text:
    Morristown Trust Company v. Ella F. Capstick et al.
    [Decided February 28th, 1919.]
    Where a fund was deposited in a bank of discount in the name of A or B, in an active account, checks being drawn thereon by both parties, the parties are not joint tenants of the fund, and the fund does not therefore pass to the survivor on the death of one of the parties.
    On bill, &C.

      Mr. ■Alfred Elmer Mills, for the complainant.

      Mr. Elmer King, for Mrs. Capstick.

      Mr. John A. Bernhard, for Elizabeth Salford and others-
   Stevens, V. C.

This is an interpleader bill filed by one of the executors of the will of the late John II. Capstick. Mr. Capstick died in March, 1918. He left him surviving his widow, Ella E. Capstick, one of the claimanis, and certain nieces and a>nephew, bis residuary legatees, who are the other claimants. At the time of his death there was on deposit in the complainant trust company the sum of $18,151.34. It stood in the name of “John II. Capstick or Ella E. Capstick.” There was also on deposit in the Boonton National Bank the sum of $10,833.21, which likewise stood in the name of “John H. Capstick or Ella E. Capstick.” These deposits were such as axe made in banks of discount and deposit and not in savings banks. In this respect the case differs from any that has heretofore engaged the attention of this court.

The widow’s contention is that she and her husband were joint tenants of the two funds and that she takes by survivor-ship. The other defendants contend that the form, of the deposit, read in the light of the evidence, shows an intention on Mr. Capstick’s part to make a provision for his wife that was in reality testamentary and that failed of accomplishment under the rule laid down by the court of errors and appeals in Stevenson v. Earl, 65 N. J. Eq. 721.

Mr. Capstick was a member of congress at the time of his death and a gentleman of considerable means. „ Prior to March 4th, 1901, he had an account in complainant company’s bank, which stood in his own name. On that day, upon his written order, it was changed to read, as already stated, “John H. Cap-stick or Ella E. Capstick” and remained thus changed, up to the time of his death. The account was an active one, covering thirty-nine sheets of the bank ledger. Mrs. Capstick drew checks of her own upon this account, but not, as 3 infer from the evidence, very frequently. The Boonton account was opened in the same form on July 13th, 1916. This, too, was an active account -and Mrs. Capstick drew, in all, two checks upon it. The money deposited by Mr. Capstick was all his own money.

There cannot be the least doubt as to his purpose. In a private memorandum book containing a list of securities held by him and his wife he wrote: “My bank accounts are jointly held by my wife and self. Either can draw upon the accounts.” In conversation with a friend, Mr. Potts, about the year 1912, at his (Mr. Capstick’s) home, he asked him whether he had a joint account with his wife and Mr. Potts answering no, he said:

“it was a nice thing to have; that I should have an account from which my wife could draw, and he said if anything happened to him or to me that there would be money there which she could use to tide over until such time as the estate was settled up, * * * and I recall one time he told her * * * that there was a joint account (the Morristown Trust Company account) that she could draw on for the full amount any time she wanted it, when he gave her the book.”

Exactly what the witness means by the words “when he gave her the book” is not clear, for the account had been opened in the two names eleven or twelve years before and the account being an ordinary one, delivery of the pass book was unnecessary, as her check would suffice. The witness is probably referring, inaccurately', to the changing of the account to the two names.

Mrs. Potts" version of the conversation is as follows: Mr. Capstiek said:

“Clyde [Mr. Potts], have you a joint account with Jane [Mrs. Potts],' and Mr. Potts said ‘Noand he said well you ought to nave; it is a good thing. Mr. Capstiek was a little inclined to profanity, and when he talked about his joint account, he said that he came home to his wife one night and he said: ‘Dearie, X have opened a joint account in the Morristown Trust Company with you and you may draw on it to the full amount, but if you do, I will give you hell.’ I remember that because of the remark.”

The witness testified further that he told her husband, that he had opened the account because he might die airy time

“and a woman who was left alone in the world with an estate to settle up was in a bad way; he opened this account with Mrs. Capstiek that she might use it; if he died she could use this money to settle up things while waiting for the estate to be closed.”

From this- evidence a twofold purpose is evident. First, he wanted to give his wife .the power, occasionally', to draw upon money's which he was depositing; and secondly — and this ivas his main object — he wanted to make provision for her pending the settlement of his estate.

In Stevenson v. Earl, 65 N. J. Eq. 721, one Earl made application to become a depositor in the Savings Fund of the Pennsylvania railroad. One of the rules of the company required a statement of the name and residence of the person to whom, in the event of death, his deposits should be paid. He stated to the company that in that event, all deposits standing to his credit should be paid to his wife and the account was opened accordingly. He gave his wife the pass book, stating to her that here was the money and that if he died, it should go to her; and that she could get it in ten clays by giving notice. Hnder the company’s rules, he was at liberty, while living, to draw the whole or any part of the money thus deposited. It was held that the disposition of the money remaining to his credit at his death was testamentary and invalid because not made in the manner prescribed by the statute of wills.

The case in hand differs from Stevenson v. Earl in the circumstance that, by the form of the deposit, the wife was able to draw on it during her lifetime. The question is, Does this differentiate it, in principle, from the case cited? Had the account been opened in the names “John H. and Ella E. Cap-stick,” without more, I should have had no difficulty in finding that they were joint tenants and that Mrs. Capstick took by survivorship. The legal presumption would have been, in the absence of proof to the contrary, that Mr. Capstick intended a present gift and not a resulting trust.

But the account, in the case of both banks, was opened in the names of John or Ella. Now the word- “or” and the evidence both negative the idea of a joint tenancy. In the case of such a tenancy neither tenant can destroy the estate of the other. The effect of a transfer by one alone, of his interest,' is only to create a severance. Says Blackstone (Book 2, *185) “if one joint tenant aliens and conveys his estate to a third .person, the joint tenancy is severed and turned into a tenancy in common.” In the case in hand either party had the legal right to' draw out all the money and thus completely to appropriate and destroy the common fund. It seems, therefore, to be the reasonable inference from the facts that what Mr. Capstick intended when he deposited this money was, to use it at his pleasure and yet, at the same -time, to give his wife power to draw, if, in any contingency, she needed money. This is plainly apparent from his picturesque,but unconventional remark, “You may draw to the full amount, but if yon do, I will give you hell.” In other words, he meant to give her the equivalent of a power of attorney to be exercised by her in a reasonable way.

In Schick v. Grote, 42 N. J. Eq. 352, a savings bank account was opened with “A. G. and wife or either” and Chancellor Runyon held that the form of the entry was not evidence of gift to the wife; that the money deposited remained the husband's at his death. The reason is evident. The depositor deposits his own money in such fashion that, from the moment of deposit, he is at liberty to draw it out when and as he pleases. This he could not do, if the gift were complete. Says Chief-Justice Gummere in Stevenson v. Earl, “in order to legalize a gift, there must be not only a donative intention but also, in 'conjunction with it, a complete stripping of the donor of all dominion or control over the thing given.” Such being the rule, it follows inevitably that in a case of this kind only after the wife draws the money does she get any title.

Marshal v. Crutwell Law Rep., 12 Eq. 328, is a case in point. There plaintiff’s husband, being in failing health, transferred his banking account from his own name into the name of himself and his wife and directed his banker to honor checks drawn either by himself or his wife. The husband did not explain to his wife what his intention was in making the transfer but was said by the bank manager to have remarked at the time of the transfer that the balance of the account would belong to the survivor of himself and wife. The wife claimed this balance at his death. Sir G. Jessel, from the way in which the monejr was drawn out and the use to which it was put, inferred a resulting trust in the husband and he did this notwithstanding that the form of entry on the books of the bank (the conjunction “and” was used) appeared, by itself, to warrant the inference of a joint tenancy. The direction to honor checks of either the one or the other coupled with proof of the application of the money, showed, he thought, that the transaction was “simply a mode of conveniently managing the testator’s affairs.”

In view of the way in which the money deposited through a long series of years, was dealt with by Mr. Capstick, I find it quite impossible to infer an intention to make an immediate gift. As I have said before, the purpose appears to have been to let Mrs. Capstick, while he was living, draw a part of his money thus deposited, if she needed it, and then to give her what remained at his death. This brings the case directly within the rule laid down in Stevenson v. Earl and Cook v. Lum, 55 N. J. Law 375.

