text:
    George M. LaMonte, as commissioner, &c., complainant, v. Harvey Mott et al., defendants.
    [Argued March term, 1921.
    Decided October 18th, 1921.]
    Appeal of Edward D. Dunn.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Stevens, who filed the following opinion:
    “This is a suit brought by the commissioner of banking and insurance in the company’s name against the directors of the inVsolvent Roseville TlngLCompapy to subject them to liability because of their negligent conduct of its business.'
    “The company was organized in July, 1908, It commenced business on December 1st, 1908. On August 13th, 1913, the commissioner of banking, concluding that it was unsafe for the company to continue, took possession of its property and assets under the axithoa’ity conferred by the act concerning trust companies (Comp. 8ial. p. 5661), as amended by the act of 1913. P. L. mis p. 28&.

    “As of that date, Mr. Yredenburgh, the commissioner’s examiner, found that on the face of the general ledger the liabilities of the company appeared to be $985,541.05, a figure which included the capital stock [$100,000.], and that the resources appeared to be $985,420.92. On that day, however, had the ledger been properly posted, the liabilities would have appeared to be $1,237,816.11, and the deficit $393,848.05. But this would not have represented the true deficit for the books, other than the general ledger, misrepresented the total deposits, which were much greater in amount than the books showed, while the assets were overvalued. The bill charges a deficit-exceeding $600,000.
    “It is unnecessary now to specify with particularity what was realized from the assets. It is enough to' sajr that the commissioner obtained by sale or otherwise $657,437.59. He compromised with nine of the directors, viz., Odell, Sexton, Ivilgus, McCord, Woodward, Fairlie, Bell and William and James Banister; and received in cash from eight of them $86,703.11. Three of them surrendered claims against the company amounting to $53,796.89.
    “This gives a. general view of the situation. The present suit is brought against those of the directors who- have not compromised. Speaking, generally, the losses are of two lands. First, those arising from bad debts. Smith, the treasurer, and, occasionally, the directors"themselves, lent to persons ajr corporations who, by reason of their insolvency, cannot now be made to pay. Second, those arising from abstractions or wrongful applications of_the company’sjmoney.by Jlmith. These abstractions represent the greater part of the deficit, and he continued to make them without discovery for about two years.

      “The claim to hold the directors liable for Smith’s acts is twofold — first, that almost from the beginning they were advised that he. was, not to.-b.e:-ti’-usted and that they continued, nevertheless, to trust him; second, that the defalcations would have been discovered had due care beenj:aken_tot examine the books and accounts and to supervise Smith’s acts.
    “The first contention lies at the foundation of the case and colors the whole of it. The facts upon which it is based are the following: The.company was organized to do business in that part of Newark commonly called Roseville. Mr. G-. Rowland Munroe was appointed by the organization committee to inquire about Mr. Smith, who had been brought to its attention by Mr. Bryan, a national bank examiner. Smith was then assistant cashier of the Second National Bank of East Orange. Mr. Mun-roe saw Mr. Calhorm, the attorney for that bank, and also three other gentlemen — one a lawyer, one the owner of the Second National Bank building, and the third, one of its directors. He dloes not testify that he saw any of the officers of that bank. This was an omission of some importance, in view of the- fact that he was, shortly after Smith’s appointment, told by State Bank Examiner Appleton that it was rumored that, in the words of Mr. Odell, there Tad been fault found up there about him,’ or, as'Mr. Munroe seems to admit, that Tis record, had been bad.’
    “On November 30th, 1908, the directors met, organized and elected Smith secretary and treasurer. The first,examination of the company by the banking department was made by Mr. Appleton in March following. He reported, to Mr. Lewis, then commissioner of banking, who thereupon wrote as follows:
    “ ‘May 14, lOOn
    “ ‘William P. Odell, Esq., President,
    The Roseville Trust Company,
    Newark, N. .T.
    “ ‘Dear Sir:
    “ ‘The report on the official examination of your company as of March 11th last, .which recently came to hand, shows a condition of affairs which is by no means satisfactory to this department. The most serious matter is the use by the treasurer, Mr. Smitlp of the company's funds, without tb^-LnC-wiedge of the other officers orTrectors, for the benefit of one of his friends. The facts are reported to bo as follows:

      “ ‘On February Gth last Mr. Smith drew a draft on the New York State National Bank of Albany, to the order of Charles A. Nones, for $1.350. which was endorsed by the latter and given by him to one Edward G. Johns, said to be a New York broker, who deposited it to his [Johns] credit in the National Copper Bank of New York. The account of the New York State National was not credited with this draft until a week later, February 13th, when two checks were drawn on tlje -Philadelphia National Bank of Philadelphia, one for $1,350 and the other for $1,000. -The account of the New York State National was then credited with the $1,350, and an additional $1,000 in cash was handed to Nones. For neither of these checks, of $T]3StTand $1,000, drawn on the Philadelphia National Bank, was there any credit made on the books of your company, but the total amount, $2,350, was charged to the Philadelphia National, thus covering the credit of $1,350- to the -account of the New York State National and the handing out of the $1,000 in cash; hence, at the date of the examination the company’s account__with the_Phjladelphia National showed a shortage ofJf2j][i0. " ”
    “ ‘The examination was made on Friday, March 12th, but no word was dropped by Treasurer Smith of this shortage at that time, although he evidently realized that it must come out in the course of the examination. On Sunday, March 14th, Mr. Smith called the examiner up at his home by telephone, and made arrangements to see the latter the following Tuesday evening, March 10th, when he confessed the whole matter to the examiner and stated that he had made a similar confession to yourself and Mr. Munroe, a director and attorney of the bank, on the Saturday following the examination. The explanation offered by Mr. Smith was that Nones, a friend of his, had come to him on February 6th, stating that he must have $1,350, and that he [Mr. Smith] had advanced Nones the money in this manner, taking the note of the latter for the amount. As Nones already had in the bank $6,000 of paper, of which only-$3,500 was known to any of the directors of the company, the other $2,500 having been put in by Treasurer Smith without reporting it to the board or executive committee, he [Mr. Smith], therefore, did not put the $1,350 through as a loan, but allowed it to stand without any entry upon his books, thus making a deficit of $1,350 -in the company’s Albany account.
    “ ‘On February 13th, one week later, Nones again came to Mr. Smith and stated that he could not pay the $1,350 as agreed, but that he must have another $1,000, and in order to accomplish this, Mr. Smith drew the two drafts above mentioned, for $1,350 and $1,000, on the company’s Philadelphia 'correspondent [the Philadelphia National Bank], giving Nones the $1,000 in cash, and with the other draft, $1,350, crediting the Albany account, so that all the shortage would be in one account. Mr. Smith then received another account from Nones for the $1,000, which he also failed to put through. This left a shortage in the Philadelphia National Bank account from that date, February 13th, to the date of his examination, of $2,350, which difference showed in the examiners’ reconcilement of the account with the' Philadelphia National for the 11th of March, the date of the examination.
    “ ‘The reason for transferring this shortage to the Philadelphia National Bank is apparent when it is stated that the company has no regular draft book on that bank [it has such a book in the cases of its other correspondents], only ordinary bank drafts being used for the purpose of drawing on Philadelphia, the stubs not being filled in, hence there were no telltale stubs to show these two transactions.
    “ ‘On April 6th, when the examiner returned to the trust company’s office for the purpose of making certain verifications, all the drafts on the various correspondents being then on hand to March 31st, a full comparison of all the paid drafts was made with the stubs of the check books, whore there were any such, and with the general cash book, to see the various dates that the credits were made to the banks upon which the drafts were drawn. This led to the discovery that the above transactions with Nones were not the first of the kind, but that similar transactions had occurred in December and January. Another peculiar feature discovered was that where such transactions had been the stubs of the checks were blank, having neither name, account nor date. The examiner also noted that those cheeks all found their way to the above-mentioned Edward G. Johns, said to be a broker.
    ' “ ‘No mention was made by Treasurer Smith of these earlier transactions to either the officers of the) company or to the examiner, and when his attention was called to the same lie admitted the fact and said that previously Nones had always made good, while this last time he had not.
    ‘‘ ‘Taking the various matters together they seem to disprove the statement of Treasurer Smith that he had no interest ini any of the transactions and that they were all made out of friendship for Nones. But be this as it may, no sufficient excuse can be offered by Mr. Smith for his action, which seems indefensible and deserving of the strongest condemnation. No confidence can be placed by this department in any official who would be guilty of this sort of thing, nor does he seem worthy of the confidence of the directors of the institution. He should be required to resign and cease his connection with the company. The examiner states •that the matter is known only to yoiwself and Directors Poster and Munroe, and that at the interview he had with you .and Director Mun-roe, at your home, on the evening of March ISth, the matter was thoroughly gone over and that he informed you and Director Munroe that the facts must be made known to every director, which, I assume, has been done.’
    “On receipt of this letter, which it is admitted, contains an accurate statement of the transactions therein referred to, the directors, on June 21st, 1909, held a special meeting. Smith tendered his resignation and a vote was-had on its acceptance. Three ballots were taken. On the first two there were two votes cast in favor of acceptance, one of them by Mr. Odell, the president, the thirteen against it. On the third ballot the_vote was nnanimonsty against acceptance and Smith continued to be_tcaasnrer until the close of the institution.

      “In accordance with the commissioner’s request, Mr. Odell forwarded to him a eop3r of the minutes signed try all the directors except Mr. Munroe, wlm was abroad. T'he commissioner acknowledged its receipt and said it would have his consideration. He added: ‘I will sa3' now, however, that I emphatically disapprove of the decision of the board in-the matter.’
    “The question to be determined is whether the acts set forth in the letter were merely irregular or whether they showed Smith to he untrustworthy. Section 15 of ihe by-laws provides that the treasurer
    [shall sign all cheeks, drafts, notes and orders for the payment of money and pay out or dispolse of the same under the direction of the president or board of directors, taking proper vouchers for such disbursements and shall render to the president and directors at the regular monthly meetings of the board or whenever they may require it an account of all his transactions as treasurer.'

