author: Bergen, V. C.

text:
    Beak Lithia Springs Company v. Great Bear Spring Company.
    [Decided May 22d, 1906.]
    1. A corporation may adopt a corporate name if not in conflict with the Corporation act, but such adoption gives it no greater right to use it to tile injury of another than if an individual should so act. A corporation cannot appropriate the name or trade marks of another, and thus obtain its business by any simulation or deceit.
    2. Where the complainant had first adopted as a trade mark or symbol the figure of a black bear, the defendant’s subsequent use of a polar bear as a trade mark or symbol is not an infringement.
    3. If the commodity which the complainant is selling under a trade name, trade mark or symbol, is offered to the public under a misrepresentation or falsehood, he has no standing in a court of equity, nor can he successfully call upon that court to aid him in preserving to him the right to deceive the public without interruption.
    4. The complainant’s advertisement of its water as “bottled at the spring,” when in fact it was bottled at a city warehouse, and also the declaration in such advertisement that such water is a cure for certain diseases named therein contrary to the truth, are such misrepresentations as will induce the court to refuse the complainant any relief.

      On final hearing on bill, answer and proofs.

      Messrs. Collins & Corbinfor the complainant.
    ■ Messrs. Weller & IÁchiensiein, for the defendant.
   Bergen, V. C.

The issue presented in this cause is the alleged infringement by the defendant of complainant’s trade name and symbol. The complainant advertises its potable water under the name “Bear Lithia Water,” and a symbol which is the representation of a black bear with the words “Bear Lithia Water” printed across its body. It appears that recently some of the advertising matter of the ccftnplainant contains figures or representations of various kinds of bears, including one of a polar bear, but such use was made for the purpose of illustrating the printed matter, and not with the intention of adopting them as a trade symbol. The symbol used by the complainant upon all of its labels, and which it relies upon as its adopted trade mark, is a black bear standing upon four feet, with the words above mentioned printed across its body. The defendant advertises its potable water and offers it to the public under the name of “Great Bear Spring Water,” and is using as a trade symbol the figure of a polar bear standing on a cake of ice in some cases, and in others partly on a cake of ice and partly in the water in which the ice is floating. The complainant claims priority in the use of a bear as a symbol, and of the word “Bear” as descriptive of the origin and ownership of the articles sold, and charges that in using the polar bear as a symbol, and the words “Great Bear Spring” as descriptive, the defendant has created a confusion in the marketing of goods of the respective parties, resulting in unfair competition, besides misleading the unwary purchaser, and prays that the defendant be restrained from using the word “Bear,” or the figure of a bear of any description, in connection with its business. The water sold by the complainant comes from springs at Elkton, Va., located on lands owned by a family named Bear as long ago as 1778, and which, at least since 1860, have been known in the neighborhood of Elkton as “Bear Springs,” a name undoubtedly accorded because tbe lauds were owned by tbe Bear family. While the testimony shows that this water was sold prior to 1885, such sales were confined to a very limited area, and were not of sufficient moment to have any weight in settling the merits of this controversy, but in the latter year an analysis of the water was made by Professor Mallet, of the University of Virginia, which disclosed the presence in the water of twelve one thousandths of a grain of lithia per gallon, and from that time the name “Bear Lithia Water” was adopted to describe the water, and a copy of the analysis has since then been printed on the labels used by the complainant on one of its packages. The analysis of the water made by the defendant for the purposes of this suit vary so little from that made in 1885 that I am justified in assuming that the earlier analysis was substantially correct. Prom 1888 the complainant and its predecessors in title have extensively advertised this water as “Bear Lithia Water,” in connection with the figure of the black bear above described as a symbol, until it has become well known in the market under that name. The testimony also shows that the defendant did not put its goods on the market under the name and symbol it now uses until after the complainant had, to some degree, established a name and reputation for its water under the trade name “Bear Lithia Water,” in connection with its trade symbol of a black bear with the name of the water printed across its body.

The defendant’s use of its name and symbol, of which complaint is made, originated as follows: Near Pulton, New York, there existed a spring known for many years in that locality as the “Great Bear Spring.” It was situated in a section of country which for several miles adjacent to the spring contained numerous other springs, some of which were appreciably affected by the drawing of the water from the Great Bear Spring, for a public water-supply. In 1885 a water company was organized to furnish the city of Fulton with a public water-supply, and for that purpose the Great Bear Spring was appropriated by that company and artificially enlarged, so that its capacity was increased at the expense of other smaller springs in the immediate vicinity. In 1890 a partnership was formed by persons at Fulton under the name of the “Pure Water Supply Company,” which at first purchased water from the Fulton Water Company, taken from the Great Bear Spring, and sold it in Syracuse, New York, as a table water. This business so increased that in 1894 the partnership established a branch in Jersey City, and began supplying potable water to purchasers in New York City, as well as in other cities adjacent. The water distributed from Jersey City does not come from the original Great Bear Spring, but from other springs located in the same district or water-shed some distance from it. The defendant undertook to show that the spring from which the water they are selling is taken was known in the neighborhood as one of the Great Bear Springs, but in my opinion the preponderance of the evidence does not favor that claim, and my conclusion is that the water which they are thus selling does not come from the Great Bear Spring, nor is it one of a group sufficiently near the Great Bear Spring to be classed as a feeder to that spring, because it has an outlet of its own and has no subterraneous connection with the Great Bear Spring, since it has not been depleted or affected by the demands made upon the greater spring.

On the 18th day of April, 1899, the defendant was incorporated under the laws of this state, assuming the name of “Great Bear Spring Company,” which corporation succeeded to the property and rights of the Pure Water Supply Company, and has since conducted its business under the new name. The complainant corporation was also incorporated under the laws of this state, in August, 1899, as “Bear Lithia Springs Company,” succeeding to the corporate rights of the Bear Lithia Water Company, á corporation organized under the laws of Virginia. While the water sold by the defendant was always advertised, since 1890, as “Great Bear Spring Water,” the use of the polar bear as a trade emblem does not appear much earlier than 1894, at least not to an -extent sufficient to indicate any intention to appropriate it for such a purpose. The complainant by its bill of complaint prays for an injunction restraining the defendant from using the word “Bear” as a part of its corporate name; from applying the word “Bear” to the water sold by it, and from using the figure of a bear of any description in advertising or selling its table water. The defendant insists that because it was chartered by this state to use its present corporate name, this court cannot restrain such use. This proposition has not the sanction of the best authority. A corporation may adopt a corporate name if not in conflict with our Corporation act, but such adoption gives it no greater right to use it to the injury of another than if an individual should so act. A corporation cannot appropriate the name or trade marks of another, and thus obtain its business by any simulation or deceit. C. S. Higgins Co. v. Higgins Soap Co., 144 N. Y. 462.

The first question presented is, Has the defendant, by the adoption and use of a corporate name, including the word “Bear,” and by advertising its goods as “Great Bear Spring Water,” unlawfully infringed the rights of the complainant, resulting in unfair competition and probable confusion of business? There is ho pretence that the defendant has simulated the labels or packages of the complainant, other than in the use of the figure of a polar bear. The labels otherwise are so distinct in size, shape and color as to negative any charge of attempted simulation. They are so different that no person of sufficient intelligence to warrant the court in entertaining his complaint on that score could possibly mistake the package if depending upon its appearance as an assistance to the character of his purchase. The question under this branch of the case is reduced to the charge of unfair competition in business arising from the confusion of the names of the “Great Bear Spring-Water” and “Bear Lithia Water.” In support of this claim the complainant has shown that it has received from its customers communications through the mails Variously addressed to “Great Bear Spring Company,” “Great Bear Lithia Water Company” and “Great Bear Spring Water Company,” which it insists shows that the confusion among its customers is great, and that the defendant is unfairly benefited, at complainant’s expense, in the competition for business between them.