I regret the result, for it no doubt runs counter to Mr. Cap-stick’s intentions. But finding his gift to be essentially testamentary I must hold that he has not made it in the way prescribed by statute.


source: Caselaw Access Project

author: Stevenson, V. C.

license: Public Domain

text:
    Chicago Title and Trust Company and Frank G. Logan v. Executors of Edward F. C. Young and United Telegraph, Telephone and Electric Company.
    [Decided January 9th, 1919.]
    1. An action to levy an assessment on behalf of creditors upon the holders of stock of an Illinois corporation must be brought in Illinois and this court has no jurisdiction where the corporation has no assets, no agent and apparently no creditors in New Jersey.
    2. After a suit for an accounting of the assets and liabilities of an. Illinois corporation has been conducted to a finish in the State of Illinois and an assessment of stockholders ordered, to which proceeding all stockholders wherever resident are privies, and by which they are bound, then action can be maintained in a court of competent jurisdiction in New Jersey, against the executors of a former stockholder, to enforce such assessment.
    On final hearing on bill, answer and proofs taken'partly on commission in Illinois and partly in open court.

      Mr. Ilenry W. Runyon, Mr. Walter L. McDermott and Mr.Warren B. Wilson (of the Illinois bar), for the complainants.

      Mr. Edwin F. Smith, Messrs. Forman, Levine & Robinsonj and Mr. David Blumrosen (of the Illinois bar) and Mr. John W. Griggs, for the defendants.
   Stevenson, V. C.

The bill alleges that the complainants are creditors of the defendant the United Telegraph, Telephone and Electric Company, hereinafter referred to as the United Company. The complainant the Chicago Title and Trust Company, hereinafter referred to as the Title Company, as trustee hold a mortgage of the United Company to secure an issue of bonds of the last-named company, amounting to a million dollars. The complainant Logan holds forty of these bonds.

In the year 1904 the Title Company filed a bill to foreclose its mortgage in the superior court of Cook county, in the State of Illinois, where both mortgagor and mortgagee were domiciled, and the result was a decree for the sale of the mortgaged assets which was entered on January 29th, 1913. On April 30th, 1913, in the same cause, in accordance with the Illinois practice, a decree for deficiency, was entered, the amount of the deficiency being $60,148.26. The Illinois court was enabled to grant this money decree in the foreclosure suit in favor of the mortgagee, who was a mere trustee, by virtue of an express covenant in the mortgage by which the United Company, the mortgagor, covenanted with the Title Company, the mortgagee, that it, the United Company, would “duly pay or cause to be paid the said bonds * * * according to the tenor and effect” thereof. Upon this decree for deficiency an execution was forthwith issued from the Illinois court and was returned wholly unsatisfied.

The standing of the complainant Logan as a creditor of the United Company and co-complainant in this cause, is altogether different from that of the Title Company. The complainant Logan stands upon rights which he holds on his own behalf as a legal creditor of the United Company under the bonds of the company which he owns and which are still to a very large extent unpaid.

I am not certain that I understand the relation of the decree of the Title Company to the apparently independently asserted claim of Mr. Logan on his bonds. There seems to be at least a suggestion that when the Title Company under the Illinois law and practice took its deficiency decree embracing the entire unpaid amount due on the bonds which the mortgage was given to secure, a merger of some sort was thereby effected, or, in other words, that the claim of the complainant Logan became a part of the decree of his trustee, the Title Company. This matter, however, was-not referred to in the argument or briefs and need not be considered.

The bill of complaint is filed, I think, after the model prescribed by the court of errors and appeals in the case of Wetherbee v. Baker, 35 N. J. Eq. 501. It charges that the United Company in the year 1894 or 1895 made a fraudulent over-issue of stock for property purchased, which property in fact was not worth a fractional part of the amount of stock so issued. The bill also charges that in the year 1902 the late Edward E. C. Young, the defendant’s testator, acquired the whole of this issue of stock ($1,000,000 par value) with-perhaps the exception of a few qualifying shares with full notice of the over-valuation and accompanying fraud.

If we assume for present purposes that there was in fact a gross over-valuation of the property for -which this million dollars in stock was issued, there are strong indications in the evidence that Mr. Young acquired the company in good faith expecting to take care of its obligations, and that in fact he was deceived by fraudulent representations into paying for the property which he acquired ten or twenty times its value. After financing for a few years this. United Company, which -was a telephone and telegraph company, undertaking to' operate in one of the suburbs of the city of Chicago, Mr. Young apparently .gave up the project as hopeless, transferred his stock, as his executors allege, to some person unknown, and about five years after his death all the assets which he had acquired through his ownership of the stock were sold in the foreclosure suit above mentioned for $3,500.

The defendant the United Company, this Illinois corporation, although made a defendant in the bill has not been brought within the jurisdiction of the court by service of process, nor does it appear that legal -or other potiee of the suit has been given to this company, or that the company has in any way been invited voluntarily to appear and defend. In the absence of a voluntary appearance I understand that counsel agree that no decree in the cause would be binding upon the United Company, and that therefore no decree can properly be entered against it. The United Company has no -assets in New Jersey and so far as appears never came into the state to do business even in a single instance. The complainant the Title Companjr, likewise is an Illinois corporation doing business in Illinois, and, leaving this present suit out of view, has done no business and has no assets in the State of New Jersey.

The other complainant, Mr. Logan, is described in the bill as being a resident of the city of Chicago. In his case also it appears to be true that, leaving out of view this present suit, he has never had any assets or done any business in the State of New Jersey.

The bill is filed on behalf of all the creditors of the United Company,-and it undertakes to accomplish the objects appropriate to such an equitable action in New Jersey according, to the views and doctrines set forth in the opinion of the court of errors and appeals in Wetherbee v. Baker, supra. The bill prays that an accounting be taken under the direction of- the ■ court of chancery of New Jersey of the amounts due to the complainants, and of any amounts due to any other creditors of the United Compaq, and that an accounting also be taken of the amounts remaining unpaid of the subscriptions to the capital stock of the United Company, and of the amount of property or assets received by any of the defendants from the estate of Mr. Young and undistributed, and that the defendant executors be decreed to pay to the complainants the amounts of their said claims, and to such other creditors, on behalf of whom this suit is prosecuted, as may establish their claims, the amounts due them respectively. The bill assumes that not only will the court of chancery of New Jersey make an assessment upon the stock alleged to be held by the Young estate, but will in the same suit make a decree for the payment of such assessment, either directly to the complainants and any other creditors who may establish their claims or to a receiver hereafter to be appointed.

A large number of defences have been interposed, among which are these:

That all the subscriptions were made in good faith:

That all the capital stock issued was fully paid for in money or in property;

That there is no proof of any over-valuation;

That if there was a fraudulent over-valuation Mr. Young had no notice of it;

That the certificates purchased by Mr. Young were stamped “Pull paid and non-assessable,” and that he had no notice that this statement was not true;

That Mr. Young was a purchaser in good faith and without notice and that under the laws of Illinois he was free from any claim from liability, &c., by reason of any over-valuation;

That under the laws of Illinois and the decisions of the supreme court of that state, Mr. Young as transferee and assignee of the stock received the same free from any liability to the United Company for any alleged unpaid subscriptions thereon, for the reason that under said laws the acceptance by the United Company of the said property in consideration of the issue of its said stock was, as between the said corporation and- the subscribers to whom said stock was issued and all- subsequent transferees thereof, a valid and binding contract;

That the suit is brought to enforce a statutory liability under section 25 of chapter 32 of HurcTs Revised Statutes of the State of Illinois, and that the Illinois statate of limitations (section lo of chapter 83 of Hurd’s Revised Statutes) as well as. the New Jersey statute of limitations is a bar;

That the suit is based upon an alleged liability of the Young estate created by and arising from a statute'of a foreign state, that the United Company was a foreign corporation which never has had any place of business or representative or agent, or any assets in New Jersey, and has never transacted any business in New Jersey, and that under the provisions of chapter 50, section 2 of the laws of 1897 (P. L. 1897, p. 125; 2 Comp. Stat. p. 1656, § 94b) the court of chancery of New Jersey is without jurisdiction of the cause;

That under the last mentioned New Jersey statute all of the creditors are indispensable parties to the suit, and that the complainants failed to join as defendants a number of creditors;

That the Illinois statute (section 8, chapter 32 of Hurd’s Revised Statutes) provides an exclusive remedy for the enforcement against the defendant executors of their liability under the Illinois statutes, and that no suit to enforce that liability can be maintained in New Jersey by reason of the provisions of the New Jersey statute of 1897 above cited;

That the action is barred by laches as well as by the statute of limitations because no suit was brought by complainants or either of them to enforce the payment, &c., until ten years after the alleged right of action accrued and became enforceable;

That all the holders of the bonds for the payment of which the Title Company recovered its decree are estopped from complaining of the manner and method by which the capital stock of the United Company was paid for because the said holders all had actual notice of all the facts;

That the court of chancery of New Jersey is without jurisdiction because no judgment or decree for the alleged cause of action has been recovered or entered in the State of New Jersey;

That the court of chancery of New Jersey is without jurisdiction because it does not appear by the bill that the complainants have exhausted their remedy at law within the State of New Jersey;

That the court of chancery of New Jersey is without jurisdiction because of the non-joinder as parties defendant of all the parties who at various times held the stock which was after-wards transferred to Mr. Young.

