text:
    William Bensel v. William O. Anderson et al.
    [Decided December 24th, 1915.]
    The complainant, an old man of ninety years, owning a small estate and living with and dependent upon his children and son-in-law, agreed to bepome a joint endorser of commercial paper, without limit in amount, to finance a business about to be engaged in by the son-in-law and the co-endorser. The enterprise failed, with paper outstanding, jointly endorsed, far in excess of the value of the complainant’s property.—Held, that the agreement and endorsements were obtained under the influence of confidential relations existing between the complainant and the son-in-law, of which the co-en’dorser was charged with notice, and as to the co-endorser the agreement and endorsements were void for want of intelligent understanding by the complainant and absence of competent and independent advice; also, Held, that a judgment recovered by the co-endorser on the joint liability is invalid, execution whereof would be restrained; and that third parties, innocent holders of the paper, would be compelled to exhaust their remedy against the co-endorser before resorting to the complainant’s property.

      Mr. Aaron V. Dawes and Mr. James J. McGoogm, for tbe complainant.

      Mr. Frederic B. Brace, for the defendant Anderson.

      Mr. W. Holt Apgar, for tbe defendant First National Bank.
   Backes, V. C.

The complainant, William Bensel, ninety years of age, retired from the butcher business some twenty-five years ago, with savings of about $10,000, invested in a home and a small frame house nearby. During his retirement, he has occupied his home with an unmarried daughter; another daughter, Mrs. Howell, and her husband living in an adjoining house, and Samuel Kline, who married a third daughter, lives in one in the rear. They all take their meals at the father’s house, and have done so for many years. The means for the upkeep of the home, the supply of the table and the needs of the parent, are provided by the married daughters, who also assist in the household; the funds, of course, being furnished by the husbands. Samuel Kline was the man of the house, who, in his daily association with the old gentleman, assisted him in his personal affairs, which infirmities, due to extreme old age, made necessary, and entertained and amused him—not exclusively, but in common with the daughters. He was his adviser in whatever little business transactions there were, and shared his confidence. Kline was engaged in manufacturing barbers’ chairs and supplies, and Bensel was his accommodation endorser to the amount of $4,650, when, in 1912, Kline and Anderson organized the Samuel Kline Company, Kline contributing $2,500, the estimated equity of his business, as against $2,500 in cash put up by Anderson. Each held equal shares of the capital stock of the company, and together they managed the concern. They continued until 1914, when Anderson withdrew. Anderson is now the owner, but just how he got control of the company does not appear. During the joint management, Bensel became an accommodation endorser with Anderson on the' company’s paper to the amount of $23,400, discounted by the First National Bank of Trenton. When An-, derson withdrew, the corporation executed to him a chattel mortgage upon all of its then and after-acquired property, conditioned that it should be void upon the payment of the notes so endorsed by Anderson, and his discharge from liability thereon. On the mortgage Anderson has so far realized $5,000, out of a possible value of the mortgaged property of $8,000. The mortgage is now held by the First National Bank, having been assigned to it as collateral security. The accommodation paper was all dishonored, notice of which was duly given. One of the notes, dated March 27th, 1914, at four months, for $5,000, was" redeemed by Anderson, upon which he recovered judgment against Bensel in the supreme court for one-half of the face, plus interest and costs. The First National Bank brought suit against Bensel and Anderson as endorsers upon two notes for five and eight thousand dollars, respectively, and at the request of Anderson entered judgment against Bensel only, and thereunder levied upon the latter’s property, and was about to make its money when this bill was filed. The object of the bill is to compel Anderson' to pay the notes and judgment of the bank out of his own funds and those had and derivable from the proceeds of the chattel mortgage, in relief of the complainant, and pending the effort, stay collection by the bank out of the complainant’s property. Anderson is solvent and there is no danger on this score of loss to the bank. I take this to be so, because of the bank’s prosecution of Bensel alone, and its willingness to forego proceedings against Anderson.

When Kline proposed to Anderson to join him in business, he was in a precarious condition for lack of funds and credit, and unable to continue alone. For the purpose of raising capital to take up outstanding obligations upon which Bensel was endorser and to float the new project, it was arranged between the two that Bensel and Anderson should jointly endorse commercial paper for discount. By appointment made by Kline, Anderson met Bensel at his house, and what occurred there is best told in Anderson’s language:

“I simply stated I came to see Mr. Bensel to talk the matter of Mr. Kline and myself going into business together, and to see if it was agreeable to him to continue as endorser, equally, on paper with me; but that, whereas, now he was personally liable for the entire amount, 'he would then be liable for half, and that the paper given with his endorsements would be used to lift paper on which he was personally endorsing for Kline, and in such use of the business as might be deemed necessary. I asked Mr. Bensel at the time as to his financial responsibility ; he told me he owned the property, 328 North Broad, and the property on Montgomery street. The property on Montgomery street he said was mortgaged for $1)200. As to the value of the property on North Broad street, there was nothing particular said; I put my own value on it.”

The value of both properties Anderson estimated at from ten to twelve thousand dollars. Nothing was mentioned of the amount to which the new line of paper was to be issued. Thereafter the Kline company was formed, and from time to time notes were taken by Kline to Bensel for his endorsement, until the net accumulations amounted, as above stated, to over $23,000.

The theory upon which the case is presented, although scantily charged in the bill, but, in view of the answer, sufficient to advise the defendants of the gravamen of the complaint, is that the endorsements of Bensel, resulting in his present predicament, were procured by the undue influence of Kline, to the knowledge of Anderson'—an undue influence presumed, and not effectually rebutted—from a relationship of trust, confidence and dependence, existing between Bensel and his son-in-law. The determination of;the issue, if it were confined to Bensel and Kline, would involve no difficulty in condemning the transaction as fraudulent. For here we have a tottering old man, in years far beyond the allotted time, dependent for his temporal wants entirely upon his children, and in a large measure upon his son-in-law, a member of his household, in whom he undoubtedly reposed great confidence, involving himself, at the latter’s instance, in obligations which in nowise could have benefited him, and if permitted to stand would result in sweeping away his meagre competence, leaving him impoverished, a subject of charity, or, possibly, a public charge. From such calamity equity, in a measure, shields him. In all transactions between parties occupying relations, whether legal, natural or conventional in their origin, in which confidence is naturally inspired, or, in fact, reasonably exists, the burden of proof is thrown upon the person in whom the confidence is reposed, and who has acquired an advantage, to show affirmatively not only that no deception was practiced therein, no undue influence used, and that all was fair, open and voluntary, but that it was well understood. Hall v. Otterson, 52 N. J. Eq. 522; Same Case on appeal, 53 N. J. Eq. 695. Where parties hold positions in which one is more or less dependent upon the other, courts of equity hold that the weaker party must be protected, and they set aside his gifts if he had not proper advice, independently of the other. The presumption against the validity of the gift is not limited to those instances where the relation of parent and child, guardian and ward, or husband and wife exists, but in every instance where the relation between the donor and donee is one in which the latter has acquired a dominant position. Haydock v. Haydock, 34 N. J. Eq. 570. And, where one so situated is despoiled of all his property, a rule putting an additional burden upon the beneficiary is brought 'into play. Mr. Justice Garrison explains it with marked clarit}^ thus (Post v. Hagan, 71 N. J. Eq. 234) : “That a person already aged or infirm, or otherwise dependent, should give to the one upon whom he thus depends practically his whole living beyond recall, and at the very time when apparently he had most need to retain it, raises in the mind of a chancellor the presumption that the donor may not have, appreciated the irrevocable character of his act or that he did not foresee its legal consequences to himself. This presumption of apparent improvidence gives rise to the special rule followed in Slack v. Rees, which ihay be called the rule of independent advice. By force of this rule, if a person upon whom another has in fact come to be dependent accepts a gift from such dependent person of all his or her estate, a court of equity, moved by the apparent improvidence of such a gift, casts upon the donee the burden of showing that the donor had the benefit of proper independent advice. Proper independent advice in this connection means that the donor had the preliminary benefit of conferring fully and privately upon the subject of his intended gift with a person who was not only competent to inform him correctly as to its legal effect, but who was furthermore so disassociated from the interests of the donee as to be in a position to advise with the donor impartially and confidently as to the consequences to • himself of his proposed benefaction.” These beneficent rules of equity have been chiefly employed in cases of outright gifts,* but their underlying principles call for their application as vigorously, in circumstances where the subject, by enmeshing and entangling himself, has his property taken from him by legal process, as where he gives it away. The result is the same. And, when inspired by confidential relation, the presumption of undue influence is as much excited- in the former as in the latter instance, and the rules applicable to the one are as fitting to the other.

