text:
    James R. Combes v. Theodore R. Hoffman and Cornelia Hoffman.
    [Submitted April 20th, 1914.
    Decided September 24th, 1914.]
    . 1. A sheriff’s deed will be set aside where the conduct of the judgment creditor was unconscionable and inequitable and the price* grossly inadequate.
    2. The complainant to obtain equity must do equity and restore the status quo as nearly as possible.
    On bill, answer and proofs.

      Messrs. Hartshorne, Insley & Leahe, for the complainant.

      Mr. Frederic R. Chamberlin, Mr. Randolph Perkins and Mr. Edward 8. Holman, for the defendants.
   Griffin, Y. C.

The complainant in this cause seeks to set aside a deed dated May 29th, 1912, made by a sheriff pursuant to a sale under an execution at law. The order of the important events is as follows:

December 19th, 1892, judgment entered in the Hudson circuit court in favor of Dennis Reardon and George Doremus, partners, trading as Reardon & Doremus, plaintiffs, v. James R. Combes, defendant, for $590.83.

Doremus died, leaving Eeardon as surviving'partner.

December 10th, 1906, Eeardon, as surviving partner, assigned to his son, James H. Eeardon, which assignment was recorded August lJplh, 1906. These dates are so alleged in the bill, and admitted by the answer, but are evidently incorrect.

September 21st, 1907, James H. Eeardon received $127.36 from a special master in a partition suit, being money awarded to the defendant, Combes, and the same was applied to the account of Eeardon & Doremus.

March 15th, 1912, Dennis Eeardon, as surviving partner, assigned the judgment to Theodore Hoffman.

March 26th, 1912, Hoffman docketed judgment in supreme court.

April 18th, 1912, execution issued out of the supreme court for $590.83.

May 29th, 1912, property sold by sheriff to Hoffman for the-sum of $25', being the amount of his bid.

June 15th, 1912, the deed from the sheriff to Hoffman, which bears date May 29th, 1912, was acknowledged.

August 20th, 1912, deed recorded in the register’s office 'of Hnion county.

After August 16th, 1912, the defendant, Combes, was examined in • supplementary proceedings, and for the first time learned of the sale.

January 14th, 1913, bill filed in this cause.

February 7th, 1913, James H. Eeardon reassigned the judgment to Dennis Eeardon, dating the assignment October 23d, 1907. 1

Mr. Bowen, the counsel for the surviving partner, Reardon, testified that the assignment made by Dennis Reardon to his son, James, was for the purpose of making easier the collection of money which was expected to be had from a partition case in which Combes was a party, with the understanding that James should reassign after the partition suit terminated, and that the son, as assignee, always held the judgment for his father; that there was collected from the special master in the partition proceedings on September 21st, 1907, the sum of $127.36, which moneys were applied to the account of Reardon- & Doremus.

James H, Reardon, the assignee, testified that he was not connected with Reardon & Doremus; did not know of the judgment, and never claimed any right, title or interest therein. He knew of the occasion of the assignment of the judgment, but never claimed to own or have any right, title or interest in the judgment.

After the sale attacked had been made, and more than twenty years after the entry of the judgment, James, on'February 17th, 1913, reassigned to his father as surviving partner by'assignment dated October 23d, 1907. This appears to be the only written assignment executed by James to his father.

A point made by the complainant is that “Hoffman had only an equitable title to the judgment. Any claim he makes to enforce it is barred by his inequitable conduct.” I do not take it, from the brief submitted, nor the, argument of counsel for the complainant, that he disputes the validity of the execution, or the manner in which it was issued. Dennis Reardon was clearly the equitable owner, at least, of the judgment. His son had no interest therein. It was the duty of the son to account to the father, as surviving partner, for anything he received on account of the judgment, and to reassign whenever requested so to do. This situation vested such a right in Dennis Reardon, as surviving partner, that he would be protected in the ownership of the judgment either at law or in equity. Terney v. Wilson, 45 N. J. Law 282; Brown v. Dunn, 50 N. J. Law 111; Johnston v. Bowers, 69 N. J. Law 544, 547.

The complainant also asks that the sale be set aside on the grounds of (1) fraud or surprise; (2) inadequacy of price.