The foregoing enumeration of the principal contentions of the parties in this cause may not be exhaustive, and in some details may not be entirely accurate. The enumeration will serve, however, to indicate the variety and complexity of the propositions which were the subject of protracted oral argument and of voluminous briefs. A large part of the argument was occupied with the construction and application of the above-stated statutes of the State of Illinois, concerning which some important questions were raised and debated.

After the cause had been argued and the court was engaged in the preparation of an opinion, the attention of counsel was called by the court to the case of McDermott v. Woodhouse, 87 N. J. Eq. 615, which was decided by the court of errors and appeals after the argument and had escaped the attention of this court at the time of its publication. An opportunity was given to partly reargue the case or to submit briefs upon the ' question whether under the controlling authority of this recent decision of our court of last resort, the court of chancery had any jurisdiction to make an, assessment on behalf of the creditors upon the holders of stock in a foreign corporation which was not doing and never had done any business in the State of New Jersey, had no assets, no agent and apparently had no creditors in this state, and did not voluntarily appear in the suit.

After receiving briefs on the above-stated question from each side of this controversy, and duly considering the same, I have reached the conclusion that to hold that the court of chancery of New Jersey has jurisdiction of this action would be in effect to undertake to overrule a unanimous decision of the court of errors and appeals. Accepting the view set forth by Vice-Chancellor Lane in Atwater v. Baskerville, 104 Atl. Rep. 310, that the statement contained in the opinion of Mr. Justice Swa)ze for the court of errors and appeals in the McDermott Case, to the effect that the New Jersey court of chancery has no jurisdiction to appoint an insolvency receiver, i. e., the statu tory receiver, of a foreign corporation having assets and doing-business in the State of New Jersey, was a dictum which did not overrule many prior decisions of the court of chancery in which such jurisdiction had been asserted, it still remains that this authoritative decision of our court of last resort established the proposition that an action to make an assessment for the benefit of creditors upon holders of unpaid stock in a foreign corporation, cannot be. maintained in New Jersey but must be brought in a court of the domicile of the corporation. The eon- - elusion is stated that “the propriety and amount of an assessment to pay creditors are internal affairs of the corporation with which the courts of another jurisdiction will not intermeddle.”

Confining our consideration for a moment strictly to the facts proved in the McDermott Case, and the facts proved in the case at bar, it seems clear that if the court of chancery had no. jurisdiction to make an assessment in the McDermott Case, a fortiori, it has no jurisdiction to make an assessment in this case.

In the McDermott Case a foreign corporation created under the laws of New York had come voluntarily into New Jersey, had purchased a tract of land and had embarked in the' business of a land company in this state, thereby subjecting itself to the provision of our statute (Corp. act § 96) that “foreign corporations doing business in this state shall be subject to the provisions” of the act, including, of course, the sections providing for winding up insolvent corporations, “so far as the same can be applied to foreign corporations.” No doubt it was argued that stockholders of a foreign corporation which comes voluntarily into the State of New Jersey and proceeds to do business ■ and acquire assets (in many cases having all its business and all its assets and perhaps all its creditors in this state), are, “in the view of the law * * * privy to the proceedings touching the body” of which they are members (at. p. 618) conducted under the provisions of our Corporation act.

In the case at bar no such argument can be made. The United Company has never done an act which could possibly have the effect to subject its internal affairs, or, indeed, any of its affairs, to the jurisdiction of a New Jersey court. The complainants, as we have seen, consist of an Illinois corporation and an Illinois individual, who prior to the commencement of this suit have had no relations, arising from the transaction of business or the possession of assets, with the State of New Jersey. Of course these two residents of Illinois can came into the New Jersey court and sue defendants whom they can serve with process in this state.

The complainants seem to have assumed that they are in the same position as if they were asserting in this cause a direct liability for a liquidated amount to them and the other creditors of, the Illinois corporation from the defendant executors. They are doing nothing of the kind.- Only after an accounting has been had of all the assets and liabilities of this Illinois corporation, in a suit in which the court has jurisdiction of the corporation, can it be ascertained whether the defendant executors are liable at all, or if they are liable, what the extent of such liability is. The very gist of this equitable action in New Jersey is to'ascertain whether an assessment should be made upon the stock held or formerly held by the defendant’s testator, and if an assessment is to be made, then for what amount. After the suit for an accounting of the assets and liabilities has been conducted to a finish in the State of Illinois, and the assessment of the stockholders has been therein ordered, to which proceedings all the stockholders wherever resident are priv.y, ánd by which they are bound, then for the first time an action can be maintained in a court of competent jurisdiction in New Jersey to enforce the assessment against the executors of the former stockholder, Mr. Young.

It would seem from the opinion of the court of errors and appeals in McDermott v. Woodhouse, supra (at p. 620), that such action would be a strictly legal action of which the court of chancery would have no jurisdiction. Barkalow v. Totten, 53 N. J. Eq. 573.

In the case of Manning v. Hercules Motor Company decided by me many years ago but not reported, I reached the conclusion in effect that in these cases of over-valuation of property purchased by stock, in which, however, there was absolutely no legal contract and no liability at any time enforceable by the corporation, the liability of the stockholders to creditors was equitable, and that an insolvency receiver could file a bill setting forth the facts out of which the defendant stockholders’ liability arose, have an ascertainment of the amount which the defendants respectively must contribute, and get a decree against the stockholders fixing the amount to be paid to the receiver by each stockholder, and that .the proceedings would be conducted in such manner as to recognize and adjust as far as possible the equities of the stockholders inter sese in a way impossible in separate actions at law. My view was that such a suit in equity is not based on any contractual' obligation of the stockholders but upon an equity of the creditors, involving the theory of a trust fund and of fraud, matters clearly of equitable cognizance. Whether this view can now be held in New Jersey or whether it has become untenable is a matter which I have not undertaken to examine and about which I shall express no opinion in this case. There may be a distinction between New Jersey corporations like the Hercules Motor Company and foreign corporations like the Lakewood City Development Com¡Dany whose stockholders were sued in McDermott v. Woodhouse. In the case of New Jersey corporations the creditors, usually through a receiver, are obliged to invoke the jurisdiction of the court of chancery in order to obtain am enforceable assessment against the stockholders. In the case of foreign corporations, as is decided in McDermott v. Woodhouse, the assessment can only be made in the domiciliary court: There is an inevitable hiatus in the proceedings between the assessment and its subsequent enforcement.

So far as appears in this case if the court of chancery of New Jersey had jurisdiction to conduct an accounting of the assets and liabilities of this Illinois corporation, and to establish the amount of an assessment binding upon the stockholders wherever resident, this, according to the view expressed in McDermott v. Woodhouse, would be the limit of the decree. The complainants, presumably through a receiver to be appointed in the cause, would be obliged to bring an action at law against the defendant executors in which action they (the defendants)' would of course have the benefit of all their legal defences.

If a suit- for an assessment in' this case wherever conducted can result only in establishing a basis for an action at law, there seem to be no reasons of convenience for having such suit conducted in New Jersey. The propriety of having such suit conducted in Illinois where the United Company is domiciled, had all its assets,'conducted all its business and where all its creditors apparently reside, is so obvious that any discussion of the subject is unnecessary.

Having concluded that the court of chancery of New Jersey has no jurisdiction under the principle established by the ease of McDermott v. Woodhouse to determine any of the questions which were originally argued in this case, I have concluded that any expression of opinion in regard to those questions is not only unnecessary but would be improper.

In accordance with the foregoing views a decree dismissing the bill of complaint will be advised.


author: Leaming, V. C.

text:
    In the matter of Anna M. Owens, alleged to be a lunatic.
    [Submitted November 18th, 1918.
    Determined November 27th, 1918.]
    1. Although an alleged lunatic may have had no fixed purpose to remain in a neighboring state when she went there, her continuous residence for four years, accompanied by her statement that it was her permanent home, renders it impossible to regard her as a resident of this state.
    2. Although this court may have jurisdiction to entertain lunacy proceedings in the case of a non-resident lunatic owning property in this state, that jurisdiction should not be exercised unless some unsurmountable obstacle exists preventing the appointment of a guardian by the orphans court of the proper county.
    3. Where legal title to lands of a lunatic in this state has passed to another, and where her personalty is in no danger of loss or injury, this court will not appoint a receiver to contest the conveyance of her lands, there being no obstacle to lunacy proceedings in the state of the lunatic’s residence.

      On hearing on motion in behalf of alleged lunatic to vacate order for commission of lunacy.

      Messrs. Wilson & Carr, for the motion.

      Mr. Samuel M. Roberts, opposed.
   Leaming, V. C.