The fraud actually perpetrated upon this old man emphasizes the necessity for the rules, although here the fraud is established as a fact. Bensel’s endorsements covered a period of two years, before he discovered he was swamped by their enormous total. From time to time, when called upon by his son-in-law to endorse notes, he was told they were renewals, when, in fact, they were original instruments increasing his obligations. He kept no record or check of the notes, paying little heed to number or amounts, and endorsed indiscriminately, in blind subjection to confidence, implicitly relying upon the representations. Kline says that he was moved to the imposition by Anderson, but this is denied, and, in the face of his confessed perfidy, I must disregard the accusation.

The important inquiry in the case then is, is the vice in Bensel’s undertaking—the constructive fraud—chargeable to Anderson ? The position taken by Anderson is that he drove a direct bargain with Bensel, free from any taint of undue influence which Kline may have exerted. My impression of his motive in interviewing Bensel does not accord with his avowed object; and this is my analysis of his conduct: Anderson apprehended that large capital would be necessary to successfully swing the enterprise. Eor this purpose, BenseFs credit was not necessary at the bank; Anderson’s standing was sufficient! He was willing to take a chance which held out prospects of large profits, but disinclined unless someone shared with him the responsibility. To Bensel he went, not to deal, because Kline .had already offered Bensel-as a partner, but simply to confirm Kline’s assurance and to appraise BenseFs material worth to him if the venture proved to be a failure. Having secured one, and made an estimate of the other, he and Kline proceeded to "endorse” this helpless old man out of all his worldly goods. Now, is he any less amenable than Kline ? He saw for himself that Bensel was a complacent feeble old man, simple in his habits and content to live out his few days happily surrounded and cared for by his children. He knew his manner of living and how he got it; that his income was insufficient to maintain him, and that support by labor was out of the question. Kline’s apparent unlicensed proffer of Bensel as a joint venturer, and BenseFs ready acquiescence in the scheme of suretyship without limit, and disaster beyond redemption, were calculated to arouse suspicion that Kline’s sway of Bensel was a subtle factor. And, later, the ease with which the endorsements were forthcoming, must have carried conviction that none but Kline could have persuaded Bensel to such folly. It is far from my intention to intimate that a person advanced in years and dependent, cannot bind himself as an accommodatioh, endorser, or that an innocent holder would not be protected, or that Bensel had not the right to do just what he did in this case, for while the law incapacitates youth from contracting, it has not fixed a corresponding disqualification upon the decline of life, but equity succors the old and infirm laboring under a form of duress which it alone recognizes, by demanding of him in a position to exert it, and those who use Mm as a medium for advancing their'own interests, satisfactory proof that the transaction was well understood and that it was the result of an independent judgment. Some of the authorities go so far as to require independent advice in all cases, but, by analogy to the authorities of this state relating to donations, it seems to me that this should not be exacted, unless all is sacrificed, and then on the notion of apparent improvidence. Anderson, therefore, cannot be permitted to go away with the complainant’s estate, without meeting the equitable requirements. Now, has he done so ? Bensel denied ever having seen or dealt with Anderson, but I am inclined to believe he did, and that the conversation made little impression upon him and that he has forgotten. At the hearing, he was unable, apparently, to tell very m,uch about any of the affair. As related by Anderson, it appeal’s that at the time of the agreement, Anderson made the proposition of joint surety-ship, to which Bensel gave assent. Anderson assumed that he understood, but the question is, was the matter understandingly explained? Bensel, undoubtedly, was given the impression that by the new arrangement, his then liability would be cut down by one-half, but was it brought home to him that it was also to'expand to the limit fixed by Anderson’s estimate of the amount to which Bensel’s property could be made to respond ? Eor, beyond that length Anderson designed not to go, and he did not; he stopped there, obviously because he had exhausted the old man’s financial capacity. Was it Bensel’s conception that a compliance with the agreement to endorse meant that on default he would be expected to pay the Kline output of paper; that he was really financing the concern; and that failure of the Kline company meant his utter ruin? It is not so established by the evidence, and it is quite evident that no effort was made to bring these possible dire consequences within his comprehension. Anderson’s duty did not stop short of: this. The old gentleman was led to understand that Anderson was a man of much wealth, and the inference is not strained that he believed he was standing back of Anderson’s business, and that no loss could befall him. Courts of equity have been prone to disallow contracts in favor of third parties, where advantage is derived through confidential relations, and the opinions plainly indicate how far the beneficiary must go to overcome impeachment on this ground. The authorities, in instances of duress by parents, where parental influence was presumed to prevail after the child had arrived at legal age, are especially apposite, inasmuch as the complainant’s advanced years and dependency put Kline in the ascendant position. Other cases where trust and confidence subsisted are also in point. In Archer v. Hudson, 7 Beav. 551; 49 Eng. Reprint 1180, a niece, just of age, entered into a security for her uncle who had brought her up, upon the strength of which he was permitted to overdraw his account with his .bankers. The bank’s manager participated in obtaining the security and explaining its effect. In relieving the plaintiff from the obligation, Lord Langdale, master of the rolls, said: “It therefore does not appear that this young lady was ever severed from the influence which the uncle and aunt had over her, so as to enable her to form an adequate, full and independent opinion as to what she ought in prudence to have done. I do not mean to say that if this' young lady had her trustees, or some friend or relation of the family, or somebody interested in her welfare, to advise and consult with, in the absence of the uncle and aunt, that the circumstance of her situation, and the circumstance of the uncle’s situation, might not have been such that this court would have said that, having entered into this liability, she should be held by it. It might have been so; but to say that Mr. Hauxwell, the agent of the bank, a person with whom the uncle was dealing, the person through whom he is carrying on his business as a customer of the bank, by explaining to an inexperienced young woman who had just attained her age of twenty-one years the meaning of this note, offered anything like such a protection as would secure to her that free and independent judgment which she had a right to exercise, seems to me to go far beyond anything which has been proved in this case. It does not appear to me, taking' this transaction as it stands upon the evidence before me, that it can be supported.” Similar eases are those of Maitland v. Irving, 15 Sim. 437; 60 Eng. Reprint 688; Maitland v. Backhouse, 16 Sim. 58; 60 Eng. Reprint 794. In Espey v. Lake, 10 Hare 260; 68 Eng. Reprint 923, the plaintiff, a young lady of twenty-two, who had lived with her step-father from infancy, became surety on his note for £500, on which he secured a loan of that amount. In restraining execution of the judgment obtained by the lender, Lake, Vice-Chancellor Turner said: “I take it to be quite clear. that the principles of this court go to this extent—that in the case of a security taken from a person just of age, living under the influence and in the house of another person, with a relationship subsisting between such other person, and the person from whom the security is taken, which constitutes anything in the nature of a trust, or anything approaching to the relation of guardian and ward, or of standing in loco parentis to the surety, this cou'rt will not allow such security to be enforced against the person from whom it is taken, unless the court shall be perfectly' satisfied that the security was given freely and voluntarily,.and without any influence having been exercised by the party in whose favor the security is made, or by tfle party who was the medium or instrument of obtaining it.” And to Lake’s disclaimer of any part in the transaction, and that he had left it entirely to the step-father, he replied: “In the application of the principles of the court, I 'see no distinction between the case of one who himself exercises a direct influence, or of another who makes himself a party with the guardian who obtains such a security from his ward. The defendant, Lake, left it to Speakman, who had influence over his young ward, as she may be called, to induce her to join in the seeurdy, thereby placing her more directly under undue influence than if he had applied for the security himself. Such a security cannot be maintained consistently with the principles of this court.” In Savery v. King, 5 H. L. Cas. 627, a son’s pledge for his father’s debt was set aside, although the son was of legal age, on the ground that he was still under- his parent’s influence—a fact well known to the creditor. In Berdoe v. Dawson, 34 Beav. 603; 55 Eng. Reprint 768, two sons mortgaged their estate to secure a debt of the father. They were the age of twenty-five and twenty-three, respectively, and lived with the father. In setting aside the mortgages, the master of the rolls, Sir John Romilly, said that, “When a person executes a deed by which his father, or any other person nearly related and connected with him, or who, from any other cause, has necessarily a considerable influence over him is benefited, then the person who claims the benefit of that deed is bound to establish two things— he is bound to establish, in ‘the first place, that the person who executed the deed knew what he was about when he executed it; and, in the next place, he is bound to show that it was made of his own free will, and unbiased by and without being subject to that influence which he could not easily resist. * * * The cases upon the subject are exceedingly strong in showing that this sort of security cannot be relied upon.” In Sercombe v. Sanders, 34 Beav. 382; 55 Eng. Reprint 682, the plaintiff, a younger brother, upon attaining twenty-one, mortgaged his share of his inheritance from his father, to secure the debt of his elder brothers, by whom he had been raised. It was set aside for undue influence presumed. In Bischoff’s Trustee v. Frank, 89 L. T. R. 188, a wife executed a guarantee in favor of her husband’s creditor, to secure his debts then due, and a present advance of £500 and future credits limited to £1,500. The creditor and his solicitor made the arrangements with the wife, but it was held that the relationship of husband and wife was one where, in the case of a large voluntary benefit, influence was presumed to exist, and that the transaction being challenged, the burden was on the donee to prove that the nature of the guarantee was well understood and free from the influence of tire husband, and that in the absence of independent advice, this had not been discharged; and, further, that the creditor was sufficiently put on inquiry, to be affected with the equitable flaws in the transaction. In McMackin v. Hibernian Bank (1905), 1 Ir. Reps. 296, a daughter who had recently become of age, and to whom was explained the transaction, consented to become surety for her mother’s debt. On a bill filed, a judgment recovered upon the guarantee against the daughter was declared void on the grounds of undue influence presumed from parental control and not rebutted by proof of independent advice. O'Connor v. Foley (1905), 1 Ir. Reps. 1, involved endorsements of promissory notes given by youthful persons as security for debts of relatives by whom they had been raised. The court, in granting relief against the' holder, upon the ground of undue influence of the relatives^ said: “Again, the rule is that in the application of the principles of the court there is no distinction between the case of one who himself exercises a direct influence, and of another who makes himself a party with the person who exercises the undue influence. Kerr 158. These are legal commonplaces—truisms, which constitute thq very lifebreath of our system of equity.” In Noble v. Moses Brothers, 81 Ala. 530, the doctrine is discussed and applied, and some of the above, and many other cases cited in support. The principle upon which these authorities rest are, it seems to me, applicable to the circumstances under consideration.

