text:
    Joseph Tate v. Frank S. Field et al.
    [Submitted June 25th, 1900.
    Decided June 30th, 1900.
    Filed February 11th, 1901.]
    1. Where a bill rendered by an attorney for prosecuting a suit for his client is not only fraudulently untrue as to items for services not rendered, but inflated throughout by charges beyond what the services were worth, and, with the retainer paid by his client, amounts to more than the sum recovered of defendant, it is within the rule that if the behavior of the attorney towards his client is dishonest, oppressive or illegal, and shows a fraudulent intent, the court may proceed summarily against him for his misconduct.
    2. A failure by a client to object to his attorney’s bill for services until nine months after rendered is not unreasonable, where other attorneys employed by the client had been trying to see the attorney and secure a satisfactory explanation, and where the attorney could not have changed his position to his injury.
    Heard or petition and answer.

      Mr. Jerome D. Gedney, for the petitioner.
   Pitney, V. C.

The complainant presents a petition asking the court for relief against his solicitor and counsel in the cause, setting forth his employment to conduct the action, and stating the amount of moneys which he had collected from the defendants therein.

A copy of a bill in detail for services performed and moneys disbursed, amounting to $586.93, rendered by his solicitor, was annexed to the petition, which, with a letter accompanying the same, show that the solicitor had collected and received from the defendants, exclusive of costs, in payment of the decree against them, $505.49, and had received pending the suit, from the complainant, as fees, $100, making in all $605.49, from which he deducted the amount of his own bill, $586.93, and enclosed a check for $18.56 for the balance.

The complaint and prayer of the petition is that “there are divers false, exorbitant and unreasonable charges made by the solicitor against your petitioner, as shown in his bill rendered. Your petitioner prays that said solicitor may be ordered to come to an accounting for the moneys in his hands, and that an inquiry and adjudication may be made by the court touching the charges for services made by the respondent, and the compensation to which he is entitled may be ascertained by the court” and remedy given.

Upon presenting that petition an order to show cause was made against the solicitor, and on the return day he appeared and filed an answer, but further than that declined to take any part in the proceeding, though counsel appeared for him on several occasions.

Evidence on behalf of petitioner, consisting mostly of correspondence, was taken according to the practice of the court; opportunity was given to the respondent on several occasions to offer evidence on his behalf, and the matter was submitted by the petitioner’s counsel.

The respondent wrote a letter to me making objection to the proceeding; first, that the same was no't justified under the rule laid down in Strong v. Mundy, 7 Dick. Ch. Rep. 833; second, that there was adequate remedy at law; third, lack of authority on the part of the vice-chancellor to proceed unless the matter was specially referred to him; fourth, proper and sufficient notice of hearing was not given; fifth, that the account was delivered in March, 1899, and no objection made to it for about nine months.

The answer of the respondent gives a history of the proceedings, and admits, in substance, that several of the charges made in the bill rendered are incorrect; states that the payment to him by the petitioner of $100 was made in two payments of $50 each, and that the first payment of $50 was for services rendered before the bill was filed, and not included in the bill rendered, and should not have been credited to the petitioner. It further sets out the amount of labor and the time devoted to the conduct of the suit, and says, in effect, that although the services charged- for in his bill were not all rendered, yet that, upon the whole, the bill is not exorbitant.

Before examining the matter in detail it may be well to refer to the latest judicial utterances on the subject of the propriety of this court dealing summarily with the respondent, which are found in the opinion of the court of errors and appeals in Strong v. Mundy, 7 Dick. Ch. Rep. 833. The language is this (p. 88p) : “Attorneys and solicitors are officers of the court, and there is no doubt of the authority of the court to proceed summarily against them for their misconduct. But the behavior which will justify the exercise of this summary jurisdiction must be such as is dishonest or oppressive or clearly illegal. If it appear that there exists between a lawyer and his client a fair dispute, which can be decided only on the settlement of doubtful questions of fact or law, the court should not exercise its summary power, but should leave the parties to their ordinary remedies ” citing authorities.

The language just quoted was no more than a well-considered dictum of the court, for it was not necessary for the decision of the cause then in hand.

In order to ascertain what behavior is “such as is dishonest or oppressive - or clearly illegal” we may refer to the cases cited by the learned'judge; and we must also distinguish between motions to disbar and motions strictly such as that here before the court.

The first of those cited is Balsbaugh v. Frazer, 19 Pa. St. 95. That was an action at law against Erazer, an attorney-at-law, for moneys collected, and he offset against the demand a claim for services. In the trial below the claim was allowed. On error a series of propositions and rules were laid down by Chief-Justice Black, among them the following:

“3. An attorney who has money in his hands which he has recovered for his client, may deduct his fees from the amount, and payment of the balance is all that can be lawfully demanded.
“4. If the client is dissatisfied with the sum retained, he may either bring suit against the attorney, or take a rule upon him. In the latter ease the court will compel immediate justice, or inflict summary punishment on the attorney, if the sum retained he such as to show a fraudulent intent. But if the answer to the rule convinces the court that it was held back in good faith, and believed not to be more than an honest compensation, the rule will be dismissed, and the client remitted to a Jury trial.

[This shows that the fact of retaining out of the moneys collected a .sum so large as to show a “fraudulent intent” is such “dishonest” and “oppressive” behavior as to “justify the exercise of summary jurisdiction.”]

“5. If, upon the trial, the jury finds that the attorney claimed no larger fee than he was justly entitled to, and in other respects behaved faithfully and well about his client’s business, he should be allowed his demand, and a verdict rendered in his favor, if he has paid the balance; or a verdict against him only for the balance, if he has not paid it; or a certificate, as in this case for what may still be coming to him.
“6. But if he has not acted in good faith; if he has attempted to defraud his client, or connived at the fraud of others; if he has received money without giving notice to the client within a reasonable time; if he has refused or neglected to pay it promptly upon demand ; if he has denied that he had it when questioned by one entitled to know; or, if he has fraudulently claimed the right to retain out of it a larger fee than the jury find to he just, he forfeits all claim to any compensation whatever, and the verdict should he in favor of the client for all the money collected, allowing no deductions for anything hut actual payments. A party must not be put to two suits to recover the same debt.”

The second case cited in Strong v. Mundy is In re Kennedy, 120 Pa. St. 497, where Chief-Justice Paxton refers to Balsbaugh v. Frazer, and cites, with approval, the fourth proposition above set forth, and adds: “And we may add to this that a man does not lose his right to trial by jury because he is an attorney-at-law.”

The third case cited in Strong v. Mundy was In re Paschal, 10 Wall. 483, where Mr. Justice Bradley, in delivering the judgment, uses this language (at ¶. 191) :

“The application made on the first of these eases (So. 4), for an order on the ■ respondent to pay money into court is in the nature of a proceeding as for a contempt. The application is based upon the power which the court has over its own officers to prevent them from, or punish them for, committing acts of dishonesty or impropriety calculated to bring contempt up'on the administration of justice. Eor such improper conduct the court may entertain summary proceedings by attachment against any of its officers, and may, in its discretion, punish them hy fine or imprisonment, or discharge them from the functions of their offices, or require them to perform their professional or official ■duty under pain of discharge or imprisonment. The ground of the jurisdiction thus exercised is the alleged misconduct of the •officer. If an attorney have collected money for his client, it is prima facie his duty, after deducting his own costs and disbursements, to pay it over to such client; and his refusal to do this, without some good excuse, is gross misconduct and dishonesty on his part, calculated to bring discredit on the court and on the administration of justice. It is this misconduct on which the court seizes as a ground of jurisdiction to compel him to pay the money, in conformity with his professional duty. 'The application against him in such cases is not equivalent to an action of debt or assumpsit, but is a quasi criminal proceeding, in which the question is not merely whether the attorney has received the money, but whether he has.acted improperly and dishonestly in not paying it over. If no dishonesty appears the party will be left to his action. The attorney may have •cross demands against his client, or there may he disputes between them on the subject proper for a jury or a court of law or equity to settle. If such appear to be the case, and no professional misconduct be shown to exist, the court will not exercise its summary jurisdiction.”

To these cases I add In re Dudley, 12 Q. B. Div. 44, where the earlier English cases are dealt with, first in the high court, and afterwards on appeal, where the solicitor was imprisoned for not paying over moneys, notwithstanding the Imprisonment for Debt act.

In applying those authorities it must be borne in mind that the services here in question were rendered in a suit in chancery, and not in an action at law, and that it may be a debatable question whether the “ordinary remedy” of the petitioner, mentioned in Strong v. Mundy, would not be by bill in equity for an account in which the respondent would not be entitled in the ordinary course of practice to trial, by jury.

With these remarks I come to the consideration of the merits of the bill rendered; and premising that the respondent is a counsellor of the supreme court of about fifteen years’ standing, will inquire whether it was honestly rendered, or was such as to show a “fraudulent intent.”

The evidence upon which I shall rely consists, first, of the official files in the cause; second, the respondent’s answer to the petitioner’s petition; third, the correspondence between petitioner and respondent.