    “Section If provides that the executive committee shall superintend and advise all investments to he made with the funds of the company. The executive committee may, in its discretion, authorize the president to make investments without previously consulting the committee.
    “Now, the commissioner’s letter show's that on February 6th, 1909 — that is, two months and six days after the bank had begun-business — Smith lent $1,350 to hisJriea4-Nones. He did not note the transaction on the stub; did not enter it in the hooks, and did not credit it to the bank on which the draft was drawn until he had made the amount good by a draft on the Philadelphia bank one week later, which also remained uncredited. ‘The reason for transferring this shortage to the Philadelphia National Bank/ says the bank commissioner,
    ‘is apparent when it is stated that the company has no regular draft book on that bank [it has such a book in the case of its other correspondents], only ordinary bank drafts being used for the purpose of drawing on Philadelphia, the stubs not being filled in, hence there were no telltale stubs to show those two transactions.’
    “It thus appears that without consulting Mr. Odell, who called at the bank daily, he first lent $l,350_cpjitrai-y-4p the by-laws, and then, this not being paid, $1,000 more, and kept the jhortage off the books until the examiner came on March 12th. Then, fearing discovery, he confessed the matter.
    "But this was not all. The commissioner in his letter says:
    “ ‘This led to the discovery that the above transactions with Nones were not the first of the kind, but that similar transactio.nsJia.cLnccnrred in December -and January, and that where such transactions had been, made the stubs of the cheek books were blank, having neither name, account or date.’
    "Now, it seems to me, that to call such transactions mere irregularities is impossible. Had Smith forgotten to enter a single draft on his ho-oks after having been authorized by the president or executive committee to make it, that would have been an irregularity, but he lent without authority; qoncealed what he lent, and falsified the accounts until discovery was imminent. Pie did this several times within a few weeks after the company commenced business.
    • "It is, moreover, admitted that when the bank examiner communicated to Mr. Odell and to Mr. Munroe what he had learned, he told them of rumors as to Smith’s record. Mr. Munroe testifies that he investigated it, hut he does, not tell us how or what he learned, if anything. Pie says that whatever Appleton told him he reported to the board. When the board met on June 18th, 1909, the minutes state that the directors thoroughly discussed the commissioner’s letter, but they say nothing about any investigation of the rumors. In view of the fact that Smith’s conduct had been so reprehensible from the start, it is quite surprising that it was not thought advisable to follow up the rumors in order to find out what, if anything, Smith had done to give rise to them. The information came from a man in daily contact with hankers.
    "The argument advanced on behalf of the hoard is that it was composed of business men of excellent reputation, and perfectly honest in all that they did; that they were unwilling, without necessit3r, to east a shadow upon their undertaking at its start; that, to quote counsel’s argument, The transaction was an isolated one — not involving moral turpitude; that it must have appeared to. them more like an irregularity in banking matters than an absolute wrong, and that for judgment honestly exercised no action will lie.’ It is, undoubtedly, true_that the directors who so acted were, with one exception, memof .business experience and perfectly honest. But this, would not exonerate them, if they with the best intentions knowingly retained a dishonest man. The institution was small. Its whole working force consisted of Smith, himself, a teller, a bookkeeper, a stenographer and a janitor, all subject tia Smith’s direction. If the directors were going to entrust the money to the depositors [over three thousand, in number, in 1913] to tire keeping of one man, that man should, certainly, have been above suspicion. Now, what did the directors know? They knew that Smith had lent money in disregard of the b}r-laws; that he had failed to advise with Mr. Odell, whom he saw daily; that he had failed to make the proper entries, not from forgetfulness or carelessness, but because he intended to conceal what he had done; they knew [for they were so informed by the examination and the commissioner’s letter] that he had done it more than once, and they knew, too, that in' doing so, he had, necessarily, either falsified the general ledger or caused it to be falsified. The falsification of books or the making of a false statement of facts is a ‘high misdemeanor’ under section 17 of the Trust Companies act. Under these circumstances had they given the matter real consideration, it seems to me that they would have come to no other conclusion than they had in their employ a man who was willing" to deceive them. The general ledger which he had control of, and in which the account of the depository banks was kept, showed each day for more than a month the aggregate balance- standing to the company’s credit to be $2,500 more than it really was. The minutes of the executive committee show that the total deposits were reported by him weekly.
    “Now, the cases hold that directors are guilty of a plain breach of duty if they retain in responsible position a man who has shown himself to be unworthy of trust. Scott v. National Bank, 73 Pa. St. 47.1; Third National Bank v. Boyd, 44 Md. 347J Gutting v. Mavrlor, 7-3 N. Y. 4-54; Prather v. Kean, 39 Fed. Rep. 498; '137 U. S. -Ú04; Gibbons v. Anderson, SO Fed. Rep. 345;

      Rankin v. Cooper, 14& Feel1. Rep. 1010'; Willia/ms v. Brady, 221 Fed. Rep. 118. If Smith had deceived them once, what sufficient reason had they to suppose that lie would not doi so again. They not only retained him, but they did so against the warning of themommissioner of banking, who was vested by the statute with power of supervision (Comp. Skd. p. 5662 § 21), though not of removal. Says Mr. Justice McKenna, speaking of the federal comptroller in Thomas v. Taylor, \224 U. S. 78: ‘Disregard of the direction of the officers appointed by the law to examine the affairs of the bank is a violation of the laV. Their directions must be observed. Their function and authority cannot be preserved otherwise and be exercised to save the bank from disaster and the public who deals with them and supports them from deception/
    “It cannot be overlooked that the directors were without banking experience. New to the business, it was all the more incumbent upon them to heed the advice of the officer to whom the law hád committed the duty of supervision. I am .unable, therefore, to agree with the argument of counsel that the vote of fifteen good business men to retain Smith is the best evidence of what it was reasonably prudent and expedient to do under the circumstances. To' hold that a mere vote is the best evidence of prudent action is practically to hold that, given an honest board whose members possess, a fair amount of intelligence the court is precluded from deciding otherwise. This is not the language of the cases. The directors may condone mere irregularities, but they cannot condone moral obliquity without rendering themselves liable for the consequences.
    “Smith’s conduct proved that he was capable of deception. One would have supposed, therefore, that ifJm_Mas-.toJo.fi retained some check would have been imposed uponjiis action. Counsel argue that any action taken to. that end would have shown lack of confidence and would have condemned their vote. This shows the difficulty of their position. In Campbell v. Watson, 17 Dick. 427, Pitney, Y. C., quotes with approval the following passage from Percy v. Millaudon, Mar. (N. S.) 68: ‘The duties of directors are those of control, and the neglect which would render them responsible for not exercising that control property, must depend on circumstances, and,1 in a great measure, be tested by the facts of the case. If nothing has come to their knowledge to awaken suspicion of the fidelity of the president and cashier, ordinary attention to the affairs of the institution is sufficient. If they become acquainted with any fact calculated to put prudent men on their guard, a degree of care commensurate with the evil to Lie avoided is required, and a want of that care certainly makes them responsible/ In the present case, assuming it to have been due care, in the first instance, to have given the treasurer unlimited opportunity to draw upon all the funds of the institution, certainly, when it was found that, from the very beginning, he had abused his power, ordinary prudence would have suggested that restraints be placed upon his action. None were even the subject of consideration. The evidence shows that, as time went on, Smith was allowed a greater degree of control. At first Thompson kept the general ledger. After a time Smith was allowed to keep it, and, by keeping it, to acquire greater facilities for deception.
    “I think it impossible to avoid the conclusion that by retaining Smith and allowing, him, without cheek or restraint,_to dispose of.tine-moneys of the institution, the directors made.them,selves responsible for the consequences of bis acts.
    “The act concerning trust companies (Qomp. Sial. p. 5Q5k § 12) provides that
    ‘each director of every trust company when elected shall take an oath that he will, so far as the duty devolves upon him, diligently and honestly administer the affairs of such trust company, and will not knowingly violate or knowingly permit to he violated any of the provisions of this act.'
    “It is contended that the directors and two of their committees —the executive and the examining committees — failed diligently to administer the company’s affairs. I will first take up the executive committee.
    “The by-laws provide (section Iff) that thejneagutive eonmjittee 'shall_súpenñtend; and advise_all investments, but may, in its discretion, authorize the president to make investments without previously consulting it/ This by-law was disregarded from the beginning. The executive committee authorized some of the loans, but most of them were made, not_by j.t or the .president, but by Smith. On November 30th, 1908, the minutes of this committee state that it was moved That the treasurer be empowered to make .loans up to $1,000 without consultation.’ He not only did this, but, as early.as June, 1909, he began, without any formal authorization, to make larger loans. We find in the minutes of June 29th, 1909, flor instance, a statement that the loans of the week were approved, and among them -otne of $1,100 and one of $2,500. After they were made they were submitted to the executive committee at their monthly meeting and approved, the approval being noted thus, Hills purchased daring the week Were approved.’ The money was so recklessly lent that an enormous loss resulted. Mr. Yredenburgh, the state examiner, found that the face value of the notes and loans [$623,585.65] when the company closed its doors was $181,603.94 greater than their fair value. Had the executive committee passed upon these loans, in the first instance, such a loss would hardly have been possible. Its collective judgment, based apon personal knowledge and proper inquiry, woiild have been quite a different thing from its perfunctory approval of what Smith had already done.
    “Not only was there a failure to comply with the by-laws. The statute was disregarded as well. The Trust Company act (section 6) authorizes the trust company (inter alia) To purchase, invest in and sell stocks, promissory notes, bills of exchange, bonds and mortgages and other securities.’ In section 7 it- provides that
    ‘no corporation created under this act shall have power to discount commercial paper or to malee loans upon bills, notes or other evidences of debt [except to a municipality], unless the same shall be secured by mortgage upon lands or by other securities, the actual market value of which other securities shall at all times exceed by at 'least, ten — percentum the amount loaned upon the same.’
    “The evidence shows that the company made it their principal business to discount or lend money upon paper. Some of this had only one name, but the greater part of it was endorsed. By the statute, whether endorsed or not, it all stood upon the same footing. In Durant v. Bantu, S Dutch. 621h the case relied upon b3r defendants, it was said that To lend money on the security of a note is one thing; to sell a note is another.’ There the court was considering’ whether a note on which the payee had acquired a legal right to sue the maker could be endorsed by him generally and then sold without rendering the transaction usurious; and, reversing the prior decision, in Freeman ads. Britton, the court of errors and appeals held that such a. transaction might, as between payee and purchaser, be a loan or a sale according to the real meaning- and intention of the parties, and that this was to be determined by the evidence. The distinction is between paper on which the payee had acquired a legal right to sue — paper which, by the express terms of the Trust Companies act, the company has the right to' buy, and paper on which ím right to sue arises until the company has acquired it, their right to sue arising, and arising only, out of the fact that they have lent money upon it. Having lent_jnoaiey--in._disregard. of tha. statute andffiy-lawg the directors as a.body are responsible for .any resultingjoss, for they knew and approved of the action of their committee in this regard. Citizens Loan Association v. Lyon 2. Stem. 110j Williams v. McKay, IS Slew. 18@.