In granting the complainant relief it is not necessary to, nor do I, impute to Mr. Anderson any intentional wrong-doing or actual fraud. The fact that he staked his own credit, and is a heavy loser of the defunct company, by reason of his endorsements, is sufficient refutation. In disposing of the issue against him, consideration is given onty to the equitable rules above alluded to, which are held not to be satisfied by the proofs and that for failure of evidence manifesting a clear understanding by the complainant of the nature and consequence of his act, and because he had not independent advice, Anderson cannot retain the benefit of his contracts, which otherwise he would be entitled to.

The claim that at the time of the contract Bensel was liable for $1,650 on endorsements for Kline; that he was relieved to the extent of one-half by the joint endorsements, and that therefore a valuable consideration moved to him, cannot be seriously entertained. The circumstance may have been one of the allurements of the transactions, but it certainly has no part in the present equities. These obligations were paid off by the Kline concern, as assumed, in payment of the property turned over by Kline. Heid v. Vreeland, 30 N. J. Eq. 591. At that time Kline had sufficient to pay his debts, and more, by at least $2,500, which could have been, by legal process, appropriated to the liquidation of the debts upon which Bensel was then guarantor. Sullivan v. International Baking Co., 60 N. J. Eq. 80. And, so it is plain to be seen that Bensel gained nothing.

The First National Bank is an innocent holder for value and, of course, is not affected, except, that in executing judgments to make its debt, it must first resort to the Kline company and Anderson’s property, and if there is any deficiency, recourse may be had to Bensel. Philadelphia and Reading Railway Co. v. Little, 41 N. J. Eq. 519; Kidd v. Hurley, 54 N. J. Eq. 177; Holcombe v. Fetter, 70 N. J. Eq. 300.

The complainant is entitled to a decree, but without costs.


source: Caselaw Access Project

author: Backes/V. C.

license: Public Domain

text:
    Abraham Schwartzman v. Anna M. E. Creveling.
    [Submitted December 8th, 1915.
    Decided January 12th, 1916.]
    1. On a bill for the specific performance of a contract to sell “the store property owned by me, No. 224 S. Broad St., Trenton, N. J.,” evidence of a contemporaneous verbal agreement or understanding between the parties that the land to be conveyed was to include more than the store property and messuage—Held, to be inadmissible as varying the terms of the written agreement and contravening the statute of frauds.
    2. A written contract for the sale .of land cannot be reformed so as to include the terms of a contemporaneous verbal agreement for the purpose of specific performance.
    On final hearing.

      Mr. John P. Kirkpatrick, for the complainant.

      Mr. Aaron V. Dawes, for the defendant.
   Backes/V. C.

The defendant is the owner of a store and premises No. 224 South Broad street, Trenton, fronting on the street eighteen feet and two inches and extending eastwardly one hundred and eighty-one feet two inches to Conover’s alley. ' The store lot is fence enclosed to the depth of one hundred feet and has been occupied by the complainant as tenant for eleven years past, while the remaining and rear portion of the land is enclosed with adjoining properties and together have been used for upwards of fifty years as a livery stable and yard, with entrance on Market street, a cross street three doors south of the defendant’s premises. The stables extend from Market street across the defendant’s lot and form the fence line. The complainant claims to have purchased from the defendant the whole of her property from Broad street through to Conover’s alley, under an agreement as follows:

“No. 31 Glenwood Avenue,
“Jersey City, N. J.,
“May 20th, 1912.
“Dear Me. Schwartzman—I hereby agree to sell you the store property, owned by me, No. 224 South Broad St., Trenton, N. J., for $5,000, whenever it is convenient for you to purchase it, during the term of your lease. In case of my death, I direct this agreement to be carried out as stated by me.
“Anna M. E. Creveling.”

During the term of his lease, the complainant accepted the offer, paid down $100 and received the following acknowledgment :

“Trenton, N. J., May 15th, 1913.
“This is to certify that I have to-day received $100 on deposit from A. Sehwartzman, pending the sale of property 224 S. Broad St., Trenton, N. J., for $5,000, the balance of $4,900.00 to be paid when the deed is delivered on or before July 1st, 1913.
“Anna M. E. Creveling,
“No. 31 Glenwood Ave., “Jersey City, N. J.”