The proceedings in the cause are indicated by the reported opinions in Tate v. Field, 11 Dick. Ch. Rep. 35; 12 Dick. Ch. Rep. 53; and, on appeal, 12 Dick. Ch. Rep. 632.

It was an ordinary bill to foreclose a mortgage, with a special feature asking for special relief on account of waste of the premises by the defendants while in possession, who were assignees of the mortgagor. The mortgage was given by the Powerville Eelt Roofing Company, a trading corporation, which afterwards went into the hands of a receiver, who conveyed the premises to the real defendants in the cause, Field and others. They removed the building; and the bill set out those facts in addition to the ordinary allegations in a bill to foreclose.

The single quest*011 presented at the first hearing of the cause was whether or not remedy for the waste could be had in a foreclosure suit in equity. After holding that the suit was properly framed in that particular, an order for the sale of the premises -was made in order to ascertain what deficiency, if any, would arise after a sale. The sale took place and the deficiency proved to be several hundred dollars. Then the cause was again brought to hearing for the purpose of ascertaining the amount of the waste; and on that hearing a decree was made against the defendants personally, which was affirmed by the court of errors and appeals.

Looking now at the respondent’s bill rendered; we find, first— “April 9, 1896, Retainer, $50.”

Then, April 9th, a charge for

“Drawing and serving petition and notice for leave to make the receiver of the Powerville Pelt Roofing Oo. a party, $15; April 9, drawing order to show cause and service of same, $10; April 20, appearance at return of order to show cause, adjourned, $10; April 28, another adjournment, $10; May 4, another adjournment, $10; May 5, another adjournment, $10; May 12, another adjournment, $10; June 3, appearance and obtaining order making receiver party, $10; June 3, disbursements in this proceeding, $4.44,”

making $89.44 for charges and expenses incurred in procuring an order from the court of chancery for permission to make the receiver a party.

The amount of these charges at once arrests the attention of the court.

No proof wás offered by the respondent on this subject, or, in fact, as before remarked, on any subject.

In his answer to the petition he sets up that, upon'inquiry, he found that the property had been sold by Mr. E. B. Goodell, a respectable counsellor of this court, acting as a receiver of the mortgagor company, and had been conveyed to the defendants by the receiver; sets up that, after procuring a search of the premises, he prepared his bill, and then thought it necessary to make the receiver a party; that he saw the receiver, requested him to consent to being a party, that the receiver refused to do so, but referred respondent to his counsel, Mr. McCarter; that he saw the counsel and requested him to consent, and that he absolutely refused to give consent, and thereupon he prepared a petition, and that Mr. MeCarter procured an adjournment of the motion, and procured further adjournments from time to time until the 3d of June, when he waived the objection and endorsed his consent on the bill to its being filed.

Now, if the deed from the receiver to Eield & Company had been on record at the time that the solicitor prepared his bill, 1 should say that there was no occasion whatever for making the receiver a party. But it .appears, by an examination of a search made by the clerk of Morris county, where the land is situate, found among the official files, that the deed to the defendants was not on record at the time the respondent was about ready to prepare his bill, if such preparation was made before the 20th of April, 1896; and I imagine it was so made, because the search is in two parts, the first one being made on the 5th of March, 1896, and. the second on the 21st of May, 1896, and showed that the conveyance from the receiver was made in July, 1894, but recorded April 22d, 1896. The recording of the deed was probably either the result of a correspondence which the respondent had with the defendants in February, -1896, as shown by his answer, or was done by the request of the receiver. The respondent had full notice of the conveyance as early as the 10th of February, 1896.

But supposing that he was justified in taking proceedings to make the receiver a party, it is not conceivable that, the receiver would have objected to being made a party unless there was some threat to hold him responsible for the waste that was committed. It is common knowledge, and must have been known by respondent,' that it is a matter of course for this court, almost without question, to allow suits to be brought against receivers; and the answer, standing by itself, fails to satisfy me that there was the least occasion in this case for any such expense to be incurred in obtaining the required consent.

Then I think that the items of charges are exorbitant. The aggregate amount of them — $89.44—above mentioned shows this.

The next item is: “June 3-4, Drawing and filing bill for foreclosure and other relief, $30.” This is over and above the amount allowed him in the taxed costs for that purpose. There-was really nothing difficult in the bill, nor were the matters-necessary to set forth its special features voluminous; and I am constrained to say that I think that charge, considering the-amount involved and the previous charge of a retaining fee of $50, is, to say the least, quite large enough. And I stop here to-say that the amount involved is always a matter to be considered in fixing the amount of charges for professional services outside of the fee bill. It is -recognized by our statutes providing for counsel fees and by the court of errors and appeals in Strong v. Mundy.

The next charge is: “June 16, Drawing and obtaining order of publication, $10.” It is well known that that is a mere matter of clerical work, and it is obtained by mailing it to the clerk, based upon the return of the sheriff. The respondent was allowed for it in the taxed bill of costs, which was paid by the defendants.

The next charge is: “June 20, Drawing, publishing and mailing notice to absent defendants, $10.” That, again, is mere clerical work, and also included in the taxed costs, and in this case he had no trouble in ascertaining where the defendants were; thejr were in the city of New York, and he had been in correspondence with them before bill filed. The charge is, perhaps, a proper one, but, in my judgment, like the preceding ones, is too large.

The next charge is: “Sept. 15, Copy, reading and considering answer of defendants, $15.” Now, he is entitled to be allowed for the copy of the answer in the taxed bill of costs. If he chose to borrow the answer from the counsel of dcfendr ants and have it copied in his office, he should charge no more for it than the mere cost of making it. But I think he is entitled to compensation for reading and considering the answer, and I am unable to say that $15 is an extraordinary charge.

Next — September 16th — is a charge for “Drawing and filing replication, $10.” Now, the replication is the one in the common form; it simply joins issue on the answer, and occupies one-third of one side of a sheet of legal cap. This I think is an exorbitant charge.

Next is: “Sept. 22, Drawing and serving notice of motion for order of reference, $10.” And next: “Sept. 29, Drawing .and obtaining order of reference, $10.” It seems to me that both of these are exorbitant charges. It is common knowledge that the obtaining of an order- of reference is a simple matter. Further, in this case, an examination of the order on file shows that it was consented to by the solicitor of the defendants; and I- do not find among the papers any notice of application for it.

The next charge is: “Sept 30, Drawing and serving notice of motion to fix day of hearing, $10.”

Next: “Oct. 12, Attendance at court and having day of hearing fixed, $10.”

Next: “Dec. 7, Drawing and serving notice of hearing, $5.” Three charges, amounting to $25. I do not find among the papers any order setting the cause down for hearing. I consider these charges exorbitant.

The next charge is: “Dee. 28, Attendance at hearing — adjourned — $.10.”

There is no occasion for that charge, for among the papers is a consent signed by the solicitor of the defendants and dated December 26th — two days previously — that the cause be adjourned to January 11th, 1897.

The next is a charge, on February 18th, 1897, for “Attendance at hearing, trial, $25,” which I think is reasonable.

The next is a charge, on April 20th, for “Copy, reading and considering opinion of vice-chancellor, $15.” Then — “April 21, Drawing decree etc. in accordance therewith, $10.” Then— “May 4, Drawing fi. fa. etc. $5,” making a charge of $30 for studying the opinion, drawing decree in accordance with it, and the fieri facias. I think those charges are exorbitant. An examination of the decree shows that it was quite simple, and that it was not skillfully prepared, for the judge who signed it felt constrained to interline a material matter in it.

The next charge is: “June 14, Attendance at sale of mortgaged premises at Morristown, $25.” It seems to me that is a large charge. It appears he simply attended the sale and bid in the premises for his client. This would occupy, including the trip to Morristown, not more than half a day.

Then, next, wo have the proceedings subsequent to the sale: “1898, Feb. 17, Attendance at hearing, adjourned, $10.” “April 28, Attendance at trial, $25.” I cannot say that those two, taken together, are too large.

Then comes: “April 28, Drawing decree etc. $10.” That was a very simple matter; it simply recited the appearance and decreed that the defendants pay to the complainant the sum of $480, together with costs, and a counsel fee of $10 to be allowed. 1 think $5 is ample for that.

Then — “1898, May 14, Making copy decree and bill of costs, and services, $10.” A copy of the decree and costs could not have amounted to any such sum, and he was entitled to have them taxed in his bill of costs; and the “service” was simply the handing of it to the counsel of the other side. It seems to me that is too large a charge.

Then comes the appeal, and we have a charge as follows: “July 5, Drawing and filing answer to petition of appeal, $15.” Of course, a copy of the petition of appeal was served on the respondent, as appears by his acknowledgment, and the answer, found on page 74 of the printed book, shows that the document was of the simplest form — a mere copy of a printed form found in the books. That charge I consider exorbitant, bearing in mind the amount involved.

The next charge is: “Eov. 15, Attendance at court of errors and appeals at Trenton, and argument, $50.”