The evidence in this cause leaves no doubt in my mind that, to a certain extent, the use of the word “Bear” in the two names is confusing to some of complainant’s customers, and that the similarity between the names of the two corporations is so great that the ordinary purchaser may be easily confused and misled to send his order to the defendant when it was his intention to buy from the complainant; but I am also of the opinion that the confusion shown by the testimony is not, to any appreciable extent, caused by the symbols used by these parties, but is confined entirely to the difficulty in distinguishing between the corporate names, and that the use of the word “Bear” in'the two names is the principal cause of the confusion, for it is not shown that such condition existed while the defendant was marketing its water as the “Pure Water Supply Company,” but only arose after the defendant had adopted its present corporate title. This title it adopted with full knowledge that the complainant iras then in the market, selling its water under the title of “Bear Lithia Water Company,” and it is to be charged with the knowledge that in adopting a name Avith the word “Bear” in it, confusion would be likely to arise, especially as the business it was engaged in Aras substantially the same as that then being carried on by its competitor. It might hare continued to carry on its business of selling Great Bear Spring water under the name of the “Pure Water Supply Company,” and have thus avoided the confusion in business proven to exist in this case. It chose to do otherwise, and the result which it should have apprehended would follow norr exists, and if this question alone controlled this cause, the complainant would be entitled to the relief sought on this particular branch of the case.

The next ground of complaint is that the complainant having adopted as a trade symbol the figure of a black bear, the defendant should be enjoined from using as a trade symbol the polar bear. I am not disposed to accede to this claim. The animals represented, Avhile of the same genus, are so dissimilar in appearance, and the labels upon which they are used so unlike in color, shape and size, that anyone relying upon the label and the symbol, as indicative of the character of the article he desired to purchase, could not be misled, nor could the goods of one of these contestants be sold as the goods of another by an unscrupulous dealer to any person of ordinary intelligence who relied upon the character of the symbol.

In Popham v. Cole, 66 N. Y. 69, it was held that'the use of a .small, lank and lean wild boar was not an infringement upon the representation used by another of a large, fat, well-conditioned domestic animal of the same genus, the court saying that they were “so entirely dissimilar that the one can hardly be said to be an imitation of the other, and clearly not a fraudulent or deceptive imitation.” In the case now under consideration the complainant’s symbol is a black bear with the words “Bear Lithia Water” printed across it. The symbol used by the defendant is a large polar bear, white in color, and unless we are to hold that the use as a symbol of a black bear prevents another from using as a- symbol any other of the bear genus of an entirely distinct type and color, then the complainant’s contention on this point must fail, and in my judgment the use made by the complainant of the black bear with large letters across it does not give it the exclusive right to the use of every other figure of a bear.

The defendant also interposes as a reason why relief should not be afforded to the complainant that it does not come into court with clean hands. It was shown that on all of the labels used on carbonated water by the complainant is the statement that the water is “bottled at the springs.” This statement was proven to be untrue. The water is not bottled at the springs, but is brought from the springs in large glass-lined tank cars to New York City, where it is siphoned by a pipe or hose into a tank in the warehouse, and from thence bottled. The complainant seeks to meet this charge by the argument that, as they bring the water from the springs in glass-lined tanks, for all essential purposes it is bottled at the springs. This argument does not appeal to me, if there is any merit in having the water put in the bottles at the springs, and that there is merit is to be inferred from the fact that the complainant keeps that statement constantly before the eyes of its purchasers. In my judgment this statement is material in inducing the public to purchase what the complainant offers for sale. It may be fanciful, it may be that just as good results are reached by bringing the water in glass-lined car tanks and bottling it in New York City as if it was bottled at the springs, but the purpose of the advertisement is to induce the sale of the water, and when the public are buying potable water because they supposed it to be bottled at the source or spring, and thus kept pure and less subject to contamination, and therefore more healthful than that furnished through the ordinary public water-supply or other local sources, they have a right to be furnished with what it is represented to them they are buying, and it does not answer the purpose to be told that some other method of bottling is just as good. The complainant, during the progress of the trial, when this point was made by the defendant, gave orders to discontinue the use of the labels containing the false statement, but in my judgment repentance came too late to be entitled to any consideration in the determination of this cause. The condition existed when the bill of complaint was filed, and the discontinuance of the misrepresentation when discovered and exposed is entitled to but little consideration in determining the bona, fides of the complainant’s position when it applied for equitable assistance.

The second objection urged by the defendant in this point is that the complainant has falsely represented to the public the curative property of Bear Lithia Water, and that such representation was known to the complainant to be untrue. The evidence shows, beyond doubt, that as long ago- as 1893 the complainant’s circular advertisements and all letterheads used by it contained the following representations referring to Bear Lithia Water:

“Nature’s own remedy. Cures kidney and bladder troubles, uric acid, gout and rheumatism, phosphoric deposits, inflammation of the bladder, dropsical affections, brick dust deposits, gravel, and all forms of dyspepsia.”

The advertisement on the letterheads included malaria as one of the ills curable by the use of this water, but this statement was not embraced in the circular. The letterheads of the complainant now in use still advertise that the water cures not only the foregoing list of ailments, but, in addition thereto, “Albuminuria, cholera infantum, malaria, and all forms of dyspepsia.” It is proper to say that all of complainant’s advertisements do not make, the broad claim above set out, but.the general trend of them all is an appeal to those suffering from the enumerated troubles to use .the water with a confident expectation of. cure in all cases which are supposed to be derangements likely to yield to lithia when prescribed as a medicine, and the information sought to be conveyed by these advertisements is that the presence of lithia in the Bear Lithia Water makes it an antidote in eases of that class.

The testimony shows that the minimum dose of lithia usually prescribed by a reputable physician for the relief of a disease for which that medicine in its commercial form is usually given is three grains each, three times a day, and in order to administer a like quantity by using Bear Lithia Water, the patient would have to drink at least one thousand gallons of water in twenty-four hours. The testimony of three most reputable physicians called by the defence shows very clearly that the water, used as freely as human capacity will permit, not only will not cure, but will not afford any benefit beyond such as would come from the use of any ordinarily pure drinking water. The complainant produced some witnesses as experts who had no experience in the use of the water, but their testimony proves nothing beyond the claim that from a chemical standpoint the analysis was not inconsistent with the possibility that the water might have a beneficial effect upon the diseases it was claimed it would cure. One of the witnesses gave it as his opinion that “its mineralization does not preclude its being of medicinal value,” and that the possibility would be enhanced if there was present a recently-discovered agent, which he described as “radio activity,” but there was no evidence that “radio activity” was present in the water. The testimony of these experts as a display of learning is very interesting, but does not meet the question at issue, for none of the experts or physicians called by either side pretend that this water would cure any of the diseases named, except Dr. Smith, who did say that acute rheumatism, resulting from a gouty affection, might be cured by the use of a proper remedy, and that such a result might be reasonably expected from the use of this water, but that it would cure rheumatism generally he did not assert.