    “I now oome to the examining committee. Section 14 of the Trust Companies act provides that
    ‘the board of trustees of each trust company shall from time to time appoint from its members an examining committee. wh£^_duties. shall be to exaininejdw condition of the company at least once every six months or oftcner, if required by the board: and such committee shall after each examination forthwith report to the board, giUng_irLxlatail„_al.I items inchrifid — injjwqjisscts of Jhe trust cojnpany, whichjhey have- reasor»to beíievouare_iiot ñ>T~thé value at which they appear on the boohs and records of ..the company, and giving the value in their judgment of each of such items, and the board shall cause said report to be recorded in the minute books of the company.’
    “The statutory duty imposed upon them by their oath and by this section :of the act was to examine diligently and honestly. The committee by accepting the task undertook to use as much diligence and care as the proper performance of their duty required. Campbell v. Watson, 17 Dick. US. If its members were not already sufficiently familiar with the books to make an intelligent examination of them, it was their duty to become so. Not an examination such as an expert accountant would have made, but jin. ascertainment oí the assets and liabilities, as far as ascertainable by careful work, such as their were able to do. The ,£^ets_consisted chiefly (1) of cash in the vaults of the Compaq; (2) of the negotiable paper, misnamed ion the books 'bills purchased’; (3) of collateral and other loans, and (4) of amounts that were due to the bank from other depository banks. The first three were tangible and could be counted and examined. The amount due from other banks could be ascertained by inquiry of those banks. As to assets, such as these, the object of the examination was to ascertain, first, whether they corresponded in amount with the statement of them on the books, and second, whether the individual items had the value attributed to them.
    :'Pitne3r, Y. C., himself an experienced banker, in Campbell v. Watson-, supra, 416, said: 'In making the examination it is necessary to ascertain the amount oí each item without the aid of the ledger with which they are to be compared and independent of the books. To rely upon the books alone for that purpose is simpfy absurd. The cash and bills discounted and other tangible assets must each be seen, handled, inspected and counted, and the amount due from other banks must be ascertained in some manner equally efficient.’ The items must not only be handled and counted, they must, under the Trust Companies act, be valued. Section 14 makes it the duty of the examining committee to report to- the board giving in detail all items included in the assets which they have reason to believe are not of the value at which they appear on the books and giving the value in their judgment of each of such items. Unless the examination of the assets embraces all this it is not 'diligent.’
    “As to the liabilities, the case is somewhat different. Here the books must be taken as they stand. There is nothing wherewith to compare them. They ma3r be compared with each other, but the result of the most careful examination is not conclusive. The case in hand is an illustration. The evidence is, that the treasurer, who not infrequently took the place ef~ the__ jeller, altered the deposit slips and credited the customer with less than he_had handed in over the counter. Here, it is obvious, the books would fail to indicate the true amount standing to the depositor's credit. Then, again, jhe treasurer repeatedly cashed checks. whose drawers liad, nothing or very little., to their credit, and eith.er made no note or a false note of the payment; keeping the cheeks in a receptacle to which no one but himself had access. The committee had no means of ascertaining what checks had been cashed except as the hooks showed, and no way of ascertaining the_ amount really due the depositor unless it communicated with him or called in his pass-book. Itjnay.be doubted whether, the absence of anything calculated to excite suspicion, this duty was imposed upon it. Mr. Cloran, the expert employed by complainant, says that the calling in of pass-books might have caused a run upon the company. The fault, in this particular, if fault it was, was rather one of system. One way of meeting the difficulty is that now adopted by many well-conducted banks and trust companies. They send to their customers at stated intervals an account of their balances.
    “In the case under consideration the committee handled and counted the assets, but dirLnot report The value of such,..as they hacl_xeason- to believe wer.e_jio_t of the value at-which they appearedjmJdie books.' This was not SO' in the case of the Scarlett note for $10,000, the Miele and Bruno notes of $27,000, the Frederici notes of $1,235, and other notes mentioned in the banking commissioner's letter of October 28th, 1912. The duty to report these notes, on which there were heavy losses, was. as I have shown, a statutory one, and, inasmuch as the report was to be made to the entire board and entered on its minutes, not only'JJie-Gommittee but the board, as a whole. was_negligent in not recjuiring performance.
    “The examining committee.was alsoinegligent.in.its examinationjxLthe, accounts of .depository banks. Of these there were several, two in Newark, one in Albany, one in New York City and one in Philadelphia, and they often held large balances to the credit of the trust company. These credits were a part of the_assets, and often a large part. The trust company's general ledger stated the amount. Smith made the entries, and it was the committee's duty to see that the entries were correct. To this end the chairman of the committee _was in the habit of writing to_the correspondent banks to find out what their’balances weie^as of tlie day of .tlie examination. Now, it is evident that the balances given by the correspondent banks as of that day might not correspond with the balance appearing in the trust company's ledger under the same date; for .checks in transit would cause a difference. These checks might be of two kinds* y(l) Checks drawn by the cashier of the trust company upon'the correspondent banks. These would diminish, the apparent balances in the correspondent hanks. v(lJ) Checks or drafts held by the Boseville bank and sent for deposit to* the correspondent banks. These would, when they reached their destination, increase the balances standing to the credit of the trust company.
    “The committee were negligent in this. -They took .Smith's statement as to what these two classes of checks or drafts were, instead of getting a statement of them from the correspondent banks, as they could have done by obtaining a statement not only of the balance on'the given day but of the checks and drafts that might have come in three or four days afterward. To rely upon Smith’s statements — the statements, written and verbal, qf the man whose work they were verifying — was, to use the' words of •Pitney, V. 0., in the case cited, speaking with reference to a'précisely similar situation, absurd. ' ' ' ■ :
    “Now, Smith, who was always present while the examination was going on, soon found out in what respect the committee's inquiry ivas defective. To cover "up his abstractions, or some of them, lie entered a balance -in the general ledger such as would for the time being serve to conceal .them, and he then .explained to tlie committee tliat the balance thus entered differed from-the balance reported by the correspondent banks because of the checks in transit. It ivas here that the committee’s examination failed. It did not verify his statement of checks in transit.
    “It is next contended that the examining committee were negligent in not examining the paving teller’s proof-books. It is said that if they had clone so they would have discovered an abnormal amount of cash items, so called, and that their discovery would have led to the discovery of Smith’s other methods.
    “Cash items, or, as it is styled in the proof-hooks, cash itemized, is a technical term and means in banking phraseology, as I understand, notes,.checks or memoranda iiLihe-pajd-ng-teller’s possession at the close of the day’s work, that he, for the time being, treats as cash. They may be items cashed after banking hours or they majr be items held for criticism oir inquiry. They are of such importance that they are specially mentioned on the printed blank reports furnished by the banking commissioner under the head, ‘Checks and other cash items.’ They do not include the checks or bank bills deposited by customers in the ordinary course of business.
    “In the general ledger kept by Smith, both cash, properly so called, and caiSh items were entered as cash. During the last year of the company’s existence the cash items often exceeded $40.000. To anyone casually consulting the general ledger — the hook which gave a résumé of each day’s work — the showing of cash on hand would therefore be misleading — in the case at hand, not only misleading, but false — for the cash items consisted very lar-gely of worthless paper — paper which Smith had cashed, but not entered on the books, and which had therefore, for the time being, to be treated as cash by the teller in order to make his proof-book balance. When the committee was_ expected — and Smith was usually informed in advance of its coming — he tookthesej;ash.item&, or such of them as were illegitimate, out of the cash, andJhen-brHlalse.entries covered up the..abstractions. One way of doing it was the way already referred to — a pretended remittance to a depository bank. When the committee counted the cash, the cash items had disappeared. They did not show on the teller’s proof-book for that day because removed before it was balanced. But the committee did not examine the proof-book; they compared their count of the money with the cash entry made by Smith in the general ledger after their arrival and found it correct. It is claimed that their failure ,to__look at the proof-books was negligence. Whether it was or not depends on how far the committee should have gone in the examination of the books. It will be more convenient to discuss this in connection with what follows.
    “The examining committee are further charged with negligence in not detecting Smith’s manipulation of the general ledger. Perhaps, the most glaring instance of this occurred in the course of the examination of December 14th, 1912. As already said, tlie general ledger showed a trial balance for each day’s work. It gave the total of the different kinds of assets and of the different kinds of liabilities in separate columns so arranged as to balance. The committee verified the figures by comparing them with the assets as actually counted and with the liabilities as they were stated in books of original entry. At the time when the December examination began, the collateral loans were truly stated at $51,438, hut before the committee had completed the addition of the column which contained the various assets, Smith put the figure 'one’ before the other figures, thus making the collateral loans appear to amount to $151,438. This covered up a deficit of $100,000 and made the debit and credit columns balance. The act was a bold one, for had the committeeman who performed the addition happened to observe the figures and their connection with the words 'collateral loans,’ it would at once have occurred to him that the collateral loans were overstated and this would have led toi tlie discovery of the trick. The contention is, that the committee’s failure to observe this alteration, and their failure in the case of the other examinations to notice erasures made with similar intent, was gross negligence. Judging by the result, it would have been better to have taken the books into their exclusive custody while the examination was going on, or, as counsel suggests, to- have used their own figures in computing the totals^ comparing them, after the computation, with the figures in the ledger. But L doubt — very, much whether they could be called over-confiding when they assumed that Smith would not be guilty of the crime-of — altering^ the books in the short space of time that it took to. make the examination. It was suggested that they ought to have compared the figures in the trial balance of December 14th with tbe figures in tlie balances of previous days. This, too, as in the case of their failure to observe the cash items in the proof-books, brings up1 the question as to- how far they should have proceeded in the examination of the books generally. The task of the committee, as they understood it, was to ascertain the assets and liabilities at the time of the examination. Tp have examined the figures in all the books for tlie whole, or even a part of the preceding six months, would have been the work of an expert..aceountant, and, if not an impossible undertaking for the committee, would have occupied more of its time than any examining- committee could reasonably have been called upon to give. It is difficult for one without knowledge of practical banking- toi say how far such a committee in a well-conducted institution ought to go. There is no evidence on the subject and perhaps none of any value could be obtained. It is to be noted that this case differs from most of the reported cases to which my attention has been directed. In the Walson Case, for example, there was no attempt a't supervision or examination. Here, there was an honest effort on the part.of the committees, to- do_their duty."~"The executive, committee met 'weekly. The examining committee met semiannually -and- made an examination that seemed to it to be sufficient. They could hardly have anticipated that Smith would manipulate the cash items and alter books in their very presence and while the examination was going on. At all events, I find difficulty in convicting them of culpable negligence when they assumed that he would not. The observation of Pitney, V. C., in Campbell v. Walson, seems to apply. He says: .‘No one, I suppose, will go so far as to- suppose that any system of supervision practicable at this day will absolutely prevent a dishonest cashier who has- charge of the cash -of the bank from stealing- some of it and stealing- it in such a manner that not a shadow of ground would exist for holding the directors liable for the loss/
    “It would answer no useful purpose to discuss in detail the alleged neglect of the committee toi examine the other books and compare them with the general ledger. The observations above made apply to their acts in this, respect as well, and whether their examination should have extended to them or not, their liability and that of the directors, as I have found it, would remain unchanged.
    “Thus far I ba.ve discussed, this case as it bears upon the liability of those of the directors who were such from the beginning. One of the directors, Mr. Dunn, was elected to the- board in-January, 1912s and again in 19,13.. He was an architect and real estate agent. On the day of hisjdectj.on-he was inacTe’.a.jnnmber. of the examining committee. The examination of April, 1.912, was'tSe"only one that he took part in. The work was divided up among the different members. To Dunn was, assigned the task of. examining the so-called Tills purchased’ in amounts varying from five dollars to five thousand, and aggregating at that time about five hundred thousand dollars. These he examined and checked up with a, typewritten list furnished by Mr. Sexton, the chairman. Then he examined a bundle of mortgages and found that they were regular in point of form and accompanied with proper policies of insurance. A few days after he went toi the Fidelity Trust Company’s vault, and, with other members of the committee, counted the collateral loans. He heard Mr. Sexton read letters received from the depository banks, whose figures tallied with those they had. This completed-his part of the work. He_did not .examine the general ledger.or.the_o±her-books. He was young and inexperienced, and he was trying for the first time to do the work assigned to him by the chairman, Mr. Sexton. In so far as I have been unable to convict the other and more experienced members of the committee of negligence, _I_ cannot convict Mr._ Dunn. And I do not think that he, as a member of the committee, could at that time, inexperienced as he was, be charged constructively with tire negligence of Mr. Sexton, who had not required from the correspondent banks such a statement as has been mentioned. Besides, it does not satisfactorily appear that at that time [April, 1912] Smith was using the correspondent bank accounts to cover up his frauds. There were discrepancies [$826.74 in the case of the Union hank and $597.09 in the case of the Irving bank], but I am unable, on Mr. Cloran’s evidence alone* to conclude that, while small in amount, they were part of an effort to deceive. They might have been susceptible- of explanation on grounds consistent with honesty. At that early stage of his abstractions Smith had better and safer ways of covering them up.
    “Two other examinations were made before the company failed, but Dunn did not take part in them. Sickness prevented him from attending one and a wedding trip the other.
    “It is insisted that Mr. Dunn is liable because as a member of the examining committee he with the others failed to perform his statutory duty to report to the board such assets as in the opinion of the committee ought to have been carried at less than their face value. That there were such assets and that they did not report them is indisputable. That any loss resulted directly from the failure to report is not proven. The entire board knew the Scarlett and some 'Other loans ought not to have .been carried on the books at their face value, and if the examining committee had reported the fact, and the report had been entered in the minutes, the board would not have been informed of anything they did not know before. The failure to comply with the statute is evidence of negligent conduct on the part of the committee and of the board, but does not necessarily increase their liability.
    “The evidence shows that after Mr. Dunn became a director loans were made when the reserves were depleted and dividends were declared when there was no'surplus. It does not show that the directors knew this. The argument is, that examination would have shown it. But here, as before, we are met with the fact that there was, on the part of the directors and committeemen, an honest effort to perform their duties. The examining committee, as has been said, met half-yearly and made what they regarded as a sufficient examination. The executive committee met once a week and the directors once a month. There was no such ‘supine neglect’ as appeared in Campbell v. Watson, supra. When they lent money and declared dividends, they had before them Smith’s weekly statements, their own examinations, the examination of the state bank examiners, and their general knowledge of the course of business, and they relied upon them as the basis of their action. I do not think that, under the cases, there was a lack of ordinary care on their part because they went no farther.
    “Mr. Dunn is liable for loans made contrary to the by-laws and the statute, after he became a director, if any loss resulted therefrom, for the reasons heretofore mentioned.
    “I do not think it necessary to consider how far the president was in fault in signing the reports prepared by Smith and made toi the banking commissioner without examination as to their correctness. He has been released. The attesting witnesses have been held on other grounds. At farthest the evidence does no more than show an additional instance of lack of diligence on the part of the president.
    “The insistence of the defendants is that they have all been released by the legal operation and effect of the releases given to some of their number. On the application to strike out the bill (.LaMonie v. Zurich, 36 N. J. Eq. £t&) the same defence was set up, but on an allegation that did not fully and fairly state the facts. It would, indeed, have been unfortunate for the parties concerned if, after this prolonged, complicated and costly litigation, it should have turned out that these releases had the effect now contended for. The real question ought to have been determined in advance, and to that end the pleader ought to have set forth the facts as they are. The aEegation passed upon was this: That Odell and others made partial restitution * * * ‘pursuant to an agreement duly made with said directors on December 10th, 1913, and pursuant to the express provisions of the statute, but without prejudice to the causes of action against the other directors as herein alleged.’ The decision was that the alleged agreement was a covenant not to sue and not a technical release. It now appears that a technical release was in fact given by the commissioner of banking, and the insistence made on his behalf is that other contemporaneous documents SO' qualify the effect of the release as to make it operative only on those to whom it was given. The facts are as follows:
    “On December 10th, 1913, the commissioner of banking entered into a written agreement with the Mutual Bank of Rose-ville, a corporation that had been organized to take over the property of the insolvent company, wherein it was agreed that, ‘subject to tflie approval of the court of chanceryj compromises would be made with nine of the directors, the proceeds of which were to be included among the assets to be sold to the new bank, but that there was excluded from the sale ‘any right to recover from officers and directors of sai d Roseville Trust Company on account of the negligence or improper conduct of said officers and directors exclusive of’ those with whom the settlements were to be made. The agreement also provided that the commissioner would institute suits against those not settled with to recover for losses suffered by their negligence.