October 2d, 1918, a petition was presented to this court alleging that Anna M. Owens had become so far deprived- of her reason as to render her unable to care for herself or her property, and praying for the appointment of a commission in the nature of a writ efe lunático inquirendo. Pursuant to the prayer of the petition, commissioners were appointed and the writ was ordered issued on that day. October 18th, 1918, was designated b} the commissioners for the hearing and a precept was delivered to the sheriff for that purpose. October 14th, 1918, a petition was presented to this court, signed by the alleged lunatic, for leave to file a special appearance and contest the jurisdiction of the court. On that day an order .was made permitting such appearance, staying the inquisition, and fixing November 11th, 1918, for hearing under the special appearance; depositions in behalf -of the .respective parties were ordered taken in the interim for use at the hearing.

The petition for the writ de lunático inquirendo set forth that the alleged lunatic was the owner of certain real estate in this state and also of some personal property, and that she was then residing temporarily with her daughter in Philadelphia. Pennsjdvania, but had no property in that state, and for that reason no similar proceedings had been instituted in Pennsylvania.

The petition of the alleged lunatic sets forth that she is, and for four years preceding, has been a resident of Philadelphia, Pennsylvania, and that she has no real or personal estate in New Jersey; that the real estate referred to in the original petition was sold by her in September, 1918, to John Q. Bonner, of Wilmington, Delaware, for a full consideration; that the deed has been delivered and that the purchaser is in possession; that she is not insane and is capable of managing her own affairs.

The depositions which have been taken render it impossible to regard the alleged lunatic as a resident of this state at this time. About four years ago she was residing with her son, the original petitioner herein, at Palmyra, in this state; at that time she went to live with her daughter in Philadelphia, and has lived there continuously since that time; during that period she has stated to others that that was her permanent home. It may well be, as claimed, that when ’she first went to Philadelphia she had in mind no fixed purpose to remain there and she may have then even intended to return to Palmyra; but her continuous residence in Philadelphia for four years, accompanied by statements during that period that it was her permanent home, renders it impossible to find as a fact that she is now a resident of this state. Nothing in the testimony indicates that during much of the period referred to tire alleged lunatic was without adequate mentality to determine her domicile.

By the first section of our Lunacy act (2 Comp. Stat. p. 2781) it is provided that in cases of idiocy 'or lunacy found in proceedings da lunático mquirendo, the chancellor shall cause a certified copy of the proceedings to be transmitted to the orphans court of the county where such idiot or lunatic may reside, and the orphans court shall thereupon appoint a guardian. This section was first enacted March 1st, 1804. Bloomf. 117. Prior to that time guardians in lunacy proceedings were appointed by the chancellor, pursuant to the act of 1794 (Pat. L. p. 125), in harmony with the English practice This direction for the appointment by the orphans court of the county of residence necessarily excluded from its operation cases of non-residents. Whether the chancellor possessed jurisdiction in cases of non-residents owning property in this state appears to have been long doubted. In the absence of siich jurisdiction on the part of the chancellor no means existed through the medium of lunacy proceedings for the protection of property in this state owned by a lunatic whose domicile was in another state, since the finding of a commission in another state could not be effective as -to property in this state in the absence of statutory authority for that purpose. See In re Neally, 26 How. Pr. 402; In re Perkins, 2 Johns. Ch. 124. Legislation of that nature appears to have been first enacted in this state in 1840. P. L. 1840 p. 27. That act, the provisions of which are similar, to the provisions of the second section of our present act (2 Comp. Stal. p. 2783) provided that when a person residing out of this state should be duly found an idiot or lunatic according to the laws of the place where the idiot or ■lunatic resided, the orphans court of the county in this state in which any property of such idiot or lunatic should be found, or the ordinary, on production of an exemplified copy of the proceedings, could appoint a guardian.

Together these two sections of our statute provide means in lunacy proceedings for the appointment of guardians by our orphans court for resident lunatics and for non-resident lunatics having property in this state; the former by proceedings initiated in this state; the latter by proceedings initiated in the state of tire residence of the lunatic.

In re Devausney, 52 N. J. Eq. 502, Vice-Chancellor Green reached the conclusion that, notwithstanding this legislation, the chancellor still has jurisdiction to entertain lunacy proceedings in cases of non-resident lunatics owning property in this state, but says (at p. 508 of the reported case) : “In my judgment, these [statutory] provisions are so full, and the procedure so simple, that recourse should be had thereto unless there are unsurmountable reasons for not doing so.”

In appropriate recognition of the conclusions reached (In re Devausney), it must now be held that, although this court may possess jurisdiction to entertain proceedings in lunacy in cases of non-resident lunatics who own property in this-state, that jurisdiction should not be exercised unless some unsurmountable obstacle exists which prevents the procedure contemplated by our statute; that procedure is: In cases of non-resident lunatics the primary proceedings shall be taken in the state of domicile and ancillary letters of guardianship issued thereon in this state if the lunatic owns property here; primary proceedings shall be taken here only in cases of residents, and letters of guardianship issued by the orphans court of the county of such residence.

In the present case, it appears from the depositions which have been taken that a conveyance of the real estate of the alleged lunatic was made by her to one Bonner under date of September 30th, 1918 — shortly prior to the filing of the petition herein. The purchase was made by Bonner through a real estate agent with whom the property had been listed for sale for a considerable time. This agent has testified that tire sale was tona fide and for a fair price. Other testimony is to the effect that the price was low. Although the agreement of sale and .date of the deed was prior to the institution of these proceedings, the evidence discloses that the money was probably paid and the deed delivered after these proceedings were begun. The proceeds of the sale are now on deposit in a bank in Philadelphia. Whether the purchaser knew, or had any reason to know, that the mental capacity of his vendor was questioned does not appear.

The situation thus presented is that the legal title to the real estate of the alleged lunatic has passed from her to another person. If he has purchased in good faith for a fair price without knowledge or suspicion of any mental incapacity of his vendor, his title cannot be successfully .assailed. Matthiessen & Weichers Refining Co. v. McMahon, 38 N. J. Law 536. Obviously, this court cannot at this time determine the validity of that conveyance in a proceeding in which the purchaser is not a party. The personal property referred to in the petition is of little value and is in the possession of the original petitioner herein and is not in clanger of loss or injury. It follows that, inasmuch as the non-residence of the alleged lunatic prevents the appointment of a guardian in this proceeding by the orphans court, pursuant to the direction of our statute and the alleged lunatic resides in a jurisdiction adjacent to this state, and no obstacle exists to prevent lunacy proceedings there, the only possible impelling purpose of retaining the present proceeding appears to be for the future appointment by this court of a receiver or committee in the nature of a guardian, in the event of an affirmative return of lunacy, to the end that such receiver or committee might, if so advised, file a bill to contest the validity of the conveyance.

I am convinced that the retention of the present proceedings for the purpose suggested cannot find adequate justification. No obstacle to the statutory procedure ■ exists. Indeed, converiience may be substantially conserved by proceedings in the jurisdiction of domicile of the alleged lunatic, where her witnesses reside, and especially in view of her enfeebled condition of health. Should lunacy be there found a guardian can be easily appointed here pursuant to the provisions of our statute. Should such guardian seek to contest the validity of the conveyance, his power to do so will be without question, and in the meantime the consideration of that sale, now on deposit in a bank in Philadelphia, can be preserved by the guardian of the state of domicile. In re Dey, 9 N. J. Eq. 181, Chancellor Williamson, Commenting on the exercise of equitable powers in cases of this nature, says: “But I can find no precedent for converting the petition ["petition for a commission in the nature of a writ 3a hwudico inqidrendo] into a bill in chancery, making a case against third persons, and in this way invoking the action of the court upon matters involving the rights of others not parties to the proceedings. I am not willing to approve this practice unless it can be shown that it has received the deliberate sanction of the court, and on that account should be considered settled.”

No costs should be taxed against either party.


text:
    Walter T. Reed, executor of the estate of George P. Canning, deceased, v. Charles Tilton et ux.
    [Submitted January 15th, 1919.
    Determined January 16th, 1919.]
    1: A creditor has the right to secure preference from an insolvent debtor, provided it be done with the single honest purpose to-collect or procure security for the payment of the debt.
    2. This right obtains in the wife of the debtor to the same extent as in any other creditor, but when a preference to a wife is attacked, she must show the correctness of her claim with reasonable certainty.

      3. She must establish not only that she had a separate estate, but also the sums advanced to or paid out for her husband from her separate estate.
    4. In a suit questioning such a preference, the burden was not on her to negative the claim that the principal of her separate estate which had been used by her husband, was a gift by her, since the presumption in such circumstances is against a gift.
    5. In a suit to set aside a conveyance of realty made by a judgment debtor to his wife to pay what was due her, relief will be denied where there is no evidence of gift by her, and it appears that the principal of her separate estate was appropriated by her husband in an aggregate amount in excess of the value of the property conveyed and that he has repaid nothing.
    On final hearing on hill of judgment creditor of husband to set aside a conveyance to the wife.
    ■ Mr. Henry W. Leiuis (Mr. William M. Clevenger), for the complainant.