This is admitted to be an untrue charge. The respondent did attend on the first day of the court of errors and appeals, when the list was called, but he did not attend the court on the argument; did not argue the cause, either orally or in print; and he states in his answer that, after studying the opinion of this court, he concluded that he could not improve upon it, and made no argument whatever.

This is, of course, a fraudulent charge, and I think it cannot be holpen by the statement in his answer that he attended on the first day of the court of errors and appeals, when the list was called. It appears by his answer that he had already made up his mind not to prepare or make an argument; and, if so, then there was no sort of propriety or necessity of his attending at the first day of the court of errors and appeals. In simple English, he allowed the appeal to take care of itself.

Eext is: “1899, Mar. 7 [which is the day decision was announced], Attendance at court of errors and appeals at Trenton, $25.” “Mar. 7, Drawing decree and service of copy of same, $10.”

Eow, there was no occasion for his attending there, and there is no proof that he did attend there. On this subject he says in his answer: “Upon being notified of the decision of the cause by the court of errors and appeals [by which he meant, as appears by one of his letters, that the decree had been affirmed] defendant immediately went to Trenton and examined the opinion filed by said court and the check list of the votes cast by the members of said court, finding that the vote was unanimous to affirm both of the decrees advised by the vice-chancellor; and thereupon defendant prepared and filed the remittitur.”

■Upon examining the decree of affirmance and remUtitúr on file in this court it is found to consist of a printed form — -with the names of the parties inserted — such as is in general use by the clerk of the court of errors and appeals in cases of simple affirmance. It covers one side of a sheet of paper. Upon the back is also printed the usual certificate of the clerk. . The decree of affirmance so certified is incorrect in that it says that the decree is affirmed, with costs. This circumstance seems to me to prove that the decree was entered in the court of errors ■and appeals without an examination of the opinion, for if the respondent had, as he states in his answer, gone to Trenton to examine the opinion, he would have found that it declared that the decree should be affirmed, without costs; but the clerk, in entering the rule in the ordinary course of business would be governed entirely by the check list, and would not be likely to observe that the decree was affirmed without costs, and so would have entered, as he did enter, the decree as affirmed with costs, according to the usual practice of the court.

I am unable to believe that the respondent did anything in the way of preparing or entering that decree of affirmance and remittitur, unless it was to simply write to the clerk to enter the usual rule for affirmance.

The idea that a counsellor of this court of several years’ standing would, on a simple" affirmance, find it worth while to make a journey to Trenton to enter the rule of affirmance in the minutes of the court of errors and appeals, is well-nigh ridiculous. I think the charge of $25 and $10 for that work is exorbitant.

Hext is: “Mar. 7, Disbursements,’$70.49.” Ho items are given of the same, and I am unable to see where such disbursements could have been incurred.

The next item is: “Mar. 21, Drawing and executing warrant of satisfaction, $2,” which is correct.

The next and last item is: “Mar. 21-23, Services in ascertaining and settling tax liens against the premises, $10.” The proof shows that he did render some services in that respect; how much does not appear, but I shall make no criticism on that charge.

It appears that the cost of searches and of a copy of the stenographer’s notes was allowed to him by special order, and included in the taxed bill of costs.

It is to be remarked that, in addition to the charges which he has made, the solicitor’s column in the taxed bill of costs amounts to $77.30, and that, with the other disbursements, the costs amount to $122.65, and were paid by the defendants with the decree.

It appears in the letters of the respondent to the petitioner that the sheriff’s fees on the sale of the premises, amounting to $40.24, were paid bjr the complainant to the respondent, together with the sum of $38.11 for taxes in arrear, making in all $78.35, which amount was paid to the respondent by a check sent by mail on the 22d of March, one day after the respondent executed his warrant of satisfaction to the defendants, in which he acknowledged the receipt of the decree and costs.

It would thus seem that the petitioner paid in cash $140.24, besides the cost of recording his deed, in order to get back his title to some vacant lots upon which he held a mortgage, and that the respondent took the whole (less $18.56) of the money received for waste to pay for services in collecting the amount of the waste, to wit, the sum of $505.49. It seems to me that the affair thus stated speaks for itself.

I come, with regret, to the conclusion, upon the whole case, that the bill rendered by the respondent is not only untrue, but fraudulently untrue, in that it not only charges for services not rendered, but inflated the charges throughout quite beyond what the services were worth, even had the amount involved been larger. But I cannot refrain from repeating that in all these cases solicitors and counsel are always expected to regulate their charges somewhat by the amount involved, and that here was only $500, as found by both courts. 'There was, at the start, no room to suppose that a large sum could be recovered; and I find it quite impossible to avoid the conclusion that the respondent deliberately framed his bill for services in such a manner as to absorb the whole product of the suit.

The respondent, in his answer to the complainant’s petition, enlarges upon the large amount of study that he gave to the case, and the elaborateness of. his written arguments which he presented to the court. At my special request, he has sent me the briefs of the arguments which he used,, and they accord with my memory that there was nothing extraordinary in the assistance given by him to the court in solving the questions involved.

Under these circumstances, I think the case is brought squarely within the rule laid down by the court as above cited in Strong v. Mundy, and in the cases relied upon in support of that rule. 1 think that the case shows a “fraudulent intent” on the part of the solicitor, such as is aimed at by Chief-Justice Black in the opinion above cited. 1 think the “behavior” of the respondent has been “dishonest” and “oppressive;” and further, that the ease presents no “doubtful questions of law or fact to be settled.” 1 further think that it is brought within the description laid down by Mr. Justice Bradley, In re Paschal, where he says: “The ground of the jurisdiction thus exercised is the 'alleged misconduct of the officer. If an attornej^ have collected money for his client, it is, prima facie, his duty, after deducting his own costs and disbursements, to pay it over to such client; and his refusal to do this, without some good excuse, is gross misconduct and dishonesty on his part, calculated to bring discredit on the court and on the administration of justice. It is this misconduct on which the court seizes as a ground of jurisdiction to compel :him to' pay the money, in conformity with his professional duty.”

The last objection made by the respondent is that the complainant retained his check without complaint for a long time. The proof on that point is that the complainant, at the time the decree of the court of errors and appeals was rendered, had in his employ a Mr. Hayes, a real estate agent in New York City, and that this gentleman, at complainant’s' request, attempted to see the respondent with regard to the items of this bill, called at respondent’s office in Newark several times for that purpose, and failed to obtain any satisfactory explanation. This occupied considerable time. The complainant seemed to be somewhat wary of employing lawyers, but finally met, in a social way, the solicitor who represents him in this proceeding, and mentioned his grievance to him, and the latter took the matter up, studied it, sought interviews with the respondent, and finally filed the petition herein. • I think that the doctrine of laches has no application here, for the reason that the delay is not -only reasonably accounted for, but that the respondent could not have changed his position in the meantime to his own injury.

The rule above cited, laid down by Chief-Justice Black, approved by Chief-Justice Paxton, and, impliedly, by our court of errors and appeals, would bar the respondent from having any compensation whatever for his services, and the result would be an order for him to pay to the petitioner not only the amount received from the decree — $505.49—but also a return of the $100 paid on account during the progress of the suit.

I am not at all sure that such remedy would not be a proper measure of justice in the present case. It must be borne in mind that the complainant has been at the expense and trouble of employing counsel to establish his claim. He is in the position, forbidden by Chief-Justice Black, of being put to two suits to recover the same debt.

But, waiving that, I am of the opinion that, under the circumstances, the $100 paid to him as compensation pending the proceeding, together with his disbursements, if any, in addition to the taxed costs received from the defendants, will be a fair compensation for his services in this ease; and I will advise an order that he do forthwith pay into court the sum of $505.49, less $18.56, with interest thereon from the 21st day of March, 1899, together with the costs of this proceeding to be taxed, in which shall be included a counsel fee of $25 for petitioner’s solicitor herein, and that after such payment is made the respondent may have leave to adduce proofs, if he shall be so advised, of necessary disbursements made by him in the progress of the suit not included in the taxed bill of costs, and also of special services rendered by him as stated in his answer prior to the filing of the bill and not covered by his bill rendered.


source: Caselaw Access Project

author: Pitney, V. C.

license: Public Domain

text:
    Alfred W. Booth et al. v. Elizabeth Kiefer.
    [Submitted July 22d, 1900.
    Decided August 8th, 1900.
    Filed February 11th, 1901.]

      Gen. Stat. fi. 2073 § 38 provides that whenever any contractor shall, upon demand, refuse to pay any materialman the money due him, it shall be the duty of such materialman to give notice to the owner of the building of the amount due him, and that the owner shall thereupon be authorized to detain the amount due out of the amount owing to the contractor. Gen. Stat. p. 207J¡ § ¡¡1 provides that if the owner of a building shall, in advance of the terms of a building contract, pay any money on the contract, and the amount still due to the contractor, after such payment, shall be insufficient to'satisfy the notices served in conformity with section 38, such owner shall be liable as if no such payment had been made. — Held, that where a dispute arose between the owner of a building and one who had contracted to make repairs, and there was a submission to arbitration of matters in difference between them, concerning the materials used, &c., the liability of the owner to make the last payment did not mature until the award of arbitration was made, and claims of materialmen, of which notice was given to the owner of the building pending the arbitration proceedings had preference over a prior draft drawn by the contractor on the owner in favor of the plaintiff, whose claim against the contractor had no connection with the building.
    On bill, answer and proofs.