      “An application was then made to the court of chancery upon notice [inter alia] to all the directors to obtain its approval of the agreement, pursuant to the provisions of section 22 of the act concerning trust companies. P. L. W13 ¶. 283. The provision reads as follows:
    “ ‘For the purpose of executing and performing any of the powers and duties hereby conferred upon -him, the commissioner may, in the name of such trust company, prosecute and defend any and all suits and other legal proceedings, and may, in the name of such trust company, execute, acknowledge and deliver any and all deeds, assignments, releases and other instruments necessary to effectuate any sale of real and personal property or sale or compromise or compound, authorized by the court of chancery as herein provided.’
    “After a hearing the court of chancery authorized the commissioner To complete and carry out the compromise and settlements upon the terms and conditions set forth in the said contract.’ The commissioner thereupon gave to each director who settled with him a release which, as far as the present question is concerned, was, in terms, absolute. It does not refer to the above-mentioned agreement and it cannot, on the face of it, be construed as a covenant not to sue. The question, then, is, Can it be regarded' as such a covenant if taken in connection with the other contemporaneous documents? Perhaps a better way of putting the question would be this: ' Considering the petition, the order and! the agreement, ought not the operation of the release to be restricted, to the releasee, who alone is named therein? This question, at least, in equity, seems almost to answer itself. If the construction contended for by the defendants should be adopted, the banking- commissioner would be convicted of having deliberately disregarded the order of this court. It was a part of the scheme, and soi represented to the court, that the other directors not settled with should be sued for their negligent acts. The commissioner had no authority to release them. By holding that he has not in fact released them no violence is done to the language of the release. It has full effect, as far as its language goes, for it does not, in terms, purport to extend to or give immunity to anyone but the releasee. If it extends to others, it is not because it so states but by legal construction. The other documents rebut the wider effect ordinarily given to such a paper and show that its operation is to be limited to the releasee only. I know of no rule of law which will prevent the expressed intent of the parties from being carried out. Contemporaneous documents are frequently read together and construed as one harmonious whole. If the order, contract and releases be so read it is apparent that the scheme was that the releases were to' effect the releasees onty. Such being the case^ there is no- reason why this court should now say that the defendants are entitled to' an immunity that the court did not intend and that the commissioner had no right to give. The case of Murphy v. Pennimm, 66 All. Rep. 28£, is very much in point. . •
    “The briefs discuss at length the question of degrees of responsibility as it was formulated in Williams v. McKay, 46 N. J. Eg. &5. The contention on the part of the defendants Benjamin and others is that the president and committeemen were more negligent than they were and stood in a higher grade of liability. The corollary drawn is, that if the president and committeemen were released, the others were, to the extent of their prior liability. In the view that I have taken of the case, the question does not arise. All the directors stood in the same degree--of negligence when they retained Smith and when they-lent money contrary to the statute and by-laws.”
    MrNTURN, J. (dissenting as to Dunn).
    If the case presented by these appellants were predicated only upon the theory that they had pursued a course of conduct as directors in the management of the affairs of the Boseville Trust-Company. which during a period of years was lgwwnNo_the,banking department, and was neither criticised nor objected to, but waTalfowed to continue unchallenged as to its business correctness and legality, I should hesitate, under the acknowledged rules of law imposing liability upon defendants as trustees, to sustain this decree. It might well be contended that such a course of tacit acquiescence upon the part of the banking department had given to the Trust Company act regarding the making of loans by way of purchase of commercial paper as distinct from the usual method of discounting peculiar to the law merchant a practical working construction, and thus had impressed upon the practice a semblance of legalify, which would relieve these appellants of anything more than a technical charge of tort-feasance or wrong-doing by adopting it as a banking method. A practical construction of that character was given to the act under which the secretary of state had appropriated fees to his own use upon a claim of ownership thereof, based upon continuous usage by his predecessors, unchallenged by the state financial officers for many years. State v. Kelsey, dd N. J. Law• 1.