      Messrs. Durand, Ivins & Carton (Mr. Frantic Durand), for the defendants.
   Leaming, V. C.

Complainant, as a judgment creditor of defendant Charles Tilton, seeks to set aside a deed of conveyance of real estate made by the judgment debtor to his wife. The conveyance was made to the wife, through an intermediary, after the debt was contracted. Each, of the conveyances recites one dollar as its consideration. The judgment debtor has no other property of substantial value.

It is the right of a creditor to seek and procure preferment from an insolvent debtor, providing it be clone with the single and honest purpose to collect or procure security for the payment of the debt. Atlantic Refining Co. v. Stokes, 77 N. J. Eq. 119; affirmed, 78 N. J. Eq. 301. This right obtains in the wife of a debtor to the same extent as in any other creditor; but a preference to a wife of the debtor necessarily excites suspicion, and when attacked it is incumbent on the wife to shpw the correclness of her claim with reasonable certainty. She must establish as a fact not only that she had a separate estate, but also the sums advanced to or paid out for her husband from her separate estate. Cramer v. Cale, 72 N. J. Eq. 210; Horton v. Bamford, 79 N. J. Eq. 356. Should these facts be established the further burden is not cast upon the wife to negative the claim that the principal of her separate estate which has been used by her husband was a gift by her to him, since the presumption in such circumstances is against a gift. In the absence of evidence of gift, such advancements will be presumed to have been as loans. Adoue v. Spencer, 62 N. J. Eq. 782.

In the present case the evidence adequately establishes the fact that the wife of the judgment debtor enjoyed a separate estate, and that from time to time over a long period of years the principal of the wife’s separate estate has been appropriated by her husband, the judgment debtor, in an aggregate amount in excess of the value of the property here in question. A considerable degree of. uncertainty exists touching the dates and amounts of some of the advances the husband is claimed to have received from his wife’s separate estate -T but it is reasonably clear that he has received more than the value of the property here in question and has repaid nothing excepting by that conveyance. He has at all times been the dominant character and has appropriated his wife’s funds whenever they were needed and available, and has at no time considered her rights sufficiently to give her evidences of his appropriations. While both defendants testify that the several amounts used by him were as loans from her to him with express promises of repajonent, I incline to the view that his attitude has been more nearly that of appropriation, and her’s that of mere submission; but no direct evidence of gifts exists and the circumstances do not imply gifts. He appropriated her property to his own use and should have returned it long before he did. In such circumstances the language used in Adoue v. Spencer, supra, is apposite: “If it is clear that a husband has taken the principal of his wife’s separate estate, with or without her consent, but without an express gift of clearly implied intent to give, equity should hold it not a gift, but to be treated in the same manner as the money or property of any other person, taken by the husband under like circumstances, would be treated.”

The testimony of defendants is to the effect that the conveyance here in question was made to pay the .wife what was due to her as far as the property would go to pay her. No specific amount appears to have been agreed upon as a credit. The value of tire property being plainly less than the amount due no relief can be afforded complainant herein.

I will advise a decree dismissing the bill.


text:
    Myrtle Profenius v. Charles L. Profenius.
    [Submitted January 27th, 1919.
    Determined February 4th, 1919.]
    Where the fact of the marriage between the parties- is in doubt no alimony pendente lite will be allowed.
    On bill for maintenance. On hearing on return of order to show cause for alimony and counsel fee pendente lite.

      Mr. James Mercer Davis, for the petitioner.

      Mr. William J. Kraft, for the defendant.
   Leaming, V. C.

In this suit complainant alleges that she is the lawful wife of defendant by reason of a parol contract of marriage followed by cohabitation and repute. The suit is to compel defendant to contribute to complainant’s support as his wife. A petition in the cause has been filed by complainant seeking an order for support pendente lite and a counsel fee.

No‘ceremonial marriage is claimed to have been .celebrated. Defendant denies that complainant is his wife. Accordingly, the single issue now presented is one of marriage or no marriage.

In Robinson v. Robinson, 88 Atl. Rep. 951, I held as follows: “In such case a preliminary order for alimony may be made, but should not be made if the result of that issue appears to be in substantial doubt, for the very foundation of the right is the existence of the marriage status, and the burden of establishing the existence of the marriage relation is on the petitioner.” See also cases to that effect there cited.

Voluminous affidavits have been filed in behalf of both petitioner and defendant. The affidavits in behalf of petitioner strongly indicate that petitioner and defendant were man and wife. The affidavits filed in behalf of defendant strongly indicate that their relations were those of man and illicit mistress. In behalf'of petitioner evidence is presented of frequent recognitions of petitioner by defendant as his wife before relatives and neighbors. The affidavits in- behalf of defendant make claim that such recognitions as were made, of that nature were made by the parties for purposes of deception and concealment of their real relations. Affidavits in her behalf state that she was known in the neighborhood where she resided as the wife of defendant; other affidavits in behalf of defendant are to the effect that she was generally known as defendant’s mistress. Letters from defendant to petitioner are produced on the envelopes of which defendant has uniformly addressed petitioner as “Mrs. C. L. Profenius.” On the other hand, it is shown that during the period here in question petitioner kept bank accounts in her maiden name, and a receipt for a motorcycle suit signed by her in that name is also produced. In one letter written by her she clearly discloses that in the absence of defendant she entertained a lover illicitly.

I find myself unable to escape the conclusions that the fact of marriage of the parties is too much in doubt to justify preliminary relief based upon the existence of the marriage status. A final hearing will be necessary to adequately establish that fact. The language of Chancellor Zabriskie, in Vreeland v. Vreeland, 18 N. J. Eq. 43, is here applicable: “The only foundation for the order for alimony and counsel .fee pendente Hie is that the marriage has ex-istecl in fact between the parties. Where the real controversy in the snit is, as here, between the parties, whether that relation exists, or ever did exist, the order cannot be made upon the mere allegation or ex parte affidavits of the wife. Else every man might be .made to pay the expenses of any woman who claimed him as her husband, and sues for maintenance, and to support her as long as the suit could be spun out.”

I will advise an order dismissing the order to show cause.


text:
    William B. Austin v. John L. Young et al.
    [Submitted December 30th, 1918.
    Determined February 20th, 1919.]
    1. Equity can only recognize a voluntary intention to create a trust in land in favor of another when the trust has been executed — that is, when it has been perfectly and fully declared, and has thus resulted in the creation of a defined equitable estate in the donee.
    2. When a valuable consideration exists between the alleged trustee and the cestui que trust, a court of equity may deem a contract to declare a trust as equivalent to an actual declaration.
    3. 'While the terms of an express trust must be disclosed by written evidence with sufficient certainty tc enable a court of equity to enforce its performance, yet parole evidence is admissible to show the circumstances under which the written evidence was executed in aid of its construction.
    4. A voluntary parole promise by one to purchase land with his own money and hold it in trust for another is within the statute of frauds, and unenforceable as an express trust. If not founded on a consideration, even a written promise to become such a trustee could not be enforced as an express trust. <

      5. Revenue statements concerning- the real estate in question signed by’ the secretary or bookkeeper of the holder of the title to the land, and rendered to the supposed cestui que trust, or entries in the books of the legal holder of the title made by such secretary or bookkeeper, cannot be taken as evidence of the existence and terms of the trust to satisfy the words of the statute of frauds, unless such secretary or bookkeeper was authorized to declare a trust, especially as they do not disclose the nature and terms of any trust that may have existed.
    6. Parole evidence is not admissible to establish the nature and extent and terms of the interest of the cestui que trust. It may be used to construe latent ambiguities, but not to supply unstated terms to the signed writings which are claimed as executed voluntary declaration of trust.
    7. The evidence legally admissible in this case, held not to establish the trust stated in the bill.
    On final hearing on bill to establish and enforce a trust in land.

      Mr. John Rauffenbart (by Ulysses G. SLyron), for the complainant.

      Messrs. Thompson & Smalhers, for the defendant, Young and others.

      Mr. Alberti O. Abbott (by Enoch A. Higbee), for the defendant Isaac Aaron.

      Messrs. Bourgeois & Coulomb, for the defendant Myer Cravis.
   Leaming, V. C.

This suit is to establish and enforce a trust of real estate in favor of complainant.

The primary inquiry herein is whether the trust which is claimed to exist is adequately manifested and proved by the writings which have been offered in evidence for that purpose.

