author: Gummere, Chief-Justice.

text:
    The State, ex rel. The Board of Health of the State of New Jersey, appellant, v. The Borough of Vineland, respondent.
    [Argued April 8th, 1907.
    Decided June 17th, 1907.]
    The seventh section of the act of 1899 (P. L. p. 536), entitled “An act to prevent the pollution of the waters of this state by the establishment of a state sewerage commission,” as amended by P. L. 1900 p. 113, makes it unlawful for a municipality to build or operate any plant for the treatment of sewerage from which the effluent is to flow into any of the waters of the state, except under such conditions and upon such plans as shall be approved by the commission.—Held, that this legislation, by necessary implication, removes such disposal plants, when constructed on plans and under conditions approved by the commission, from the supervision of the state board of health, which was conferred upon that body by the act to secure the purity of the public supplies of potable waters (P. L. 1899 p. 73), and relieves the owners and users of such plants from the liabilities created by that act.

      On appeal from a decree advised by Vice-Chancellor Learning,whose opinion is reported ante ¶. ¡289.

      Mr. Edward D. Buffield and Mr. Robert II. McCarter, attorney-general, for the appellant.

      Mr. Herbert C. Bartlett and Mr. Royal P. Puller, for the respondent.
   The opinion of the court was delivered by

Gummere, Chief-Justice.

This is an appeal from a decree of the court of chancery dismissing a bill of complaint filed in the name of the state on the relation of the state board of health, for the purpose of securing an injunction to restrain the borough of-Vineland from permitting the effluent from its sewage filtration beds to flow into the waters of a tributary of Maurice river, from which the city of Millville takes its water-supply. The bill is filed by the state board of health under the act of March 17th, 1899, entitled “An act to secure the purity of the public supplies of potable waters in this state.” It was dismissed on the ground that, as the learned vice-chancellor considered, this statute was repealed, by implication, by a subsequent act passed in the same year, entitled “An act to prevent the pollution of the waters of this state, by the establishment of a state sewerage commission, and authorizing the creation of sewerage districts and district sewerage boards, and prescribing, defining and regulating the powers and duties of such commission and such boards,” as revised and amended by the legislature of 1900. P. L. 1900 p. 113.

We have had occasion at the present term to consider the question whether the act creating the state sewerage commission, by necessary implication, repealed the act to secure the purity of the public supplies of potable waters in this state, and reached the conclusion that it repealed only so much of the prior legislation as was repugnant to the provisions of the later act. State, ex rel. Board of Health of New Jersey, v. Ihnken.

It appears from the proofs in the'case that the borough of Vineland constructed the plant for the treatment of its sewage, the effluent of which flows into the tributary of Maurice river, in the year 1903, under conditions which were approved by the state sewerage commission, and upon plans which it submitted to that body, before constructing its plant, and which received its approval. By the seventh section of the act creating the state sewerage commission, as amended in 1900, it is declared that

“It shall be unlawful for any person, corporation or municipality to build, or cause to be built, or operate any plant for the treatment of sewage' or other polluting substance from which the effluent is to flow into any of the waters of this state, except under such conditions as shall be approved by the state sewerage commission, to whom any new plans shall be submitted before building.”

The enactment of this provision is a legislative recognition of the fact that the health of the citizens of a municipality absolutely requires the adoption of some method for the disposition of its sewage, and that some part of the effluent thereof will almost inevitably be carried to running streams. Recognizing these facts, and the importance of having such disposal plants constructed under proper supervision, it created a body for that purpose, and declared that it should be unlawful for a municipality to construct any such disposal plant which did not meet with its approval, and, by necessary inference, made lawful all such plants as were constructed upon plans and under conditions approved by the commission. By necessary implication, also, it removed from the supervision of the state board of health sewage-disposal plants so constructed, and relieved the owners and users of such plants from the liabilities created by the provisions of “An act to secure the purity of the public supplies of potable waters in this state.”

For this reason the decree appealed from should be affirmed.

For affirmance-—The Chief-Justice, Garrison, Fort, Hendrickson, Pitney, Swayze, Reed, Trenci-iard, Bogert, Vre-DENBURGH, VROOM, GRAY, DlLL—13.

For reversal—None.


source: Caselaw Access Project

author: 'Gummere, Chief-Justice.

license: Public Domain

text:
    The State, ex rel. The Board of Health of the State of New Jersey, respondent, v. George Ihnken, appellant.
    [Submitted April 8th, 1907.
    Decided June 17th, 1907.]
    1. So much of the act entitled “An act to secure the purity of the public supplies of potable waters in this state” (P. L. 1899 p. 78), as is repugnant to the provisions of the act entitled “An act to prevent the pollution of the waters of this state by the esablishment of a state sewerage commission” (P. L. 1899 p. 636), is repealed by the latter act.
    2. The power conferred upon the state board of health by the former of these statutes to invoke the aid of the court of chancery to restrain the discharge of waste water, from the washing of bottles and cans in a creamery and from the cleansing of its floors, into the tributary of a stream from which a municipality obtains its water-supply, is not revoked by the latter statute.
    On appeal from a decree advised by Vice-Chancellor Stevenson.

      Mr. William 0. Gudlipp, for the appellant.

      Mr. Edward D. Duffield and Mr. Robert H. McGarter, attorney-general, for the respondent.
   The opinion of the court was delivered by

'Gummere, Chief-Justice.

The bill in this case was filed in the name of the state, on the relation of the state board of health, for an injunction to restrain the appellant, who was the defendant below, from permitting the waste water from the washing of cans and bottles, and the cleansing of the floors in his creamery near Stockholm in this state, to flow into and pollute a tributary of the Pequannock river from which the city of Newark obtains its supply of water for domestic use. The bill was filed pursuant to authority conferred upon the state board by the provisions of “An act to secure the purity of the public supplies of potable waters in this state,” approved March 17th, 1899. P. L. 1899 p. 78. The first section of that act provides that

“no sewage, drainage, domestic or factory refuse, excremental or other polluting- matters of any kind whatsoever, which, either by itself or in connection with other matter, will corrupt or impair, or tend to corrupt and impair, the quality of the.water of any river, brook, stream, or any tributary or,branch thereof, or of any lake, pond, well, spring, or other reservoir, from which is taken, or may be taken, any public supply of water for domestic use in any city, town, borough, township or other municipality of this state, or which will render, or tend to render, such water injurious to health, shall be placed in or discharged into the waters, or placed or deposited upon the ice, of any such river, brook, stream, or any tributary or branch thereof, or of any lake, pond, well, spring, or other reservoir, above the point from which any city, town, borough, township, or other municipality, shall or may obtain its supply of water for domestic use; nor shall any such sewage, drainage, domestic olfactory refuse, excremental or other polluting matter, be placed, or suffered to remain, upon the banks of any such river, brook, stream, or of any tributary or branch thereof, or of any lake, pond, well, spring, or other reservoir, above the point from which any city, town, borough, township, or other municipality, shall or may obtain its supply of water for domestic use as aforesaid.”

No person or corporation is exempted from tlie provision of this statute except municipalities, which, at the date of the passage of the act, had a public sewer system legally constructed under municipal authority, discharging its drainage or sewage into any such river, brook, stream, &c.

Upon the hearing in the court of chancery it was considered that the proofs made it clear that the defendant was engaged in polluting the waters of a tributary of the Pequannock river, about ten miles above the Newark intake, and that he was doing so within the prohibition of the act of the legislature just mentioned, as construed by the court of chancery, and subsequently by this court, in the case of State Board of Health v. Diamond Mills Paper Co., 63 N. J. Eq. (18 Dick.) 111; S. C. on appeal, 64 N. J. Eq. (19 Dick.) 793.

We concur with the learned vice-chancellor in his conclusion upon the facts, and in the view expressed by him that the acts of the defendant which are complained of are within the prohibition of the statute referred to.

It is argued before us, however, that the act of March 17th, 1899, was repealed, by implication, by a subsequent statute passed in the same year, and entitled

“An act to prevent the pollution of the waters of this state by the establishment of a state sewerage commission, and authorizing the creation of sewerage districts and district sewerage boards, and prescribing, defining and regulating the powers and duties of such commission and such boards” (P. L. 1899 p. 536),

and that for this reason the decree appealed from should be reversed, notwithstanding the fact that it is supported by the decision in the Diamond Mills Paper Company Case.

In considering this question it is to be borne in mind that an inferential repeal of a statute is a pure question of intention, and that every reasonable intendment will be made against such result; that such destroying effect will be deemed to reside in the more recent statute only when it is absolutely irreconcilable with the prior one. Ruckman v. Ransom, 35 N. J. Law (6 Vr.) 565; Hotel Registry Corporation v. Stafford, 70 N. J. Law (41 Vr.) 528. And this is peculiarly true with reference to statutes enacted at the same session of the legislature. If it is possible to do so they should receive a construction which will give effect to each. Each is supposed to speak the mind of the same legislature, and the words used in each should be qualified and restricted, if necessary, in their construction, so as to give validity and effect to every other act passed at the same session. The presumption is that different acts passed at the same session of the legislature are imbued by the same spirit, and actuated by the same policy, and that one was not intended to repeal or destroy the other. 1 Lew. South. Stat. Con. § 268.