    A usage of that general character long acquiesced in by the department of state has protected the plainly limited and restricted legislation under which riparian grants were originally made from successful attack in ejectment. Hoboken v. Pennsylvania Railroad Co., 12d U. S. 66\6.

    Superadded to this construction the rule is generally accepted that for an honest error of judgment tire trustee cannot be held personally liable. Citizens Association v. Coriell, 3d- K. J. Eq. 392.

    To hold otherwise would be to erect a practical barrier to the acceptance of a position of trust of this nature, by any one short of a person capable of devoting his entire time to the business, plus the possession of necessary expert or technical knowledge of the business, which common experience teaches, few directors can bestow or can claim to possess. Ilensler v. Sharp JfS N. J. Eq. 367.

    The result is that the liability of a trustee in such a situation, except when the loss results from obvious indifference amounting to negligence or recklessness, must always be determined practically by the cquo animo. Williams v. McKay, dON. J. Eq. ISO; 10 Cyc. ,830, and cases.
    These considerations would be controlling as to all the appellants were it not that the testimony shows that on more than one occasion their attention (with the exception of Dunn) was called to the derelictions of the Cashier Smith, and to his devious financial methods, and that with their eyes open to the dangers inherent in the situation, and against the practical protest of the banking department, they retained him with the usual resulting financial debacle. In such circumstances the elementary rules oí Habilitar must be invoked, that he who reposed the confidence which caused the loss must bear it as against an innocent third party, and as to these appellants, excepting Dunn, liability may be predicated upon that ground. Manchester Building and Loan,. Association v. Geyer 7.1 N:. J. Beg. .192; 10 R. O. L. 695; 21 O. J. 1170.

    As to Dunn a different question arises. He entered the directorate after the questionable transactions with Smith had practically culminated, and no notice of those transactions or of the bank department’s action was accorded to him, so far as the proof shows. He appears not to haveheen_d.erelict„inhis duties during his directorship or indifferent to his responsibilities, and the past affair’s of the bank, so far as the-testimony shows, were to him a closed book. He is therefore not in tire same category with the other directors, and for that reason the rule of liability invoked against and legally applicable to them can have no application to him.
    The rationale is clearty and succinctly presented by Chancellor Bunyon in Ackerman v. Halsey. 37 N. J. Eq. 365, and followed and applied by Vice-Chancellor Garrison in Barry v. Moeller, ■68 N. J. Eq. ^89, as follows: “Each director will answer only for the period of Ijs administration, and, in making its decrees, the court will of course discriminate between those who are culpable and those who are not.”
    These considerations lead me- to affirm the decree under review as to all the defendants excepting Dunn. As to him the decree should be reversed.
    Mr. Justice Parker and Judges Hepperrheimer and Gardner request me to state that they concur in these views.
    Gardner, J.
    In the above case I vote to affirm only that part of the decree that finds the directors, exclusive -of Dunn, “liable for the specific sums and parcels of the $575,000, approximate losses due to misappropriation and misapplication of the funds and property by ' the treasurer, Baymond E. Smith.”

      Messrs. Collins & Corbin, for the complainant.

      Mr. Roger Hinds, for the defendants.
   Per Curiam.

Tlie decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Stevens.

For affirmance — The Chief-Justice, Swayze, Trenchard, Bergen, Kalisoii, Black, Katzenbaci-i, Williams — 8.

For reversal — Parker, Minturn, Heppenheimer, Gardner — 4.


source: Caselaw Access Project

author: Per Cuetam.

license: Public Domain

text:
    George M. LaMonte, complainant, v. Harvey Mott et al., defendants.
    [Decided October 18th, 1921.]
    Appeal of Harvey Mott and others.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Stevens, whose opinion is reported ante p. -2®9.

      Mr. Otto A. FI tie f el, for the complainant.

      Mr. Roger Hinds, for the defendants.
   Per Cuetam.

The decree a]>pealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Stevens.

For affirmance — The Ci-iiee-Justice, Swayze, TrenchÍrd, Parker, Bergen, Minturn, Iyalisci-i, Black, Katzenbaci-i, Heppenheimeb, Williams — 11.

For reversal — None.

For modification — Gardner—1.


author: Per Curiam.

text:
    George M. LaMonte, as commissioner, &c., appellant, v. Edward D. Dunn, respondent.
    [Decided October 18th, 1921.]
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Stevens, whose opinion is reported ante p. ®£9.

      Mr. Roger Hinds, for the appellant.

      Messrs. CoTlim & Corbin, for the respondent-
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Stevens.

For affirmance — The Chiee-Justice, Swayze, Trenoi-iaed, Parker, Bergen, Minturn, Kaltsci-i, Black, Iyatzenbach, Heppbnhbimeb, Williams, Gardner — 12.

For reversal — None.


author: Walker, Chancellor.

text:
    Alice Jimenez, petitioner, v. Ralph Jimenez, defendant.
    [Decided February 28th, 1922.]
    1. Marriage, as to its dissolution, is governed by the lex domicilii, and so is the nullity of a voidable marriage.

      2. Decrees of nullity of marriage are granted in New Jersey only for causes existing under our law and not for causes existing under tlie law of a foreign state, although such state recognizes the cause of action as ground for the same relief prayed for in this state. It is otherwise in cases for divorce under our statute.
    3. Under our statute providing that a decree of nullity of marriage may be rendered at the( suit of the wife when she was under the age of sixteen years at the time of the marriage, unless such marriage be confirmed by her after arriving at such age, nullity will be denied to a wife who lived with her husband for three months and upwards after attaining the age of sixteen years, upon the ground that she thus confirmed the marriage.
    4. How long a wife who was married under the statutory age of consent must live with her husband after attaining that age, in order to be deemed to confirm and ratify the marriage, has not been determined as a hard and fast rule; but if at the age of consent the party who may repudiate1, agrees, confirmation results and there can be no subsequent disagreement.
    5. Where the matrimonial domicile of spouses is in á foreign state, can a wife, claiming the marriage is voidable, desert her husband in that state and come to this state and here obtain a domicile for the purpose of bringing a nullity suit, quiere.

    On final bearing on master’s report and depositions ex parla.

      Mr. Isadora Rabinowilz, for the petitioner.
   Walker, Chancellor.

This is a petition for annniment of marriage brought by the wife on the ground that she was under the age of consent at the time of the performance of the ceremony, and has not confirmed the marriage since attaining- that age. The petition alleges that the parties were married on or about March 4th, 1918, in the city and State of New York; that by an act of the legislature of New York, being chapter 19 of the laws of 1909, it. is inter alia provided that a marriage is void from the time its nullity is declared by a court of competent jurisdiction if either party thereto is under the age of legal consent, which is eighteen years, and which statute remained in full force and effect as the law of New York at the time of the marriage of these parties; that at that time petitioner was fifteen years and eight mouths old. and at the time of filing this petition was of the age of eighteen years and eleven months, having been born July 29th, 1902; that she has not confirmed or ratified the said marriage; that she was a bona fide resident of New Jersey at the commencement of this action; and prays that the marriage may be decreed to be null and void pursuant to our statute. All the facts as pleaded are. corroborated and sufficiently verified.