By our statute of frauds it is declared as a rule of evidence that all declarations and creations of trust of lands shall be manifested and proved by some writing, signed by the party who is or shall be by law enabled to declare such trust, or else the trust shall be utterly void and of no effect. The exclusion of resulting and constructive trusts from the operation of that statute need not be here considered; the trust here alleged to exist is neither a resulting nor a constructive trust.

No consideration is necessary to support an express trust of lands if the existence of the trust and its terms are adequately established in the manner required by our statute, since when a trust of lands is thus established as definitely and completely declared it stands as in the nature of a completed gift, vesting an absolute equitable estate or title in the ceshoi qua trust. But like other gifts it must be fully completed to become effective as a gift. As equity cannot aid in perfecting a gift it can only recognize a voluntary intention to create a trust in land in favor of another when the trust has been executed, that is, when the trust has been perfectly and fully declared, and has thus resulted in the creation of a defined equitable .estate in the donee; until then, in the absence of a consideration, equity will not enforce it but will consider it a nullity.

But when a valuable consideration exists between the alleged trustee and cestui que trust, a court of equity may deem a contract to declare a trust as equivalent to an actual declaration, upon the equitable rule that what ought to be done will be considered as done; this is sometimes expressed in the formula that a valuable consideration will induce a court of equity to complete an imperfectly created trust.

These general principles are given recognition in the following decisions in this state: Janes v. Falk, 50 N. J. Eq. 468, 472; Landon v. Hutton, 50 N. J. Eq. 500; Wittingham v. Lighthipe, 46 N. J. Eq. 429; Ownes v. Ownes, 23 N. J. Eq. 60, 62. See, also, 3 Pom. Eq. Jur. §§ 996, 997. It is also the privilege of the answering defendants in this suit, who claim as innocent purchasers for value without knowledge of the alleged trust, to require the trust to be established by evidence in conformity to our statute without speci fically pleading the statute as a bar. Whyte v. Arthur, 17 N. J. Eq. 521.

The exaction that the terms of an express trust.must be disclosed by the written evidence with sufficient certainty to enable a court of equity to enforce its performance by -its decree, in no way denies to parole evidence its recognized office to disclose the circumstances under which the written evidence may have been executed in appropriate aid of its construction; but the statutory written evidence, properly construed, must establish the existence of the trust and its terms.

Since it may bo thought that the several writings which have been offered in evidence should, when considered together, be treated as an agreement to declare a trust, it must be first ascertained whether any consideration has existed to support an agreement of that nature.

By the testimony of complainant it appears that defendant Young told complainant that he, Young, would buy the property here in controversy and would from time to time collect enough rents to pay for its maintenance, and when he should be p$id his expenditures in the transaction he, Young, would convey the property to complainant. The property had formerly belonged to complainant and had been sold on foreclosure to the mortgagee; but complainant does not claim that Young was responsible for that. The utmost claimed by complainant is that Young, as his friend, advised him to let the property be sold at the foreclosure sale, and stated that he, Young, would then go to the purchaser and fix it up for complainant, and that after the foreclosure sale Young- stated to complainant that he would buy the property and hold it for complainant in the manner already stated. This promise on the part of Young was by parole and was purely voluntary. It was merely the expression of a friendly purpose of one friend to another to buy a property and carry it until the other should be able to take it over and relieve the purchaser from the expenditures or obligations incurred by him. Young was financially able to buy the property, while complainant was not; as a friendly act Young accordingly volunteered to buy it for the benefit of complainant in the manner stated. No amount appears to have been suggested as the price at which Young should purchase; the whole plan was apparently based upon the hope that Young would be able to buy at a favorable price and the further hope that he might become relieved from his expenditures and obligations incurred in connection with it, in which event he was to turn it over to complainant. The transaction was in no sense a loan of the purchase price from Young to complainant. No obligation for payment has been executed by complainant at any time, nor am I able to believe that any binding obligation of that nature was intended by either of the parties. It was to be, in effect, a mere privilege for complainant to take over the property if and when Young should be relieved from tire expenditures and'obligations incurred by him in the transaction. By endorsements on notes Young was already carrying obligations of complainant in a large amount. Complainant testified that the understanding was that he was to be privileged to receive a deed from Young for the property here in controversy when Young had received the money expended by him. Young has not testified; but other testimony of complainant and the testimony of Albert-son strongly indicate that Young’s understanding of the original plan was that complainant would only be privileged to take over the property when Young should be fully discharged from all obligations incurred by him in behalf of complainant — that is, obligations incurred by Young as endorser on complainant’s commercial paper as well as those incurred in connection with the property here in question. To that extent the terms of the alleged trust must be said to be uncertain, so far as the original understanding of the parties may be thought competent to define the terms of the trust. At the conclusion of the hearing it was urged by complainant that the transaction might be treated as a deed to Young, or to Young’s appointee, to secure a debt of complainant, and hence, in legal effect, a mortgage, thus rendering parole testimony competent to establish complainant’s equitable title. Not only does the bill allege that the legal title was held in trust for complainant, but the testimony clearly negatives the idea of a loan of money to complainant.

The foregoing brief statement of facts antecedent to the purchase by Young sufficiently discloses that the original promise of Young was purely voluntary and was no more than a parole promise, wholly unsupported by any consideration, to purchase land with his own money and hold it in trust for complainant in the ma,nner stated. A voluntary parole promise by one person to purchase land with his own money and hold it in trust for another is, of course, within the statute of frauds and unenforceable as an express trust. 39 Cyc. 47. As already pointed out, if tire engagement should be in writing the promise to become a trustee might be enforced if founded'on a sufficient consideration; if not founded on a consideration, even a written promise to become a trustee could not be enforced as an express trust. Wittingham v. Lighthipe, 46 N. J. Eq. 429.

Subsequently to the parole engagement of Young, already referred to, Young negotiated the purchase of the property in question. Title was taken by a corporation by the name of Estates of Chelsea. The most favorable view that can be adopted on behalf of complainant -is to assume — an assumption perhaps admitting of some doubt under the evidence — that that corporation was so far owned and dominated by Yortng as to be, in legal effect, Young. In that view tire adverse effect upon complainant of the resolution of the board of directors of that corporation touching the purchase of the property by it could be measurably disregarded. The purchase appears to have been made for the amount of the foreclosure decree, with costs, interest, taxes and some other expense items added. 'Part of the purchase price was paid in cash with money of either Young or the corporation referred to and the balance by a purchase-money mortgage executed by the corporation, the bond secured by the mortgage being signed by the corporation and Young. The corporation thereafter executed a new mortgage on the property for approximately the entire original purchase price and discharged the purchase-money mortgage referred" to, the new mortgage securing a bond of the corporation; in that manner the amount of cash originally paid was restored to Young or the corporation, but the obligation on the new bond secured by the mortgage continued. Thereafter the corporation collected most of the rents of the property; complainant appears to have collected some of the rents; complainant also took a lease from the corporation for the apartment occupied by him.

Written financial statements were from time to time supplied to complainant by one Albertson, who was secretary and bookkeeper of the corporation, and also an employe of Young. These written statements, so far as produced, disclose the revenues received by the corporation from the property and various expenditures made by the corporation in maintenance of the property. These statements were made up by Albertson from the data appearing on the books of account of the corporation. If statutory written evidence of the trust and its terms is to be found, it must be found in these revenue statements and the entries on the books of account of Estates of Chelsea from which the statements are made up; no other writings exist.

It is evident that for these writings to adequately establish a voluntary trust and its terms they must meet the requirements already referred to; they must be signed by the party who is or shall be by law enabled to declare such trust, and they must not only disclose/ the existence of a trust declared in prossenli, hut must disclose its terms with sufficient clearness and certainty to enable a court to enforce it. As phrased in 28 Am. & Eng. Encycl. L. (2d ed.), at p. 879: “They must be sufficient to establish the whole trust; not only that there is a trust, but what the trust i's.” As stated by Prof. Pomeroy:

• “The fact that a trust of lands is created must not only be manifested and proved by a writing properly executed, but it must also be manifested and proved by such a writing what the trust is. The declaration of trust, whether written or oral, must be reasonably certain in its material terms; and this requisite of certainty includes the subject-matter or property embraced within the trust, the beneficiaries or persons in whose behalf it is created, the nature and quantity of interests which they are to have, and the manner in which the trust is to be performed. If the language is so vague, general or equivocal, that any of these necessary elements of the trust is left in real uncertainty, then the trust must fail.” 3 Pom. Eq. Jur. § 1009.

See, also, Newkirk v. Place, 47 N. J. Eq. 477, 486.

Most of these revenue statements are unsigned. Two of them are signed.- But as they have apparently been prepared for some single purpose, and if all could be produced, such would no doubt connect with the others, they probably may be all regarded as component parts of the two which are signed.