The credulity of a court cannot be expected to extend beyond a reasonable limit, and when testimony is given which is opposed to common knowledge and the experience of mankind, as well as reliable medical evidence, hypothetical testimony which seeks to lead to a contrary result must be rejected as of no value. It is testimony, but not evidence. That this water will not cure the ills it is promised by the complainant that it will is in accord with the evidence in this cause and with common sense. There may have been isolated cases where the user supposed his recovery was aided, or perhaps produced, by the use of this water, for conditions may have existed in some cases which made it appear to the person benefited that it was the result of the use of this water, but that is the case with every quack medicine, as the numerous testimonials obtainable and published in such eases testify, but that this water will cure all the human ills it is advertised to do no sane person can for a moment believe, and assuming, as we must in the absence of contrary evidence, that the managers of the complainant corporation were and are in that class, they were, in advertising for sale their commodity, making a statement which they know to be false. The question is thus presented, Do such representations justify this court in refusing the relief asked for? In considering this question I disregard all claims of the complainant to the effect that the defendant has been guilty of like conduct, without passing upon the question whether such conduct has been proven, for the complainant is the supplicant for aid, and it is its position, and not that of the defendant, which must be established to be such as to appeal to a -court of conscience. In cases of this class the complainant, to be entitled to equitable relief, must show an honest property right in the trade mark or label for which he is seeking protection, and the rule is well settled that if the commodity which the complainant is selling under a trade name, trade mark or symbol is offered to the public under a misrepresentation or falsehood, he has no standing in a court of equity, nor can he successfully call upon that court to aid him in preserving to him the right to deceive the public without interruption. Manhattan Company v. Wood, 108 U. S. 218; Worden v. California Fig Co., 102 Fed. R. 334, and cases there cited and discussed.

An advertisement, “The great smallpox and diphtheria cure and preventive, cures the worst cases without marking,” &c., was held to be such á misrepresentation as to require the court’ to withhold its aid from the party using it. Houchens v. Houchens, 95 Md. 37; 51 Atl. Rep. 822. The doctrine that the complainant must come into court for relief, in causes of this class, with clean hands, and that if any misrepresentation is used by the complainant to enhance the sale of his product it will induce the court to withhold its decree, is so well supported by authority that a citation of them is unnecessary.

This complainant has advertised its water as bottled at the spring. The ordinary and proper interpretation of this language, and the one intended to be conveyed by the complainant, is that the water in. the bottle upon which the label is pasted was put in that bottle at the spring, and thus kept free from any possible contamination that might affect it during transportation to the buyer, and he is justified in relying upon that statement, a statement not true, and known to the complainant to be false.

In Krause v. Peebles & Son, 58 Fed. Rep. 585; 594, Judge Taft said: “The manifest advantage which ‘distillery’ bottling has in the bottled whiskey trhde arises from the improbability that a distiller’, bottling whiskey at his own distillery warehouse, would bottle any whiskey but that which he has distilled,” and he refused the injunction upon the ground that this advertisement was a misrepresentation. The argument used by Judge Taft applies with equal force to water, and bottling it in a warehouse in New York City is not bottling it at a spring.

The declaration that the Bear Lithia Water is a cure for the diseases named is not an expression of opinion as to the possible or hoped-for effect, but a positive statement of a fact which is not and cannot be true. The care with which all courts have protected the public against imposition, so far as they have had the power, should be rigorously exercised when the misrepresentation is calculated to mislead those seeking a restoration to health, and any conduct which leads people to believe that a remedy will effect a cure, when it is known that it will not, is a menace to the community that cannot be too severely condemned, and the court should hasten to declare its determination not to aid in its perpetuation.

There will be a decree dismissing the bill of complaint.


source: Caselaw Access Project

author: Bergen, Y. C.

license: Public Domain

text:
    Alvernia R. Morgan v. William A. Morgan.
    [Decided June 22d, 1906.]
    1. P. L. 1898 p. 659 § 48, giving the court jurisdiction to transfer a lien from land sold to the money or proceeds of the sale in all cases where the court shall order the real estate sold free and discharged of any lieu or encumbrance, was not restrictive, and did not deprive the court of jurisdiction to order the proceeds of land sold in partition to be paid into court, though the sale was not directed to be free from debts which were enforceable against it.
    2. A conveyance of land sold under an order of the orphans court to pay debts of an intestate, not made until after a year from the intestate’s death, would pass only the estate of which the intestate’s heirs were seized when the order was made.
    3. The Partition act, section 52 (Q-en. Stai. p. 248B), provides that if it shall appear by proceedings in partition that there are any existing liens or encumbrances on the share or interest in the premises of any party named in the proceedings, the court shall, if it order a sale, in the decree for sale, direct the master to bring into court, or pay to the clerk, the portion of the money arising from the sale of such share or interest of the party after deducting the portion of the costs, charges and expenses to which it shall be liable.—Held, that where certain land of an intestate was subject to sale as between heirs to pay intestate’s debts, but a decree for partition directing a sale omitted to require payment of the proceeds into court, such omission might be corrected by a supplemental order directing the money to be paid to the clerk to await final adjudication of the claims properly enforceable against it.
    On bill for partition. Heard on petition of administrator for proceeds of sale.

      Mr. Austin II. Swaclchamer, for the complainant.

      Messrs. Watkins & Avis, for the defendant.
   Bergen, Y. C.

By the bill filed in this cause partition is sought of lands in Gloucester county, in this state. The complainant and defendant became jointly seized each of an equal undivided share of the lands by inheritance from their mother, Eebecca 0/Morgan, who died intestate November 12th, 1902, seized of the lands. The bill for partition was filed by the sister, the brother being the sole defendant. He has answered, and, among other matters, set up that he was an administrator, with complainant, of Eebecca C. Morgan; that her personal estate was insufficient to pay her debts, and, while consenting to a sale if an equitable partition could not be made, prayed that the proceeds of such sale should be held to answer the debts of the intestate. Proceedings were subsequently had in the cause, which resulted in a sale of the lands, the amount realized being $9,800, which sum is now in the hands of the master making the sale. The defendant as one of the administrators now presents his petition showing that the debts of the intestate greatly exceed not only her personal estate, but also the amount realized from the partition sale of the lands, and asks that the proceeds of the sale be not distributed between himself and complainant, but impounded and paid over to the clerk of this court to await the demands of the settlement of decedent’s estate. It also appears that the 'only claim presented against the estate which will justify this procedure is represented by a bond of the intestate, payable to this applicant, in the sum of $15,000, the legality of which is being contested in a law court. The order applied for is resisted upon the ground that there is no provision in our act relating to partition of lands held by tenants in common authorizing the court to make such order, and that it can only be done where the court has directed the land sold free and discharged of the debt, and as an incident of such order may direct the money paid into court, and to support this proposition I am referred to P. L. 1898 ¶. 559 § 11$. But this section is not restrictive. It merely creates a power to transfer a lien from the land to the money in all cases where the court shall order the real estate sold free and discharged of any lien or inheritance.

In. the present case the debt the applicant represents was a lien on the lands sold until the sale and transfer to the purchaser, for as to him, the year during which lands may be sold to pay debts having expired, they would not be a lien, but as to the heirs of the deceased debtor the lands remain liable, notwithstanding the year had elapsed, until a bona fide sale has been made (Haston v. Castner, 31 N. J. Eq. (4 Stew.) 697, 699), and the power of the orphans court to order a sale of the lands to pay the debts of the intestate remained subject to the condition that the conveyance under an order obtained after the year had passed would only convey the estate of which the heirs of the deceased was seized when the order was made. This court having converted the land which was liable for the debt into money, it would not be equitable to entirely discharge the lien and remove this converted property beyond the reach of those having an encumbrance on the land. As it appears by the answer and proceedings in this suit that there is an encumbrance upon the estate or share of both parties to this cause, I think section 58 of the Partition act should apply, for, although if read literally it would appear that the court should order the master to bring the fund into court in the decree for sale, the paramount intention of the act is to preserve the fund for proper application, and the omission to incorporate the legislative mandate in a particular order or decree does not forbid, but rather requires, that the omission be corrected by a supplemental order, and if necessary the decree for sale can be amended, as all parties in interest are before the court.