      Mr. James Benny, for the complainants.

      Mr. Elmer W. Demarest, for the defendant.
   Pitney, V. C.

The bill is filed by Booth & Brothers against Mrs. Kiefer to compel payment of an unaccepted draft or order dated September 15th, 1899, drawn by one Buettner on Mrs. Kiefer, in favor of complainants, for the sum of $600, with directions to deduct the same from payment due Buettner‘on his contract with Mrs. Ivieler for building a house located on East Thirtieth street, in the city of Bayonne.

The bill alleges that Buettner had built a house for Mrs. Kiefer, under contract, for the sum of $1,500, payable in three payments, the first of $450, the second of $450, and the third of $600; and it alleges, in substance, that the work was completed and that the third payment was due from Mrs. Kiefer to Buettner. It reaches this conclusion by setting out a submission to arbitration, and an award made by the arbitrators, which, as alleged, showed a balance of over $400 due from Mrs. Kiefer to Buettner. The submission to arbitration is dated November 7th, 1899, and the award is dated November 27th, 1899.

The defendant sets up in her answer that Buettner never fulfilled his contract, and never became entitled to his last payment; that he refused to finish the job, and the parties not being able to agree entered into the submission to arbitration, which reads in this wise:

“Witnesseth, that the said parties hereby do agree to submit all matters in difference between them concerning the kind and quality of materials used, the kind of workmanship, and the works omitted, if any, and all extra work and materials, and all deviations from the plans and specifications, as agreed,’’ &c.

It further sets up that pending the arbitration the Consumers Coal and Ice Company, which had furnished materials to Buettner for the erection of the building to the extent of $359.70, served a notice upon defendant, under the third section of the statute, and claimed the amount so due them out of whatever should be found due from her to Buettner, and submits herself to the jurisdiction of the court.

To the extent, of course, that Mrs. Kiefer is liable, under the statute, to the Consumers Coal and Ice Company, she is entitled to protection as against the order of Buettner in favor of the complainants.

There is no serious dispute about the principal facts of the case.

It is admitted that the complainants’ order is not based on any materials furnished to defendant’s building, and, if it were, it would not be of any advantage to them under the decision of the court of errors and appeals in Bayonne Building Association v. Williams, as reported in 14 Dick. Ch. Rep. 617. And it is further admitted that the stop notice of the Consumers Coal and Ice Company was based on an indebtedness due from Buettner to it for materials which were used on Mrs. Kiefer’s house, for the amount stated in the notice, for which a demand had been made, and which Buettner had refused to pay.

The question, then, between the parties is simply which has precedence on the funds in the hands of Mrs. Kiefer — the complainants or the Consumers Coal and Ice Company, which latter are not parties to the suit, but which conducted the defence for Mrs. Kiefer.

It will be observed that the submission to arbitration did not provide that the arbitrators should find whether any money was due from Mrs. Kiefer to Mr. Buettner, but simply

“to submit the matters iu difference between them concerning the kind and quality of materials used, the kind of workmanship, and the works omitted, if any, and all extra work and materials and all deviations from the plans and specifications.”

The arbitrators found as follows:

"First. We do award that said W. John Buettner deduct from the contract price named in the contract, the sum of fifty dollars as previously agreed upon between said Buettner and said Elizabeth Kiefer for the omission of the two attic rooms.
“Second. We do award that the said W. John Buettner deduct from said contract price the sum of sixty dollars for defective workmanship on the roof of said building, and the further sum of twelve dollars for defective workmanship and inferior material in the piers under the front of said building; and the further sum of five dollars for defective workmanship in the plumbing work of said building.
“Third. We do award that the said W. John Buettner is not entitled to any compensation for works claimed by him to be extra work on said building. ■
“Fourth. We do award that the said W. John Buettner shall deduct from the contract price the sum of thirty-seven and 60-100 dollars as one-half of the expense of these proceedings, and that the said Elizabeth Kiefer shall then immediately pay to said arbitrators the whole of said expenses.” .

It was further proven that the work done under the contract was simply the putting an additional story on a one-story-and-a-half house in the actual occupation of Mrs. Kiefer. She did not move out of the house, but continued to live in it while the work was being done.

The original price, according to the plans and specifications, was $1,450, but before the contract was signed it was agreed orally between the parties that for an additional sum of $50 Buettner should make and finish off two rooms in the attic, and the sum of $1,500 was inserted in the contract, but the additional work in the attic was not inserted in the specifications. This work in the attic he never did, except in part.

Besides that default, the roof was so entirely defective that the amount of $60 was fixed in the award as the amount which it would cost to put a new roof on.

Then the piers under the piazza were, by the specifications, to be twelve-inch-square brick piers, and they were, in fact, only eight inches square.

Buettner contended that he did all the work in the attic which he agreed to do; that he did not agree to do the mason work, and that he did set the partitions ready for the masons. But he did not hang the doors, and his story that he was not to do the mason work is simply absurd, since, by the written contract, he was to do all the work — mason and carpenter work, plumbing and tinning. So that it is proven as a fact in this cause that he never finished the building, and never became in law entitled to sue for and recover the last payment.

This is substantially admitted by the complainants. But they contend that the submission to arbitration was in effect an acceptance of the job by the defendant, and that on signing it a sum of money became due from her to Buettner, the amount to be determined by the award of the arbitrators.

I am unable to adopt this view. No money was due from Mrs. Kiefer to Buettner until the award of the arbitrators was made; and it may be an open question whether even after that an action at law could be maintained. He had never fulfilled his contract; and non constat that the arbitrators would ever make an award; the submission might be revoked, or the arbitrators might die, or fail to agree; and I am of the opinion that, the actual making of the award was an absolute prerequisite to any cause of action by Buettner against Mrs. Kiefer. The stop notice of the Consumers Coal and Ice Company was served on Mrs. Kiefer before the award was made. That being so, I am unable to see how the complainants can have preference over the Consumers Coal and Ice Company.

The fifth section of the Mechanics’ Lien law, as amended March 14th, 1895 (Gen. 8tat. p. 2073), provides that if the owner of a building shall in advance of the terms of such contract, pay any money or other valuable thing on such contract, and the amount still due to the contractor, after such payment has been made, shall be insufficient to satisfy the notices served in conformity with the provisions of the third section of the original act, such owner shall be liable in the same manner as if no such payment had been made.

In construing that act the court of errors and appeals, in Slingerland v. Binns, 11 Dick. Ch. Rep. 413 (at p. 415), said: “It directs that the owner shall not in any way discharge his liability to pay under the contract, until, according to the terms of the contract, the time to do so has arrived, in order that until that time such liability may be preserved for the benefit of workmen and materialmen who serve the statutory notice. This enactment affords a reasonably clear indication of a legislative purpose to give to persons entitled to serve the statutory notice an inchoate lien upon the liability of the owner under the contract, until that liability matures, according to the terms of the contract, such lien to become perfect on service of the notice before the liability matures, but to expire on such maturity if no notice has been given.”

This view was reiterated by the court of errors and appeals in Bayonne Building Association v. Williams, 14 Dick. Ch. Rep. 617.

In my judgment, the payment to Buettner never matured and became due until after the arbitrators had made their award.

My conclusion, therefore, is that the claim of the Consumers Coal and Ice Company must be first satisfied before the complainants are entitled to any payment on their order; and as the complainants have claimed priority over the coal and ice company and been defeated, the defendant’s costs must also be paid. The result will be, I suppose, that the complainants will get nothing.


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    Sarah E. Yglesias v. James H. Dewey, Richard W. Dewey and Harriet Potter.
    [Submitted July 25th, 1900.
    Decided August 18th, 1900.
    Filed February 11th, 1901.]
    1. An heir, by irrevocable power of attorney, delegated to two of her co-heirs the control and management of her interest in the lands belonging to the estate, authorizing them to receive the rents, and requiring them to pay to her the net income of the property to which she was entitled, less a certain sum which the deed recited they had advanced to her. The deed also expressly made a lien on her share in the estate a further advancement to her at the time of its execution, and her co-heirs then took possession thereunder. — Hold, to make them mortgagees in possession of her share, so as to defeat her right to possession until the advancements were paid.
    2. An heir cannot call for partition when co-heirs are in possession of her interest under a mortgage executed by her to them.
    3. An heir, who, as a condition of a loan to her of a certain sum by two of her co-heirs, covenants not to call for partition within a certain period, unless all the other heirs agree thereto, is bound thereby.
    Motion to strike out plea to a bill for partition.
    The complainant is the owner of an equal undivided one-fifth part of certain real estate in Hoboken, consisting of certain houses and lots. The defendant James H. Dewey is entitled to an equal undivided one-fifth part, the defendant Richard W. Dewey is entitled to two equal undivided one-fifth parts, and the defendant Mrs. Potter is entitled to an equal undivided one-fifth part.