Of the two which are signed, one is signed “Estates of Chelsea, by F. S. Albertson, Sec.;” the other “F. S. Albertson, Agt.” Albertson, who prepared and signed these statements and who kept the books of Estates of Chelsea, has testified that it was his understanding from parole statements made to him by Young that the property was being held for the benefit of complainant to enable complainant to take it over at some future time when he should have fully discharged all of his pecuniary obligations to Young or on which Young was liable. He conceded that his information on the subject was meagre, but testified that he so understood the general situation, and kept the books of Estates of Chelsea consistently with that theory and prepared these various revenue statements in that view. But there is no testimony that either Young or Estates of Chelsea at any time authorized Albertson as agent or otherwise to sign any statement or other paper or make entries on the books of Estates of Chelsea in the nature of a declaration of trust or in any way to declare a trust touching the property. As secretary and bookkeeper of the corporation he obviously could not do so without authority for that purpose being conferred on him by the corporation; as clerk or bookkeeper of Young his general authority would be subject to like limitations. It is accordingly impossible to treat these signed revenue statements or the book entries from which they are taken as writings “signed by the party who is or shall be by law enabled to declare such trust,” unless the inference is justified that Albertson was authorized to declare a trust.

But if either the revenue statements or book entries, separately or together, could be deemed to satisfy the statutory requirement for a signature by the party who is or shall be by law enabled to declare such trust, there yet remains entire uncertainty, so far as written evidence is concerned, as to the nature and terms of any trust that may have existed. In this connection it should be still borne in mind that any trust or engagement to hold in trust that may have existed in favor of complainant was without consideration, and accordingly any writing, to be effective, must presently and completely declare the trust and its terms — in a word, must execute it — and cannot be seized upon by a court as an agreement to declare a trust and be enforced as such.

These several revenue statements include, as debit entries, moneys paid by Estates of Chelsea for repairs, taxes, insurance, interest on mortgage, sewer rent and other expenses incident to the property in question, and also moneys paid for similar expenses on other property not here involved, the legal title to ■which was in complainant, and also commissions for all rent collected; as credit items, rents collected from the property here in controversy and from other property the legal title to which was-in complainant. On the books of Estates of Chelsea there is an account in the name of complainant in which these items are assembled. The statements offered in evidence all show credit balances to complainant; but in the complete account on the books of Estates of Chelsea, the balances are at times debit balances against complainant. In the books of Estates of Chelsea there are also separate property accounts showing the items incident to the several properties; the caption of the account containing items incident to the property in question designates the property as the Austin property. That, however, signifies little, as the property was commonly known by that name. On their face these several statements of accounts disclose no more than the fact that Estates of' Chelsea was collecting rents of the property here in question and of certain other property, the title to which stood in the name of complainant and charging-commissions for all rents collected by it, and was paying various expenses incident to all the properties referred to, including interest on mortgages, and rendering statements to complainant disclosing such revenues and expenses. Nowhere is it declared in these statements or on the books of Estates of Chelsea why or to what extent or for what purpose complainant may have been interested in that information or in such tabulated statements or in the property. Complainant’s interest in these accounts, so far as the property here in question is concerned, may have reasonably arisen from many situations other than as a cesbui que irusb. The utmost that can be said as to what these written statements or the books of account of Estates of Chelsea disclose, either considered separately or together, is that they disclose matters which are consistent with the claim of complainant; but what they in fact disclose is that Estates of Chelsea held the legal title to the property, subject to a mortgage which it had executed on the property, under some undefined engagement or understanding with complainant whifch included the collection of rents of the property by the Estates of Chelsea, together with rents of other- property admittedly owned by complainant, and the payment by that corporation of expenses incident to the property in question and the other property. For more information than that parole testimony must be resorted to. It is by complainant’s parole testimony that the nature and extent and terms of his alleged interest is wholly disclosed; that interest, so disclosed, does not construe latent ambiguities in the terms of, but supplies unstated terms to, the signed writings which are claimed as an executed voluntary declaration of trust.

Herein complainant’s case must fail. Unless resort can be had to parole evidence to define the nature and terms of any trust that may be claimed to have existed that information cannot be had. So far as the writings disclose, and wholly consistent with them, the property may have been held to secure some undefined obligation of complainant to the corporation or to Young or to some other person, thus constituting complainant the owner of a mere equity of redemption; the writings are equally consistent with a variety of contractual engagements which may have existed, between the-parties touching the property; the writings may be said to be also consistent with the existence of a trust of some kind in fa-vor of complainant. It is accordingly obvious that parole evidence must be resorted to first to determine whether the writings import a trust in favor of complainant, then, with that so ascertained, parole evidence must be further depended upon to disclose the nature and terms of the trust. That cannot be done. Authorities specifically to that- effect have been already cited' herein, to which may be advantageously added Smith v. Matthews, 3 DeG. F. & J. 109. It is there said (at p. 152) : “When this court is called upon to establish or act upon a trust of lands by declaration or creation, it must not only be manifested and proved by writing, signed by the party by law enabled to declare the trust, that there is a trust, but it must also be manifested and proved by writing, signed as'required, what the trust is.” And (at p. 151) the language of Lord Alvaney, in Forster v. Hale, 3 Ves. Jr. 707, is quoted with approval that “it [the trust] must he proved [by the writings] in toio, not only that there was a trust, but what it was.”

It may be appropriately added that the testimony of complainant touching the nature and terms of the trust was to the effect that it was conditional — that is, that when the obligations incurred by Young with reference to the property should be discharged, complainant was to become entitled to a conveyance of the property. The testimony of Albertson discloses a further possible condition, to the effect that complainant was to also discharge the obligations which Young had incurred as endorser on notes of complainant. But it is upon the parole testimony and not upon the writings that complainant must in this suit rely to establish either the certain existence of a trust in his favor or its nature, terms and conditions.

This view renders it unnecessary to consider whether the purchasers of the property acquired their titles without notice of complainant’s claim.

I am obliged to advise a decree dismissing the bill.


author: Lewis, V. C.

text:
    The Board of Education of the Borough of West Paterson, in the County of Passaic and State of New Jersey, v. Thomas Brophy and Mary Brophy, his wife.
    [Decided January 23d, 1919.]
    1. An “estate upon condition” is granted on the limitation or condition that the grantee do certain things, or refrain from doing certain specified things, and if the grantee violates the prescribed conditions, the grantor may re-enter and take possession.
    2. An “estate upon conditional limitation” is one where the whole estate is given the grantee absolutely, to terminate absolutely on the happening of a specified event without re-entry; the mere happening of the event terminating' the estate, and the fee passing immediately elsewhere.
    3. Conditions subsequent are always construed strictly, and will never work a forfeiture unless clearly expressed in unequivocal terms or-necessarily implied.
    On bill to quiet title. On pleadings and proofs.

      Mr. Jacob Veenstra, for the complainant.

      Mr. Michael J. Murphy, for the defendants.
   Lewis, V. C.

By a deed dated December 24th, 1858, William Brophy and Mary, his wife, conveyed by deed of warranty, for the express consideration of one dollar, certain lands to “the Trustees of Union District School No. 9, of the Township of Aequackanonk.” The granting clause is to such trustees “and to their successors and assigns forever;” and the habendum “to said parties of the second part, their successors and assigns forever,” and so with the covenant of warranty.

The present controversy has arisen because of the following phrases in the deed (after the description of the land) : “Which said premises are hereby conveyed to and for the purpose of having erected thereon a distri&t school house,” and (immediately following the conclusion of the covenant of warranty) “to and for the use of having erected thereon and maintained for the use of said district a school house and for playground for the scholars of said district and for no other purpose whatsoever.”

A school house was built upon the land; and regular daily school sessions were held therein from the year 1859 to the end of June, 1913.

In 1868, by legislative action, a part of the township of Aequackanonk, embracing the land in question, became the township of Little Falls. By operation of law, the school district, or the board of education thereof, of the new township, acquired title to the school house tract.

In 1914, the legislature incorporated the borough of West Paterson out of that part of the township of Little Palis, in which lay the premises in question. Complainant thereupon took by operation of law the title of the school district (or board of education thereof) of Little Palls township to the school house tract.

No school sessions have been held in the school house since June, 1913; but the school property is in the charge of a committee, constituted of members of the complainant board, and the key to the door is in the custody of a janitor in the employ of the complainant.

Complainant is in peaceable possession of the property, and was in such possession at the time of the filing of this bill.

The defendant Thomas Brophy disputes complainant’s title and claims to own the school house tract. In a notice of such claim dated April 30th, 1914, and served upon the board of education of Little Palls township about that time, he claimed as “one of the lieirs-at-law of William Brophy, deceased” (the original grantor); and in his answer to complainant’s bill he reasserts that claim and claims also as devisee under the will of the wife of said William Brophy.

When complainant’s bill was filed no suit was pending to enforce or test the validity of the defendant’s claim.