The state sewerage commission statute of 1899 was revised and amended by the legislature of 1900. P.L. 1900 p. 113. The amendments, however, made little change in the original statute, except by increasing the powers of the commission. The question, therefore, to be determined is whether the provisions of the later act of 1899, as amended in 'the year 1900, are so manifestly inconsistent with, and repugnant to, the provisions of the earlier act, as to disclose a clear intent on the part of the legislature to repeal it. The State Sewerage Commission act, after prescribing for the composition of the commission and the term of office of its members, imposes upon them the duty of investigating the various methods of sewage disposal, in order that it may be able to make proper recommendations in regard thereto; the investigating of all complaints of the pollution of the waters of the state which shall be brought to its notice, and if they shall find that any of the waters of the state are being polluted to the injury of any of its inhabitants, either in their health, comfort or property, to notify in writing any person, corporation or municipality found to be polluting such waters. It then provides that, prior to a time to be fixed by such commission, which time shall not be more than five years from the date of its notice, said person, corporation or municipality must cease to pollute said waters, and make such disposition of their sewage or other polluting matter as shall be approved by the state sewerage commission. It then confers upon any person, corporation or municipality, aggrieved by the finding of the commission, an appeal to the court of chancery, which court is empowered by the act to confirm the finding of the commission, or to reverse or modify it in whole or in part. The act then provides that it shall be unlawful for any person, corporation or municipality to build any sewer, drain or sewerage system from which it is designed that any sewage or other harmful and deleterious matter, solid or liquid, shall flow into any of the waters of this state, so as to pollute or render impure such waters, except under such conditions as shall be approved by the state sewerage commission, but declares that this provision shall not be deemed to prohibit the use or extension of existing sewers, drains or sewerage systems, unless the person, corporation or municipality controlling the same shall be served with a notice to cease pollution, as thereinbefore provided. It then provides that it shall be unlawful for any person, corporation or municipality to build or cause to be built or operate any plant for the treatment of sewage, or other polluting substance, from which the effluent is to flow into any of the waters of this state, except under such conditions as shall be approved by the state sewerage commission, to whom plans shall be submitted before building; and further, that it shall be unlawful for any person, corporation or municipality, after the date specified in the notice before mentioned, to permit or allow any sewage or other polluting matter to flow into said waters from any sewer, drain or sewerage system, except under such conditions as shall be approved by the state sewerage commission. Authority is then conferred upon the commission to apply to the court of chancery for an injunction to prevent violations of the provisions of the act.

It seems quite clear, from a reading of the provisions of this act, that the powers conferred upon the state sewerage commission are much less extensive than those conferred upon the state board of health by the earlier statute. The sewerage commission is only to take proceedings where actual pollution of the waters of the state is shown to exist, whereas the state board of health is authorized to invoke the aid of the court of chancery whenever the polluting matter, either by itself or in connection with other matter, corrupts or impairs, or tends to corrupt or impair, the stream from which any municipality obtains its water-supply. The state sewerage commission, before applying to the court of chancery for its injunction, must first notify the offending party to stop the pollution of the water, and must fix the time within which'the pollution shall cease, whereas the state board of health may sue out an injunction to restrain the forbidden acts immediately upon ascertaining their existence. The state board of health may restrain the deposit of all kinds of polluting matter upon the ice of any stream, or upon the banks thereof, while the supervision of the state sewerage commission would seem to be limited to such pollution as comes from sewers, drains, sewerage systems or sewage-disposal works.

It is, of course, apparent, from an examination of the two statutes, that the powers conferred upon the state board of health by the earlier act have been considerably modified and restricted by the later act. But this fact affords no ground for imputing to the legislature an intent to repeal the earlier act in toto. Bearing in mind the settled rule of construction in determining whether a statute has been repealed by implication, all that can be said in the present case is that such of thp provisions of “An act to secure the purity of public supplies of potable waters in this state” as are repugnant to the provisions of the later statute are repealed, and that the remaining portions thereof are unaffected by the later act.

The conduct of the appellant which is made the ground of its action by the state board of health, namely, the permitting of waste water from the washing of cans and bottles in his creamery, and from the cleansing of its floors, to flow into a tributary of the Pequannock river, a stream from which the city of Newark obtains its water-supply, is an act not placed within the cognizance of the state sewerage commission by the statute which created that body. The power to invoke the aid of the court of chancery to restrain such action, therefore, still remains with the state board of health.

The decree appealed from should be affirmed.

For affirmance—The Chief-Justice, Garrison, Fort, Hendrickson, Pitney, Swayze, Reed, Trenci-iard, Bogert, Vre-DENBURGH, VrOOM, GREEN, GRAY, DlLL—-14.

For reversal—None.


author: Garrison, J.

text:
    Bear Lithia Springs Company, appellant, v. Great Bear Spring Company, respondent.
    [Argued March 18th, 1907.
    Decided September 27th, 1907.]
    The bill of complaint exhibited by the Bear Lithia Springs Company against the Great Bear Spring Company to enjoin the latter from using the word “Bear” or the picture of the animal of that name in connection with its sale of natural water is dismissed, for the reason that the defendant is not shown to have practiced any simulation of the complainant’s title or trade mart, whereas the complainant itself has, by its own acts, created in great part the very confusion of which it complains.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Bergen, whose conclusions are reported in 71 N. J. Eq. (1 Buck,.) 595.

      Mr. Gilbert Collins, for the appellant.

      Messrs. Weller & Lichtenstein, for the respondent.
   The opinion of the court was delivered by

Garrison, J.

The bill of complaint was filed in this cause by the Bear Lithia Springs Company, whose business is selling “Bear Lithia Water," to enjoin the Great Bear Spring Company, whose business is selling “Great Bear Spring Water," from applying the word “Bear” to the water so sold by it, and also from making any use of tlie said word or of the figure of a bear in connection with its said business, upon the ground that such practices by the defendant result in unfair competition from which the complainant has the right to be protected by injunction.

The learned vice-chancellor who heard the cause advised that the complainant’s bill be dismissed without regard to its merits, because the statement “bottled at the springs” on the complainant’s letterheads and on some of its labels was not in all respects true, and also because certain of its advertised statements touching the therapeutic efficacy of the water itself were not borne out by the testimony.

We are not convinced of the propriety of the application that was thus made by the vice-chancellor of the ethical maxim of “clean hands” to the circumstances of the present case, but refrain from an extended discussion of the considerations that seem to us to be involved, for the reason that from our examination of the case we have reached the conclusion that the complainant is not entitled to relief upon the merits of the controversy, and hence that the decree of the court of chancery dismissing the bill of complaint should be affirmed.

The salient facts relied upon by the complainant in support of its claim of unfair competition by the defendant are that the parties are both engaged in the business of selling natural water; that the name of the water sold by each contains the word “Bear;” that the labels and literature used by each display a picture of the animal of that name, and that the titles of the two corporations are sufficiently alike to lead to confusion in the public mind.

The equitable question is whether the defendant is unfairly' profiting by these points of similarity.

The underlying facts necessary to the determination of this question are in part objective and in part historical.

Objectively the representations of a bear used by complainant and defendant respectively are as dissimilar as it is possible for them to be. The complainant’s bear is black'—in fact, is the common black American bear-—and is depicted as standing upon all fours on terra firma, with the words “Bear Lithia Water” conspicuously displayed, in pure white letters, across its entire side. The defendant’s bear, on the other hand, instead of being black, is white—is, in fact, the large white polar bear. Instead of being on all fours, it stands erect on its hind feet; instead of being on dry land it is in water in which ice is floating, or is crawling up on a floating cake of ice. Instead of presenting a side view it presents a front view, and instead of the lettering used by the complainant it has no lettering at all. In fine, if the effort of the defendant had been to depict a bear that could by no possibility be mistaken for the complainant’s, that result could not have been more successfully accomplished. So obvious is this fact that complainant is forced to make the claim that any use of any picture of any bear by the defendant in connection with the sale of water is an unwarranted intrusion upon a field already preempted by the complainant. If this broad claim of the right to preempt an entire genus of animals by the earlier use of a single species could ever be supported, it still would not have the controlling effect claimed for it in the present case, for the reason that the name of the complainant’s water was not taken at all from the animal whose entire genus it thus seeks to preempt, but from a mineral spring in Virginia that bore the name of its owner, which chanced to be Bear. The testimony shows that as long ago as 1778 the spring from which the complainant’s water comes, at or near Elkton, Virginia, was owned by a family named Bear, and that as recently as 1885 this spring was on the dividing line between the farms of Henry A. and Adam C. Bear, one of whose relatives was instrumental in having the first analysis of the water made. The analysis thus made showing a trace of lithia, that word was added to the family name of Bear in speaking of the water and in its sale for those therapeutic purposes for which both lithia and the copious use of water were supposed to be efficacious. So that “Bear Lithia Water,” at that date and now, indicates merely that the water came from the spring owned by the Bear family, and that its curative properties are attributable, in part at least, to the presence of lithia. In view of this history the adoption of the picture of the animal of the same name as the owners of the spring, while a perfectly legitimate and somewhat felicitous play upon words, lays no foundation for the broad claim of a preemption of the whole genus ursus.