About twelve years after the entry of the judgment the ancestor of the complainant died, by means whereof he became invested with a one-eighteenth interest in some meadow lands lying between the cities of Elizabeth and Newark, containing about twenty acres, which were appraised at about $20,000 by the expert of the complainant, and at $11,000 by the expert of the defendants. The interest, therefore, of the complainant, if free and clear of encumbrances, would range between $600 and $1,100. The property had a purely speculative value. The judgment at the time of the sale amounted to about $1,200. Thus, the property was hardly of sufficient value to satisfy it.

The conduct of the defendant which it is urged constitutes fraud is this: After the first execution had issued, and the amount received from the special master had been credited on. the judgment, no action was taken until about nineteen years after the entry of the judgment, when Mr. Iiolman, the attorney of Hoffman, called on Mr. Bowen, the attorney for Eeardon, and stated that he had been to see Mr. Eeardon, and that Mr. Eeardon had sent him to him (Bowen). Mr. Holman told Mr. Bowen that he had offered Mr. Eeardon $25 for the judgment; that a suit was pending against his (Holman’s) client, and that he desired to procure the judgment to plead as a set-off or counterclaim in that suit. This testimony is not denied. The result of this conference was. that the judgment was assigned to Mr. Hoffman for $75.

Mr. Combes, the complainant, is forty-eight years of age, has lived in the city of Bayonne all his 'life, and knew Mr. Holman, the attorney of Mr. Hoffman, personally for a great many years. Mr. Holman has an office in the city of Bayonne. Mr. Combes also knew Mr. Chamberlin, another solicitor of record for Hoffman, for a great many years. In fact, it plainly appears that.the solicitors and the complainant were well known to each other.

Hoffman, having become the owner of the judgment, execution was taken out thereon; the sale was advertised according to law in the county of Hnion, and the property was sold by the sheriff to Hoffman for $25, being a sum less than the sheriff’s execution fees. Combes had no actual notice of the sale, and did not learn of the fact until after August 16th, 1913, when supplementary proceedings were instituted against him under the statute; thereupon, on January 14th, 1913, he filed his bill to set aside the deed.

The defendant Hoffman stands in the place of Eeardon, the surviving partner. Eeardon does not complain that Hoffman defrauded him, but, on the contrary, testified in his favor. Therefore, if complainant could not set aside the sale if Eeardon had not assigned and he had caused the sale to be made, then Combes cannot have it set aside as against Hoffman.

Hoffman was not bound, in law, to give personal notice to Combes. He proceeded strictly within his rights. The sale was advertised in the manner provided by statute. But it is very evident from the manner in which Hoffman procured the assignment, the secrecy observed by him in the conduct of the sale,.and the price bid at the sale, that he intended by trick or subterfuge to acquire the property of the complainant for a nominal sum. In this he succeeded, obtaining a deed for a con- , sideration less than the sheriff’s execution fees, with the result that the property of the complainant was taken from him without the defendant paying even one dollar’, which was applied in reduction of the judgment debt, and thereafter, the same, undiminislied, might be satisfied out of such other property as the complainant might then have owned or should thereafter acquire. The conduct of Hoffman was so unconscionable and inequitable, and the price was so grossly inadequate, as to shock the conscience of a court of equity. This, coupled with the surprise of complainant, requires that the complainant be relieved. Kloepping v. Stellmacher, 21 N. J. Eq. 328; Rapheal v. Zehner, 56 N. J. Eq. 836; Palladino v. Hilpert, 72 N. J. Eq. 270 (275, 276).

The complainant urges that the relief to which he is entitled is a decree setting aside the sale and deed, leaving the defendant to such rights as he may have under a judgment entered more than twenty years ago; in this he is asking that equity be rendered unto him but denied to his adversary. In the case of Herbert v. Herbert (1890), 47 N. J. Eq. 11, it appears that the defendant took out a writ 'of attachment, levied on the lands of the complainant, and, in due course of law, the same were sold to the defendant. The complainant had no knowledge of the existence of the suit until after the deed had been delivered, when the defendant notified the complainant of the fact. During the suit it appears the defendant had visited the complainant at his New York office, but did not inform him' of the pendency of the suit. The motion was to dismiss the bill. There were indications in the bill that the claim in attachment was founded on notes which were barred by the statute of limitations, and it was insisted that the defence under that statute w;as unconscionable. Chancellor McGill said: “The bill invokes the assistance of this court against a sale under a judgment at law. * * * The terms upon which relief will be afforded must be equitable. If, under circumstances hereafter developed, it shall be made to appear that the complainant’s defence to the claim upon which judgment is founded is unconscionable, though ample under the strict rules of law, the defendant’s legal advantage with respect to it will not be disturbed.”