An order will be advised directing the master to pay to the clerk of this court the proceeds of such sale, less complainant’s costs and the master’s fees and expenses as allowed by law.


text:
    Frank Woolsey et al. v. Virginia M. Woolsey et al.
    [Decided June 22d, 1906.]
    The matters involved in this suit are res adjudieata, and this court is bound by the decree of the court of errors and appeals in Woolsey’s Case, 68 N. J. Eq. (g Roll.) 768.

    Oil final hearing on bill, answer and proofs.

      Messrs. Garrick & Wortendyke, Mr. James Buchanan and Mr. Robert II. McGarier, attorney-genera], for the complainants.

      Messrs. Grouse & Perkins and Mr. Richard V. Lindabury, for the defendants.
   Bergen, V. C.

The complainants seek to restrain the enforcement of a decree of the orphans court of the county of Hudson, entered in compliance with the mandate of the court of errors and appeals on exceptions to the account of the complainants as executors of the last will of Charles A. Woolsey, deceased.

The foundation of the prayer for relief is that the only quesj tion raised by the record in the accounting proceedings was whether the payments for which allowances were asked had been actually made to the-persons named, and that no issue was presented by the record upon which the appellate court could properly rest a finding refusing the application of such payments towards the discharge of the principal of certain legacies.

The bill charges that, although the money was really paid to the same parties now claiming it, credit was refused complainants for $27,016.85' so paid, because, in the judgment of the court of errors and appeals, such payments ought not to have been made on account of annuities until legacies amounting to $15,000 and a trust fund of $20,000 had been provided for; that complainants, as such accountants, are decreed individually responsible for this large sum under the rule laid down in Appleton v. American Malting Co., 65 N. J. Eq. (20 Dick.) 375, by which payments of income, made to and unwittingly received as such by a beneficiary, cannot be charged against the principal of a fund from which it is falsely represented it arises, and they insist that the question whether the legatees were induced to exhaust their principal “by the mistaken or fraudulent representation of those to whom he had entrusted it that what has been paid is income” was not before the .court, and that so much of the decree as adjudges that the pajonents made by the complainants are not 'applicable to the principal has no record to support it, because no such issue was presented for adjudication; that the only issue was payment or non-payment, and that the application of the payments was adjudged without record or hearing.

They also claim, and have undertaken to show in this cause, that all payments for which credit is denied were made upon an agreement with the legatees that they were to be charged to principal in default of sufficient estate to satisfy annuities and principal, and that there was no misrepresentation as to the character of the payment, but assert that no evidence was offered on the hearing in the orphans court on this matter because the issue as framed did not permit it.

The complainants further insist that the will justified them in holding testator’s investments in the paint company as a security for the $20,000 trust, and that it was sufficiently set apart to warrant them in so considering it, and thereupon to pay the life tenant annuities, which they did to the extent of $7,499.72, and that the refusal to allow a credit to them for that sum because they had not set apart the trust fund, without a hearing on the question of their right under the will to hold the investments in the company as security for the trust, deprives them of their property without due process of law. The defendants have answered without questioning the propriety of the method pursued, and much testimony has been taken, but under the view I take of this case it is only necessary to refer to the items in the account which are subject to the present consideration of the court. By the decree the accountants are charged with $27,016.85, the sum of the items for which credit was' refused, and also with the balance, which the executors admitted they had in hand, of $5,986.85, a total of $33,003.60 with which to satisfy the trust of $20,000, and also $10,950 balances due on legacies, making a total of $30,950, and leaving a surplus of $2,153.60, which complainants say is properly payable on account of annuities, and having once paid it to these defendants on that account, it is inequitable to require them to pay it again. This, I think, fairly states the complainants’ position.

Considerable testimony was taken with regard to the conduct of the company, the- increase of salaries of the officers, and charges of. mismanagement made and denied, but I have not considered these matters, because no objection was made to the charging part of the account, and certainly those matters were not within the issue on the former hearing, and unexplained charges made without giving parties' a chance to be heard in denial could not have influenced the court.

I am satisfied, from the evidence in this cause, that if the decree assailed is res judicata, as to all the questions raised by the complainants, they will be unfairly deprived of their property, but this situation arises, in my opinion, because they misunderstood the issue, or, if not, negligently omitted to offer the evidence at hand which -they now claim would have produced a different result; but in either case this court cannot, and ought not to, interfere in the absence of any charge of fraud or of corrupt practices. But the complainants insist that the result reached was not warranted by the issues shown in the record sent up by the orphans court.

What appears in the record is that the complainants presented their account in the orphans court, to which exceptions were filed,'and as the exceptions are alike in all cases affecting the question now being considered, I will quote but one, which reads as follows:

“That the sum of $14,832.82, claimed to have been paid by said executors, to December ¿1st, 1902, to Mrs. V. M. Woolsey, 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 purpose of such an account as is now under consideration is to ascertain what estate hath come to the hands of the executor, what disbursements have been properly made, and to determine the balance in hand to answer the bequests of the testator, and it seems to me indisputable that an exception which charges that an item for which credit is claimed was not in fact paid properly raises the question of the legality of the payment, for if not legal it is no payment for which an allowance should be given. Manifestly the exception above stated requires the accountant to show, not that the money was passed over to another, but that it was a lawful payment, or a payment for which he should have a credit in the account he oilers.

In this case the court of last resort has adjudged what credits should be allowed and decreed the balance in hand for distribution under the will, and I am unable to discover any reason, nor have I the knowledge of any rule of law, which would support the theory that the settlement of charges and disbursements and the ascertainment of the balance for which an executor should account, under the circumstances present in this cause, is not a final adjudication of the questions. The decree does not undertake to distribute the fund. It merely fixes the balance to be accounted for, and if the manner of distribution was not within the record, and was not lawfully passed upon, and is not res judicata, the very questions raised here can be more effectively presented on the application for a decree for distribution, or offered as a defence when the parties who are entitled to the balance found by the decree attempt to enforce their claims. The balance in hand need only be paid to those lawfully entitled to it. If the question of the application of the payments to the legatees is not res judicata here, it would not be subject to that objection in- another forum, but if the question has been settled by the highest court in tire state, it is a closed door in all our state courts.

The ascertainment of the balance for which an executor should account to legatees does not usually settle the question of payment to legatees or distributees. Whatever they may have had on that account is a credit, to which the executor would be entitled on a settlement between the parties.

Under the view I take of this cause, no equitable ground for interfering with the decree is. presented, and the bill of complaint should be dismissed.


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    William Bettle, commissioner of banking and insurance, v. The Republic Savings and Loan Association.
    [Decided July 10th, 1906.]
    1. The issue of income stock by a building and loan association formed under the act of April 9th, 1875 (Rev. Btat. 1875 p. 6fy), authorizing the incorporation of such association, but containing no authority for the issue of such stock, was ultra vires the association.
    2. Where a building and loan association, formed under the act of April 9th, 1875 (Rev. Btat. 1875 p. -61f), desired to raise money to meet the necessities of its borrowing members, arid issued certificates payable on sixty days’ notice, three years after date, with interest, payment whereof was secured by real estate mortgages or cash deposited with a trustee, the holders of such certificates were not stockholders, but creditors, and entitled to be paid out of the funds held by the trustee in full, subject to no deduction for costs, expenses or premiums, with the further right to participate pro rata with other creditors in the assets of the association, provided the fund held by the trustee was insufficient.
    3. The association could not escape liability on the ground that, as the' act under which it was formed conferred no borrowing power, the borrowing of the money was ultra vires.