In due time the complainant tendered the balance of the purchase-money and demanded a deed for the entire lot, which the defendant refused to execute because the description included the rear portion of the lot and embraced more land, as she contends, than she agreed to sell.

The complainant can have a decree to the extent he seeks, only if his right to the property can be found in the above documents. The contract, as reduced to writing, is simple and explicit in terms, and definite as to the subject of sale. By it the defendant agreed to sell “the store property, owned by me, No. 224 South Broad street, Trenton, N. J.,” and no more. In the light of admissible extrinsic evidence, no difficulty is experienced in identifying what was sold and in fixing the dimensions. The street number locates the property and the store building and the curtilage of one hundred feet delimit the boundaries. The complainant occupied these premises under three consecutive leases, therein described as a “certain store and dwelling,” known by the aforesaid number. The stable lot never formed a part of his demise and the agreement itself, in limiting the period to -the term of his lease, during which the complainant should have the right to purchase, implies that the leased premises only were involved. The description of the property, as employed by the parties in recording their bargain, coincides-with the description of the store and messuage occupied by the complainant, and is inapplicable to any other lands. The pertinent rule of construction is that which has been frequently applied in construing devises, as for illustration: The devise of “my house, No. 160 Rose street,” was held to pass all of the testator’s land adjacent to the house that had been used in connection with the house, either for the purposes of a residence or business. Lanning v. Sisters of St. Francis, 35 N. J. Eq. 392. By a devise “of the house and lot in which-I now reside,” it was held that the devisee took only the lot which the testator, prior to the date of his will, had separated from his adjacent lands and enclosed by fences. Phillipsburgh v. Bruch’s Executor, 37 N. J. Eq. 482: Crosson v. Carr, 70 N. J. Law 393.

The complainant does not deny the general application of the rule, but contends that it should not be here adopted because at the time of the agreement the defendant represented to him that she was selling all of the land to which she had title, from Broad street to Conover’s alley, and that that was what he understood he xvas buying. I am inclined to believe him; his evidence is corroborated by an apparently disinterested witness, and although denied by the defendant, hesitatingly, is in a measure sustained by her protest against the complainant building on the rear of the lot because it woxxld interfere with light and air of adjoining owners, and her remark at the time that had she knoAvn of his intention to do so she would not have sold him the property. The testimony was admitted at the trial, under objections, but, upon examination, I am persuaded that it is incompetent. Exdden.ce of declarations of the defendant’s intention as to what she meant to sell, cannot be entertained without violating a fundamental principle of the law of evidence. “It is sometimes said that this sort of evidence is admitted only when there is a latent ambiguity. The use of the expression ‘latent ambiguity,’ in this connection, has given rise to some confusion in the cases. The office of such testimony is that of interpretation merely, to ascertain the sense in xvhich words haxre been used by the testator. Where, in a deed, will or written contract, general words of indefinite signification are used, and there is nothing on the face of the instrument to' qualify them, or limit and apply them to a particular subject-matter, evidence of extrinsic circumstances—matters of fact as distinguished from mere declarations of intention—is admissible for the purpose of ascertaining in what sense such indefinite language was used. The effect of such evidence is not to vary the language employed, but merely to explain the sense in which the writer understood it.” Griscom v. Evens, 40 N. J. Law 402. In that case Mr. Jxxstice Depue reviews the cases in this state, and supports the text by numerous authorities. In Naughton v. Elliott, 68 N. J. Eq. 259, upon a bill for the specific performance of a contract, the question arose as to the quantity of land intended to be conveyed under a description of “my lot comer of Ocean avenue and New street.” The defendant introduced a conversation xvith the complainant tending to show that the complainant knew that the dispxxted piece of land in the rear of the lot was not included in the bargain, but Nice-Chancellor Emery rejected it as inadmissible on the ground that it varied the deed.

The admission of the evidence would also violate- the statute of frauds, which requires contracts for the sale of land to be evidenced in writing. By the written contract, the defendant sold, as we have seen, the store and curtilage—a lot one hundred feet in depth. By testimony, it is attempted to be shown that she verbally agreed to sell more, viz., the adjoining land of eighty-one feet to Conover’s alley. This, obviously, cannot be read into the written memorandum, or be used to supplement it. “The policy of the statute is to exclude testimony of that uncertain character with respect to transactions within its provisions. It, therefore, requires the substantive parts of the contract to appear in the writing. To admit parol evidence of any of the terms of the contract with respect to which the memorandum is silent, would open the door to the very mischief the statute was intended to suppress.” Johnson & Miller v. Buck, 35 N. J. Law 338; Schenck v. Spring Lake Beach Improvement Co., 47 N. J. Eq. 44; Nibert v. Baghurst, 47 N. J. Eq. 201; Bowers v. Glucksman, 68 N. J. Law 146.

The written contract cannot even be reformed so as to include the terms of the verbal agreement for the purpose of specific performance. Wirtz v. Guthrie, 81 N. J. Eq. 271; Vogt v. Mullin, 82 N. J. Eq. 452; Davimos v. Green, 83 N. J. Eq., 596.

The complainant, if he so elects, may amend his bill by correcting the description of. the land by reducing it to a lot one hundred feet in depth. He may then have a decree, but without costs; and, upon failure to do so within twenty days, the bill will be dismissed, with costs.


author: Backes, V. C.

text:
    John H. Letts v. May E. N. Letts.
    [Decided January 28th, 1916.]
    Counsel fee and .costs allowed in a final decree may be enforced by a process of attachment for contempt.

      Mr. Warren R. Schenck, for the petitioner.

      Messrs. Woodbridge <& March, for the defendant.
   Backes, V. C.

This suit for divorce was dismissed with counsel fee and costs, and the defendant moves to attach the petitioner for non-payment. He resists, claiming that costs and counsel fee on a final decree can only be recovered by execution or sequestration, and relies on Aspinwall v. Aspinwall, 53 N. J. Eq. 684. That was a contract case, and the decree was for a debt which could not be' enforced by imprisonment, as explained in Adams v. Adams, 80 N. J. Eq. 175, a matrimonial action, in which the remedy by contempt proceedings to collect alimony awarded by final decree was upheld. Mr. Biddle says:

“The means open to enforce alimony are available to enforce the order for costs and expenses. The grounds for these allowances are, indeed, indistinguishable, whether made for support solely or to carry on or defend the suit. Both are equally within the discretion of the chancellor, and subject to his sole power of enforcement.” Bid. D'iv. 170.

In litigations of this sort, it is the duty of the husband to provide his wife with means to defend the suit, and to support her while it is pending. The measure of this duty, and whether it should be performed, rests entirely with the chancellor, depending upon the circumstances of each case. Westcott v. Hinckley, 56 N. J. Law 343; Lynde v. Lynde, 64 N. J. Eq. 736. The present day practice of making allowances had its origin in the principle that, at common law, the husband having, by the marriage contract, the control of the wife’s property, she was destitute of means for her own protection. The general rule, growing out of that situation, of supplying the wife with weapons of defence has been modified by the statute giving to married women property rights, but the quality of the duty upon which it arose is undiminished. Marker v. Marker, 11 N. J. Eq. 256. In Hipwell v. Hipwell (1892), P. & D. 147, the costs on final decree in favor of the wife were ordered paid out of the marriage settlement created by her estate, the husband having absconded and there being no prospect of recovery from him.

Now, in this case, the amount the petitioner should pay to the defendant for her disbursements in her defence, was determined in the progress of the suit; the counsel fee was fixed and the other expenses estimated at the amount of the fee bill; and the mere fact that the order for payment is embodied in the final decree, it seems to me can make no difference in the method of enforcement. The allowances were for expenses pendente lite, and the character was not changed by the form of the order. In Main v. Main, 50 N. J. Eq. 712, Yiee-Chancellor Green awarded alimony pendente- lite to cover the wife’s traveling expenses, and a counsel fee, and made the order for them in the final decree. The award could have been made by a separate order, which, undoubtedly, could have been executed by attachment, and this being admitted, I am unable to see the force of counsel’s argument that the same course cannot be pursued when the allowance is incorporated in the finál decree. Taxed costs in a divorce suit, not resting in contract, and not being a debt prohibited by the constitution from being enforced by imprisonment, may be compelled by attachment.