Incidental reference has been made to the circumstance that the word “Lithia” came into the name of the complainant’s water contemporaneously with its exploitation as a medicinal agent. So firmly was this fact established before the learned vice-chancellor that it led him to deny any relief at all to the complainant, because of the extravagant terms in which the therapeutic value of its lithia water was pressed upon the public. The significance of this fact-upon the merits of the case is that the defendant is now, and always has been, a dealer in potable table water for which no medicinal properties are claimed, so that so long as the public was being taught by the complainant to regard its lithia water as a medicament no practical confusion arose, as it would not naturally occur to anyone that a medicinal agent of the advertised potency of the complainant’s could safely be used as a mere table water. Whatever confusion has arisen dates from the time when the complainant, in the exploitation of its water, began to advertise its general potable qualities and to introduce it as a mere table water. Hence the confusion of which the lithia company now complains was in reality caused by its own acts, and it must be fundamental in cases of unfair competition arising from confusion of goods that equity will not aid the party that has itself occasioned the confusion.

In another significant respect, also, the complainant has directly brought upon itself the confusion of which it complains, viz., in the insertion of the word “Springs” in its corporate title, thereby making it quite similar to the title previously adopted by the defendant.

In April, 1899, the defendant was incorporated in this state under the name of “The Great Bear Spring Company.” At this time the complainant was carrying on business under the corporate title of the “Bear Lithia Water Company,” a title which, by the absence of the word “Spring,” was readily distinguishable from that of the defendant. But in August, 1899, the complainant also became incorporated in this state, and then inserted in its title the word “Springs,” thereby bringing upon itself whatever of confusion arises from the similarity of the two corporate titles in that respect.

It thus appears that the defendant has been guilty of no scheme of simulation leading to confusion, but, on the contrary, has exhibited a studied effort to avoid such a result; but that the complainant, on the contrary, has, either wittingly or unwittingly, so shifted its business and changed its title as to be in fact responsible for the very confusion which it now sets up as the basis for equitable relief.

The fact has not been overlooked that on one occasion the defendant’s water was advertised in connection with the picture of a black bear similar to the complainant’s, but this picture was at once withdrawn, and the testimony satisfies us that its use was inadvertent and practically non-injurious to the complainant.

The complainant also contends that the defendant’s use of the word “Bear” in “Great Bear Springs Water” is in effect a fraud perpetrated to injure complainant’s business.

This contention derives its main support from the circumstance that the first concern that handled the Great Bear Springs water was a partnership that, under the firm name of “The Pure Water Supply Company,” sold Great Bear Springs water under some sort of a license from the Eulton Water Supply Company. When the defendant acquired the rights of these two concerns in the sale of the Great Bear Springs water it took its corporate title from the already established name of the commodity in which it proposed to deal. So that whether in point of fact the water actually came from the Great Bear Springs is of little moment on the question of fraud. As a fact, the water was unquestionably named 'after a somewhat celebrated group of springs in Oswego county, New York, which as early as 1860 at least are shown by the testimony to have been called “The Bear Springs” or “The Great Bear Springs.” The physical conditions affecting these springs were such that those at quite a distance from a given member of the group would be appreciably affected by conditions affecting the latter. This circumstance accounts for the extension of the name in a somewhat loose way to springs in the vicinage without any very great attempt at geodetic accuracy. The principal spring of the group had unquestionably been absorbed by the water works system at Eulton, which had licensed the predecessor of the defendant to sell water from more distant springs as Great Bear Springs water. Whether there is any direct physical connection between the defendant’s spring and the original Great Bear Spring is a fact that is quite difficult to determine from the testimony and quite unimportant in its bearing upon the issue. The material fact is that, whether accurately or inaccurately from a hydrostatic point of view, the defendant’s water took its name under natural conditions that completely negative the notion of fraud or of liny purpose of unfair competition as regards the complainant.

A review of the entire testimony satisfies us that the complainant has failed to make out a case of unfair competition, and as the decree of the court below was that the complainant’s bill should be dismissed, we affirm that decree, for the reasons we have briefly indicated.

For affirmance—Ti-ie Chief-Justice, Garrison, Pitney, Swayze, Reed, Trenchard, Vredenburgh, Dill—8.

For revei-sal—Hendrickson, Bogert, Vroom, Green, Gray —5.


author: Hendrickson, J.

text:
    John C. Farr, Junior, respondent, v. Louis Hauenstein and Theresa Hauenstein, appellants.
    [Argued March 6th, 1907.
    Decided June 17th, 1907.]
    Upon a creditor’s bill filed to have a judgment against a husband declared a charge against the wife’s house and lands, on the ground that the property had been conveyed to the wife by the husband through a third party, in fraud of his creditors, the court refused to declare the deed fraudulent as against complainant, but it appearing that the husband, since the transfer, had paid the interest on a mortgage upon the premises, and also taxes and assessments thereon during a period of thirteen years to an aggregate amount but little less than the amount of the judgment, made a decree charging the land with the payment of the judgment to the extent of those payments.—Held, on appeal, that it appearing from the evidence that at least part of the money so paid by the husband was advanced to him by his son for the purpose of making those payments in relief of his mother’s home, and it further appearing that during the whole period the husband, whose duty it was to provide a home for his family, had used and occupied his wife’s house and lands for that purpose, and it not being made to appear that the amount of such payments were in excess of the amount necessary for the reasonable support of the wife and family, such payments were not fraudulent as against creditors, and that the bill should have been dismissed.—Held further, that it appearing that the creditor had delayed the filing of his bill- for thirteen years after the recovery of his judgment, and that the situation of the wife had been entirely changed thereby from what it otherwise would have been, to her prejudice, the bill should have been dismissed on the ground of laches also.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Garrison, whose opinion is reported in 70 N. J. Eq. (.4 Robb.) 6S5.

      Mr. James F. Minium, for the appellants.

      Mr. Leon Abbeti, for the respondent.
   The opinion of the court was delivered by

Hendrickson, J.

The complainant, Earr, is the assignee of a judgment recovered against Louis Hauenstein, one of the defendants, in 1890. He filed his bill in 1903 charging that a certain dwelling-house and two lots of land in Hoboken, the title to which was in Mrs. Hauenstein, had been conveyed to her by her husband, through a third party, in fraud of his creditors, and asking for a decree so declaring and charging the judgment to be a lien upon the lands. The learned vice-chancellor refused to declare the deed fraudulent as against complainant, but discovering from the evidence that the husband had, since the date of the transfer, paid interest on a mortgage on the premises and the taxes annually assessed against it and certain assessments for improvements, concluded that the value of the property had been increased to the extent of the sum total of those payments, and that the complainant was entitled to follow those moneys of the husband into the hands of the wife and charge the lands with the payment of the judgment to the extent of such payments. The aggregate of these payments was $2,172.19, which was something less than the amount due on the judgment and interest. The decree made this amount a charge upon the lands and directed that in default of its payment within ten days by the defendants an execution might issue. The wife appeals from this part of the decree and claims that the decree should be reversed and the bill dismissed for want of equity and on the ground of laches. The opinion of the learned vice-chancellor refusing to set aside the deed as fraudulent appears in 69 N. J. Eq. (3 Robb.) 740. His later opinion, allowing this decree, appears in 70 N. J. Eq. (4 Robb.) 633.

It appears that the learned vice-chancellor, in reaching the conclusion he did, followed Walsh v. Rosso, 41 Atl. Rep. 669; S. C., on final hearing, 59 N. J. Eq. (14 Dick.) 123. It will be observed, however, that the circumstances of the case sub judice are quite different from the one last cited, and involves, we think, the application of a different rule. The burden of proof was upon the complainant, and we think he failed to show that the moneys paid in liquidating the taxes and interest was the husband’s money; that, on the contrary, it appears that they were advanced to him by his son for the purpose of making these very payments in relief of his mother’s home, and that such part of the-moneys so advanced and used cannot be reached by the complainant. We also think that none of the moneys so paid by the husband can be reached by this proceeding. The husband ■was charged with the support of his family and with the duty of providing for them a home. That home was the house and premises of the wife. She had the right to lease the property and derive an income therefrom had she so desired. She permitted her husband to use it as the family home during all these years. Instead of paying rent eo nomine, he paid it in the shape of contributions to settle the accumulations of interest and taxes. Such payments are within the rule that

“if the husband expend money upon lands of his wife in his occupation by erecting buildings or making improvements thereon, the law will presume he intended it for her benefit, and he cannot recover for the same.” 1 Washb. Real Prop. 346 20.