    On petition of receiver for instructions.

      Mr. Foster M. Voorliees, for the receiver.
   Bergen, V. C.

The defendant, an insolvent corporation, having issued certificates for the payment of money which it denominated “income stock,” the holders of it demand that certain assets of the company, pledged for its security, be applied towards the redemption of these certificates in preference to the ordinary stock, such as is usually issued by a building and loan association. The defendant was organized prior to 1897, under the statute authorizing the incorporation of building and loan associations, approved April 9th, 1875, and in its articles of association provided that income stock might be issued under such terms and conditions as the directors should prescribe, the dividends on this stock, such as the directors might fix, to be in lieu of any further participation in the profits of the corporation, the holder to have the right to surrender the certificate and receive the principal of his investment within sixty days after such surrender. The articles also provided that ten per cent, of the face value of the stock, and a monthly charge of sixteen and one-half cents on each $50 paid, should be deducted for the expenses of the association.

On. June 10th, 1897, the association and the Fidelity Title and Deposit Company entered into an agreement, the opening recitals being

“That whereas, the association is about to issue what is known as income stock, to be sold to investors generally, with coupons attached, payable quarterly, with interest* at the rate of six per cent, per annum; and whereas, it is desired that the said stock shall be deposited with the trustee until sold by the association, the redemption thereof, as also the payment of the coupons, to be secured as hereinafter provided.”

The agreement then provided that this stock was to be deposited with the trust company and by it delivered, on the order of the association, when paid for at par, whereupon the association was to assign to the trustee real estate mortgages equal in value to the stock sold, to be held by the trustees as collateral security for the redemption of the stock, and deposit with the trustee all interest payments received on account of such mortgages towards the payment of the coupons for interest attached to the stock certificates, and in order to save the trustee harmless, it was stipulated that the holders of the stock were to depend

“altogether upon the proceeds of such assigned mortgages for the redemption of their stock at maturity, and upon the deposits aforesaid for the payment of interest coupons,”

and in case of a default in the payment of any principal or. interest due on any of said mortgages, other mortgages were to be assigned in the place of those in default, and should any of said mortgages be foreclosed, the proceeds of the sale of the mortgaged premises should be deposited with the trustee.

Some of this stock was issued, placed in the hands of the trustee,, and twenty-nine certificates, representing a value, at par, of $4,800, were sold, of which $1,100 in value were redeemed before insolvency, leaving outstanding $3,700, with interest unpaid from April, 1902. About the time the stock was issued mortgages were assigned to the trustee as collateral for its redemption, but they were afterwards withdrawn and cash deposited with the trustee of an equal amount, the sum in hand at the time the receiver was appointed being $3,890.70.

The certificates were sold to investors who were not otherwise members of the association, and were in the following form (omitting formal parts):

“This certifies that there has been paid to this corporation the sum of one hundred and fifty dollars in cash. The bearer is entitled to receive from this corporation the face value hereof, on sixty days’ notice, at any time after three years from date hereof; pending such redemption, interest will be paid hereon, at the rate of six per cent, per annum, on the first days of October, January, April and July, in each year, on the presentation and surrender of the attached coupons, when payable. The principal and interest thereof are secured as certified in the trustee’s certificate endorsed hereon.”

The endorsement on the certificate made by the trustee recited that the association had deposited with it

“money equal in amount to the par value of the income stock called for in this certificate, or has assigned to it mortgages upon real estate represented to be of equal value, and to have been executed and recorded according to law, as collateral to secure the redemption thereof at maturity, and which money the said Fidelity Title and Deposit Company hereby agrees to apply to the redemption thereof at maturity.”

The petition, of the receiver admits that although the association in the first instance deposited with the trust company mortgages sufficient to cover the amount represented by the certificates issued, these mortgages were withdrawn and cash deposited in lieu thereof, and thereafter the proceeds of the sale of the stock were deposited with the trust company. It thus appears that when this receiver took possession of the assets of the association, cash representing the proceeds of the sale of all these certificates then outstanding remained in the hands of the trustee, according to the agreement made by the trustee with the purchaser and endorsed on his certificate, and by that same endorsement the trust company agreed to apply this money to the redemption of these certificates. By an arrangement with the trustee, under the direction of this court, the money was paid to the receiver, to be held by him subject to the equities which the holders of these certificates had therein, as if it yet remained in the hands of the trustee. Upon the foregoing statement of facts the receiver prays for instructions regarding the application of this special fund in the following particulars: First. Are the holders of such certificates entitled to be paid the full face value thereof ? Second. Are they entitled to be paid in full the coupons past due and unpaid? Third. Shall there be deducted the share of the expenses of the corporation under article 3 5, section 5, of the articles of association, which reads, “All expense deductions on each certificate, except 'income5 stock and 'investment5 stock, shall remain a charge against the same?55 Fourth. Shall there be deducted from this fund sums paid by the receiver for legal expenses incurred with respect thereto in the proceedings had in this court? Fifth. Are such shareholders to be treated as unpreferred creditors and entitled to share equally with other unsecured creditors ?

The act under which this association was formed, and in force in ISO1? when the certificates in question were issued, contained no authority for the issue of any such stock as is denominated in the articles of association “income stock,55 and the issue thereof would be ultra vires the association. The holders of the certificates now under discussion insist that they are not stockholders, but holders of a certificate of indebtedness of the association for money borrowed by it from them, and that under the terms of the agreement between the association and the lenders, made at the time they parted with their money, the association bound itself to deposit with the trust company, either in mortgages or cash, a sufficient security to provide for the redemption of themertificates after three years from their date, upon sixty days’ notice of a request that they be redeemed: that this agreement on the part of the association and the trust company was observed, and the money necessary for their redemption always remained in the hands of the trustee, by whom it might be lawfully applied for such purpose. In opposition to this it is urged that the certificates represent stock of a special class, which the association had no authority to issue, and therefore no power to secure its payment with collateral security; that the holders of these certificates are not entitled to payment in preference to other stockholders, and can only be paid ratably with them. It was further insisted that the act under which the defendant organized does not authorize it to borrow money, and for want of such power no debt was created, and consequently there was nothing to be paid which the collateral could secure. With regard to the first objection, I am of opinion that the holders of these certificates are not stockholders, but creditors of the defendant for money loaned. These certificates do not purport to be stock, but simply a receipt for money received by the association, which it agrees to repay to the holder at a time and upon conditions therein stated. It is on its face only an obligation to pay to the bearer, with lawful interest, a fixed sum of money, and has not the necessary characteristics of a stock certificate, nor is it claimed that the holders ever undertook to exercise the rights of stockholders, or were recognized as entitled so to do. The situation, as it appears from the papers before me, was that the association desired to raise money for the purpose of meeting the necessities of its borrowing members, and offered to persons who had money to invest their obligation, payable upon sixty days’ notice, three years after date, with interest at six per cent., the payment of all of which was to be secured by depositing with the trustee either mortgages on real estate or cash, and the trustee guaranteed by its endorsement upon the certificate of indebtedness that it had, and would always retain in its hands, a sufficient indemnity to repay the money upon demand, according to the terms of the obligation. The holders of these certificates had, in addition to the obligation of the association, the guaranty of the trust company, not only that it had in hand the indemnity, but agreed, in the words of their certificate, “which money or collateral said Fidelity 'Title and Deposit Company hereby agrees to apply to the redemption thereof,” and it seems to me that it would be inequitable to abrogate this agreement and take from the hands of the trustee the money which it now holds, and which it promised to hold, as a protection to the persons who advanced and loaned their money upon the written representation of the association and the trustee that an available security was always at hand to repay the loan upon proper demand. The trustee ought to carry out its agreement. It made itself liable to the holders of these certificates, whether they be considered as stock or obligations for the payment of money. There was nothing unlawful in the making of the guaranty by the trust company. It was within its chartered powers^ and if it chose to indemnify innocent holders against an unlawful act of the association, it must keep its bargain. It has the money in hand and should apply it as it has agreed to do as between itself and the holders of these certificates.