The English Debtor’s act prohibits imprisonment for “making default in payment of a sum of money,” and it is held that taxed costs on final decree in divorce cannot be recovered by a body writ. In the old ecclesiastical court, the practice was to tax the wife’s costs and expenses, including those on final hearing, before the hearing, and to exact payment by attachment. These costs and expenses were ascertainable because all of the evidence presented on the hearing was in writing. In the present probate and divorce court, the testimony is taken orally, and because the costs cannot be conveniently ascertained before final hearing, they have the system of estimating them and compelling the husband to pay them into court or to furnish security for an amount which will approximate the entire sum, and for failure to comply, to attach him. Such orders are not regarded as within the Debtor’s act. Robertson v. Robertson, 6 L. R. (P. & D.) 119; Hurley v. Hurley (1891), P. & D. 367; Shine v. Shine (1893), P. & D. 289; Bates v. Bates, 14 P. & D. 17. In New York it is held that the costs of an action for divorce cannot be collected by proceedings to punish for contempt. Jacquin v. Jacquin, 36 Hun 378; Weill v. Weill, 10 N. Y. Supp. 627; Branth v. Branth, 13 N. Y. Supp. 360; These cases are all based upon the civil code of procedure of that state.

The petitioner will be adjudged in contempt.


author: Baokes, Y. C.

text:
    Elizabeth C. Norton v. Samuel Nathanson et ux.
    [Submitted November 4th, 1915.
    Decided January 11th, 1916.]
    1. When a party is compelled to take goods at more than the market price in order to obtain a loan, the transaction is usurious. No contract, however framed, is good if the ultimate effect would be to secure more than the legal rate of interest.
    2. Where one man purchased land from another, at an exorbitant price, for the purpose of obtaining a loan, the seller making the loan to induce the purchase, the transaction was usurious, and the difference between the value of the land and what it was sold for may be deducted from the debt.

      3. The .inquiry is not merely whether lands, goods or securities were sold for more than their market value, but whether the property was sold and bought above its market price as part of the bargain for the loan of money.
    4. The burden of proving usury is upon the parties setting it up. The facts necessary to constitute it must be clearly established beyond reasonable doubt by the decided preponderance of evidence. It is not enough that the circumstances proved render it highly probable that there was a corrupt bargain; such a bargain must be proved and not left to conjecture.
    5. Parties to a usurious contract can do nothing which will have the effect to validate it so as to deprive the debtor of his right to defend on the ground of usury, except by expunging its usurious element.
    6. The defendant loaned the complainant $5,200 and sold her lands for $6,800, taking as security three mortgages aggregating $12,000. Upon bill filed to set aside the transaction, evidence examined and Held that the complainant’s claim that the land was sold at an exorbitant figure and that the loan was made to induce the purchase, was not established by the evidence.
    On final hearing.

      Mr. Aaron V. Dawes, for the complainant.

      Messrs. McDermott & Enright and Mr. William A. Stevens, for the defendants.
   Baokes, Y. C.

The object of this, bill is to set aside a transaction on the ground of usury. The defendant conveyed to the complainant a property called Castle Garden for $6,800, and loaned her $5,-200. In acknowledgment she assigned to him a mortgage of $5,000 on two houses and lots on Cooper avenue; executed a mortgage for $4,000 on lands known as the' Edwards Tract, and one for $3,000 on Castle Garden. All of the property is located at Long Branch. The defendant foreclosed the $5,000 mortgage and took title under a sheriff’s deed. The other two mortgages are being foreclosed. The complaint is, that at the time of the deal, Castle Garden was not worth more than $3,500, and that the complainant was compelled to take it at $6,800 to obtain the loan; in short, that a bonus of $3,300 was exacted for the $5,-000 loan. The relief sought is that upon payment of the loan, and a reconveyance of Castle Garden, the defendant be decreed to hand back the securities. The defence of usury is set upo in the two pending foreclosure suits, and the three cases were tried as one.

The decision of the case turns upon the question whether the loan was made to induce the purchase of Castle Garden at an exorbitant price, for, if it were, then the contract to pay the excess was a violation of the statute which forbids the taking, directly or indirectly, for loan of any money, above the value of $6, for the forbearance of $100 for a year. Comp. Stat. p. 5704. In the construction of the statute against usury the courts have held, with undeviating uniformity, that where the real transaction was a loan of money, no shift could evade the statute. No matter under what guise the loan was concealed, whether by sale of goods, transfer of stock, taking bond for larger amount than loaned, passing off depreciated paper, or by any other expedient, the court will strip off the guise, and ascertain the true nature of the transaction. When the real transaction is a loan of money, and the lender attempts to receive from the borrower more than the amount actually advanced with lawful interest, no master under what pretext, it contravenes the policy of the statute, and incurs its penalty. Both the English and American authorities, in support of this principle, are very numerous. Campion v. Kille, 14 N. J. Eq. 229. Lord Mansfield, in Floyer v. Edwards, 1 Cowp. 112; 98 Eng. Reprint 995, says that “if the substance is a loan of money, nothing will protect the taking more than five per cent.; and though the statute mentions only ‘for loan of moneys, wares, merchandise, or other commodities,’ yet any other contrivance, if the substance of it be a loan, will come under the word ‘indirectly.’ ” The inquiry is not merely whether lands, goods or securities were sold for more than their market value, but whether the property was sold and bought above its market price, as part of the bargain for the loan of money. Where one man purchases land from another, at an exorbitant price, for the purpose of obtaining a loan, the seller making the loan to induce the purchase, the transaction was usurious, and the difference between the value of the land and what it was sold for may be deducted from the debt. Earnest, Administrator, v. Hoskins, 100 Pa. St. 551; 39 Cyc. 929.

We must then inquire into what the value of Castle Garden was within the reasonable conception of the parties, and was it taken over at a higher figure, as a part of the bargain for the loan of the money. It rests on the complainant to show the value. Grosvenor v. Flax and Hemp Co., 2 N. J. Eq. 453. The complainant’s contention is that on November 20th, 1912, she agreed to buy the Edwards Tract for $7,000, plus taxes, and, before doing so, her husband obtained the defendant’s assurance that he would lend her $5,000 towards the purchase-money; that later on he declined to advance tire money unless the complainant would buy Castle Garden at the figure named, and give the securities above stated, and that being unable to get the money elsewhere to -pay for tire Edwards Tract, she, under pressure of the circumstances, after some show of resistance, submitted to the imposition. This, in substance, is the testimony of Mr. Norton, the complainant’s husband, who dealt for her, or, rather, as I am inclined to believe, negotiated his business affairs in .her name. In all of tire transactions disclosed by the record, she was negligible. The defendant’s version is: He held a mortgage of $4,000 on Castle Garden that had been foreclosed, and at the sale of which, in October’, 1912, he was the purchaser at $5,400.90, the principal and accumulated interest of his debt and the costs of the suit. Objections were filed to the confirmation of the sale by Norton, who was a subsequent encumbrancer, and by the Lerner Block Norton Company, a creature of Norton’s, which held the fee, on the ground that the defendant’s decree was excessive, in that there had been paid $500 on account of the principal and also some interest, for which credit had not been given. While the objections were pending, the defendant says Norton and Mr. Lerner, of Norton’s company, dickered with him from time to time for the property, for which he asked $7,500, and, finally, in December, agreed to $6,800 as his lowest figure. The matter then hung fire, he relates, until January following, when Norton applied for a loan of $5,000, which he promised to make, Norton agreeing at that time to take Castle Garden at $6,800. He admits he

“did not think he would have let Norton have the loan unless he straightened out the Castle Garden matter; that he didn’t say he wouldn’t; he was willing to, and said to him that if he would straighten it out, he would let him have the money.”