      The allegation of the bill is that the defendants James and Richard have the possession of the premises as landlords, and have taken the rents, issues and profits for several years, and have rendered no account to complainant; that they have no authority to rent and demise the premises, and are not entitled to receive the rents and issues thereof; that the complainant is entitled to one-fifth of the rents and profits, and she prays that there may be a partition, and that the defendants James and Richard may account for the rents and profits. The bill also alleges that the share of complainant is subject to a mortgage given by her to the defendant Richard W. Dewey.
    The' plea sets up a deed executed by the complainant and duly acknowledged by her, and dated October 12th, 1896, which deed is in the nature of a power of attorney, by which she constitutes the defendants Richard and James her attorneys to exercise general control over all her lands and tenements in Hudson county, to ask for, demand, collect and receive the Tents and arrears of rents thereon, pay taxes, insurance, assessments, repairs and other necessary expenses, and to reimburse themselves thereout the sum of $130, previously advanced by them to her, and to pay her the balance from time to time as the same shall accrue, and at the end of five years from the 1st of November, 1896, to render a final account of their receipts and disbursements, pajdng her any surplus that may be in their hands, less the sum of $200 then and there advanced to her, the receipt whereof was acknowledged, and in consideration of the advance of $200 she declared the power of attorney to be irrevocable until the 1st of November, 1901, and made that sum a lien and charge upon her share in the estate, and agreed that she would not file a bill for the partition of the property aforesaid within said period of five years, unless all the other heirs agreed thereto.
    The plea alleges that Richard and James have received and collected the rents and profits, and paid the taxes and taken care of the property; that they have not reimbursed themselves the sum of $130 mentioned in the deed, but have paid to complainant the net balance of her share remaining after paying taxes, assessments, insurance, repairs, &c.

      The deed in question is set forth verbatim, and shows that it was executed by her alone.. Her husband, who is living, did not join.

      No question is made as to the sufficiency of the execution of this instrument by the complainant without her husband joining. The sole question raised is as to whether the plea, being taken for true, furnishes a bar to the complainant’s bill for relief.

      Mr. Elijah T. Paxton, for the complainant.

      Mr. William G. Eeppenheimer, for the defendants.
   Pitney, V. C.

In my judgment the effect of the power of attorney and the possession taken and held under it was to make the defendants mortgagees in possession of the complainant’s share of the premises, and to defeat any present right of possession on her part until the repayment of the sums of $130 and $200 mentioned in the deed. The complainant, then, is neither in possession, nor is she entitled, in equity, to the immediate possession of the premises. The same result arises from the mortgage given by complainant to her brother Richard, set forth in the bill. She cannot claim possession as against it.

For these reasons, according to all the authorities, the latest expression of which is Smith v. Gaines, 12 Stew. Eq. 545, she is not entitled to call for a partition. In the cases which hold that an outstanding mortgage given by a complainant in partition was no bar to the action, the complainant was in possession. Kline v. McGuckin, 9 C. E. Gr. 412.

But, independent of the fact that the defendants are in possession of complainant’s share as her mortgagees, I think that her covenant not to bring partition is a good and binding one. Under the circumstances it was quite reasonable, and it was the condition upon which the defendants advanced the loan to her. It was part and parcel of the contract. The authorities upon this topic are collected in Freem. Co-ten. & P. (Sd ed.) § 442.

I think the facts set up in the plea furnish a complete defence to the complainant’s bill, and the motion to strike out is refused.


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    Margaret Kingsland and Martha L. Kingsland v. Margaret E. Kingsland, executrix of Joseph Kingsland, second, deceased.
    [Submitted August 4th, 1900.
    Decided August 23d, 1900.
    Filed February 11th, 1901.]
    . 1; Where'testator bequeathed horses and cows to his daughters, and charged real estate devised to two sons, with pasturage for the animals, and the daughters filed a bill against the executrix of one of the sons to establish a liability against her and charge the land with the pasturage, the living brother was a.necessary party to the bill, though it alleged an agreement between the brothers whereby one should provide for the horses and the other. for ■ the cows, which agreement had been kept by the living brother. ,
    2. -The deceased brother having, devised all his land to his executrix' for life, °with remainder to his children, no decree could be made, binding on the land beyond the lifetime of the executrix, without the devisees in remainder being made parties.
    3. Whére testator bequeathed horses' and cows to his daughters, and1 charged real estate devised to his sons with hay and pasturage for the animals, and the daughters filed a bill against the executrix of one of the sons to establish a liability against her, and to charge the land devised with the pasturage, no decree could be made, where the bill failed to allege that any particular land sought to be charged was in the possession of the executrix.
    4. Where testator’s will bequeathed to his daughters two cows and two horses, and provided that his sons should furnish hay and pasturage for the animals, and charged lands devised to the sons with such provision^ testator not having any cows at the time of the bequest, it' was not a specific bequest, and hence the daughters were entitled to have, hay and pasturage furnished for any two cows and two horses they might possess.
    Heard on bill and answer.

      Mr. Peter Bentley, for the complainants:

      Mr. Joseph Coult, for the defendant.
   Pitney, V. C.

The complainants, Margaret and Martha Kingsland, are two' of the children and beneficiaries mentioned in the will (dated December 3d, 1869) of Joseph Kingsland, first, who died April 26th, 1878, leaving three daughters and two sons, namely, Richard and Joseph Kingsland, second, the latter being the defendant’s husband and testator.

The object of the bill is to establish a liability against the defendant individually and as executrix of her husband, and to fasten the same upon the lands of the first testator in the hands of the defendant as executrix of her husband and tenant for life.

The basis of the claim is a clause in the will of Joseph Kings-■land, first, in these words:

“I give and bequeath to my two daughters, Margaret and Martha, my homestead where I now reside, comprising my dwelling-house, with the barn, garden and orchard adjoining; also all my household and kitchen furniture and articles of housekeeping: also two horses, two of my best carriages, and two cows, for and during their natural Hues. I also give them the use of the stables and carriage-house, for the purpose of keeping the said horses and cows, as long as they shall require them; and I hereby direct my two sons, Joseph and Bichard, to provide hay and pasture for said horses and cows during the lives of my said daughters, and I hereby charge the real estate hereinafter devised to them with the provision of the same.”

It will be seen at once that whatever personal liability there piay be is one resting upon the two sons, Joseph and Richard, jointly.

In the absence of some contract of partition or division of this liability which shall be binding upon both the defendant and the complainants, Richard Kingsland is a necessary party to this suit. As a reason, apparently, for not making him a party the bill alleges that after the death of the first Joseph it was mutually agreed between Richard and Joseph, second, that Richard should furnish the pasturage and hay for the two horses, and that Joseph should furnish the hay and pasturage for the two cows which the complainants owned or possessed. There is no allegation that the complainants assented to and became parties to that agreement; but the allegation is that Richard has performed his part of the agreement to the satisfaction of the complainants. It further alleges that the defendant’s testator, Joseph, performed his part of the agreement until the year 1895, when he declined to further perform it, and died in the year 1899 testate of a will, of which the defendant is the sole executrix.

The defendant, by her answer, denies all knowledge of any such agreement between the two brothers, and as the case is heard on bill and answer without any proofs whatever, I am unable to see how this defect of parties is cured. But the defendant makes no point based on that ground. . ■

The will of Joseph, second, after providing for the payment of his debts and funeral expenses, gives, devises and bequeaths to his wife, the defendant Margaret, the use, enjoyment and income during Tier life of all of the residue of his real and personal estate, with power of sale, and to invest and reinvest the principal and the proceeds of sales, and also power to make division of portions of principal and interest among his children if she feels disposed so to do, and at her decease he gives all his estate to his children then living and the issue of any who may have predeceased him leaving heirs, and appoints his wife sole executrix.

No decree can be made which'shall bind any lands beyond the lifetime of the defendant, without the devisees in remainder being made parties.

Eurther, there is no direct allegation which ought to-be the basis of judicial action that any particular tract of land of the first testator remains in the possession of the defendant. The following is all that the bill alleges in that respect: “That said defendant is still possessed of a large tract of land of the property of Joseph Kingsland, deceased.”

The answer does not help the complainant in this respect.

The theory of the bill is that the effect of the above clause in the will is to give the complainants a right of actual pasturage for their horses and cattle on, and the right to gather hay from, the lands of the testator which came to his two sons, Richard and Joseph; and the prayer is that the defendant shall be restrained from preventing complainants pasturing their cows on lands, and from preventing complainants gathering hay on lands. This, presumably, is the. ground for coming into this court, and of an application which was made for an injunction based upon affidavits annexed to the bill. This application was not pressed, and the affidavits, of course, will not be considered.

