars on each share, at any one time ; and, by way of penalty for neglect to pay after the proper notice, they might declare the stock forfeited.

This was fully understood by the directors, and promptly acted upon by them in their resolutions of the sixth of June, declaring the seventy-three shares of Stoutenburgh and Laffan to be forfeited to the company for default of payment. And upon their own construction it must be held that the check and other memoranda given by the directors individually were taken as cash, and. intended to be bona fide payments of the amounts mentioned in them ; otherwise their own stock became liable to forfeiture, and it is not to be supposed that they would impose upon others the penalty which they had themselves incurred.

If they were not intended as payments, the directors would be obnoxious to the charge of having procured the supplement and called in the installment, for the mere purpose of wresting from the hands of Stoutenburgh and Laffan by the forms of law, the shares of stock which they had failed to get by fair negotiation. The object of increasing the value of the shares was to raise funds to pay the debts and put the works in operation, and if the directors paid nothing upon their shares, they might be suspected of the design of raising funds out of their fellow-corporators, without making any advances themselves.

If these checks were not taken as payments, and to be collected and converted into money, then the directors must have ventured upon an expedient to raise funds to increase the nominal value of the stock, and to create a fictitious credit, which is but too common with the managers of corporations, but which a court of justice can neither uphold nor approve. Such transactions may be sanctioned by the code of those whose motto is

Rem, faeias rem,
Meets si possis ; si non, quoeunque modo rem,”

but they cannot stand the test of law or equity. They who engage in them, whether tempted by the love of gain, or seduced by the force of example, must act upon their own responsibility, and at their own risk, and look t,o the end to justify the means. The aid or sanction of the courts they will seek in vain.

The suspicion, even, of this, we cannot entertain towards these directors. Their character should be a guarantee of the honesty of their intentions, and the alternative is, that the check was taken as a payment, to be converted into money for the purposes mentioned in the bill.

Secondly. It is urged that the action at law is against equity, because thé check was considered to have been paid, and was meant to be canceled.

The allegation of payment is accompanied by a statement of the manner in which it was done, to wit, that the machinery purchased of Mr. Gay, was conveyed to the company at an advance of ten thousand dollars; and that, in the estimates, and by the understanding of the directors, the whole stock was paid by this and other machinery.

It is unnecessary for the purpose of this suit, to inquire into the validity of this sale by the associates, as individuals, to themselves, as directors, at such an advance; or of its influence upon their creditors and the public. It is sufficient that it appears by the bill that the company directed the issue to the associates of one hundred and fifty-two shares of the capital stock, of the par value of sixteen thousand seven hundred and twenty dollars, expressly to pay for the machinery, and that by it they did pay to within eighty dollars of the sum of sixteen thousand eight hundred dollars, paid by the associates from their own funds to Mr. Gay. The machinery, therefore, cannot be considered as a payment of the check and memoranda given for the installment.

Upon, the merits of the case, as made by the complainant, the bill was properly dismissed.

There is another reason why the demurrer was well sustained. The bill does not present a case in which the aid of a court of equity is required. It does not seek a discovery to enable the complainant to make out his defence. There is no allegation in it that is not proper to be proved at law. The whole transaction is within the knowledge of some or all of the associates, and they are competent witnesses. The books and papers can be procured on notice or by process, or their contents be proved. The prayer that the check be given up to be canceled is that which every defendant at law might make, and if with success, he would find an easy way of changing the forum of every action. The contribution prayed for is a matter entirely between the associates, and cannot be considered in a suit between the owner of the check and the complainant. If the facts presented by the bill afford a defence, the complainant has adequate relief at law, and a court of equity should not take jurisdiction of the case.

Let the decree be affirmed, with costs.

Decree affirmed unanimously.