It was held by this court in Coyne v. Sayre, 54 N. J. Eq. (9 Dick.) 702, that the wife’s appropriation to the purchase and improvement of her lot of the labor and services of her husband, so long as it did not appear that the value thereof was beyond the amount necessary for the reasonable support of his family, was not fraudulent as against creditors. It does not appear that these payments by the husband were beyond the amount necessary for the reasonable support of the family, and it follows that any addition of value they may have contributed to the lands in question belong to the wife. In the case of Smith v. Kane, 2 Paige (N. Y.) 303, there was an effort by the creditor of a husband to reach a debt due the wife which had not been reduced to possession by the husband. It was held that it could not be reached by a creditor’s bill because the wife’s equity was superior to that of the creditor. See, also, 15 Am. & Eng. Encycl. L. (2d ed.) 837bb; 12 Cyc. 29 5. We think that on this ground the bill should have been dismissed. And we think the same result should have followed on the ground of laches. If the complainant or his assignor had moved promptly in this matter and attempted to enforce their judgment against this property, no such situation as that which now exists would have been created. They would, under the present proofs, have failed to obtain a decree that the deed was made in fraud of creditors; if they had succeeded in establishing the existence of such a right as the vice-chancellor now declares, the further contributions of the husband to the maintenance of a home for the family would have b.een made in a very different way. We think the long delay1', some thirteen years, between the recovery of the judgment and the filing of this bill, has been such laches as to entirely change the situation from what it otherwise would have been. Prejudice by changes of conditions and changed relations involved by such delay are among the grounds upon which this principle of equitable estoppel is usually applied. DeGrauw v. Mechan, 48 N. J. Eq. (3 Dick.) 219; Tynan v. Warren, 53 N. J. Eq. (3 Dick.) 313. The result is that the decree must be reversed.

For affirmance—Pitney, Keed, Green—3.

For reversal—The Chief-Justice, Garrison, Fort, Hendrickson, Swayze, Trenchard, Bogert, Vroom, Gray, Dill —10.


text:
    Martha Wyckoff and Elizabeth Wyckoff, respondents, v. William O’Neil, executor of Mary E. Harris, appellant.
    [Argued March 27th, 1907.
    Decided June 17th, 1907.]
    1. Where an executor has paid the collateral inheritance taxes upon legacies given by the will, although it is his duty to deduct such tax at settlement with the legatee, under Gen. Stat. 3340 ¶ 338, he may properly make the payments and have allowance for them in his final account.
    2. An executor is not ordinarily compelled to pay such tax until the expiration of the year allowed him by law for the settlement of the estate, and he should not be refused allowance for such interest as he would be required to pay if the tax were paid within the year.
    3. He will not ordinarily be chargeable with interest on moneys in his hands uninvested for and during the year allowed him in which to settle the estate.
    4. An executor is not entitled to commissions until his accounts have been settled and allowed by the court, and if he withdraws from the estate prior to such settlement any money on account of such commissions he will be chargeable with interest thereon to the time of his accounting.
    On appeal from a decree of the prerogative court advised by the vice-ordinary, whose opinion is reported in 71 N. J. Bq. (1 Buch.) 729.

      Mr. Gilbert Collins, for the appellant.

      Mr. William II. Morrow, for the respondents.
   The opinion of the court was delivered by

Hendrickson, J.

This is an appeal from a decree of the prerogative court entered upon an appeal from a decree of the orphans court of Warren county wherein the respondents were the exceptants and the appellant the accountant. The conclusions of the vice-ordinary will be found in 71 N. J. Eq. (1 Buch.) 729. The appellant filed with the surrogate his final account as executor of Mary E. Harris. To this account exceptions were filed.

The first item in controversy was a payment of $1,027.75, paid to the state treasurer in satisfaction of the total sum assessed against all the legacies subject to a collateral inheritance tax. This sum included the principal of the tax and interest on it and also a penalty for not paying the same within nine months from the death of the testatrix. The section of the statute regulating such payment may be found in Gen. Stat. 3340 266. We do not think the executor was bound to pay the tax until the expiration of the year allowed him by law, within which to settle the estate. He is entitled to know the amount available for the payment of legacies after the debts are paid and to have a reasonable time thereafter, before he pays the tax on the legacies. We think, therefore, that the accountant should be allowed for the principal of the tax he has paid with interest collected thereon under the statute for one year at the rate of six per cent. And being bound to pay the tax on the legacies at the expiration of the year he cannot be allowed any interest he has paid thereon after that period and is chargeable with the whole penalty, and is not entitled to be allowed in the accounting for the excess interest or the penalty. In other words, anything on account of this item in excess of the principal amount and interest thereon at six .per cent, for one 3rear should be disallowed. The vice-ordinary held further that the accountant was not entitled to any allowance for those payments, for the reason that the amount of the tax on each legacy should be deducted from the legacy itself in settlement with the legatee, and, therefore, did not enter into the executor’s account as executor. We are unable to agree with the learned vice-ordinary upon this point. We think the executor should show in his account every payment made by him as executor. The distribution of those payments among the various legatees is a matter of subsequent arrangement between him and them when he comes to pay the legacies. In stating his account it would be better, doubtless, that the accountant should distribute the sum total of the inheritance taxes, showing just how much thereof was chargeable against each legacy, but the failure, to so distribute is no reason for disallowing the payment of the item in the account.

The next exception relates to a credit in the account of $300 for counsel fees paid Joseph H. Wilson for attorney’s services. The vice-ordinary disallowed this payment for the reason that the allowance of $100 counsel fee on the final accounting, which also appeared in the account and was excepted to, was ample compensation for any services counsel could have properly rendered the executor in the discharge of his duties. In this we agree with the vice-ordinary.

The next exception is to a charge of interest decreed by the orphans court against the accountant on $700, withdrawn by the executor as his commission. He drew this amount three months after the testatrix’s death and almost a year before his final account was filed. Upon his final accounting the commissions were fixed at $717.52, so that, with the exception of the $17.52, he had in his possession, subject to his own use, his commissions for services for nearly a year before they were finally rendered. As he was not entitled to commissions until his accounts had been settled and allowed by the court, he was properly charged with interest on the amount which he had withdrawn from the estate.

As to the items aggregating $25.50, for traveling expenses to Philadelphia in dealing with certain mortgage securities of the estate, which were disallowed by the vice-ordinary on the ground that the accountant had other business which took him to that city weekly when he corxld very readily have transacted the business referred to, we think the ruling was too strict as to this item. The accountant was under no obligation to attend to the business of the estate on the occasions when he was there on account of his own business concerns, ánd- he states that on the occasions for which he has charged expenses he visited the city solely to transact the business of the estate. This item should have been allowed.

We think the vice-ordinary was right in refusing to charge the accountant with interest on moneys in his hands previous to the accounting. It was the executor’s business to reduce the estate to cash and he was under no obligation to make temporary investments of it. The decree of the prerogative court will be reversed and modified along the lines here suggested.

For affirmance—None.

For reversal—The Chiee-Justice, Garrison, Fort, Hendrickson, Pitney, Swayze, Reed, Trenchard, Bogert, Vre-DENBURGH, VrOOM, GREEN, GRAY, DlLL—14.


author: Pitney, J.

text:
    William A. Squire v. Princeton Lighting Company.
    [Argued March 22d, 1907.
    Decided November 18th, 1907.]
    1. Under the General Corporation act (P. L. 1896 p. 298 §§ 65, 68), the title of an insolvent corporation to its property continues until there is either an adjudication of insolvency or the appointment of a receiver or trustee.
    2. Upon the filing of a bill of complaint against an insolvent corpora1 tion, under section 65 of the General Corporation act (P. L. 1896 p. 298), the court of chancery made an order restraining the corporation from paying or transferring its moneys and effects, or contracting any debts, and from selling, assigning or transferring its property, and also requiring it to show cause on a later day why an injunction should not issue and a receiver be appointed. Thereafter, and before the hearing of the order to show cause, a common-law judgment was recovered against the corporation, upon which execution was issued to the sheriff, who made a levy upon personal property of the corporation sufficient to satisfy the judgment. Upon the hearing of the order to show cause, a receiver was appointed, who tools possession of the personal property upon which levy had been made and used it for the benefit of the estate of the corporation. —Held, that the judgment creditor was entitled to priority in payment.
    On appeal from an order of the chancellor advised by Vice-Chancellor Bergen, whose opinion is reported in -64 Ml. Rep. 474-

      Mr. George White field Betts, Jr., for the appellant.

      Mr. Frank 8. Katzenbaoh, Jr., for the respondent.
   The opinion of the court was delivered by

Pitney, J.

The Westinghouse Electric and-Manufacturing Company recovered a common-law judgment in the Mercer county circuit court against the Princeton Lighting Company on April 12th, 1904, upon which execution was issued to the sheriff. The sheriff, .on April '13th, made a levy upon personal property of the defendant sufficient to satisfy the judgment. On April 11th the complainant, Squire, exhibited in the court of chancery a bill of complaint against the lighting company under section 65 of the General Corporation act (P. L. 1896 p. 298), praying for an injunction and the appointment of a receiver on the ground of insolvency, and on the same date that court made an order restraining the lighting company from paying or transferring its moneys and effects or contracting any debts and from selling, assigning or transferring its property, and also requiring it to show cause, on April 19th, why an injunction should not issue and a receiver be appointed. On Ajiril 19th a receiver was appointed and injunction issued pursuant to the prayer of the bill and in accordance with the statute. The receiver took possession of the personal property upon which the levy had been made, and used it for the benefit of the estate of the corporation.

Subsequently the Westinghouse company presented a claim- to the receiver for the amount due upon its judgment, claiming a preference under section 86 of the Corporation act (P. L. 1896 p. 304.), on the ground that by its judgment and execution it had obtained a lien upon the property of the insolvent company. The receiver refused the preference, and from this action the Westinghouse company appealed to the chancellor. The appeal was heard by Vice-Chancellor Bergen, who dismissed the same on the ground that the appellant was not entitled to a preference. The present appeal brings that adjudication under review.