On the argument my attention was called to two reported cases to which I shall briefly refer. 'The first was In re Guardian Permanent Beneficial Building Society, 23 Ch. Div. 440. Here the security deposited to secure the loan was required to be given up because the officers of the association, in disregard of the rules governing their powers, had authorized an unlimited borrowing, and for that reason the court held that the loan did not create either a legal or equitable debt from the society to the person making the loan, but in that case the court was influenced by the fact that in some cases the funds loaned were not applied to the payment of the obligations of the company, but “were lent to unadvaneed members,” and' “got so mixed up in a way which renders it difficult to say how far they have been applied in one way and how far in another,”' but nevertheless the court, after directing the payment of outside debts and the claims of unadvanced members, held that the surplus of the money thus borrowed could' not be retained by the society, thus recognizing the right of the unlawful lender to an equitable claim against the society. The facts in the present case differ so radically from those in the case just referred to that it affords us no assistance in disposing of this matter.

The other case cited was Towle v. American Building and Loan Association, 75 Fed. Rep. 938. There the court said that the certificates held by the claimants, and for which preference in-payment was asked, was nothing more than capital stock, and that the holders thereof constituted simply a different class of stockholders. This case, however, is not applicable here, for the certificates in that case purported on their face to be stock. The only difference between the questioned stock and the other stock certificates of the same corporation was that in. one case the holder had paid in full when the stock was issued, while in the other payments were to be made periodically.

More in point, however, is Wilson’s Case, L. R. 12 Eq. 521. Here a building society borrowed from Mr. Wilson $2,001, for which he was given a written acknowledgment of the amount borrowed, together with the pledge of certain securities which were delivered to him as collateral for the payment of the loan, subject to the right of the obligor, in any of such securities, to pay the same, in which case new securities of adequate value were to be delivered and pledged in the place of those taken up. The society becoming insolvent,' the public liquidator demanded the surrender by Wilson of the securities. This was refused, and the refusal sustained by the court, without passing upon the right of Wilson to enforce his securities. It, however, recognized the lien which Mr. Wilson had, and refused to disturb it or to require him to 'surrender the securities, leaving him to indemnify himself therewith in any manner permitted by law. In the case we are considering the security is money in the hands of a trustee for the use of the creditors, and no question of the right to reduce securities to money can arise.

The other objection made to the payment of these certificates is based upon the claim that the act under which the association was formed confers no borrowing power, and that in the absence of such authority the borrowing of this money was ultra vires, because it was not properly a part of the business which the statute authorized the defendant to carry on, and therefore not a necessary incident of its corporate franchise. Whether this contention be well founded it is not necessary to determine, for 1 am of the opinion that this receiver, having no greater right than the corporation he represents, cannot take advantage of such an unconscionable plea, and thus escape the fulfillment of his contract, until he has restored to the other party that which the association he represents admits it secured by what it now alleges was a wrongful act. The money was borrowed to- supply the members of the association with loans, for which they were applicants in the due course of the business of the association, and the general liability of the association was not increased beyond the amount of the assets received in exchange for the certificates. The stockholders were not injured even if, as claimed, the borrowing was unauthorized, because the very money borrowed, or the mortgage in which it was invested, remained in the hands of the trustee for the redemption of the certificate issued therefor, and if the association was exceeding its powers, it would seem- that equity would require that the money thus obtained should be returned to the people who advanced it. No one else ought to be allowed to claim it. The contest is not between outside creditors and these claimants, but between the ordinary stockholders and those who, relying upon the representation of its officers as to the legality of their act, advanced their money upon a contract with the association which provided that such money should be secured in the manner provided in the agreement, and if such contract be ultra vires, the association should return the money if it would avoid the consequences of what it now claims to have been an illegal contract, from which it received a benefit, which it insists upon retaining.

The receiver will be advised that the holders of these certificates are creditors, and not stockholders; that they are entitled to be paid in full, principal and interest, and are not subject to deduction for costs, expenses or premiums, and that the fund which, the trustee held is to be first applied towards their payment, and if it be insufficient, the residue of the debt shall be paid from the assets of the association pro rata with other creditors.


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    The Polish National Alliance of the United States of North America v. Anton Nagrabski et al.
    [Decided July 20th, 1906.]
    The laws of a mutual benefit organization provided that the beneficiary named in a certificate might be changed by a return of the certificate and the issuance of another, the renunciation of the original certificate, as well as the settlement of the other, to be made in writing, signed by the member and the president and secretary of the local group, and sent to the general secretary.—Held, that where the husband of a member obtained possession of the original certificate in which he was the beneficiary, and refused to deliver it, and the member appeared before a notary and made oath to a writing, signed by her, to the effect that one other than the husband should be regarded as the beneficiary, and th'e paper was delivered to the secretary of the local group, who signed it and forwarded it to the general secretary, as between the beneficiary named in the paper executed by the member and the husband, the former was entitled to. the proceeds of the certificate.
    On bill of interpleader by the Polish National Alliance of the United States of North America against Anton Nagrabski and others to determine the rights of defendants in a benefit certificate issued by complainant.

      Mr. Linion Saiierihwait, for the defendant Anton Nagrabski.

      Mr. John II. Baches, for the defendant Mary Sintak.
   Bergen, Y. C.

' The complainant, a beneficial organization, issued its certificate of membership to Franciska Nagrabski, in which it agreed to pay, upon satisfactory proof of her death, the sum of $300' to Anton Nagrabski, her husband, “provided no other certificate shall have been issued upon the demand of the member.” The wife, Franciska, died May 10th, 1905, and shortly before her death undertook to change the beneficiary named in the certificate from her husband to Mary Sintak, her mother, and a dispute as to the rights of the parties having arisen, the association filed its bill of complaint calling upon these claimants to inter-plead, and having paid the fund into court, the decree usual in such cases was made.

The defendants appeared and stated the grounds of their respective claims. The husband rests his right upon the certificate now in his possession, in which he is the designated beneficiary, claiming that no legal change has been made in the manner required by the certificate and the constitution and by-laws of the association. The parts of the by-laws which relate to the questions before us are as follows:

“Section 6. A beneficiary cannot be designated by will, nor can the benefit payable on the member’s death be disposed of, altered, or otherwise in any manner controlled, assigned or pledged, or in any manner diverted from or paid to anyone other than the person or persons named in the benefit certificate by either the member or his beneficiaries, excepting in the manner expressly stated in the laws of the alliance.
“Section 7. A member in good standing may at any time return his certificate and demand that a new one be given him payable to such heir or heirs as he shall direct, upon the payment of ten cents for that certificate. Such renunciation of one certificate, as well as the settlement of the other, must be made in writing, signed by the member, president and financial secretary of the group, and shall be sent direct to the general secretary, with the old certificate enclosed, and the fee required for the new one.
“Section 8. The change of the beneficiary shall take effect upon the delivery of the old benefit certificate, the written surrender, and direction of change of beneficiary, and the payment of the fee of twenty-five cents.”

Section 7, as above set out, follows the translation published in English, but I have accepted the version testified to as correct, rather than the disputed, unverified publication, to support which no attempt was made.