That claim is built up upon the cessation of use of the school premises for school purposes. The central question, therefore, is one of construction of the original deed, and, in particular, of the clauses thereof, hereinbefore quoted, 'that follow the description and the covenant of warranty. The construction is to be made, of course, in connection with the fact of discontinuance of school sessions on the school house tract.

The evidence shows that at the end of the school year of 1913, the board of education of the township- of Little Palls ordered that a carpenter be employed to close up and fasten the windows of the school house, which was accordingly done, and since that date the building ha.s remained in the same condition that it then was, excepting- the deterioration caused by time and weather. -No money has been expended for repairing, painting or cleaning it since June, 1913. The door and windows have remained closed and fastened ever since, except on rare occasions when the janitor of a new school built in the neighborhood entered the building, according to his statement. This witness testifies that he never did any work in or about the building or grounds or opened the windows.

The evidence further shows that the board of education of the township of Little Fails had caused to be erected a new and commodious school house within about fifteen hundred yards of the locus to quo, and that the children who were wont to attend the old school before it was closed in 1913 have since then attended the new school.

There was testimony also to show that the new school is ample for the children living in that part of- the borough, and is likely to íemain ample for that purpose for a considerable period of time in the future. It was also testified that some of the desks in the old school were removed by the board of education of the borough of West Paterson to another school in the borough for use there.

The defendant contends there was in fact and in law an abandonment of the school house for the use of a school.

2. That such, abandonment ojjerated as a reverter of the title to the defendant.

3. That complainant never acquired title to the premises, relying on the following cases: Jersey City v. Morris Canal Co., 12 N. J. Eq. 547; 9 Am. & Eng. Encycl. L. 55, note 1, and cases cited thereunder; 4 Kent Com. § 132; Gage v. School District No. 7, 64 N. H. 282; 9 Am. & Eng. Encycl. L. (2d ed.) 73; Methodist Episcopal Church v. Pennsylvania Railroad Co., 48 N. J. Eq. 452; Reutler v. Ramsin, 102 Atl. Rep. 351; Oxford Board of Trade v. Oxford Iron and Steel Co., 81 N. J. Law 694; Freeholders of the County of Cumberland v. Buck, 79 N. J. Eq. 472; Munro v. Syracuse Railway Co., 200 N. Y. 224; State v. Brown, 27 N. J. Law 13; Newark v. Watson, 56 N. J. Law 667.

This suit was brought under the provisions ' of “An act to compel the determination of claims to real estate in certain cases and to quiet the title to same.” P. L. 1870 p. 20; 4 Comp. Stat. p. 5399:

“That when any person is in peaceable possession of lands in this state, claiming to own the same, and his title thereto, or to any part thereof, is denied or disputed, or any other person claims or is claimed to own the same, or any part thereof, or any interest therein, or to hold any lien or encumbrance thereon, and no suit shall be pending to enforce or test the validity of such title, claim or encumbrance, it shall be lawful for such person so in possession to bring and maintain a suit in chancery to settle the title of said lands, and to clear up all doubts and disputes concerning the same.”

The first question to be decided, then, is, whether there is a conditional limitation, a condition subsequent, a covenant, or whether the phrases concerning which a construction is sought by the bill are a mere statement of what the grantee intended to use the land for.

An estate upon condition is granted on the limitation or condition that the grantee do certain things or refrain from doing certain specified things^ and should the grantee violate the prescribed conditions, the grantor may re-enter and take possession.

On the other hand, an estate upon conditional limitation is one where the whole estate is given to the grantee absolute^, but upon the happening of a specified event it is to terminate absolutely, and no re-entry is necessary. The happening of the event terminates the estate and the fee goes immediately to some one else.

Por example, if an estate be granted to a man as long as he holds the position of a vice-chancellor of the State of New Jersey, and no longer, that-would be a conditional limitation and the estate would terminate when the grantee ceased to hold that position, and re-entry or its equivalent would not be necessary.

In the instant case it is, therefore, quite clear that the phrases used in the deed in question do not import a conditional limitation.

In the case of a condition subsequent “where an estate in fee is created on condition, the entire interest does not pass out of the grantor by the same instrument or conveyance. All that remains after the gift or grant takes effect continues in the grantor and goes to his heirs. This is the right of entry which, from the nature of the grant, is reserved to the grantor and his heirs, and which gives them the right to enter as of their old estate, upon the breach of the condition.” Proprietors of the Church in Brattle Square v. Grant et al., Gray (Mass., 1855) 142.

Conditions subsequent are always construed strictly and will never work a forfeiture unless they are clearly expressed in unequivocal terms or necessarily implied. Southwick v. New York Christian Missionary Society, 186 N. Y. Supp. 392; 151 A. D. 116.

“It is no less the dictate of reason and justice than of sound law that courts should require the violation of a condition which involves a forfeiture to be clearly established. Conditions, when they tend to defeat estates, are stricti juris and to be construed strictly.” 1 Shep. Touch. 133 § 8; Roll. Rep. 70.

“Conditions subsequent, especially when relied upon to work a forfeiture, must be created by express terms or clear implication, and are strictly construed. Washb. Real Prop. 447; 4 Kent Com. 430; Southard v. Central Railroad Co., 2 Dutch. 13, 20. If it be doubtful whether a clause in a deed be a covenant or a condition, the courts will incline ag-ainst the latter construction. 4 Kent Com. 132. And words in a deed, not in form either a covenant or a condition, will be construed as a covenant rather than a condition.” Woodruff v. Woodruff; 44 N. J. Eq. 353.

In the case of St. Stephens Church v. Church of the Transfiguration, 130 N. Y. App. Div. 166; 114 N. Y. Supp. 623, the plaintiff bought from the. defendant land by deed containing a covenant not to use the land for any but church purposes. The covenant had not caused the land to be sold at a lower price and was of no value to the defendant, who was using it as a means of extortion. The court held the covenant was unenforceable and that the defendant must release it. In the instant case the consideration was only one dollar, so that it is hardly a parallel case.

Lands may be dedicated to public use for school purposes. 4 McQuil. Mun. Corp. § 1543.

In this suit tlie question of the present right of the school district to sell this land or to put it to some other use than a school purpose is not in issue, by the defendants’ claim of title. All that the claim of the defendants puts in issue is that there has been a forfeiture through non-user. There is nothing to show that the school district contemplates a sale of the land or to put it to some other use than school purposes. If, therefore, this bill to qiriet title is sustained without qualification, the adjudication would be to completely dispose of the claim of the defendants and would be an adjudication that the defendants had no rights in the property. This would leave the school district free thereafter to do with it as it pleased without an adjudication having been made of its ultimate right to regard its estate as an absolute fee without restrictions or conditions. Whatever, therefore, may be the basic rights involved between the parties to this suit, it would seem that to sustain the bill to quiet title would confer greater rights upon the school district than either of the parties may have contemplated, namely, the setting at rest of the question of an absolute fee in the school district, which is not in issue in this suit.

All that the defendant claims here is, that through non-user there has been a forfeiture. While th.e evidence shows that the school building is not at present being actually used for school sessions, there is no evidence to establish the fact that the school district has actually abandoned the property for school purposes. Circumstances might arise at any time which would induce the present board of education to utilize the building and grounds actively for school purposes; or a succeeding board, with different policies, and, perhaps, under changed conditions, might put it in active operation. It might be utilized for a manual training shop, or a kindergarten, or a special school for defective pupils, or a domestic science school and kitchen, or under the application of the cy pres doctrine for a school library or a community centre, or a public playground, any one of which might reasonabty, perhaps, be construed to be a school purpose in the light of present tendencies. Libraries, community centres and public playgrounds are almost always conducted in conjunction with educational exercises.

I am, therefore, of the opinion that so far as the present suit is concerned, the.defendants have failed to show that there has been a forfeiture through non-user, even though I should hold the estate of the school district to be subject to a condition subsequent, which I am not called upon now to decide, and to that extent complainant’s title should be quieted.

I am inclined to the view that the original grant to the school district is a grant in fee-simple without condition or limitation, the grantor merely expressing the purpose which it was his desire or wish that the propérty should he used for.

It is to he observed that in the present grant no forfeiture is prescribed, and both the grant and the habendum are unconditional.

If the issue were before me I would be inclined to hold that the grantee took an unconditional fee and that the school district could dispose of the land and building as it saw fit, but, as I conceive the present suit, I am not called upon to go that far. It is sufficient to say that under the evidence there is nothing to warrant the court in finding that the complainant’s title is jeopardized or injuriously affected by the defendants’ claim; and in view of the fact, as above indicated, that to sustain the bill in its entirety would be to adjudicate the question which I have now shown is not before me for adjudication, I am of the opinion, that the bill should either be dismissed or that it should be so modified’ as to embrace simply the issue of the forfeiture by non-user; so that a decree sustaining it would go no further in adjudicating the rights of the parties.