The question thus raised for our decision is whether the title of the receiver upon his appointment, on April 19th, related back to April 11th, the date of the making of the order to show cause. The learned vice-chancellor held that it did, upon the ground that the court of chancery, on April 11th, held, in effect, that the corporation was insolvent and restrained it from transferring its property, it being his view that under such circumstances it is inequitable to permit creditors to accomplish by indirection that which the corporation -is directly restrained from doing, to wit, transferring its property in order to pay its debts. The decision is based upon the supposed equity of the Corporation act, and, as we think, is unsupportable either by its letter or by its spirit.

Section 65 of that act provides that upon the filing of a bill or petition by any creditor or stockholder setting forth the facts and circumstances to show that the corporation has become insolvent, or has suspended its ordinary business for want of funds to carry on the same, the court, on being satisfied by affidavit or otherwise of the sufficiency of the application and of the truth of the allegations, and upon such notice, if any, as the court by. order may direct, may proceed in a summary way to hear the affidavits, proofs and allegations which may be offered on behalf of the parties, and if, upon such inquiry, it shall appear to the court that the corporation has become insolvent, and is not about to resume its business in a short time thereafter with safety to the public and advantage to the stockholders, it may issue an injunction to restrain the corporation and its officers and agents from exercising any of its privileges or franchises and from collecting or receiving any debts, or paying out, selling, assigning or transferring any of its assets, moneys, &c., except to-a receiver appointed by the court.

Section 66 provides that at the time of ordering the injunction, or at any time afterwards, the court may appoint a receiver with full power and authority to take possession of the property of the corporation, and other powers not necessary to be here particularly recited.

Section 68 enacts that

“All the real and personal property of an insolvent corporation, wheresoever situated, and all its franchises, rights, privileges and effects, shall, upon the appointment of a receiver, forthwith vest in him, and the corporation shall be divested of the title thereto.”

The practice prescribed by section 65 is elastic. It permits the court to summarily determine the question of insolvency upon, presentation of the bill and affidavits and without notice to the corporation, and forthwith to take charge of its effects by the appointment of a receiver, if the court deems it proper to pursue that course. But it also permits postponing consideration of the question of insolvency until a later time, and its determination after notice to the corporation concerned.

It seems to us that the learned vice-chancellor erred in treating the present case, as if the court below, upon the filing of the insolvency bill, had proceeded without notice to inquire into the question of insolvency and had thereupon adjudged the corporation insolvent.

The case shows that this was not done; that on April 11th there was no hearing upon the question of insolvency, no adjudication of insolvency, and no general restraint paralyzing all the functions of the corporation.. The restraint was limited; it prohibited voluntary acts of the defendant with respect to paying or transferring its moneys and effects, contracting debts, and selling, assigning or transferring its property, but did not in words or by necessary effect restrain third parties from pursuing their lawful remedies in inviium the company.

We do not rest our view alone upon tire provision of section 68 that the property of the insolvent corporation vests in the receiver upon his' appointment. We do not at present dispute that the court of chancery, upon adjudicating that a corporation is insolvent, may forthwith divest it of its corporate functions and place its assets in the course of administration indicated by the statute. A receiver or trustee is the officer intended by the statute and oi’dinarily appointed by the court to carry out this main object. But it is the adjudication of insolvency that furnishes the occasion for placing the assets of the corporation into the custody of the law.

Section 65 provides that the court, upon determining that the corporation has become insolvent, may issue an injunction restraining it from exercising any of its privileges or franchises, as well as from transferring its estate, &c., and section 66 provides that the court, “at the time of ordering said injunction, or ai any time afterwards, may appoint a receiver or receivers, or trustees,” &c. The act plainly contemplates that the appointment of a receiver may be postponed to a time subsequent to the adjudication of insolvency, with its accompanying enforced paralysis of all the corporate functions. But in the order of April 11th, 1904, there was neither appointment of a receiver nor adjudication of insolvency.

The learned vice-chancellor entertained the view that in order to grant the restraint that was included in the order of April 11th the court must have found that the corporation was insolvent within the meaning of the act. We think the clear intent of the statute is to the contrary, and that such an order to show cause as was here made (which in this aspect merely provided that an application for an adjudication of insolvency might be made upon notice to the corporation) does not determine the question of insolvency, but, on the contrary, determines that the corporation shall be heard before that question is decided.

The question now presented seems not to have been previously passed upon by this court, but the current of authority in the court of chancery seems to agree with the view we have expressed.

In Minchin v. Second National Bank, 36 N. J. Eq. (9 Stew.) 436, a receiver had been appointed in this state for an insolvent corporation of New York under our Corporation act of April 7th, 1875, which, in section 103 (Rev. 1877 p. 196), subjected foreign corporations doing business in this state to all the provisions of the act so far as applicable. Chancellor Runyon, who decided the case, recognized (36 N. J. Eq. (9 Stew.) 440) that some of those provisions could not be applied to foreign corporations—for instance, that our court of chancery could not hinder such' corporations from exercising their franchises, excepting as it might restrain them from exercising them in this state. He recognized that the question presented was as to the character and extent of the power over the corporate property for the purpose of administering it for the benefit of creditors or stockholders. He expressed (at p. 442) the view that “the mere filing of a bill in such case does not divest the company of its property. The appointment of a receiver under the statute operates as a transfer.” And he sustained the right of creditors, notwithstanding bill filed, to proceed at law to secirre a lien upon the property and to retain that lien as against a receiver subsequently appointed.

In Graham Button Co. v. Spielmann, 50 N. J. Eq. (5 Dick.) 120, 124, Vice-Chancellor Van Fleet said, referring to the provisions of sections 72 and 80 of the Corporation act of 1875 (corresponding in substance to sections 66 and 86 of the act of 1896): “The effect of these two provisions is, as it seems to me, to fasten the debts of a corporation upon its property the moment it is adjudged to be insolvent and a receiver is appointed to wind up its affairs. From that time forth its property is by law appropriated exclusively and irrevocably to the payment of its debts.”

Section 68 of the Corporation, act of 1896, which provides that upon appointment of a receiver the property of the insolvent corporation forthwith vests in him, is a new section, intended to set at rest the question whether the property of an insolvent company vests at all in the receiver. Upon the law as it formerly stood this question had been in doubt.

In Willink v. Morris Canal and Banking Co., 4 N. J. Eq. (3 Gr. Ch.) 377, 400 (1843), the chancellor held that under the “Act to prevent frauds by incorporated companies” the property of the company did not vest in the receivers; that they were merely substituted in the place of directors and managers for the purpose of settling up and closing the affairs of the company; that the title to the property was not changed, but a power only delegated to the receivers to take charge of it and sell it.

Six years later another chancellor, apparently in ignorance of the previous decision, held that the statute and the appointment of receivers under it was a conveyance or transfer of all the property of the insolvent corporation to the receivers. Corrigan v. Trenton Delaware Falls Co., 7 N. J. Eq. (3 Halst.) 489, 496 (1849).

In Freeholders of Middlesex v. State Bank, 29 N. J. Eq. (2 Stew.) 268, 274 (1878), Vice-Chancellor Van Fleet held that the appointment of a receiver tinder the Corporation act of 1875 invested him with full power to sell, assign and convey all the property of the corporation. Rev. 1877 p. 189 § 72. “No act by the corporation,” he said, “is necessary to complete either the title of the receiver ox that of his purchaser. Unlike proceedings under Bankrupt laws, no assignment by the debtor or commissioners is required. Title is divested by force of law, and such divestiture is perfect and absolute.”

The same view was entertained by Chancellor Runyon in Minchin v. Second National Bank, 36 N. J. Eq. (9 Stew.) 436, 442, who cited Corrigan v. Trenton Delaware Falls Co., supra, and Freeholders of Middlesex v. State Bank, supra.

But in Receiver of State Bank v. First National Bank, 34 N. J. Eq. (7 Stew.) 450, 456, Vice-Chancellor Van Fleet held that the receiver had a mere right of possession and power to sell; that the law took custody of the propertjq leaving the title unchanged until sale made.

And in Kirkpatrick v. Corning, 37 N. J. Eq. (10 Stew.) 54, 60, Chancellor Runyon himself adopted the view last mentioned, at the same time pointing out that while Vice-Chancellor Van Fleet’s judgment in Freeholders v. State Bank was affirmed by the court of errors and appeals in 30 N. J. Eq. (3 Stew.) 311, 339, the view expressed by the vice-chancellor upon the present topic was unnecessary to his decision, and there was no opinion in the court of last resort. See, also, cases cited in Crews v. United States Car Co., 57 N. J. Eq. (12 Dick.) 357, 362.

Section 68 of the act of 1896 settles this long-disputed question as to whether the receiver took title or only custody of the property of the insolvent corporation. •

The present question is, When does the title of the insolvent corporation cease? We answer, Not before there is either an adjudication of insolvency or the appointment of receiver or trustee.