The other claimant, Mary Sintak, rests her claim to the fund upon the following facts: Franciska, a few weeks before her death, left her husband's home and went to that of her mother, and the wife gave him the key of her trunk, which remained at his house, for the purpose, as he testifies, of allowing him to have possession of the certificate. Whether such was her purpose or not, the fact is that with the key he was able to open the trunk, and did thereby obtain the certificate.

On April 10th, while confined to her bed, reduced and weakened by the pulmonary disease from which she was slowly dying, she determined to give to her mother the benefit of the certificate, rather than her husband, and sent for a notary public, who prepared a paper-writing as follows:

“Franciska Nagrabski, residing at number 172 Jersey street, Trenton, N. J., personally appeared before me, a notary public of the State of New Jersey, being duly sworn according to law, upon her oath deposes and says that she made demand on her husband, Anton Nagrabski, to deliver her policy of insurance in the Zwiarek Narodowy Polski to her, and that he refused to deliver the same to her.”

This paper was signed and sworn to by Franciska before the notary who prepared it, and it was then taken to the secretary of the group of the general society of which she was a member, for the purpose of having the beneficiary changed. The secretary called the attention of the notary to the fact that no beneficiary was named, whereupon the notary carried the paper to the bedside of Franciska, and, with her consent, added: “I hereby assign such policy from my husband to my mother, Mary Sintak, as beneficiary." After this addition the oath was again administered, although no change was made in the jurat, but I do not consider this important, for the legal effect of the paper does not depend upon the method of its verification. After its alteration the paper was delivered to the secretary of the group, who signed it and attached the seal of the group, but it was never signed by the president of the group. He was asked to do so, but declined to act except at a meeting of the members, but before such a meeting was held Franciska died. The paper, in its general form, was forwarded to the general secretary, but no action was taken by him before her death.

The question presented is, Has the member sufficiently complied with the rules of the association to justify a holding that, in equity, a change in the beneficiary has been lawfully accomplished ?

I am satisfied from the evidence that it was the intention of the wife to change the beneficiary, but to carry out this intention she was required (1) to surrender the outstanding certificate and demand a' new one; (2) to manifest the surrender or renunciation, and name the new beneficiary she desired in a writing, to be signed by herself, the president and secretary of the group. As the present contest does not involve any rights of the association, I am not disposed to give the husband any benefit arising from the non-delivery of the certificate, because it sufficiently appears that the wife, and those acting for her, made every reasonable effort she was called on to make to obtain the certificate, in order that she might return it, and the refusal of the husband to give it up- ought not, in determining the equities between the husband and the new beneficiary, allow him an advantage which he would not have had if he had complied with the wife’s- request, for no one is entitled to the benefit of his wrong-doing.

I am also of the opinion that the paper executed by the wife and presented to the secretary is, although crude in form, notice to the association that she had appointed a new beneficiary, and is a sufficient application by her for a new certificate, in which, by her direction in writing, her mother was to be named the beneficiary, and that when she delivered the paper to the secretary of the subordinate branch of the alliance, and it was then by him, as the evidence shows, sent to the secretary of the order, she had done all she could to effectuate her intention. Hnder the b3'-laws a member of this alliance has a legal right to change his beneficiary whenever he desires, and the consent of the alliance does not appear to be required, for under section 7 a member may at any time return his certificate and demand that a new one be given him, payable as he shall direct, and that upon the return of the certificate, if he be then in good standing, it is the duty of the association to issue it. It is admitted that the member was in good standing, and that the non-surrender of the certificate resulted from the refusal of one of the claimants to surrender it. While the non-surrender, if set up by the alliance in defence of a common-law action brought by the new beneficiary against it, might be available to the alliance, it cannot be permitted to aid one who is wholly responsible for the situation. With these questions disposed of, all thát remained to be done by the alliance to perfect the new designation was simply ministerial, for if the member was in good standing, and made his written application for a new certificate, the president of the local group could not refuse to sign it, nor could the general officers of the alliance refuse to-comply with the member’s direction, and in equity that which should have been done will be considered to have been done. “If the insured has pursued the course pointed out by the laws of the association, and has done all in his power to change the beneficiary, but before the new certificate is actually issued he dies, a court of equity will decree that to be done which ought to have been done, and act as though the certificate had been issued.” Supreme Conclave Royal Adelphia v. Cappella, 41 Fed. Rep. 1. The fund is now in a court of equity to be disposed of on equitable principles, and I am persuaded that, as between the parties to this contest, the equities favor the claim of the mother, and will advise that it be so decreed. My attention has been called to some authorities expressing the judgment of this court upon cases which, it is claimed, bear upon this controversy, to which I will briefly refer. American Legion of Honor v. Smith, 45 N. J. Eq. (18 Stew.) 466. In this case a written application to change the beneficiary was made and refused, and the court declined to recognize the nomination of a new beneficiary because the by-laws, which constituted a part of the contract, declared that no act of a member, done for the purpose of changing his beneficiary, should be effective until such act had been ratified and approved by the corporation, and it was held that the approval or ratification was a material part of the contract. But such ratification is not required by the by-laws of this alliance.

In Grand Lodge Ancient Order United Workmen v. Connolly, 58 N. J. Eq. (13 Dick.) 180, the by-laws required a written application whenever a change in the' beneficiary was desired, but all the member did in that case was to give to the officers of the lodge notice that he wished the policy made- payable to his children, and the officer informed him that all it was necessary for him to do was to hand the certificate to the new beneficiary. The court held that this was not a compliance with the by-laws, for no written ápplication was presented, and that the powers of the officers of the subordinate lodge were merely ministerial, and their statement to the member, upon which he relied, was not a waiver by the association of the by-laws.

In Pennsylvania, Railroad Co. v. Warren, 69 N. J. Eq. (3 Robb.) a member had the right, in his original application or subsequently, to designate a beneficiary, subject to the ap-, proval of the superintendent of the relief department, and it was held that in the absence of a written application, and of the approval of the designation by the officer, a change had not been perfected. It will be observed that in all of these cases either the application had not been made or the necessary approval by the officers of the company was wanting, and as neither of these conditions is applicable here, the cases cited afford no support to the -husband's claim.


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    Rachel Van Houten v. Joseph C. Hall et al.
    [Decided July 25th, 1906.]
    1. Where a will provided that in case of the death of a life tenant leaving issue the property should go to his children, but otherwise should be equally divided between specified persons, they took a vested interest upon the death of testatrix, subject to its being devested in case the life tenant should die leaving issue.
    2. Where a will provided that on' the death of a life tenant without issue the property should be divided between a daughter, and, “if she be dead, her children,” and the child or children of another, the children of the daughter and the devisee of a child of the other took per stirpes.

      On bill, answers and proofs, and for distribution of residue of the estate of Rachel Yan Iiouten, deceased.
    The will of Rachel Yan Houten contains the following devise:
    “I give the remaining one-third of the said residue to my grandson, the said Adrain Post, and if he shall die leaving children, then to his children, but if he shall die without issue, then I give the one-half thereof to Elizabeth Hall, and the other one-half to be equally divided between' Oaty, and if she' be dead, her children, and the child or children of George in fee.”
    The testatrix died in 1863, leaving two children, Catherine, called “Caty” in the will, and George, and two grandchildren, Adrain Post and Elizabeth, the children of her deceased son, J ohn.
    The estate was not, to be divided until the death of George, 'the income of one-third to be paid to him, of another third to Caty, and of the remaining third to Adrain Post, or to his children if he should die before George,
    “but if he shall die without issue, then I give one-half of said income to the said Elizabeth Hall, and the other half to be divided equally between Oaty and George.”
    The will further provides that at the death of George, one-third of the estate should be paid to Catherine, another third to the child or children of George, and the remaining third was disposed of by the paragraph first above set out.
    George died in 1884, and the estate was then divided, one-third to Catherine, one-third to William H. Post, the only child of George, and one-third, being the fund now in controversy, was held for the benefit, during life, of Adrain, this court having determined that he took only a life estate. Post v. Van Houten, pi N. c7. Pq. (14 Stew.) 88.