I am unable to adopt this view as to the proper remedy, but am of the opinion that the decree, if any be made, must be for payment of a sum of money annually, which will be sufficient to pay for the pasturage and the hay for two cows, and a declaration that that amount is a standing charge on the lands; and, of course, that decree cannot be enforced without a description of the lands to be affected thereby.

These matters show that it is, probably, impracticable to grant the complainants any relief under the bill as at present framed.

But the defendant took no point as to that, and the parties seem to desire the opinion of the court as to the construction of the clause above quoted. Here, again, the court has no help from any statement in the bill or answer as to the circumstances which surrounded the testator at the time of the making of the will or at his death. It is not stated that he had any cows, horses or carriages.- The answer, indeed, does say .that Eichard and Joseph, the sons,

“did furnish hay and pasturage for the two horses and two cows bequeathed to the complainants and selected by them, for their use during their lives, and continued to give them the use of the stable and carriage-house for the purpose of keeping said horses and cows as long as the said horses .and cows taken, by the said complainants under the provisions of the said will continued to exist, and that all the said horses, and cows had died and were no longer in existence prior to the year eighteen hundred and ninety-five.”

But there is no allegation that the horses and cows were chosen out of those which the first testator had at the time of his death.

The full meaning of the clause in question is not of easy determination. The clear intention of the testator was that the complainants should have the use of two cows and-two'horses and. hay and pasture for them during the lifetime of his said daughters. The use of the words “for and during their natural lives” after the gift of the horses, carriages and cows, and, again, of the words “during the lives of my. said daughters” after the provision for the keep of the animals, puts this beyond debate. Here, again, the age of the daughters at the time of his decease is not given, so that we have not their then probabilities and possibilities of life. ¡But the fact that they are still alive is some proof that their expectation' of life was good for many years.

The argument of the defendant is that the use of the word “said” before the words “horses and cows” in the. clause confines the provision for keep to the identical horses and cows given by the testator, and at the death of those horses and cows the liability ceased.

I am unable to yield to that argument. It assumes that the •testator must have entertained the notion that his daughters, in the ordinary course of human affairs, would not outlive the domestic animals .which they might acquire under his will. This is contrary to common knowledge. Assuming, as we must, that the complainants were quite young at the date of the making of the will in 1869, I am unable to infer that the testator, at that time, supposed that, after allowing for his own probable life, his daughters would not live longer than the horses and cows which they would receive under his will.

. Again, this argument of the defendant assumes that the horses and cows so given were specific legacies of horses and cows to be chosen out of testator’s own stock. There is nothing in the pleadings to show that the testator owned any horses or cows at .the time of his death, or that if he did own any, that the horses and cows of which the complainants became possessed were chosen by them from the stock which the testator had at the time of his death. But if that fact did appear, it seems to. me ■that, under all the authorities defining specific bequests, this bequest of horses and cows cannot be held to be specific.

■ It .will be observed that the usual- earmarks which were relied upon in the early, authorities to render bequests of chattels of this character specific are wanting here as to the horses and cows. We do not find the adjective “my” or other word of distinction prefixed to “horses” and “cows,” as my horses, and my cows; while in the same gift the word “my” is applied to carriages. The words are — “two horses and two cows.” Hot “two ■ of my horses and two of my cows.” This omission in the case of the horses and cows in the same sentence in which it is used in connection with “carriages” is significant.

I do hot propose to go into the authorities on this subject. The older ones will be found collected in Chancellor Green’s opinion in Norris v. Thomson’s Executors, 1 C. E. Gr. 218 (at pp. 221, 222), and in 1 Rop. Leg. 191, and 2 Wms. Ex. (R. & T. ed. of 1895) 436. It is true that the decree made by Chancellor Green in Norris v. Thomson’s Executors was reversed on appeal under the peculiar facts of that case; but the authorities cited by the chancellor and his definition of a specific bequest were not impugned.

Among the later definitions of a specific bequest is one by Jessel, master of the rolls, in Bothamley v. Sherson, L. R. 20 Eq. 304 (at p. 308), where many later cases are cited. And later, in Robertson v. Broadbent, 8 App. Cas. 812 (at p. 815), Lord Selborne defined a specific legacy as follows: “Something which a testator, identifying it by a sufficient description, and manifesting an intention that it should be enjoyed in the state and condition indicated by that description, separates in favor of a particular legatee from the general mass of his personal estate.” To the same effect is the definition given in Giles v. Melsom, L. R. 6 H. L. 24.

I am of the opinion, then, that the bequest of the horses and cows was not a specific bequest, but was one which gave the complainants a right to have two good horses and two good cows purchased for them with money of the estate, in the absence of any held by the testator at his death answering that description; and that in using the word “said” in connection with the horses' and cows the testator did not have in mind any particular horses and cows which he might own at the time of his death, but merely the horses and cows which the daughters were to have under his will. It is true that the will does not provide that the horses and cows so given should be renewed at the expense of the estate from time to time during the lifetime of his daughters, the complainants. But it seems to me that the absence of such a provision in the will is not sufficient to overcome the clearly-expressed intention that the hay and keep should be provided during the lifetime of the complainants. This provision seems to me, by necessary implication, to include in the provision horses and cows however acquired.

Taking the clause in question as a whole, I think the better opinion is that the provision was not confined to the first horses and cows which the complainants acquired under the will, but that it was a continuing provision, applying to any which they should acquire, not exceeding two of each, during their lifetime.


text:
    Charles Schultz v. Hugo F. Waldons.
    [Submitted September 24th, 1900.
    Decided October 12th, 1900.
    Filed February 11th, 1901.]
    Where there 'was no previous partnership or joint enterprise between the parties, and they agreed by parol that defendant should purchase and take title to land in his own name, and hold it for the joint benefit of both, and plaintiff contributed no money to the enterprise, the contract was within the statute of frauds, requiring agreements relating to land to be in writing, and plaintiff could not recover any interest in the land without written proof of the contract.
    On motion to set aside decree dismissing the bill, and for a rehearing on the ground of newly-discovered evidence.

      Mr. Edgar H. Loveridge, for the motion.

      Mr. Albert Leuly, contra.

   Pitney, V. C.

The bill in this cause was filed for the purpose, first, of obtaining .an account of cash profits derived by the defendant from the purchase of two lots of land in West Hoboken, the erection of two houses thereon and the sale thereof, and a decree that the complainant was entitled to one-half thereof; and, second, for a declaration that the defendant holds a certain house and lot, which was conveyed to him in exchange for the houses and lots first mentioned, in trust, as to an undivided one-half thereof, for the complainant.

The basis of the complainant’s claim, as stated in his bill, is a parol agreement entered into by him with the defendant prior to the purchase of the two lots first mentioned, by which the defendant agreed to make the purchase on joint account with the complainant, and that everything done in the way of purchasing, building, selling and exchanging was so done on joint account. The allegation of the bill is- that the complainant “did enter into an' oral agreement” with the defendant, and in consideration of money to be advanced by the complainant to the defendant, and of the endorsement of the notes of the defendant, in order to raise money for the purpose of buying said lands and building thereon, the defendant

“should take and hold the title of said lands and buildings, and sell or exchange the same to others for the best possible price he could obtain, and for the best and mutual gain and advantage of himself and your orator, as a joint venture, and that he would well and faithfully account : to your orator for one-half of any profit derived from said venture.” ■

The bill does not pray for an answer, either under or without oath. The defendant answered under oath, denied any such agreement as that set up in the bill, and answered in detail all the specific charges in the bill, and also set up the statute of frauds.

At the hearing I held, for reasons then stated orally, that the complainant had not made out the allegation of his bill that there was a contract between the parties for a joint venture, and advised a decree dismissing the bill. Not a particle of written evidence was produced in support of complainant’s allegation of the alleged contract.

Shortly after that decree was made, a motion to open the "decree and for a rehearing of the cause, based upon affidavits of newly-discovered evidence, was made. Those affidavits were made by several persons, and stated admissions made' by the defendant in affiants’ hearing that the transaction was a ’joint Venture. The admissions were of the same character as those relied upon by the complainant on proof at the final hearing in -the ease of Smith v. Burnham, 3 Sumn. 435 (1838), and were disallowed probative force by Mr. Justice Story.' The motion might well be refused upon that ground, .upon the authority of that case.

■ But, admitting, for the purposes of the motion, that the evidence,' after the affiants were subjected -to the test of cross-examination, would establish the fact of a joint venture in this case, there still remains to be dealt with the question of the application to the transaction of the statute- of frauds. And if it should be found, upon the examination of the question, upon principle and authority, that that statute is a defence, it s not worth while to open the case to produce the proofs in open court.

I have looked into the authorities with some care, and come to the conclusion that the statute is a bar to the complainant’s relief.