The defendant allows he was anxious to clear up the affair, and explains that with the objections hanging, he couldn't do anything with the propeidy, adding, that if it had nut been for the objections he would not have been so anxious.

The sale and tire loan were associated and regarded by both parties as a $12,000 transaction, and the issue of fact calling for settlement is, was the price of Castle Garden the result of a deliberate bargain, and as such simply a:r element of the debt of $12,000; or was it coerced to augment the,debt to that sum? I do not intend to imply that to establish usury, oppression must be proved, for oppression is presumed in law when usury is a settled fact, however it may have been obtained. The burden of proving usury is upon the party setting it up, and the facts necessary to constitute it must be clearly established beyond reasonable doubt by the decided preponderance of evidence. It is not enough that the circumstances proved render it highly probable that there was a corrupt bargain; such a bargain must be proved and not left to conjecture. Berdan v. Trustees, &c., 47 N. J. Eq. 8; affirmed, 48 N. J. Eq. 309. I take little stock in Norton's story that the defendant had promised tire money and that he was pinched into the arrangement by the dilemma of its refusal. Norton says that the promise was made before he agreed, on November 20th, to buy tire Edwards Tract, and that Castle Garden was injected afterwards. He puts it as much as a week before that time (although later he said it might have been on the same day, when the impossibility was pointed out), but in this he must be mistaken, because it appears that the Edwards Tract was offered at public auction by the receiver of the Edwards company on the afternoon of November 19th, and struck off to a purchaser who failed to comply with the terms of the sale. Norton admits that he did not attend the auction and knew nothing of it until afterwards, yet, on the following day, he made a private bargain for the property and gave his check for $200 as a forfeit. The events are not in dispute and they shake conficlence in the correctness of the claim that he had a promise of the money so far in advance. And, further, Norton’s concern was at the time in default to the defendant, and Norton was in actual hostile litigation with him over his asserted rights. Now, is it likely in these circumstances that he would seek the defendant’s help in a new speculation, and that the defendant would promise his aid with so large a sum, without first having adjusted their differences ? It is also asking much of the court to accept Norton’s viewpoint, that relying upon the defendant’s promise, the refusal of the money at the last minute placed him in a situation where he was compelled to submit to the extortion. It appears that Norton’s wife at that time held the $5,000 mortgage, well secured on the Cooper avenue property, and the Edwards Tract (cheap at $1,000) was about to be conveyed to her, to pay on which she had $2,000. It is incredible that upon these properties less than fifty per cent, of their clear value could not have been raised at any money institution and at six per cent., the rate promised to the defendant. Such securities are rare, and for them money is a ready commodity. I appreciate that Norton and his wife testified that they tried to raise the money elsewhere and couldn’t, but of this I have misgivings. They were seemingly not pressed for time in which to get it. It does not appear what the condition of the Edwards’ sale was, as to when it was to be closed, but the record does show that the receiver’s deed bears date January 24th, 1913, which may be assumed to be the agreed date for its delivery, and it is also shown that the defendant’s check for $5,200 is dated February 25th following, and that the deed was not recorded until March 3d.' Thus, it appears that at least a month elapsed between the time, as the Nortons say, pressure was brought to bear upon them and when they succumbed. In the meantime there was small danger of losing the prize of the Edwards Tract, and'much time in which to turn theniselves.

The Nortons further advance that they submitted to this unconscionable exaction of $3,300 to save a forfeiture of the $200 earnest money paid on the Edwards Tract, and also that the prospective profit of that purchase was a persuasive factor, from which they hoped to recoup. The first borders on the absurd, and the second is disingenuous. Norton is a sharp, shrewd, trader and a man of affairs, far superior in intelligence, in the financial and commercial sense, to the defendant, and it is highly improbable that he was lured to the imposition by the glowing prospects of the Edwards’ purchase, especially when he had abundance of opportunity to escape. It seems to me that his reason for paying what he now declares to be excessive value may fairly be attributed to another and more covetous motive.

That Norton and the defendant negotiated at arms’ length for the sale of Castle Garden, and long before the loan was made,, is shown pretty clearly by the proofs. Castle Garden is a large, two-story frame structure, covering the whole of an irregular-shaped lot at the corner of North Broadway and Long Branch, avenue, running fifty feet on North Broadway and ninety-two feet on Long Branch avenue. The other lines are forty-seven feet by seventy-four feet. It is on the most prominent business street of Long Branch, though perhaps not in the more desirable locality. The first floor is taken up by three small stores, and the rest is cut up into twenty-four rooms used for tenements. It was a wheelwright and blacksmith shop, remodeled and added to. It has a dilapidated appearance and is sadly in need of repairs, due to neglect during the past, few years. It was in better shape when the defendant sold it .to the Nortons three years ago. Groups of three rooms rent for $7 and $8 a month; one store for $20, and the other two for $10 each, a renting capacity of approximately $100 a month. The yield, however, is less, by at least one-half, clue very much to lack of care and proper management. Norton says it was worth about $3,500. His partner, Homer’s, opinion is that $3,500 to $4,000 would be a fair price. Holtson, a real estate and insurance agent, says $3,500 or $3,-600. Mr. Chandler, another of the complainant’s witnesses, estimates its value at $5,000. The defendant’s witness Green, a real estate dealer, values the land at $2,000 and the building between $4,000 and $4,500. William H. Brehm, an owner of and dealer in property in the immediate locality, thought $7,000 a fair price. His judgment is based largely upon an income capacity of $100 a month, which he says, with care, it could be made to produce. The defendant says he valued it at.and his asking price was $7,500. Jarsky, another witness in his behalí, a real estate dealer, puts the value at $8,000. The opinions, standing alone, are of very little help, but the circumstantial testimony in the case, much of which is not disputed, fairly indicates what the contracting parties thought and regarded the property to be reasonably worth. The evidence of the complainant of estimates approximately of $3,500, is inadmissible. Holston considers the land worth $2,500 and the building $1,000, although for the past seven j^ears he carried fire insurance on it for $3,000, and this after inspection and appraisal. The insurance at one time during this period was $4,000. When Lerner bought the property, in 1907, he paid $4,750, and afterwards improved it, spending $1,000 to $1,500 in remodeling and repairs. In addition to the defendant’s $4,000 mortgage lien, Norton and his associate placed two or three blanket mortgages on it, aggregating upwards of $10,000. This, to my mind, indicates that they considered their equity of some, if not considerable, value. They wanted the defendant’s mortgage foreclosed, possibly to wipe out the subsequent liens, and when they found that the defendant and not they were to gain the benefit of the sale, they objected to its confirmation. While the grounds of the objection do not assail the bid of $5,400 as inadequate, it seems to me that inasmuch as the objection could not be sustained, except on this ground (Cropper v. Brown, 76 N. J. Eq. 406), it is to be presumed to have been within their contemplation; and suggestive is Norton’s reason for filing them—that he “did not want Mr. Nathanson to get away with the property without paying the different ones that had claims against it what was their dues.” I think it is a fair inference that they regarded the defendant’s bid of $5,400 as inadequate, under the peculiar and disadvantageous circumstances in which they found themselves. Jarsky, the real estate agent already mentioned, testified that in the fall of 1912 Norton asked him to sell the property, and when asked how much he wanted, said that he had paid $10,000 for it. That one Chris Brehm offered him (Jarsky) $7,500 for it, which he submitted to Lerner, who replied that he would take no less than $9,000, his bottom pricq; and that later he saw Norton, who turned down th§ offer. Norton denies this, and Lerner says he don’t remember. Brelnn, to some extent, corroborates Jarsky, in that he says Jarsty showed him the property and asked $9,000 for it, and that while he did not malte an offer of $7,500 in cash, he did say he did not think he would pay over $7,500 for it. And we have this undisputed evidence given by a disinterested and believable witness: Miss Throckmorten, a stenographer in the law office of Mr. Benjamin Morris, sa3rs that in the summer of 1912, Lerner and Norton applied to Mr. Morris for a loan on Castle Garden, of between $4,000 and $5,000, and that “they stated the property was worth at a low valuation $8,000; but that it brought an income (on) $10,000, bringing in about $1,-000 a year rental.” While these facts may not prove Castle Garden to have been worth $6,800 at the time of the sale, they tend to show the mood in which the parties approached the negotiation, and shed light upon whether it was a sale or a hold-up.