In Gallagher v. Asphalt Company, 65 N. J. Eq. (20 Dick.) 258, 270, Vice-Chancellor Stevenson said: “I think it is sufficient to say that in New Jersey, apart from the direct effect of statutes, an insolvent corporation has the same dominion over its assets, and its creditors have the same power to reach those assets for the payment of their claims, that we find exhibited in the case of an insolvent natural person. The modifications and limitations of this dominion of the corporation over its property, and this power of the creditors to reach that property preferentially, are derived from our statutes, and not from any theory that immediately upon the insolvency of a corporation anything that can properly be described as a trust is created in respect of the corporate assets. Of course, when, by reason of the insolvency or of the dissolution of a corporation, or from any other cause, the assets of the corporation are placed in the possession of a receiver, or have become vested in him by law, a trust of a high character is at once created. But neither the insolvency or other condition of the company, nor the commencement of a suit to establish a receivership and the trust connected therewith, has the effect to establish such trust.”

The only New Jersey case cited to the contrary is Doane v. Millville Mutual Insurance Co., 43 N. J. Eq. (16 Stew.) 522, 535. Upon the filing of a bill setting up inability of the company to pay its debts, an order was made requiring it to show cause why a receiver should not be appointed, “together with an order restraining the defendant from performing any duties whatsoever devolving upon it.” Vice-Chancellor Bird held that a judgment entered upon the same day that this restraining order was made did not entitle the creditor to a preference. He said: “When the court steps in and takes possession, all opportunity for anyone to obtain an advantage by his diligence ceases.” This decision was reversed by this court upon grounds that do not either affirm or overthrow this view. Doane v. Millville Mutual Insurance Co., 45 N. J. Eq. (18 Stew.) 274, 282. With respect to Vice-Chancellor Bird’s decision upon the point now raised, it is sufficient to say that if the order that he had under consideration did amount to a taking possession of the assets of the company by the court, his declaration that there was no longer opportunity for anyone to obtain advantage by diligence is correct. Tbe restraining order that we have under consideration had no such effect.

It follows that the levy made by the sheriff upon the personal property of the Princeton Lighting Company under the execution of the Westinghouse company established a valid lien upon that property, and the subsequent conversion of the property by the receiver entitled the Westinghouse company to priority in payment.

The order under review herein should be reversed, and the cause remitted for further proceedings, in accordance with the views above expressed.

For affirmance•—Reed—1.

For reversal—The Ci-iiee-Justice, Garrison, Hendrickson, Pitney, Swayze, Trenci-iard, Bogert, Yredenburgh, Green, Gray, Dill—11.


author: Swayze, J.

text:
    Burlington City Loan and Trust Company et al., appellants, v. Princeton Lighting Company et al., respondents.
    [Argued March 22d, 1907.
    Decided November 18th, 1907.]
    1. Where corporations are merged into a new corporation, and mortgage bondholders of one of the constituent companies exchange their bonds for mortgage bonds of the consolidated company by depositing them with a trustee, who retains them uncanceled, the question whether they are in equity to be held to be satisfied depends upon the intent of the parties and the facts of the case.
    2. Where an agreement for the merger of corporations provides for the issue of mortgage bonds to be exchanged for similar bonds of the constituent companies, the holders of the latter bonds who do not assent to the merger agreement cannot complain if the parties thereto vary the terms upon which the bonds are exchanged.

      3. Where an agreement for the merger of corporations provides for the exchange of the whole of an outstanding issue of bonds for new bonds of the consolidated company by depositing them with a trustee, and the deposited bonds are held by the trustee uncanceled, and the agreement is not consummated owing to the failure of some of the old bondholders to assent, the question whether the bonds actually deposited are to be held as additional security for the benefit of those depositing them and taking new bonds in exchange, or for the benefit of all holders of the new bonds, depends upon the intention of the parties and the facts of the case.
    On appeal from a decree advised by Vice-Chancellor Bergen.

      Mr. George Whiiefield Beils, Jr., for complainants-appellants.

      Mr. Bdward P. Johnson, for respondents.'
   The opinion of the court was delivered by

Swayze, J.

This is a bill to foreclose a mortgage given to the complainant trust company to secure certain bonds of the Hopewell Electric Light, Heat and Power Company for $50,000. By two orders in the cause certain persons who claimed to hold $40,500 of the bonds were joined as co-complainants and other persons holding $9,500 of the bonds were allowed to intervene as defendants. The controversy in the case is between these two classes of bondholders. The issue to be decided is whether $38,500 part of the bonds of the individual complainants are still outstanding obligations.

The bonds and mortgage in suit were given by the Hopewell company in 1901. Two years later the Hopewell company was merged with other corporations to form the Princeton Lighting Company. The agreement of merger provided for an issue of bonds of the new company secured by mortgage for the purpose of taking up securities of the old companies. These new bonds I shaR, for convenience, call the Princeton bonds. The portion of the agreement of merger that is of importance for the present purpose reads as follows:

“Of the foregoing number of bonds, fifty thousand dollars ($50,000) at par shall be retained by the trustee, however, for the purpose of redeeming bond for bond as they are presented, an issue of fifty thousand dollars ($50,000) of bonds of the Hopewell Electric Light, Heat and Power Company, dated August first, nineteen hundred and one, and secured by a mortgage to the Burlington City Loan and Trust Company, a corporation of the State of New Jersey, which last-mentioned bonds shall be delivered up to the trustee and canceled, so that they shall be no longer a lien upon the property of the Plopewell Light, Heat and Power Company, or upon any of the property of the consolidated company.”

The material provision of the mortgage securing the Princeton bonds reads as follows:

“(6) Seventy thousand five hundred dollars ($70,500) of said bonds are to be retained by the trustee, and are to be certified and delivered from time to time as required to take up and replace fifty thousand dollars ($50,000) at par of outstanding bonds of the Hopewell Electric Light, Heat and Power Company, dated August first, nineteen hundred and one, which bonds are redeemable by the conditions of the mortgage securing them.”

The Hopewell bonds were twenty-year bonds, dated August 1st, 1901, and were subject to redemption after August 1st, 1906, a time which had not arrived when the exchange was made of Hopewell bonds for Princeton bonds soon to be mentioned. The Hopewell mortgage contained in the clause giving the mortgagor the option to redeem after August 1st, 1906, this language : “Providing if less than the whole issue is redeemed, the bonds to be paid shall be determined by chance by the trustee under this mortgage.”

There is no suggestion that there was ever any such determination by chance. The $38,500 of Hopewell bonds now in controversy were exchanged in 1903 by the holders for a like amount of Princeton bonds through the medium of the North American Trust Company, the trustee named in the Princeton mortgage; they were held by that company, and never surrendered for cancellation to the Burlington Trust Company, the trustee named in the Hopewell mortgage and one of the present complainants. After the insolvency of the Princeton Lighting Company the bonds were sold and bought by the individual complainants.

Under these circumstances the learned vice-chancellor held that the $38,500 of bonds were satisfied, and advised a decree that the property be sold to pay the remaining $11,500 of Hopewell bonds, with interest.

The $38,500 bonds are in fact outstanding as legal obligations uncaneeled, and the decree rests upon the supposed equity of the holders of the remaining bonds to have the property sold to pay them alone. The bondholders who profit by the decree were not parties to the merger agreement, and can only obtain the advantage which the decree gives in case the other bonds are to be regarded in equity as actually satisfied. Whether they have been so satisfied or not must rest upon inference, for the holders never in terms were parties to the merger agreement. Their assent to it is to be inferred only from their conduct in acting under it, and in drawing such an inference all their acts ought to be considered; all the circumstances were relevant to show to what extent and upon what conditions they must be inferred to have yielded their assent. It is not for the respondents, who chose to refuse their assent, to complain if the actual parties to the merger agreement chose to modify the terms upon which the depositing bondholders might exchange their bonds. In this view the correspondence between the trust company and the Princeton Lighting Company was admissible to show the terms upon which the bonds were actually deposited. We do not, however, find it necessary to rely upon that correspondence, since we reach the same result by a consideration of the language of the mortgages and the merger agreement only.

Where a contract is to be inferred from the conduct of the parties, the question is obviously one of intention. Upon this point the cases cited in the instructive brief of the respondent and other cases are at one. Mowry v. Farmers’ Loan and Trust Co., 76 Fed. Rep. 38, 43; New York Security and Trust Co. v. Louisville, &c., Railroad Co., 102 Fed. Rep. 382; Barry v. M., K. & T. Railway Co., 34 Fed. Rep. 829, 833; Ames v. Railway Company, 2 Wood 207; Fidelity Company v. Shenandoah Valley Railroad Co., 86 Va. 1; Ketchum v. Duncan, 96 U. S. 659; Union Trust Co. v. Illinois Midland Railway Co., 117 U. S. 434.

The merger agreement provides that the new bonds are to be used for the purpose of redeeming bond for bond as they are presented an issue of $50,000. The transaction is to be an entire transaction, and it is the whole issue of $50,000 that is to be redeemed, not some fraction of that issue. The words “bond for bond as they are presented” are intended only to authorize the trust company to acquire these bonds one at a time if necessary, but the redemption is not complete until the whole issue is redeemed; until that time the contract remains executory. This construction is borne out by the subsequent provision that the “last-mentioned bonds” (words which can only refer to the issue of $50,000) are to be delivered up to the trustee (evidently the Burlington Trust Company since the North American Trust Company was to make the delivery) and canceled. The use of the word “canceled” in connection with the delivery to the Burlington company and to characterize a subsequent act, is a plain intimation that prior to that delivery there was no cancellation. The propriety of having the bonds canceled by the Burlington company, the mortgagee, which would be called on to discharge the mortgage, is manifest. To remove all doubt, the agreement proceeds “so that they” (still evidently meaning the issue of $50,000) “shall be no longer a lien upon the property” of the Hopewell company. The provision that this issue of bonds should no longer be a lien was incapable of performance until the whole issue had been exchanged.