It may be conceded that a partnership may be formed for the purpose of dealing in real estate; and it may -be further admitted that if the members of a going partnership, with a partnership fund, shall, in pursuance of a parol agreement between them, purchase with partnership funds real estate-for the, purpose of being used, not as an incident in the ordinary business of the partnership, but purely for speculative purposes, the title being taken in the name of one member of the firm, he will be, held to hold it for the benefit of the firm; but this holding will not be based upon the parol agreement between the parties, but upon a trust resulting from the fact that the partnership funds and partnership credits were used for the purchase thereof.

The question still remains whether if two persons, not theretofore engaged in business jointly as partners or otherwise, and ■Having no joint or partnership funds, shall agree that they will go into a single joint venture of the purchase of real estate upon a parol agreement that the profit, if any, shall be equally divided between them, and the title be taken in the name of one, the other, without having contributed anything toward the purchase-price, can claim a benefit from the purchase.

And that is the present case. There was here no previous general established partnership or joint operations between the parties, nor any joint fund, nor did the complainant advance any money whatever towards the purchase. The facts show that all he did was to endorse the note of the defendant upon which money was raised to make the first payment on the purchase of the lots; and then, afterwards, when further money was needed by the defendant in the erection of the houses, the complainant endorsed one or more notes for him. The defendant, however, paid these notes, and the complainant contributed no money whatever.

It is not necessary to cite authorities for the position that if A employs B to purchase a certain piece of real estate for him, and furnishes him with the money to pay for it, and B negotiates for and purchases the premises, takes the title in his own name, and pays for it with his own money, A, in the absence of any writing signed by B, by reason of the statute of frauds, can have no remedy against him.

On the other hand, if A employs B to purchase a certain piece of real estate for him, and gives him the money for that purpose, and B negotiates for and takes the title in his own name, but pays A’s money for it, B holds the title in trust for A, though there be no writing signed by him, on the ground that such trust resulted from' the circumstances of the case.

In each of these supposed cases the title was taken in the name of B contrary to the parol understanding between A and B; but in either case, if the original parol agreement had been that the title should be taken by B for the benefit of A, the result would have been the same. In the one case, B could hold the'title against A if he did not use A’s money in payment of the purchase-money; in the other case, B holds the title for A because he did use A’s money in payment of the purchase-money.

But it is alleged, and there is some appearance of authority for the position, that if such a contract, resting wholly in parol, were made for a joint enterprise in the nature of a partnership, the result would be otherwise. I am unable to adopt that view, and I think it is not sustained by any weight of authority.

The two cases principally relied upon in its support are Forster v. Hale, 3 Ves. 696, before Sir William Grant, master of the rolls, and, on appeal, before the Earl of Rosslyn, lord chancellor, 5 Ves. 309 (1800), and Dale v. Hamilton, decided by Vice-Chancellor Wigram, 5 Hare 369 (1846), and, on appeal, by Lord Cranworth, lord chancellor, 2 Phil. 266 (1848).

Mr. Lindley, late master of the rolls, in his work on Partnership, states the law thus (at p. *81):

“First. A partnership [with regard to real estate] constituted without writing is as valid as one constituted by writing; and second, if a partnership is proved to exist, then it may be shown by parol evidence that its property' consists of land.”

Speaking of Forster v. Hale, supra, he quotes the famous dictum of the Earl of Eosslyn in that case, and then refers to Dale v. Hamilton, supra, and the elaborate and somewhat celebrated judgment of Vice-Chancellor Wigram in that case, and says (at p. *82):

“This is certainly going a long way towards repealing the statute of frauds. Dale v. Hamilton was appealed from, and the plaintiff obtained a decree without any issue as to the fact of partnership.”

But he adds:

“Both in Forster v. Hale and in Dale v. Hamilton there was a signed writing showing a trust in the plaintiff’s favor, and this circumstance was relied upon by Sir William Grant in the former case, and by Lord Cottenham in the latter; but, curiously enough, the signed writing was not made-the foundation of the decision of Lord Rosslyn in Forster v. Hale, and-was not considered sufficient by Vice-Chancellor Wigram in Dale v. Hamilton.”

This criticism of Mr. Lindley is perfectly just. There was no occasion whatever for the elaborate examination of the authorities indulged in by Vice-Chancellor Wigram, for there was a distinct paper, signed by the persons holding title to the real estate, by which they acknowledged the right of the plaintiff. And in Forster v. Hale the case was put by Sir William Grant distinctly on the writing, and all that was said by Lord Eosslyn on the general subject was a pure obiter dictum. I will not heie repeat it, but 'content myself with saying that a careful examination of it shows that it does not support the proposition here in question.

Then Mr. Lindley proceeds to say that Vice-Chancellor Wig-ram’s decision is difficult to reconcile with sound principle, or with the more recent “decision of the case of Caddick v. Skidmore” decided by Lord Cranworth, lord-chancellor, as.reported in 2 De G. & J. 52 (1858), on appeal. The bill was there filed for an' account and a' share in'the profits of a mining operation, and was based' upon an alleged co-partnership agreement, one defence being that there was no sufficient agreement within the statute of frauds. The bill was dismissed on this ground by Vice-Chancellor Kindersley, and again, on appeal, by Lord Cranworth. The head-note is:

“An agreement between A, a lessée of a mine, and B, to become, partners in the mine, paying the reserved rent, sub-letting the mine at a royalty, and dividing the profits. — Held, to be within the statute of frauds, and not sufficiently proved by a receipt signed by A and given to B for a sum as B’s share of the head, rent of the-mine, the sum being exactly half ■ of that rent.” - -

And the lord chancellor, in delivering judgment, said: “The grounds upon which I proceed are that the agreement was one for the purchase of an interest in land, which was not reduced 'into writing so that its terms can be ascertained; that there was no part performance; and that the defendant sets up a totally different contract from that which is insisted upon by the plaintiff, and claims the benefit of the statute of frauds.”

The older case (1732) of Lake v. Gibson, 1 Eq. Cas. Abr. 290; 8 Wms. P. 158 (sub nom. Lake v. Craddock); and the later case (1855) of Essex v. Essex, 20 Beav. 442 (at p.449), decided by Sir John Romilly, not by Lord Cransworth, as stated by Mr. Brown (§ 261c), do not, when carefully examined, support the complainant’s case. They dealt with written contracts to carry .on partnership for a certain period of years, with an option to the partnership to buy the lands on which it was carried on, which was owned by one of the partners, at any time during that period, and it was held that the result of the transaction was to make the real estate personal property, and that the option to purchase did not expire with the.exact time limited in the written contract, because the partnership business was orally extended .upon the same terms beyond the time limited in the contract.

Against the general proposition above referred to, namely, that the mere fact of a joint or partnership enterprise will prevent, the operation of the statute, may be cited the old ease of Bartlett v. Pickersgill, 1 Eden 515 (1760); 1 Cox 15. The leading.case in this country is Smith v. Burnham, supra, where Mr. Justice. Story makes an elaborate examination of all the .authorities up that date (1838). There the.Jearned justice, in a ease much like the present, held, first, that the plaintiffs ease was not made out; and, second, if it was made out, if was within the statute of frauds.

The ease in this state of Personette v. Pryme, 7 Stew. Eg. 26, simply holds that two owners of land — a farm — could agree by ' parol ..that the working of the property on a farm should be considered and conducted as partnership business, each owner contributing 'equally to the support of a widow, whose support for life was a-charge on the land, .and to the expenses and taxes, and that an account should be kept of the proceeds derived from the sale of the produce, and of the sale of any sand therefrom.

The ease of Chester v. Dickerson, 54 N. Y. 1 (1873), was a suit against three persons who were alleged- by the plaintiff to ■ be engaged in partnership in the buying and selling of lands, charging them with fraud in representations made with regard to those lands to induce a sale thereof to the -plaintiff. The title was in one of the. defendants, and the representation was made by "one of the defendants, who was not the owner of the land; and the alleged partnership between them was proven entirely by parol. ’The question here involved was not therein involved; though, the learned justice, in delivering the opinion of the court of appeals, held that a partnership in dealings- in land could exist by parol. In the course of the opinion the court approves of 'the -reasoning of Vice-Chancellor Wigram in Dale v. Hamilton, but' does not call attention to the fact that' there was a written declaration, signed by the-defendants, in that case, or to the fáet that on appeal the-plaintiff’s.ease was rested wholly on that written contract. These circumstances prevent the case from having any application to the present case.

Another case in New York is Traphagen v. Burt, 67 N. Y. 30 (1876). There three parties were confessedly engaged in the business of buying and improving real estate. They bought two farms, and the title was conveyed to the parties jointly. Moneys were expended by all the parties in the improvement of these farms, and there was an established partnership fund-and going business. Then one of the parties, by consent of the others, purchased a third farm, and, without the knowledge or consent of his partners, had the title taken in his own name. After-wards, it was treated as partnership property precisely as the other two farms. The head-note states the decision thus:

“After discovery by plaintiff of the fact that the farm was conveyed to defendant, the parties entered into an agreement that plaintiff should convey to defendant his interest in one of the other farms, and in the personal property thereon, defendant agreeing, among other things, to convey to plaintiff an undivided one-half interest in the farm in question. The agreement was fully executed save in respect to such conveyance, which defendant refused to execute. — Held, that aside from the question of the co-partnership, plaintiff was entitled to and could enforce a specific performance in this particular.”