The defendant Hoffman is not here seeking relief; he is content with his present position. The complainant, however, seeks equity,.and must do equity. That equity consists in restoring the status quo as nearly as possible. This can only be accomplished by allowing the sale to stand and declaring that the defendant holds the property in trust to sell and apply the proceeds in reduction or payment of the amount due upon his judgment, rendering any surplus to the complainant.

I will advise a decree appointing a special master of this court to sell said lands and apply the proceeds in accordance with the views above expressed. No allowance will be made to the defendants for the costs and expenses of the sale attacked.


source: Caselaw Access Project

author: Grieein, V. C.

license: Public Domain

text:
    Florence I. Merkel, individually and as executrix, &c., v. William Merkel.
    [Submitted September 12th, 1916.
    Decided November 21st, 1916.]
    1. Under the facts in this case the compromise' agreement will not be set aside, the complainant being guilty of laches.
    2. It will not be set aside because the counsel of the complainant had given her mistaken advice, the facts upon which said advice was founded being all the time in the possession of the complainant.
    On bill, &e.

      Mr. Herbert G. Gilson, for the complainant.

      Messrs. Raymond, Mountain, Van Blarcom & Marsh, for the defendant.
   Grieein, V. C.

The bill-in this cause is filed (1) to set aside a compromise agreement which resulted in the settlement of a suit at law; (2) to compel the return of moneys paid thereunder, and (3) to restrain the disposal of the notes given under the agreement.

It seems that John G-. Merkel in his lifetime was the holder of two hundred and forty^eight shares of the capital stock of the John G-. Merkel Companjq with a capital issued of two hundred and fifty shares; he practically owned the corporation, the other two shares being held-by the present complainant and one Julia Voight to qualify them as directors. Prior to December 24th, 1903, the defendant, who was a brother of John G-. Merkel, was in the employ of the company as salesman.' On the last-mentioned day an agreement was entered into between John and William, under which John agreed to transfer thirty shares of the capital stock of the company to William if he continued in the employ of the company for five years, from January 1st, 1904, and during that time devoted his full time and energy in behalf of the company, and also upon condition that the capital stock of the company should, on January 1st, 1909, reach the book value of $400 per share, and if it did not reach such book value, then the said stock should • remain the sole property of John, in which latter case William should receive (in cash) the difference between the book value of the shares on May 1st, 1904, and January 1st, 1909—that is, if the book value had increased. On July 3d, 1910, John G. Merkel died, leaving a will in which he appointed the complainant, who was his wife, executrix. The defendant continued in the employ of the company from the time of the signing of the agreement until about November, 1912 (erroneously alleged in the bill to be November 4th, 1914), when he was either discharged or voluntarily left the employ of the company. The complainant in her bill alleges both that he was discharged and also that he left voluntarily. The defendant says that he was discharged.

The defendant, on February 5th, 1913, demanded that the complainant transfer to him the thirty shares of stock under the agreement, or the equivalent thereof in cash. This she declined to do, whereupon defendant, on February 28th, 1913, began suit in the Essex circuit court against the complainant, alleging performance of the agreement on his part, and the non-performance on the part of the complainant here, demanding damages in the sum of $15,000. The complainant here answered, denying generally that defendant performed, and also set' up as a defence that on February 5th, 1913, the day that the plaintiff demanded said shares of stock, the same were not of the value of $400 per share, nor that they were worth anything near $400 per share, and denied that the plaintiff (this defendant) was entitled to said thirty shares of stock. She also says that she refused to deliver the shares of stock because the plaintiff, having broken his contract in many and divers respects, was not entitled to them.

When the case was about to be reached for trial, in December, 1914, they compromised their differences for the sum of $6,000. The compromise provided that $1,000 should be paid in cash, and fifty promissory notes, in the sum of $100 each, payable monthly, should be given for the balance. The cash was paid, the notes delivered, the suit was discontinued and a release was given by the defendant here to the complainant. There appears to have been numerous efforts to compromise before this time, which failed; and, apparently, the compromise was only effected when the complaiant here was subpoenaed by the defendant (the plaintiff in the law suit) to produce her books in the law court, to the end that he might prove the book value of this stock. Two days after this subpoena was issued the case was settled. She continued to pay the notes, in accordance with the agreement, down to about July, 1915, during which time she paid seventeen, thus making the total amount paid under the agreement $2,700.