There is little room to doubt that after the defendant purchased Castle Garden at sheriff’s sale, the Norton-Lerner combination (and I speak of them as such because it is patent that the complainant, Mrs. Norton, was a mere cipher and that her husband and Lerner were the real parties in interest in the Edwards purchase and in Castle Garden) was keen to get it back and at the lowest price it could be had. Lerner’s testimony evinces this. He admits he tried several times before the loan was spoken of. They wanted to buy and the defendant was ready to sell, but for no less than $6,800—the odd figure of $6,800 indicates that they haggled—and in this situation the agreement was reached and it does not appear to have been otherwise than upon the basis of what Norton and Lerner at that time regarded the property to be worth to them. Now, in this state of affairs, how can it be said that the agreement of the defendant to make the loan, if they would buy at his figure, was unlawful ? The question is not whether the purchase price was in fact in excess of the fair market value, but the decisive point is, was it mutually recognized as such and was the sale induced exclusively by the promise of the loan ? I do not find this established.

On the whole case, I feel that the complainant is much in the same position that Dowdall was, in Dowdall v. Lenox, 2 Edw. Ch. 267, which Vice-Chancellor McOonn discusses in- a manner fitting to the present situation. He says:

“There is no evidence showing that Dowdall was in such a state of distress or embarrassment as would probably induce a man to agree to hard and oppressive terms of a proffered loan in order to relieve his wants. His condition was not that of a debtor pressed by his creditors and his property about to be sacrificed by forced sales or his person imprisoned and whose anxiety or eagerness to obtain the means of relief would, in some measure, deprive him of the faculty of acting and judging with the coolness and deliberation which belongs to a free agent. His incentive was of another kind; not one arising from distress and pecuniary embarrassment, but from a desire to engage in a profitable enterprise with the confident hope of large gains. There was time for calculation and reflection, and if he found the terms of a loan, and the responsibilities he must assume to obtain it greater than his anticipated profits would warrant, he had only to reject the terms and abandon the undertaking. A person in this situation, taking up a loan for such purposes, and upon terms which may appear to be exorbitant, yet founded upon calculation and the free exercise of his own judgment, however the statute against usury may be violated, cannot be said to be imposed upon by the lender or to have had an advantage taken of his necessities. It is not the case of distress on one side which the law can notice and of undue influence and oppression on the other (Ramsbottom v. Parker, 6 Mad. C. R. 5); and in this respect I think it is clearly distinguishable from Browne v. O’Dea, 1 Sch. & L. 115; Drew v. Power, Ibid. 182, and Molloy v. Irvin, Ibid. 310, and others of this class which are reviewed in Moore v. M’Kay, where the able judge, who then presided in the chancery of Ireland, concludes by saying: ‘That he considered himself as duly applying the protective policy of the court, and as acting in consistency with all preceding judgments, when he decides that to induce the interference of the court, there must be some evidence or legal presumption of the loan being used as a means of restraint or undue influence to obtain an unjust profit/ ”

Moreover, the conduct of the Nortons, after the loan and until this suit was brought, is significant. While parties to a usurious contract can do nothing which will have the effect to validate it, so as to deprive the debtor of his right to defend on the ground of usury, except by expunging its usurious element (Trusdell v. Dowden, 47 N. J. Eq. 396), yet their action may be looked to as reflecting correctly their previous attitude. The defendant advanced the $5,200 in February of 1913, but the title to Castle Garden was not taken by the complainant until the following August, and then without complaint or protest. The Lerner-Nortons have at all times been in possession, collected the rents, and with regularity paid the interest and taxes, and when the defendant foreclosed the $5,000 Cooper avenue mortgage and bought it in at sheriff’s sale, Norton entered into an agreement with him that he should purchase it for, and convey it to, the complainant upon the payment of the amount of the decree and costs; and to secure this he paid the defendant the costs of the litigation, amounting to $267. In fact, there was no claim made at any time that usury played a, part in the transaction, until after tire complainant defaulted on that agreement, and the defendant attempted to collect his dues. The filing of this bill gave the first intimation of the Nortons’ dissatisfaction with their bargain. Courts are prone to denounce usury and equity is ever ready to relieve the oppressed; but when its aid is sought, on this ground, it will not only carefully scrutinize the transaction to discover whether the offence has been committed, but will be as watchful to observe that the plea is not the guise of a disappointed dealer in which he seeks to escape liability.

If the defendant had realized $5,400, it would have made him whole, so far as his lien on Castle Garden was concerned, and the fairing of the difference between that sum and $6,800 is pointed to as plenary proof of usury. This cannot be affirmed, because the defendant had changed his status from lienholder to owner (Cropper v. Brown, supra; Knickerbocker Tr. Co. v. Carteret Steel Co., 81 N. J. Eq. 130, 518); and it was his privilege to bargain for the best price, and the assumption of illegality is not permissible if that price, though profitable, was agreed upon by the parties, influenced by their impressions of the value of the property.

It is also contended that the defendant’s admission on the stand, that he would not have let Norton have the loan unless he straightened out the Castle Garden matter, proves that the purchase was made under pressure., I do not so interpret his language or sentiment. His explanation, as already referred to, shows the fix he was in and why he acted. His rights as a purchaser under the sheriff’s sale of Castle Garden were then being held up by Norton and others, and his disinclination to further accommodate may properly be ascribed to his' resentment of this interference. Further dealings were out of tire question, so far as they were concerned, until the objections to the sale were withdrawn and tire matter cleared up. The settlement of the litigation may have comprehended tire purchase of tire property, but the purchase was not necessarily an element of the adjustment. Indeed, it is not a remote supposition that these real estate operators availed themselves of the objections to depress the defendant’s price.

The complainant has failed to establish usury and her bill will be dismissed, with costs. The defendant is entitled to a decree in his two foreclosure suits, with costs.


author: Backus, Y. C.

text:
    Edward S. Savage and Margaret T. Savage v. John Blanchard Edgar.
    [Argued and decided September 27th, 1915.]
    1, By an agreement in writing between the defendant and one of the complainants, it was agreed that the said complainant should deliver to-the defendant certain shares of stock of a named corporation, and should in addition pay the defendant a certain sum of money in cash and also give his note for a specified sum payable to the defendant thirty days from date, in settlement of all claims and demands whatsoever; which the said complainant accordingly did, and that in consideration thereof the defendant agreed to discontinue an action at law then pending and pay all costs; afterwards, upon the advice of counsel, the defendant having refused to carry out the agreement on his part—Held, that the case was one of accord and satisfaction unexecuted, which may be specifically enforced in equity.
    2. After the defendant repudiated his contract and gave notice of the trial of his action at law, the complainants applied to the law court to exercise' its equity power to enforce the contract of settlement and to dismiss the suit, which that court declined to do on the ground that because the proofs were conflicting, the issue of fact, whether there was or was not a satisfaction, should not be decided upon the depositions, but should (if it was triable at law) be pleaded in defence and submitted to the jury, together with the other issues in the case.—Held, that the privilege given to the complainants to plead the settlement was not in the nature of an adjudication that the issue could, and must be tried at law, and was not intended as a bar to an appeal to chancery.
    3. A suitor who comes to a court of equity ashing that he may have the benefit of a just defence which a court of law cannot hear, presents a case exclusively the subject-matter of equity cognizance; and he has, therefore, a right to have his adversary enjoined until the validity of his claim to relief has been examined.
    4. And resort may be had to equity even after the law court has investigated and overruled the equitable defence.
    On motion for preliminary injunction and motion to strike ont bill.