This result is sustained by an examination of the Princeton mortgage. By that mortgage $70,500 of the new bonds are to be delivered from time to time as required to take up and replace (not tú “pay” or “satisfy”) $50,000 of the Hopewell bonds and certain bonds of the other constituent companies. There is no language here which would authorize the trustee to take up and replace anything less than the whole $50,000. Until the whole were secured, the bonds which the North American company had redeemed bond for bond as presented under the merger agreement, were held, in escrow as it were, to await the consummation of the entire and indivisible contract.

If we felt any doubt as to the correctness of our conclusion based upon the language of the merger agreement and the Princeton mortgage, that doubt would vanish upon an examination of the Hopewell mortgage. The provisions of that mortgage as to the redemption of the bonds secured thereby are referred to in the Princeton mortgage. Among them is a clause providing for the case where less than the whole issue is redeemed; that clause requires that the bonds to be paid shall be determined by chance. There was in this case no determination by chance, no doubt because the parties concerned did not regard the transaction as the equivalent of payment.

Upon general considerations of equity we should reach the same result. Three views suggest themselves to us as possible—• first, the deposited bonds may be held for the benefit of all the new Princeton bondholders pending the exchange of the whole issue; second, they may be held as collateral security to the new bonds taken in exchange and for the benefit of the depositing bondholders only; or third, they may be treated as satisfied for the benefit of those who have refused their assent to the scheme.

The last seems to us inequitable for the reason that it allows non-assenting bondholders to profit by a transaction which they have in effect opposed; all that they are equitably entitled to is such a proportion of the mortgage security as their bonds bear to the whole issue. Barry v. M., K. & T. Railway Co., 34 Fed. Rep. 829.

This allows them all they would have but for the merger agreement, and merely denies them an increased security due to the efforts of others. Equity does not allow them to gather the fruit after others have shaken the tree. While it may fairly be argued, as some of the cases suggest, that the depositing bondholders, by the exchange of bonds, evince an intention to give up the lien of their old bonds, it by no means follows that they intend to give up that lien for the benefit of those who refuse to co-operate with them. It is far more reasonable to assume that if thejr give it up at all it is for the benefit of all the new bondholders, who in return allow them to share in the security of the new bonds. In the present case none of the parties to the merger agreement—the trust company, the Princeton Lighting Company (which by virtue of the merger stands in the shoes of the Hopewell company also), the Princeton bondholders, or the depositing Hopewell bondholders—assert that the $38,500 bonds were satisfied. The trust company, by retaining the bonds uncanceled and not surrendering them to the Burlington company, evinced its intent to preserve their lien, and the only persons having a right to determine that question—parties to the merger or Princeton bondholders—raise no objection.

If it were necessary to hold that the contract was varied, they had the right to vary it.

A somewhat similar case is Steven v. Mid-Hants Railway, L. R. 8 Ch. App. 1064; 42 L. J. Ch. 694.

* Whether the deposited bonds are held for the benefit of the depositors alone or for the benefit of all the Princeton bondholders we are not now in a position to determine. The former holders of the $38,500 of Hopewell bonds are not parties, nor do we know what bondholders are represented by the individual complainants. Hntil the proper parties are brought in, the ultimate disposition of the fund to be realized out of the mortgage premises cannot be decided. The decree must be reversed and the record remitted to the court of chancery in order that a decree may there be entered for the amount'due on the whole $50,000 of bonds. It should direct that the proceeds of the foreclosure sale be brought into that court to abide its further order.

The appellants are entitled to costs in this court.

For affirmance—None.

For reversal—The Chiee-Justioe, Garrison, Hendrickson, Pitney, Swayze, Beed, Trenchard, Bogert, Vredenburgi-i, Green, Gray, Dill—12.


text:
    Frank Woolsey and James P. Northrup, individually and as surviving executors, appellants, v. Virginia M. Woolsey and Alice Woolsey, respondents.
    [Argued March 22d, 1907.
    Decided November 18th, 1907.]
    The orphans court, upon an executor’s accounting, may ascertain the condition of the estate as fully as the court of chancery, and in the absence of fraud, or accident unmixed with negligence or fraud on the part of the accountant, or of some matter of pure equity cognizance, the decree upon the accounting is conclusive upon the executor as to the propriety of allowances claimed by him.
    On appeal from a decree of the court of chancery, advised by Vice-Chancellor Bergen, whose opinion is reported in 67 N. J. Eq. (1 Robb.) 57h.

      Mr. Robert Ii. McCarter, attorney-general, and Mr. James Buchanan and Mr. Charles L. Garrick, for the appellants.

      Mr. Richard V. Lindabury and Mr. Randolph Perkins, for the respondents.
   The opinion of the court was delivered by

Swayze, J.

This is an appeal from a decree of the chancellor dismissing a bill for an injunction to restrain the enforcement of a decree entered in the Hudson orphans court pursuant to the mandate of this court. Our former opinion is reported in 68 N. J. Eq. (2 Robb.) 763. The ground on which relief is sought is an alleged family arrangement by which one of the legatees and one having a life estate in a trust fund created by the will are said to have agreed with the executors to vary the order and priority of payment of legacies, and to accept by way of annuities to themselves partial payments of the principal of the legacy and trust fund. The vice-chancellor held that the matter was res adjudicates, and that he was therefore bound by our former decree.

To sustain this defence it must appear that the identical matter was involved. Water Commissioners v. Cramer, 61 N. J. Law (32 Vr.) 270, 273; Cromwell v. Sac County, 94 U. S. 351. The issue in the orphans court was presented in the form of exceptions to certain allowances-claimed by the executors. All were in the following form: That the sum claimed to have been paid on annuity account was not in fact paid by said executors, and said item is improperly credited to said executors, and allowance thereof should not be made.

The point made is that this exception questions only the fact of paj-ment, and not the propriety of the allowance claimed by the executors. We cannot concur in this view. The very last words of the exceptions challenge the propriety of the allowance, and the executors did not at the hearing before the master assert that they were not apprised of any reason for the exception other than the bare denial of payment. Upon the contrary, in their testimony they .sought to justify the allowances claimed, and did not confine themselves to proving the fact of payment. It was manifestly necessary for them to do so since the burden was on them to prove the propriety of the allowances (Kirby v. Coles, 15 N. J. Law (3 Gr.) 441), and the claim of payments on account of annuities as credits against the corpus of the estate necessarily arrested attention. The objection was distinctly stated in the master’s report, and when the present complainants excepted to that report they in so many words affirmed that the amount was justly and properly paid by the executors under the terms of the will, and should have been allowed by the master. The very form of these exceptions by the accountants themselves presented to the orphans court the question of the justice and propriety of the allowances which the accountants were bound to establish.

The issue now presented is the same. The only difference is in the evidence adduced to sustain it on the part of the accountants. In the present litigation they set forth with a little more distinctness and care the alleged family arrangement, in which. however, only two of the legatees joined, and one of those a mere life tenant.

Since the issues in the litigations are identical, the only remaining question is whether the orphans court had jurisdiction to pass upon the attempted justification by the executors of their payments of annuities out of corpus.

By the statute power is conferred on the orphans court to hear and determine all controversies respecting the allowance of the accounts of executors, administrators, guardians or trustees (P. L. 1898 p. 715 § 2), and the section providing for exceptions authorizes the court to examine the accountant touching the truth and fairness of the same. The broad language in which the jurisdiction is conferred, and the authority to examine as to the fairness of the account, authorizes the orphans court to deal with the account on equitable principles, and we have held that the orphans court on such accounting may ascertain the condition of the estate as fully as can the court of chancery (Pyatt v. Pyatt, 46 N. J. Eq. (1 Dick.) 285, 288), that case decided that the powers of the court are sufficiently broad to justify it in allowing a guardian credit for payments for the support of his ward after the latter’s majority. This result was reached upon a consideration of the powers exercised by the English court of chancery and the New York courts under legislation similar to ours. The court of appeals in New York determined the bounds of the jurisdiction of the surrogate upon an administrator’s accounting by reference to the jurisdiction of the courts of equity, and Judge Andrews said: “The surrogate’s court is a court of limited powers and jurisdiction, but it has jurisdiction to determine questions either legal or equitable arising in the course of proceedings in the execution of powers expressly conferred, and which must be decided therein.” Hyland v. Baxter, 98 N. Y. 611. It was there held that the determination of the surrogate, on settlement of an administrator’s accounts, denying a claim for advance for support and maintenance of a minor entitled to a share in the estate was res adjudicata, conclusive in an action subsequently brought by the administrator therefor.

In this state the orphans court and the court of chancery have a concurrent jurisdiction in matters of this nature, and it is only where there are special reasons for going into equity that that course is justified. Salter v. Williamson, Administrator, 2 N. J. Eq. (1 Gr. Oh.) 480.