The bill, after referring to the suit at law and the issues raised therein, bases the right to relief here upon two grounds—first, newly-discovered evidence, which, if known at the time the suit at law was pending, would have enabled her to successfully defend the action, and second, that she consulted counsel learned in the law and was mistakenly and illegally advised by him that William had a lawful cause of action against her for the thirty shares of stock, or for damages for breach of the agreement, and advised her to compromise.

First. Is the evidence newly discovered?

She says that on November 4th, 1914 (should be February, 1913), when William demanded the thirty shares, or the equivalent thereof in cash, he falsely and fraudulently represented to the complainant here that he had devoted his full and undivided , time and energy, &c., to the company during the term of the five years mentioned in the agreement; that the capital stock had reached a book value of $400 for each share; that the book value of said stock had increased since May 1st, 1904, to $400, on January 1st, 1909, and was then of that value, which statements were false and untrue; and that, relying upon such statements and mistaken and illegal advice, she entered into the compromise' settlement.

That she did not rely upon the statements made by the defendant is quite evident from her affidavit made in this cause on the 5th day of September, 1916, in which she says that during the five years he had. not devoted all his time to the business because he had been discharged during that time several times by John; that at the urgent solicitation of the mother of John and William, in the presence of the complainant and her daughter, Julia, William was taken back; and William admitted that he had not devoted his entire time to the said business, and would do so in the future. A similar affidavit is made by Julia. She, therefore, could not have been deceived by any such statement alleged to have been made by William, because, if her story be true, she knew the-contrary to be the'truth; William, however, denies her story.

This leaves, as the remaining ground, the alleged deception practiced by William in securing the compromise, namely, the representation that the stock had increased in value to $400 per share on January 1st, 1909. In dealing with this matter, it must be borne in mind that this suit was in progress in a court of law for almost two years before the compromise was reached. It was necessary for the defendant in the law suit (the complainant. here), in preparing for trial, to ascertain this book value from the books of the company. It was the principal issue involved in that suit, according to the pleadings. The books were in her possession. She and her counsel were in a position where the book value could be easily ascertained. Thus, it was unnecessary for the complainant to rely upon any statement which the plaintiff in the law suit might make as to this book value. Therefore, it would seem to have been gross negligence on the part of the complainant not to have known the book value and be acquainted with the facts touching it.

After the settlement she continued to live up to the terms of the compromise agreement for a further period of about eighteen months, when, as she says, she “has just discovered and been advised of the false representations and statements and the mistake > in law and advice as aforesaid.” ■ During the period from the settlement until the bill was filed here she had the books in her custody, and could at any time have ascertained the. truth of the alleged representations. Now, at the end of three and a half years after the suit at law was begun,' and eighteen months after the compromise was effected, she comes into this court seeking to set aside the compromise agreement-on the ground that she but recently learned that the statements of the defendant as to book value were false.

To entertain such a complaint upon such facts would be most intolerable. There should be a limit to litigation; it is not the policy of equity to aid in its prolongation.

The case as presented is somewhat analogous to an application for a new trial on the ground of newly-discovered evidence. If the complainant went tojfcrial in her case at law, having in her possession the books which would tend to prove the book value, but did not produce them, and judgment went against her, she could not obtain a new trial, because such evidence would not be considered as newly discovered, nor such that, by the use of ordinary care and diligence, she might not have produced at the trial. Servis v. Cooper, 33 N. J. Law 68; Stein v. Cuff, 76 N. J. Eq. 277; Hannan v. Maxwell, 31 N. J. Eq. 318; Powers v. Butler, 4 N. J. Eq. 465; 4 Pom. Eq. Jur. (3d ed.) § 1364.

Here, however, instead of going to trial, the parties substituted their compromise agreement for the' judgment of the court and jury. If complainant is in such laches that a court of law would not grant a new trial on the grounds above stated, if the Suit at law had proceeded to judgment against the complainant, why should a court of equity, under similar circumstances, set aside the solemn agreement of the parties settling their ’suit at law, when it is apparent that her lack of knowledge of the facts was due to her gross laches in’ not examining the books in her custody, which would then have given her all the information on the subject she now possesses ?

Second. Is the case of the complainant"aided by the allegation that she was mistakenly and illegally advised by counsel ?