      Mr. Clark McE. Whittemore and Mr. Robert II. McCarter, for the complainants.

      Messrs. Garrick & Wortendyke, for the defendant.
   Backus, Y. C.

Upon the argument of the order to show cause why the defendant should not be restrained from prosecuting his action at law until a final determination of this suit, the defendant raised but three questions in opposition—first, that the subject-matter has been litigated and determined in the supreme court; second, this court will not, under the circumstances, assume jurisdiction of the controversy, and third, that the bill of complaint, being met by the defendant’s affidavit, no preliminary injunction can go.

The facts disclosed by the affidavits axe these: Mr. Edgar had an action pending in the supreme court to recover $50,000 from Mr. Savage and his wife, which they agreed to adjust, and which agreement they reduced to writing, as follows:

“Rahway, Oct. 3d, 1914.
“Whereas differences have arisen between J. Blanchard Edgar and Edward S. Savage, and suit is now pending in the supreme court of the State of New Jersey wherein said Edgar claims the sum of fifty thousand dollars and interest. It is the desire and purpose of both parties to settle and adjust all matters of difference and accounts between them. It is agreed that said Savage shall transfer to Edgar 250 shares of the common stock of the Trembly Point Corporation and shall in addition thereto pay in cash two thousand dollars and give his note payable to said Edgar for two thousand dollars thirty days hereafter, in full settlement of all claims and demands whatsoever. The said Edgar in consideration thereof agrees to discontinue said suit at once and pay all costs including his attorney’s fees and counsel fees. The receipt of two thousand dollars and the note above mentioned is hereby acknowledged. The stock to be delivered at 10 Wall on Oct. 5th at 12 m. It being understood that said Savage, his heirs and assigns shall have the option to purchase said two hundred and fifty shares of Trembly Point Corporation stock at any time within six months from this day by paying the par value therefor, but no obligation is created by this agreement to repurchase said stock.
“(Signed) J. Blanohakd Edgar.”

On the clay of adjustment Savage paid to Edgar $2,000 by check; gave him his note for a like amount, payable in thirty days, and the following Monday morning the two met by appointment in Savage’s New York office to pass the shares of stock. Accompanied by Edgar, Savage took a certificate of two hundred and fifty shares of the common stock of the Trembly Point Corporation to the company’s transfer office, and endorsed in blank, delivered it to the secretary of the company, with directions to transfer it to Edgar, and upon request of Edgar directed it to be transferred to Harriet B. Edgar, his wife. Edgar promised to call for the new certificate the next day, which he failed to do, and set up in justification that his agreement was for $5,000 in cash; that the capital stock was represented to be worth par, for the assurance of which he reserved to himself the right to inspect certain appraisements of the propérty of the company; that he took the check under a mistaken notion that it was for $3,000; and that at the time of the intended transfer Savage tendered to him, for signature, an acquittance, Avhicli he said he would like to first submit to counsel, who, upon examination, advised against continuing the transaction; that he did not return for the stock, nor did he receive it, nor was it ever tendered to him. He, however, kept the note and used the proceeds of the check. In January, 1915, his attorneys offered to return $2,000 and the note.

The case thus made out. is one of accord and satisfaction unexecuted, which may be specifically enforced in equity on the principle laid down in Headley v. Leavitt, 65 N. J. Eq. 748; Same Case, 68 N. J. Eq. 591; Trenton Street Railway Co. v. Lawlor, 74 N. J. Eq. 828. This was not controverted, and it was conceded, upon the argument and in the brief of counsel, that the complainants might properly have sought relief in this court if they had originally filed a bill. It appears that after the defendant repudiated his contract, he gave notice of trial of his action a.t law, and threatened to proceed with it, when the complainants applied to the supreme court to exercise its equity power to enforce the contract of settlement and to dismiss the suit, which that court declined to do. The point the defendant made is that “having been fully heard and dismissed from that court, the complainants will not be permitted to again litigate the same subject-matter in this court, even though the grounds upon which, they seek relief be of an equitable nature,” viz., res judicata. An examination of the proceedings, and the per curiam opinion of the supreme court, disclose that the court did not determine tire matter. It is the very thing the court refused to do, and on the ground that because the proofs, were conflicting, the issue of fact, whether there was or was not a satisfaction, ought not to be decided upon the depositions, but should (if it was triable at law) be pleaded in defence and submitted to a jury, together with the other issues in the case. The privilege given to the complainants to plead the settlement was not in the nature of an adjudication that the issue could and must be tried at law, and was not intended as a bar to an. appeal to chancery. The course directed left the complainants in precisely the same position they were in before they applied to the supreme court to control the proceedings, except that they had the court’s permission to set up the defence if it were available to them at law. The complainants conceived that they could not make out a perfect legal defence, so they came here with their equities— not to again litigate matters decided by the supreme court, or to review its findings, but to obtain relief which this court alone can give. Holmes v. Steele, 28 N. J. Eq. 173; Vaughn v. Johnson, 9 N. J. Eq. 173; Reeves v. Cooper, 12 N. J. Eq. 223, upon which the defendant’s counsel relied, do' not sustain their position. In each of these cases the grounds for relief were all of things purely legal, of which the law court had jurisdiction and had determined. The distinction in remedies is plainly pointed out in the case first cited, where it was held that “a suitor who comes to a court of equity asking that he may have the benefit of a just defence which a court of law cannot hear, * * * presents a case exclusively the subject-matter of equity cognizance; and he has, therefore, a right to have his adversary enjoined until the validity of his claim to relief has been examined; but the doctrine is perfectly well settled that this court will not, on the application of a defendant in a judgment at law who lias had a fair opportunity to be heard upon a defence over which the court pronouncing the judgment had full jurisdiction, enjoin the enforcement of the judgment, simply on the ground that it is unjust, even if it is convinced the court passing judgment committed an error in law.” And resort may be had to equity even after the law court has investigated and overruled the equitable defence. Commercial Union Assurance Co. v. New Jersey Rubber Co., 64 N. J. Eq. 338; Headley v. Leavitt, supra. Upon the ease as presented, the complainants were entitled to a preliminary injunction.

Two weeks after the injunction was granted, the defendant moved to strike out the bill, which was denied. The motion was not discussed, counsel submitting it upon their previous argument; the defendant’s counsel stating that they desired a ruling for the purpose of reviewing it with an appeal to be taken from the order granting tire injunction. I now observe that one of -the grounds in the notice of the motion to strike out is that “the bill does not allege any ground for equitable relief.” If, in the broad sweep of this assignment, it was meant to specify that the technical verbiage of the bill shows a complete accord and satisfaction, cognizable at law, it was not brought to my attention, and tire language of the bill was not so understood upon the argument. My interpretation of it, although at the time not seriously considered, and that of counsel in. the discussion, was that Savage had delivered the certificate of capital stock for transfer as directed by Edgar, but that it had not been in fact accepted, and for the reasons already stated. In this view, the bill makes out an accord and satisfaction unperformed and enforceable in equity. The allegation that the settlement made “was positive and final, and was accepted by the said J. Blanchard Edgar, together with the property paid and' delivered pursuant to. the terms of the same as a full compromise settlement,” is to be read in connection with later allegations and regarded as an averment that, on their part, the complainants had fully carried out and performed the agreement, but that tire defendant had refused.