An authority in New York in favor of the position I have above taken is Levy v. Brush, 45 N. Y. 589. The head-note of that ease is as follows:

“A verbal agreement was entered into between the plaintiff and defendant, by which the latter agreed to bid off in his own name, and enter into a contract for the purchase of land, and pay from his own funds the necessary amount for that purpose for the joint benefit of both. The plaintiff was to reimburse one-half of the money so paid; the deed to be taken in the name of both. — Held, the defendant having bid off the land in his name and taken a contract thereof, but refused to convey one-half of the contract to the plaintiff, that no action would lie to compel the execution of the agreement.”

In Bissell v. Harrington, 18 Hun 81 (1879), an agreement was made between the members of a partnership already existing to buy a farm on speculation on account of the partnership, each party furnishing his share of the funds necessary to carry out the speculation. That distinguishes the case from the present.

In Everhart’s Appeal, 106 Pa. St. 349 (1884), the head-notes are:

“1. Where a partnership is formed for the purpose of buying and selling lands, one of the partners cannot establish his interest in such lands by parol evidence, where the other sets up the statute of frauds requiring agreements relating to lands to be in writing. 2. But that rule does not apply -to an agreement for a division of profits arising from the sale of lands so purchased by the partnership.”

The cas.e is quite similiar to the one before the court, and the proofs consisted entirely of proof of admissions by the defendant of the complainant’s one-half interest in the enterpriseand were also distinct admissions relating to a large sum of money and other personal chattels in the hands of the defendant representing the profits of the transaction. The court held that as to those profits the admission was binding,, but not as to any of the real estate not yet disposed of.

The above remarks cover the most important of the authorities cited by Mr. Brown in his treatise on the Statute of Frauds § 261, et. seq.; and by Mr. Reed in his treatise, volume 2, section 727, et seq.

The result of my consideration of the subject is that where, as here, there is no previous partnership or joint enterprise between the two parties, A and B, and they agree, by parol, that B shall purchase and take title in his own name to a single piece of real estate, and hold the same for the benefit of both, and A contributes no money to the enterprise, and there is no written proof of the contract, the statute of frauds prevents A from successfully claiming an interest in the land.

The motion to open the decree is refused, with costs.


text:
    Charles Sullivan et al. v. International Baking Company.
    [Submitted January 27th, 1900.
    Decided February 7th, 1900.
    Filed November 17th, 1900.]
    While the firm of W. & S. was indebted to a certain creditor, S. sold his interest to G., who failed to pay the agreed consideration, and who sold to A., who refused to pay the consideration. After the firm became insolvent a newly-organized corporation received its assets, and in consideration therefor agreed to pay the firm debts, and issued stock to W. and A., and to one who had loaned money to the firm after the debt to said creditor had been contracted. — Held, that a sale of the corporate assets, acquired from the firm, under a judgment obtained by the creditor against the firm of W. & S., after the formation of the corporation, transT ferred a valid title, as against a receiver of the corporation who was appointed at the day of the sale, in proceedings commenced after the judgment was rendered, where the corporation had contracted' no new obligations. , • . !
    Heard on petition and answer of William Y. Mulford, receiver,' and evidence produced in open court.
    Mr. Doremus is the receiver appointed by this court in insolvent proceedings of the International Baking Company! The petitioner complains that a'S such receiver he has in possession certain. goods and chattels which belong to the petitioner, and prays that he may be directed, by this • court to deliver the same to him. ' 1 >

    The chattels consist of the machinery, implements, &e., constituting a bakery plant, which were in the possession of the insolvent corporation at the time of the appointment of the receiver, but were at that time subject to the levy of an execution in the hands of a constable founded on a judgment in favor of a firm composed of Smith and Morehouse, doing business under the name of C. Smith & Company, against a firm of Walker & Straehan, who, it is admitted, were once the owners of the plant, and transferred it to the baking company after the accrual of the debt which was the basis of the judgment, and before the recovery of the judgment.
    The petitioner, who purchased the goods at constable’s sale under the judgment, asserts that the transfer from Walker & Straehan to the baking company was made after Smith & Company’s debt accrued, and without any valuable consideration, and was fraudulent and void as against the judgment creditors, C. Smith & Company, because it tended to hinder and delay them in the recovery of their debt. And that was the point litigated. hTo question was made as to the power and propriety of the court proceeding in this manner to determine the question.

      Mr. James E. Howell, for the petitioner.

      Mr. John J. Joyce, for the receiver.
   Pitney, V. C.

At and before the 20th of March, 1899, Walker & Straehan were partners engaged in the business of baking, and were the owners of the plant here in controversy. Between March 20th and May 24th, 1899, they became indebted to C. Smith & Company in the sum of about $170.: About the 20th of May, Mr. Straehan sold out his interest in the firm to a Mr. Germer for $2,000, and took his promissory note for the same. The business continued as before, and part of the terms of the sale was that the new concern was to assume all the existing debts. Mr. Germer, apparently, soon perceived that the business was a losing one, and his interest in it of no value, and sold out that interest to a Mr. Sullivan. Sullivan never paid Germer anything, for the reason that he found that Germer had not paid Straehan, and was not likely to do so. The fair inference from the facts and circumstances is that Germer was a man of no pecuniary responsibility. The object of bringing Sullivan in was to increase the business of the plant, so that it might make a profit instead of being conducted at a loss, as it was at that time, and Sullivan interested himself in' the direction of increasing the business.

The concern at that time was indebted in the sum of $4,600, in which was included, with C. Smith & Company’s claim, a debt of $1,000 for borrowed money which it had just procured on the note of the firm from a Mr. Steenburg. That $1,000 was placed in bank to the credit of the firm, and was expended in part payment of its floating indebtedness. The probable motive of Steenburg in making the loan was that his son might be employed by the concern. Then, on the 39th of May, the International Baking Company was formed by Walker, Steenburg, Jr., and Sullivan, and afterwards, on July 36th, it purchased the plant from the firm at an expressed price of two hundred and fifty shares in the corporation, and issued shares of stock therefor to Walker and Sullivan. Not a dollar in cash was paid for the stock so issued. One thousand dollars of additional stock was divided among Walker, Sullivan and young Steenburg on the strength of the $1,000 which the elder Steenburg had loaned to the firm of Walker & Germer, and the plant and other assets and good will were transferred to the corporation by a bill of sale dated July 36th, 1899, which expressly assumed all the debts of the partnership. Not a dollar in money was paid for the transfer. ■ When Mr. Sullivan looked into the finances of the corporation he found a sum of money in the treasury of less than $50, which came from the firm.

The business had been previously, and continued to be, conducted at a loss until the SYth of September, when the bill pray-( ing for the appointment of a receiver was filed.

In the meantime suit was brought by C. Smith & Company on their demand against the firm of Walker & Strachan, judgment was recovered September 19th, and levy made before the bill for the receiver was filed. The property was properly advertised for sale, and sold by the constable October 3d for $460, and purchased by Mr. Mulford. The receiver was appointed the same day.

The sum bid was paid by Mulford to the constable in cash, and C. Smith & Company’s execution was paid out of it, and the balance retained by the constable to answer any demand for arrears of rent which were then due.

If the transfer to 'the corporation had been made directly by the original defendants in execution, Walker & Strachan, I should say the ease was not debatable. The circumstances satisfy me that the firm was substantially insolvent at the time of the transfer, and, as I have stated, no consideration was paid. The issuing of shares of stock to the members of .the firm was not a valuable consideration, for the reason, among others, that it had no intrinsic value, and was, with the exception of the shares issued to Steenburg, issued to the very individuals who owed the debts of the firm. The effect was simply to put the title of the property and assets of the partnership in a corporation which assumed the payment of the debts of the partnership, including those of C. Smith & Company, without the least pecuniary ability to pay them. The result was unlawfully to hinder and delay the creditors in the enforcement of their claims against the partnership property.

The only question is whether the withdrawal of Strachan and the substitution in his place of Germer, and afterwards of Sullivan, changed the character of the transaction. I am of the opinion that it did not. Germer never paid Strachan anything, and Sullivan never paid Germer anything; but in point of fact the shell of an indebtedness from Sullivan to Germer, and Germer to Strachan, was later on settled by a transfer of shares of stock in the corporation from Sullivan to Strachan.

But further, the debt from Walker and Strachan to Smith & .Company became by assumption, and was in equity, the debt of the partnership, which was constituted at the moment of the transfer to the corporation. So that the change in the personality of the composition of the firm becomes quite immaterial.

No new rights were acquired by any person by the transfer to the corporation, and so far as appeared at the hearing by any of its business operations during its short life — two months. It collected some of the dues to the partnership, bought its supplies in cash, and incurred no new indebtedness.

I will advise a decree accordingly.