Marriage, as to its dissolution, is governed by tire lex domicilii. Bolmer v. Edsall, 90 N. J. Eq. 299, 306. And this applies to nullity suits as well. The petitioner claims to be domiciled in New Jersey and invokes the jurisdiction- of our court. Therefore, her case must be decided bjr the application of our lawr.

Our statute provides that a decree of nullity of marriage may he rendered at the suit of the wife when she was under the age of sixteen (not eighteen) years at the time of the marriage, unless such marriage be confirmed by her after arriving at such age. P. L. 1907 p. 474 § 1 subdiv. 5; Comp. Stat. p. 2921.

The petitioner testifies inter alia that immediately after her marriage to the defendant on March 5th, 1918, she went to live with her husband in New York state and lived! with him until the month of November, 1918, at which time she went home to Butherford, New Jerse}r, to her father and mother and has never seen her husband since. She says:

“I have never ratified or confirmed my alleged marriage with the defendant since I have become eighteen years of age, having left my husband permanently in November, 1918, and never having heard from him since, when I was the age of sixteen years and four months. I have never received any letters from him nor have I written to him since I left him.”

It will -be observed that the petitioner says that- she has not confirmed her marriage with the defendant since becoming eighteen years of age, but, according to her own statement, she was sixteen years and four months old (sixteen years, three months and several days precisely) when she left him.

T\re do not grant divorces or nullity of marriage' under the statutes of New York, but those of our own state only. The petitioner has evidently mistaken the provision of our Divorce act that divorce (not nullity) may be granted, where the cause of action alleged was recognized in the jurisdiction in which the party resided at the time the cause arose, as ground for similar relief asked for in an action in this state. P. L. 1907 p. 474 § 6(b). Therefore, if nullity is to be’ decreed it must be because our statute, not that of New York, provides the remedy, and it does not, as this young woman lived with her husband upwards of three months after she was sixteen' — the age at which under cur statutes she must make her election to confirm or repudiate the marriage.

I have found no case which prescribed the length of time considered necessary to ratify and confirm a marriage after coming of the legal age of consent by the spouse who was married under such age. In 1 Bish. M., D. & S. § 577, the learned author states that an obvious way of confirming is by continuing to co habit or b}' sexual intercourse. In 2 Com. Dig. 73, it is staled that if persons marry under legal age the husband or wife mav agree or disagree at his or her age of consent, and (at p. 74) that if either at the age of consent once agree to the marriage they cannot afterward disagree; and this is also laid down in Hubb. Suc. *272. There is no testimony that this young woman disagreed to her marriage upon attaining the age of sixteen years, and, if there were, the disagreement would be without effect because she continued to cohabit with her husband for upwards of three months, as just stated. I presume that cohabiting with him for the shortest possible time after attaining the age of consent, and indulgence in sexual intercourse, would confirm the marriage. It is, of course, to be presumed that these parties had sexual intercourse during the three months and more they lived together after the wife attained the age of sixteen years. It seems to me that there is a strong analogy between nullity for this cause and nullity under the general jurisdiction for fraud where the marriage has not be consummated. See Bolmer v. Edsall, 90 N. J. Eq. 299; Ysern v. Horter, 91 N. J. Eq. 189; Dooley v. Dooley, 115 Atl. Rep. 268. That is, if there has been reconsummation after attaining the age of consent, with full knowledge as to age, the right of nullity may be gone.

Another thing: The statute of New York is not the same as ours, and if the provision as to divorce in our state that a decree may be granted where the injured party came into this state after the cause of action arose, where that cause was recognized in the other jurisdiction at the time it arose, was provided also for nulbdw suits, still the provision would not come in aid of the petitioner here. The provision in New York that eighteen shall be the age of consent to marriage by a female, and sixteen in our state, are quite different; and that difference is pointedly manifested in this case, for here the petitioner confirmed her marriage by living with the defendant after the age of consent provided by our statute, which defeats her application, when, if she continued to live in New York and sought redress in its courts on the same state of facts she presents here, she might have been afforded relief.

The question of domicile suggests itself. The law is settled that it is the right of the husband, acting for the benefit and not in tyranny to the wife, to determine where the matrimonial domicile shall be. 2 Bish. M., D. & S. § 1713. In other words, the husband fixes the domicile. And the matrimonial domicile of these parties was in the State of New York. The wife’s leaving the husband and coming here to her parents was an aciual desertion, and the question arises, Could she in doing this, even if her marriage was voidable, obtain an independent domicile herself in this state to enable her to bring a nullity suit here ? <

Because for the other reasons above set forth the petitioner’s suit must fail, it is unnecessary to decide this question.

Let the petition be dismissed.


text:
    Elizabeth Robbins, otherwise Elizabeth Lanning, petitioner, v. Lewis Lanning, defendant.
    [Decided March 28th, 1922.]
    So much of the act entitled '‘An act to amend an act entitled ‘An act for the punishment of crimes’ (Bevision of 3S9S), approved June fourteenth, one thousand eight hundred and ninety-eight,” passed March 1st, 1921 (P. L. p. J/3), as provides that every marriage contracted in the circumstances made a misdemeanor by the act, is void because violative of article 4, section 7, paragraph 4 of the constitution, which provides that every law shall embrace but one object and that shall be expressed in the title.
    On application for assignment of solicitor to prosecute a suit for nullity of marriage in forma pauperis.

   Walker, Chancellor.

The petitioner applies for appointment of a solicitor- to prosecute for her a. suit for nullity of marriage in forma pauperis. The matter was referred to a special master who reports that on September 8th, 1921, petitioner was married to the defendant; that she is seventeen years of age, and that the defendant is twenty-three years old. It appears from the testimony before the master that on the day named defendant took the petitioner from her home, in Trenton, to Bed Bank, without- knowledge or consent of her mother or father, and, being informed that her mother had said she was disgraced, the parties were married; and that the marriage has never been consummated.

The act providing for divorces and decrees of nullity of marriage, &c. (P. L. 1907 p. 474), provides, in section 29, that wherever any poor person shall have cause of suit under that act, not being worth $100 clear estate, the chancellor may at his discretion assign a solicitor and counselor to prosecute said cause without fee or reward. The act concerning marriage (Comp. Stat. p. 3217 § 7) provides that a license to marry shall not issue if a male applicant is a minor under twentjf-one or the female under eighteen years of age, unless the parents or guardians of the minor shall certify under their hands their consent thereto, but this section does not make void any marriage performed in violation of its provisions. The petitioner has no cause for nullity under our Divorce act, supra, nor, so far as I can see, under the general jurisdiction of the court for fraud affecting an essential of the marriage relation (Bolmer v. Edsall, 90 N. J. Eq. 299; Ysern v. Horter, 91 N. J. Eq. 189; Dooley v. Dooley, 115 Atl. Rep. 268), at least no such showing is made on her application for the assignment of counsel. Reliance, however, is, made upon the provisions of the act of March 1st, 1921 (P. L. 1921 p. 48) entitled “An act to amend an act entitled ‘An act for the punishment of crimes’ (Revision of 1898), approved June fourteenth, one thousand eight hundred and ninety-eight,” which provides, inter alia, that any person who shall convey or take away any unmarried woman child under the age of eighteen years, from the possession, custody or governance and against the will of the father, mother or guardian of such child, though with her own consent, with intent to contract matrimony with her, &c., shall be guilty of a misdemeanor; and if he contract matrimony with her, without such consent, he shall lie guilty of a misdemeanor; and every such marriage shall be void.

' Assuming that leave to sue in chancery in forma pauperis extends to any and all cases and is not restricted to, those arising under the Divorce act of 1907, .supra, still the applicant in this case is not entitled to that leave because the provision in the act of 1921, making the marriage between the parties to these proceedings void, is itself void because unconstitutional, because it offends against article 4, section 7, paragraph 4 of the constitution of New -Jersey, which provides, inter alia:

“To avoid improper influences which may result from intermixing in one and the same act, such things as have no jsroper relation to each other, every law shall embrace but one object, and that shall be expressed in the title.”

In. Hawkins v. American Paper Co., 69 N. J. Law 126, section 17 of "An act to provide a uniform procedure for tiie enforcement of all laws relating to fish, game and birds, and for the recovery of penalties for violations thereof,” was under review as to its constitutionality, and Mr. Justice Garrison, speaking for the supreme court, observed (at p. 127) that it was inoperative because its object was not expressed in the title of the act, which related wholly to procedure and gave no intimation of a purpose to impose or increase penalties.

In Hayes v. Storms, (64. N. J. Law 514., the supreme court had before it the question of the constitutionality of the third section of an act entitled "An act to increase the jurisdiction of the justices of the peace,” which made it a penal offence for any justice to issue a summons on behalf of airy person for whom he was agent, and Mr. Justice Garrison, speaking for the court, said (at p. 516) that this section was not an increase in the jurisdiction of the justice, and did not concern jurisdiction; that it prescribed a decent rule of conduct, and that object was not expressed in the title; and that no section of an act has any effect beyond the object expressed in its title. Now, the title of the act under consideration, namely, one for the punishment of crimes, to my mind gives no hint or token of an intention to make a marriage void, and, in my judgment, that provision of the act is a nullity because it violates the constitutional provision above quoted.