In the present case there is no matter of peculiarly equitable cognizance which requires the action of the court of chancery. There can, of course, be no question that the accountants, upon a proper statement of their account, were entitled to credit for the payments actually made. What we decided—68 N. J. Eq. (2 Robb.) 7-63 (at p. 767)—was that, by reason of the payments having been made on account of annuities, the accountants were estopped to deny the receipt of income out of which to make the payments, and as they failed to charge themselves with such receipts, they could not be allowed for the payments. It was open for them in the orphans court to show that the payments were made and received on account of corpus and ought therefore to be allowed as credits against the corpus. There is nothing in the alleged agreement by Mrs. and Miss Woolsey which prevented the orphans court from dealing with the matter as fully as the court of chancery. The items would not, to be sure, be proper credits as against non-assenting legatees, but that question did not arise. In Birkholm v. Wardell, 42 N. J. Eq. (15 Stew.) 337, the ordinary held that, even where improper payments had been made, they should be allowed as between the parties, and in the recent case of Wyckoff v. O’Neill, 71 N. J. Eq. (1 Buch.) 729, we have held that payments on account'of collateral inheritance taxes should be allowed, although they were chargeable to some only of the legatees and in varying amounts. So in this case, if the agreement had been proved, the respondents could not have been heard to object to an allowance to the executors therefor, and upon a distribution the respective amounts paid to each would have been deducted from their several shares.

Our former decree was based on the equitable estoppel arising out of the facts of the case. A court which was competent to determine a question of equitable estoppel, as we have held the orphans court to be in this ease, was certainly competent to hear and determine facts which would prevent the estoppel from operating. There is in this case no ground of equity other than the estoppel itself, and the parties entitled to its benefit may make it available even in a court of law. Dickerson v. Colgrove, 100 U. S. 578; Drexel v. Berney, 122 U. S. 241; Van Marter v. Lucas, 64 N. J. Law' (35 Vr.) 182; affirmed, 65 N. J. Law (36 Vr.) 311. Other eases are cited in Central Railroad v. MacCartney, 68 N. J. Law (39 Vr.) 165, 175, and in 16 Cyc. 725, notes 1, 2.

There is a further reason why in this case relief should be denied complainants. They themselves sought to account in the orphans court when the court of chancery was open to them, and they have themselves obscured the issue, if it can be said to have been obscured, by claiming allowance for payments on account of annuities without charging themselves with any receipts applicable to the payments, and have caused this second litigation by their failure to prove the alleged agreement in the orphans court. Having thus, by acts of omission and commission, led to the result of which they complain, they ought not to be allowed to set it aside. To permit that would amount to permitting suitors to experiment with the court, and if defeated in one court to resort to another. The principle upon which courts of equity intervene by way of injunction to restrain judgments in courts of law are applicable to a suit to restrain the enforcement of a decree of the orphans court. Those principles are thus stated in Mechanics’ National Bank v. Burnet Manufacturing Co., 33 N. J. Eq. (6 Stew.) 486 (at p. 488), and affirmed on the vice-chancellor’s opinion (35 N. J. Eq. (8 Stew.) 344): “Courts of equity sometimes give relief against judgments at law, but only where it is shown that the defendant was ignorant of the facts on which his defence rests until after the time for making defence at law had passed, or that he was prevented from making defence by the artifice or fraud of his adversary, or by accident unmixed with negligence or fraud on his part, or that his defence is a matter of pure equity cognizance. But in cases where the grievance he attempts to urge is one that the court which pronounced the judgment is competent to hear and decide, and he has either urged it there unsuccessfully, or has negligently omitted to do so, this court can give no relief.”

In Phillips v. Pullen, 45 N. J. Eq. (18 Stew.) 830, where a question of fraud was raised, this court said: “In so far as this contention rests upon fraud in the procurement of the written contract, it is no longer an open question. That was one of the issues directly involved in the suit at law. If true, there could have been no recovery. The thing to be proved and the quantum of proof do not differ in the two jurisdictions,” and it was held to be res judicata that the agreement was not the product of fraud. In Ruckelschaus v. Oehme, 48 N. J. Eq. (3 Dick.) 436 (on appeal under the name of Borcherling v. Ruckelschaus, 49 N. J. Eq. (4 Dick.) 340), the jurisdiction of chancery was sustained only because the court of law overruled the defence of equitable estoppel, and it was held that the defendant had the option either to test the accuracy of that ruling by a writ of error or to accept it as the law of the case and present his defence to the court of chancery as one not cognizable by a court of law. The learned vice-chancellor had said (48 N. J. Eq. (3 Dick.) 445) that it was not for his adversary, on whose motion the defence at law had been excluded, to say that the ruling of the trial court was wrong and should have been tested by a writ of error. This court said that if he had taken a writ of error he would be undoubtedly estopped from litigating the same question anew in another court. Such is exactly the position here. The appellants presented the question to the orphans court by exceptions to the master’s report, and, having been defeated, appealed to the prerogative court, and the decree of that court was brought to this court, with a result adverse to the accountants.

We think the vice-chancellor was right in holding that the matter was res judicata, and that it is unnecessary to consider whether the alleged agreement has been proved, or, if proved, would have the effect for which the appellants contend.

The decree should be affirmed, with costs.

For affirmance—The Chief-Justice, Garrison, Hendrickson, Pitney, Swayze, Reed, Trencitard, Bogert, Yredenburgh, Yroom, Green, Gray, Dill—13.

For reversal—None.


author: Reed, J.

text:
    Michael Brady, appellant, v. The Carteret Realty Company et al., respondents.
    [Argued March 6th, 1907.
    Decided June 17th, 1907.]
    1. The clause in section 5 of the act to quiet titles (3 Gen. Stat. p. SJ/87), which enacts that when an issue at law shall be directed to try the validity of a claim of title to land, the court of chancery shall be bound by the result of such issue, is constitutional.
    2. The previous determination in this case by this court that the power conferred upon the court of chancery to take jurisdiction of this class of suits and to award a feigned issue was not in conflict with the constitution, and the further determination that the order of the chancellor refusing a new trial of the issue should be affirmed involved and settled the constitutionality of the entire provision respecting a trial at law and the finality of the verdict thereon.
    On appeal from a decree of the chancellor, whose opinion is reported in 68 N. J. Eq. (2 Robb.) 55.

      Mr. Ephraim Cutter and Mr. Willard P. Voorhees, for the appellant.

      Messrs. Collins & Corbin, for the respondents.
   The opinion of the court was delivered by

Reed, J.

This appeal is a supplement to a previous appeal decided in this court, and reported in 70 N. J. Eq. (4 Robb.) 748.

The former appeal brought up a refusal of the chancellor to order a new trial of a feigned issue after a verdict was returned for the realty company. On that appeal the jurisdiction of the court of chancery to direct a feigned issue was challenged on the ground that the parties were entitled to a jury trial in an action at law. The jurisdiction of the court to award such an issue was vindicated, the court holding that the legislature possessed the power to confer upon the court of chancery the right to entertain suits to quiet title, and that the power to award a feigned issue was an inherent incident of such a suit.

The court also affirmed upon its merits the order of the chancellor refusing to grant a new trial. Thereafter a decree was entered in favor of the realty company in conformity with the verdict of the jury. The present appeal is from the decree thus entered upon the verdict of that jury.

Brady now insists that, conceding the ability of the legislature to confer upon the court of chancery the right to entertain a suit to quiet title and to award a feigned issue therein, nevertheless the legislature had not the ability to bind the conscience of the chancellor by giving to the verdict rendered upon such feigned issue the quality of finality, save as to errors occurring in the trial.

The former appeal attacked this feature of the act to quiet title as one which stripped the courts of law of a faculty exclusively preserved to them by the constitution. This appeal challenges the constitutionality of the act on the ground that it deprives the court of chancery of one of its jurisdictional faculties secured by the constitution.

If the question now mooted can be regarded as still open in this case, we think that the appellant’s insistence is entirely untenable. It goes without saying that the quality of finality given to the verdict by the statute strips the courts of common law of none of their faculties preserved to them by the constitution, nor is it perceived in what way it denudes the court of chancery of any of its powers as they existed at the time of the adoption of our constitution.

The bill in this case was not filed by the appellant for any relief which was administered by the court of chancery at that time. The bill was filed under the act to quiet title. The ground of relief was created by that act as well as the method of procedure. Although this suit is equitable in its nature, it was one unrecognized by the court of chancery previous to the enactment of the questioned statute.

Therefore the legislature, in providing for a trial at law upon demand of the party and for a conclusive verdict, deprived the court of chancery of none of its constitutional powers. Instead of depriving, it conferred a power, and the extent of that power, and the manner in which it should be exercised, was a question for legislative discretion.

Although an opinion is thus expressed upon the merits of the question, it is not to be admitted that, after the decision of the previous appeal, this question is now open for discussion in this court.

This court in the former decision recognized the verdict and the chancellor’s order thereon as valid under the Quia Timet act. Those features of this statute were such a material part of the legislative scheme that it would seem impossible to declare that the statutory provisions for a verdict and for a review of the verdict were valid, and at the same time declare that the finality given to the verdict was a nullity. Finality is such an inseparable incident of the verdict that, if it is vicious, the whole provision for the verdict would be vicious.

The decree should be affirmed.

For affirmance—The Chief-Justice, Garrison, Fort, Hendrickson, Pitney, Reed, Trenoi-iard, Bogert, Yroom, Green, Gray, Dill—12.

For reversal—None.