    Catherine Yan Houten died in 1897, leaving children— Rachel, the complainant; John, Mary and Aaron, and Henry, who died intestate, unmarried, and without leaving issue, and one grandchild, Catherine Post Yan Houten, a daughter of Catherine’s son, George, who died in 1903 intestate.

      Adrain died in November, 1905, without issue. William H. Post, the only child of George, the brother of Catherine, died before Adrain, leaving a last will, in which he devised all his property to Catherine A. Peck.
    The question presented is, Do the children of Catherine and the devisee of William H. Post take the one-half of 'the residue given over in the event of the death of Adrain without issue as a class per capita,, or is it to be distributed per stirpes ?

      Mr. Preston Stevenson, for the complainant.

      Mr. Robert Williams, for Catherine A. Peck.

      Messrs. Griggs & Harding, for Abram Van Houten.

      Mr. Joseph P. Osborne, for M. H. Van Houten et al.
   Bergen, V. C.

Assuming that the bequest to Caty and the children of George was to-a class, and that Caty, if living, would have taken per capita with the children of George, I am nevertheless of the opinion that under the language used the children of Caty take as substitutes for their mother, and only such share as she would have taken if alive at the period of distribution. The gift was not to her and her children. Consequently they formed no part of those first entitled. They could, in no event, participate with their mother, and could only acquire an interest should their mother die before distribution.

The class of donees intended by the testatrix, if any, consisted of Caty and the children of George. They took a vested interest upon the death of the testatrix, subject to its being devested should the life tenant die leaving issue. The testatrix did not create a class which included Caty’s children as original parties, for if the mother had been alive when Adrain died she would have taken, to the exclusion of her children.

The gift was not conjunctive, but disjunctive; not to Caty and her children, but to her, or her children if she was not alive when distribution was made. A gift to two or more persons or their children is substitutional, and the children take only their parents’ share. Bartine v. Davis, 60 N. J. Eq. (15 Dick.) 202. The trustees will be advised that the fund is to be distributed per stirpes between the children of Caty and the representative of the child of George. The fees of the trustees and other expenses incident to the distribution of the fund will be settled when the decree is handed up for advisement.


author: Garrison, Y. C.

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    John V. O’Hara et al. v. Richard J. Nelson et al.
    [Decided May 16th, 1906.]
    An injunction will issue to restrain the introduction of gasoline into tanks of automobiles inside of a frame building adjacent on three sides to other frame buildings, and against storing automobiles with gasoline in their tanks inside of the building.
    On final hearing on bill, answer and proofs.

      Mr. J. Merritt Lane, for the complainants.

      Mr. Frank P. McDermott and Mr. Arthur B. Archibald, for the defendants.
   Garrison, Y. C.

This is the final hearing of a case heretofore heard upon an application for a preliminary injunction, the result of which is reported in 71 N. J. Eq. (1 Buch.) 161.

Since by stipulation all of the testimony which was taken on the preliminary hearing was imported into the final hearing, the only question for consideration is whether the additional testimony taken upon the final hearing has caused the court to alter its view of the facts and the law applicable thereto.

The additional testimony shows that within the last two months the defendants have abandoned the use of electric lights within this building and are now using illuminating gas. It also shows that the defendants permit people inside of this building to smoke, and that, whether they have knowledge of the facts or not, people have drawn gasoline from the pump which is now situated outside of the building and carried it in open vessels into the building.

I remain of the same opinion as expressed in my previous conclusions concerning the necessity of restraining the defendants from storing or using gasoline within this frame building. The only question that seems to me debatable is whether or not there is sufficient danger from the gasoline allowed to remain in the tanks of the automobiles within the building to enjoin the defendants from permitting automobiles having gasoline in their tanks to be stored within the building.

If there is any case in which such injunction should be granted, the ease at bar is that one.

These defendants have shown an utter disregard of the commonest measures of safety. It is shown that they have, while this case has been pending in court, permitted people to smoke within this building, with the inevitable result that matches are lighted therein, 'and, much more serious than that, have invited disaster by abolishing electric lights and introducing the use of gas.

The testimony is absolutely in accord, from all those having any knowledge of the subject-matter, that the vapors from gasoline are migratory, and, when mixed with air and brought in contact with flame, cause explosion.

The question, therefore, is whether there is sufficient likelihood of leakage from the tanks of automobiles stored in this building to cause the- court to enjoin such storage.

The testimony of the inspector of combustibles of the New York fire department, who for twelve years has occupied that position and has had* large experience, is that the danger from this source is great. He specifies the danger arising from leaky tanks as one of the things that is constantly present, and instances an explosion caused by such a leaky tank in a garage in New York City, in which over $200,000 worth of damage was done, that being the last experience that they had had in New York City with this form of explosion.

The principle of law is, I think, settled, and all that is required is to apply it. The court will not entertain fanciful fears, nor provide against all conceivable possibilities of danger. It will, however, take into account human carelessness and the likelihood of danger arising from the conduct of people under ordinary or customary circumstances. Since there is proven to be absolute danger from the leaky tanks, and those whose personal knowledge, founded upon personal experience, agree concerning this danger, I do not feel justified in finding that it is fanciful or imaginar}’, but I do find that it is real and substantial.

It will be observed that the rules and regulations adopted by the Jersey City authorities concerning the storage of combustibles, although they were adopted at a time before automobiles were used, specifically provide places in which combustibles may be stored, requiring detached and properly-ventilated warehouses, the outer walls of which must be of stone, brick or iron, specially adapted for the purpose; and further provide that if such place of storage is less than fifty feet from an adjacent dwelling, the same must be separated by a brick or stone wall, at least ten feet in height and twelve inches thick, constructed in such manner as the board of fire commissioners shall prescribe; and further, they provide that no such combustible as gasoline shall be contained in any metallic vessels or tanks excepting such as are approved by the committee of the bureau of combustibles.

It is only necessary to refer to the previous opinion for a description of this building, which is entirely of frame, and its adjacency on three sides to other frame buildings, one of which is the dwelling of the complainant.

With respect to the vessels in which the gasoline is contained in the automobiles, the case is barren of proof that they are such as are approved by the city authorities, as aforesaid, and the testimony of the inspector of combustibles of the New York fire department before mentioned shows that there are many different kinds of tanks used in automobiles, some of which are, in his view, sure to leak. If those whose duty it is to regulate this matter, at a time when automobiles were not known, thought it necessary to prohibit the storage of gasoline in any vessel excepting one approved by them, it certainly seems unreasonable to hold that its storage in any kind of a tank that may be placed in any kind of an automobile is safe.

For these reasons I will advise a decree that a final injunction do issue. I find that the defendants should be restrained from introducing gasoline into the tanks of the automobiles inside of the building, and from storing automobiles with gasoline in their tanks inside of the building. By filling'the tanks of the automobiles outside of the building, and by emptying the tanks before the automobiles are taken into the building, the danger is minimized to the point where, under the necessities of the case, the complainants and others must endure the remaining risk.

The injunction, therefore, will restrain the storage or use of gasoline within the building.