In Griffith v. Trenton, 76 N. J. Law 23, the supreme court-held that in whatever sense the title of an act would naturally and generally be taken, is ordinarily the meaning that should in a constitutional sense he, held to be expressed in it. Surely, one would not naturally think that an act for the punishment of crimes would deal with the substance .of the marriage relation. On the contrary, one would expect to find such legislation under the title of "Marriage” or "Divorce and Nullity.”

In Reese v. Stires, 87 N. J. Eq. 32, I held that the act of March 3d, 1915, which in terms abolished estates and interests of dower and curtesy, violated the provision of the constitution hereinabove quoted, and was null and void to that extent, as the single object expressed in the title concerned only the descent of real estates, and dower and curtesy do not descend; and. in effect, expressed the view that legislation with reference to dower and curtesy could only be affected by acts having an appropriate title — that is, ones mentioning those subjects as objects of the legislation.

In Jordan v. Moore, 82 N. J. Law 552, the court of errors and appeals held that under article 4, section 7, paragraph 4 of the constitution the title of an act of the legislature constitutes a limitation upon the enacting clauses, and that any construction of the latter that would give them a scope beyond tire object expressed in the title is to be rejected.

The views above expressed a.re not in conflict with the decision of the court of errors and appeals, in State v. Twining, 73 N. J. Law 683, wherein it was'held that the title of an act concerning trust companies included in its expressed object not only regulation but also provision to enforce regulation by penalties and prosecution. Chancellor Magie, who wrote the opinion of the court (at p. 689), said : “The title indicates tire legislative purpose to be directed to trust companies. Such legislative purpose necessarily includes regulation of such companies, including the regulation of those who direct or act for them and the enforcement of such regulations. That enforcement is usually provided by enactments for penalties for the breach of regulations, and this, which Rlackstone calls the sanction of the law, seems necessarily included in the title, which expressed the object to be to regulate certain corporations.”

Rendering void a marriage otherwise valid cannot. I think, be held to be a punishment for a crime, not even the crime of contracting the particular marriage, because, the innocent party to it — that is, the party without criminal intent, might not desire to have it annulled. Now, this marriage, in and of itself, appears to be valid, even though the girl at the time of contracting it was under the age of consent to marriage without the consent of parents or guardian, which is eighteen years, she being actually seventeen years of age, while she was,not at an age which permits her to repudiate the marriage and have it declared null when coming to the age of such consent, namely, sixteen years. It is true that this young woman desires to have this marriage annulled, but she does not count upon any cause for annulment under our law except this statute of 1921, whose provision in that regard,, as stated, is inoperative and void because constitutionally defective.

The application for assignment of a solicitor will be denied.


author: Teaming, Y. O.

text:
    Girard Trust Company, trustee under the will of Herman Buchborn, deceased, v. Joseph C. Cheeseman et al.
    [Submitted November 14th, 1921.
    Determined November 18th. 1921.]
    1. Where from the entire will it is clear that a duty has been imposed on a trustee which necessarily carries with it a power of sale, such power will be implied.
    2. Tinder a will devising the residue, of testator’s estate, both real and personal, to a trustee to “invest and reinvest” and pay the net income to testator’s wife and daughter during their lives without provision for distribution by the trustee at the termination of the trust on the death of both beneficiaries, the trustee may sell land for purposes of investment, though the. above-named directions usually apply to personal property only.
    On final hearing on bill, for construction of will.

      Messrs. Bleakly & Btockwell, for the complainant.

      Mr. Wilfred B. Wolcott, for the defendants.
   Teaming, Y. O.

The single question here involved is whether the will of Herman Buchborn, deceased, confers upon the Girard Trust Company, as trustee, a power of sale of certain real property which forms a part of the residuary trust estate.

The sixteenth paragraph of the will provides as follows:

"Sixteenth — All the rest, residue and remainder of my estate, real and • personal, of whatsoever nature and wheresoever the same may be I give, devise and bequeath unto tile said Girard Trust Company in trust; to invest and reinvest the same; to collect and receive the income thereof and, after the payment of all necessary charges and expenses, to pay the net income derived therefrom in equal shares unto my wife, Mary Buchborn, and my daughter, Katherine Dorothy McKinley, for and during their respective lifetimes.”

No other part of the will in any way aids the present inquiry. The residuary estale comprises both real and personal property and the sole duties of the trustee are to be found in the paragraph above quoted. By subsequent clauses of the will the wife and daughter are each given tire right to dispose of one-half of the residuary estate by will. At the death of both the trust terminates and no provision is made for distribution by tire trustee at the termination of the trust. The situation thus presented confines the inquiry to the single question whether this direction of the testator for the trustee “to invest and reinvest” a residuary estate which is composed of both real and personal property will be understood as including by implication a power of sale of the residuary real estate in the absence of any other-provision of the will to aid in the ascertainment of testator’s intent in that respect.

Research of counsel has discovered no1 adjudication where the answer to this precise question has. been made the basis of decision.

The text of 39 Cyc. 351, tit. “Implied Powers ’’ is to the general effect that a. power of sale will be implied from the power and duty “to invest and reinvest;” but the several eases there cited in support of the text will be found to have determined the force of the words “to invest and reinvest” or “to invest and manage,” when applied to real estate, in connection with other provisions of wills in aid of the conclusions reached. Tims in Robinson v. Robinson, 105 Me. 68, there cited, the court said: “It would seem that the words ‘to invest and manage’ properly import and imply a power of sale, unless a contrary intention on the part of the testator can be found in the will taken as a whole. There are other considerations, however, which lead to the belief that a power of sale was intended by the testatrix.” Other provisions of the will are then pointed out which indicated that a power of sale of the real estate was intended to be conferred upon the executors. In Sargent v. Sibley, 8 Ohio Dec. Reprini 434, another case cited in support of that part of the text above referred to, the language of the will which was deemed to in7 elude by implication a power to- sell was materially broader than the language used in the text above cited; and in Purdie v. Whitney (Mass.), 20 Pick. 25, the other case there cited, a portion of the principal of the trust estate was required to be paid over annually.

In 32 Lawy. Rep. Ann. (N. S.) 676, an extended and valuable-note undertakes a classification of the various cases dealing with power to sell conferred upon executors or trustees by implication arising from the force of various expressions found in wills and trust deeds; but no case appears to have arisen in which the force to be given to the direction to “invest” or “invest and reinvest” has been judicially ascertained when referable to real estate and when unaided by airy other provisions of the •instrument.

In this state it has long been an established rule of construction of wills that where from the terms of the entire wilL it is clear that some duty has been imposed by testator upon an executor or trustee which necessarily carries with it a power of sale in order to enable him to perform the duty, a power of sale will be understood to have been given by implication. Lindley v. O’Reilly, 50 N. J. Law 636, 649. And in Chandler v. Thompson, 62 N. J. Eq. 723, it is pointed out by the same court that the right to exercise- such power of sale by implication has been rigidly restricted to those instances in which it is necessary in order to- carry out the purposes of testator’s will, and that the implication must be clear from the terms of the entire will. In that case the executrix was directed by the fourth clause of the will to hold and manage the property during the minority of the cestui qui trust and to keep it safely invested, &c. But owing to the circumstance that this clause of the will prescribing that duty was found to relate only to personal property it was not determined what force would have been given to tiróse directions of testatrix had the clause -been held to refer to both real and personal property.

In Belcher v. Belcher, 88 N. J. Eq. 126, Chancellor Runyon, in referring to the terms of the testamentary trust there under consideration, which included .both real and personal property, among other things, said: “The direction to pay the son’s shares implies a direction to convert, and so of the direction to pay the income of the daughter’s shares; it implies a direction to invest, which involves the necessity of converting the land.”

In Cook v. Cook (New Jersey Chancery), 47 Atl. Rep. 732, Vice-Chancellor Reed, in referring to the language “to hold and invest,” as used in the trust then before him, which related to both real and personal property, said: “The terms To hold and invest’ are applicable to personal property, and the use of these terms in respect to this blended property 'indicates that it was all to: be converted.” But the implied power of sale of real estate, there ascertained to exist, was in part based upon the duties imposed upon the executors to pay over portions of the estate in a manner indicating that the real estate was to be converted. While the language above quoted from the opinions filed in the two cases last cited ma.y he said to' be obiter, it clearly indicates that in the opinion of these two learned jurists the duty to “invest” when directed to blended real and personal property includes the power to sell the real estate.

In the present ease it will be observed that the personal and real property comprising the residuary estate are bequeathed and devised to the Girard Trust Company in trust during the period that the survivor of the testator’s wife and daughter should live, and that the duty is imposed upon the trustee “to invest and reinvest the same” and to pay the net income as direeled. It may be appropriately said that the direction for trustee to “invest and reinvest” is used more commonly and more appropriately with reference to personal property; when so used it can only be understood to include the power to sell for purposes of investment of the proceeds of sale, but when that duty is imposed upen a trastee with reference to real estate, can it be reasonably said that the duty so imposed is restricted to the duty to merely manage the real estate and collect its revenues? A direction to invest real estate in government bonds would be obviously a direction to sell the real estate and invest the proceeds of sale in government bonds, and a general direction to a trustee on whom a. fee is conferred “to invest and reinvest” certain real estate would seem to be. only appropriately understood to include the power to sell the real estate for purposes of investment of the proceeds of sale. But where, as here, the duty imposed upon the trustee “to invest and reinvest” is directed to blended real and personal property, it seems impossible to give one meaning to the language so- used as to the personal property and a wholly different meaning and force as to the real estate.

A decree will be advised declaratory of the powers of the trustee to sell residuary real estate for purposes of investment of the proceeds of sale.


author: Teaming, Y. C.

text:
    Leon Hampton v. Omar H. Newkirk et al.
    [Decided October 31st, 1921.]
    I. A separate paragraph of a will limiting an estate devised in event of the devisee’s death without issue was effective not only as to the gift in the last preceding paragraph, but extended to a devise in an earlier paragraph.

      2. Where a testator, after giving a house to his son and his residence and household goods to his daughter, by a separate paragraph gave one-half the residue and remainder to his son in fee-simple and the other halt to the daughter for life, and at her death to the son in fee-simplo, and provided in the following paragraph that “should my son die without leaving lawful issue, then bequests and devises in his favor should go to” others, the limitation applied to the several gifts to the son, including the remainder in the event of his death at any time though after the death of the testator and the life tenant.
    3. One paragraph of a will devising property to the testator’s son without words of inheritance, though within the statute of wills (1¡ Comp. Rtat. p. 5873 § 36), was not inconsistent with the creation of a determinable fee by a later paragraph of the will.
    4. A devise to the testator’s soh with a limitation over should the son die'without leaving lawful issue was not invalid as a limitation over on an indefinite failure of issue, as the common law rule that the words “without issue” impart an indefinite failure of issue has been changed by

      Comp. Rtat. p. 5870 § 27.

    On final bearing on bill for construction of will.
    The bill which has been filed herein is for the construction of the will of John Hampton, deceased. All parties in interest have been made defendants and have joined in the prayer of the bill for a construction of the will.
    'I’lie material provisions of the will are as follows:

      “Fourth. — I give and bequeath unto my son Leon Hampton, the Stokes House and lot situated on Broad street Woodbury, N. J., north of the Presbyterian church.

      “Fifth. — I give and bequeath unto my daughter Emma M. Hampton, the House where I. live which is a double dwelling situated on the northerly side of high street in the city of Woodbury, and all of my house hold Goods that I, may die possessed'off.

      “Rixth. — Of all the rest residue and remainder of my estate, real and personal. I, give bequeath and devise the one equal undivided half part unto my son Leon Hampton in fee simple, and the other one equal undivided half part unto my daughter Emma M. Hampton for and during her natural life and at her death to my son Leon Hampton in fee simple.

      Seventh. — Should my son Leon Hampton die without leaving lawful issue, then the bequests and devises herein made in his favour shall go to the children of my sister Eliza Newkirk, viz.: Anna E. Elwell, Omar
    H. Newkirk, Adaline Fortiner. Elton ,T. Newkirk and Etiphemia New-kirk, and my Grandson Burtsell, per capita in equal shares.”
    Leon Hampton, Emma M. Hampton and the several persons named in the seventh paragraph of the wiJl survived testator.

      It is contended on behalf of Leon Hampton, complainant herein, that the provisions of the will above quoted vested in him at the death of testator an indefeasible estate in fee-simple in the Stokes House, referred to in the fourth paragraph of the will, and also bestowed upon him a like estate in the undivided half of the residue of testator's property, real and personal, referred to in the sixth paragraph of the will, and also an indefeasible vested remainder in the other undivided half of the residue referred to in that paragraph.

      Mr. Austin IT. Bwackhani er, for the complainant.

      Mr. Joseph J. Sum-menlt; ior the defendants.
   Teaming, Y. C.

Complainant first contends that the provisions of the seventh paragraph relate only to the residuary estate referred to in the preceding paragraph, and have no reference to the Stokes property referred to in the1 fourth paragraph. This contention cannot be sustained. The seventh paragraph of the will stands alone as an independent provision of the will and is given an independent number segregating it from the preceding paragraph; nor is there anything found in any part of the will to justify a conclusion of intent upon the part of testator to limit the operations of the provisions of the seventh paragraph in the manner suggested by complainant.

Complainant further contends that the contingency of death of complainant withofit leaving lawful issue, referred to in the seventh paragraph of the will, must be understood to refer to the event of his death without lawful issue before the death of testator. In this contention complainant relies upon Burdge v. Walling, 45 N. J. Eq. 10, which case may be said to give support to that contention. But Burdge v. Walling cannot be regarded as a controlling authority to that effect. The more logical and the accepted: view in this state at this time is that where land is devised to1 a person in fee and a subsequent clause in the will limits such land over to a designated person or persons in case of the death of the first taker without issue, and there is no other event expressed in the will to which, the limitation over can be fairly referred, the event of death without issue will be understood to refer to the death of the first taker at any time, and not to his death before the .death of testator, and in such devise the first taker enjoys at the death of testator a vested fee which becomes divested at his death without issue and vests in the person or persons in esse to whom the estate is thus limited over. Patterson v. Madden, 54 N. J. Eq. 714; Rogers v. Bailey, 76 N. J. Eq. 29; affirmed on opinion below, 78 N. J. Eq. 589; Ripley v. Freeholders, 40 N. J. Law 45. The difference between a gift over in case of the death of the first taker and a gift over in case of the death of the first taker without issue is apparent; the logic of the essential difference is tersely expressed in Rogers v. Bailey, supra, at p. 32 of the opinion.

The English judges have given extended consideration to cases of this class and have defined certain canons of construction to be applied. The leading case prior to a review by the house of lords was Edwards v. Edwards, 15 Beav. 357. Four classes of casesi are there defined — first, a gift to A, and if he shall die,- then to B. This imports a gift over only in case A dies before testator. Second, a gift to A, and if he shall die without leaving a child, then to B. This imports a gift over in the event of the death of A, without leaving a child, at any time. The third and fourth classes are in cases where the gift to A is preceded by a life estate, or some other interest of partial duration, thus: Third, a gift to one for life and after his decease to A, and if! A shall die, then to B. This imports the same as the first case in all respects except as to the period of enjoyment; the period of enjoyment in the first class being the death of testator, that in the third class the death of the life tenant; hence, if A dies before the death of the life tenant tire gift goes to B. Fourth, a gift to one for life, and after his decease to A, and if A shall die without leaving a child, then to B. . This was considered of doubtful import, but was held, like rule No. 3, to refer to death before distribution. In 1874 these rules of construction came under review by the house of lords in O’Mahoney v. Burdett, L. R., 7 Eng. & Ir. App. Cas. 383. There rules 1 and 2, and apparently rule 3, were- approved. Rule 4 was disapproved, and it was there held that the fourth rule should have followed the second rule and imported death of A without issue at any time, unless from the provisions of the will there could be said to be conferred upon A a. power of disposition, in which case the title of A would be regarded as indefeasible frpm his time of enjoyment. It may be here noted that the effect of the latter circumstance is in entire harmony with Patterson v. Madden, supra. Since O’Mahoney v. Burdett, the principles defined in Edwards v. Edwards, as modified, have been uniformly adhered to in England as settled canons of construction in cases of the classes there considered.

The present case presents, as to the Stokes property referred to in the fourth paragraph of the will under consideration, the situation defined in the second canon of construction in Edwards v. Edwards, supra, and that presented in Rogers v. Bailey, supra, that is, a gift to one with gift over in the event of his death without issue. This imports death at any time without issue. As to one undivided one-half of the property referred to in the sixth paragraph of the will the same situation and import clearly obtains. As to the other undivided half of the property referred to in the sixth paragraph of the will, complainant is given the fee subject to a life estate, with a gift over in the event of death without issue. This gift over must in like manner be said to stand in opposition to the devise to complainant, and to' import the death of complainant without issue at any time and not merely prior to the death of the life tenant. It is not conceivable that the testator could have intended to limit over the fee in the property referred to in the fourth paragraph and in an undivided one-half of the property referred to in the sixth paragraph in the event of the death of complainant without issue at any time, and also to have intended to limit over the fee to the other undivided one-half of the property referred to in the sixth paragraph only in the event of the death of complainant without issue prior to the expiration of the life estate. Furthermore, no clause of the will, either expressly or by implication, confers upon complainant a power of disposal at the death of the life tenant, as did the will in Patterson v. Madden, supra, and in Wilson v. Wilson, 46 N. J. Eq. 332, hence, it is clearly impossible to either seize upon a power of alienation at the termination of the life estate as inconsistent with the existence of a defeasible fee after that time, or to regard the gift over as standing in opposition and referable to the termination of the life estate, and thus invoke the second rule defined in Patterson v. Madden, or the like exception to the fourth canon in O’Mahoney v. Burdett, supra. See Chetwood v. Chetwood, 81 N. J. Eq. 296.

It is necessary next to inquire whether any provisions of the will here in question can be said to be in any way inconsistent with the creation' of a fee in complainant determinable at 'his death at any time without issue.

It will be noted that the devise of the Stokes property in the fourth paragraph of the will is without words of inheritance. It is suggested that section 26 of our statute of wills, which section removes the necessity of words of inheritance to create a fee (4 Comp. Stat. p. 5873), is inapplicable because of the “further devise” contained in the seventh paragraph of the will. Den v. Allaire, 20 N. J. Law 6; Den v. Snitcher, 14 N. J. Law 53, and Rogers v. Bailey, 76 N. J. Eq. 29; affirmed, 78 N. J. Eq. 589, appear to adequately dispose of that contention.

Again, the limitation over is upon the death of complainant without issue, and not upon his death childless. It is well recognized that there can be no limitation over upon an indefinite failure of issue, and also that the words “without issue” import an indefinite failure of issue. See Den v. Allaire, supra. But the act of 1851 (4 Comp. Stat. p. 5870 § 27) has changed the common law rule touching the meaning of the words “die without issue.” By that act the words “die without issue” must now be understood to mean a “want of issue in the lifetime or at the death of such person, and not an indefinite failure of issue, unless a contrary intention shall otherwise appear by the will.” Accordingly,.the failure of issue referred to in the present will must be regarded as a definite failure of issue and the limitation over by way of executory devise is wholly unassailable. Decisions under wills antedating that act are inapplicable. Patterson v. Madden, supra.

A decree will be advised in accordance with the views herein expressed.