This advice, I will assume, was given by counsel without knowledge of what the books in possession of his client might prove. It does not appear by the bill that counsel had seen the books; the bill does not allege that he had not seen them; it is quite plain,-however, that he was charged with notice of their existence when the complainant here was subpoenaed to produce the books at the trial. Hnder such circumstances, the case is quite like that of Stein v. Guff, supra, where an attorney, knowing of the importance of a certain witness and the value of certain papers, proceeded to trial without them, with the result that judgment passed against his client. A new trial was denied at law and relief was refused in equity. To the same effect is 4 Pom. Eq. Jur. § 136J¡..

The order to show cause will be discharged.


author: Griffin, V. C.

text:
    Raymond P. Wortendyke, trustee, &c., v. Louis Rayot et al.
    [Submitted April 3d, 1916.
    Decided May 4th, 1916.]
    1. A joinder by a wife in a conveyance by a solvent husband releasing her dower, is sufficient consideration for a reconveyance to the husband and wife jointly of a part of the same land.
    2. A reference to a master is necessary to determine the respective contributions of the husband and wife to the improvements on the land.
    3. The evidence of the defendants as to the disposition of the consideration for the conveyance held so improbable as to be unworthy of belief.
    On bill and answer.

      Mr. Higgins and Mr. Merritt Lane, for the complainant.

      Messrs. Peter '& John Bentley, for the defendants.
   Griffin, V. C.

The bill in this cause is filed'by the complainant, as trustee in bankruptcy, to set aside conveyances alleged to have been made by Louis Rayot, the bankrupt, in fraud of creditors. It appears from the bill, and is admitted by his answer, that about the 18th of August, 1907, Louise Gousset, the mother of the. defendant Louis, the bankrupt, died, leaving her last will and testament, which was duly admitted to probate, in and by which she devised all the property, with the buildings thereon erected, known as two and forty-nine one hundredths acres, situate in the borough of Eairview, Bergen county, New Jersey, to her four children, Mrs. Lucy Grod, Mrs. Zeline Baker, Louis Rayot (the bankrupt) and Aimee Gousset, as tenants in common, in fee; that on or about the 24th day of June, 1910, said devisees conveyed said lands to Barney Hermes, single, who then reconveyed to said devisees certain portions of said two and forty-nine one hundredths acres as had been agreed upon by them among themselves, in pursuance of an agreement to that effect before made among them, for the purpose of vesting parts of the land devised by said Louise Gousset to her children, so that each would own in fee-simple a certain part in his or her own right; that said Barney Hermes, accordingly, by deed dated the 22d of June, 1910, and recorded the 24th of June, 1910, conveyed a portion of said land, less than one and forty-nine one hundredths acres (the description being “for a tract of one and forty-nine one hundredths acres, excepting therefrom a portion thereof thereinafter described”) to Louis Rayot and wife. And it is alleged that said conveyances were voluntary, and were made by virtue of an agreement made between the said Hermes and said devisees whereby a certain portion of the property devised by the said Louise Gousset would be owned in fee by Louis Rayot in his own right; that afterwards, on the 26th day of May, 1913, Louis Rayot and his wife conveyed to Barney Hermes the lands and premises theretofore conveyed by Hermes to them.

Paragraph 8 of the amended bill alleges that while the said Louis and his wife were the owners, and prior to the conveyance to Hermes of May, 1913, Louis Rayot erected on the premises five two-family houses, upon which he executed five mortgages in the sum of $600 each. This paragraph is substantially admitted by Louis Rayot, excepting this, that he denies that all the moneys therefor were furnished by him. The answer of Mrs. Rayot to this paragraph is an admission that the “said defenclaut physically erected the buildings on the premises; that there is a mortgage of $600 on each house, but denies that said Louis Rayot erected them out of his own money or property.” The answer of - Hermes practically pleads ignorance of all the facts set out in the bill excepting that he denies that the conveyance of May, 1913, to him was voluntary,. but that, on the contra^, he paid a valuable consideration therefor.

No evidence in the cause was taken on the question of who advanced the funds to erect these buildings.

The prayer of the bill is that it may be adjudged and decreed that the lands conveyed by Hermes to Rayot and wife belong to Louis Rayot, bankrupt, and that the conveyance mentioned in paragraph 7 was voluntary and made with the intent, on the part of the parties thereto, to hinder, delay and defraud the creditors of Louis; and that the land mentioned in paragraph 7 might be decreed to be sold for the pa3rment of the debts due to the creditors of Louis.

The conveyance referred to in the prayer is that made on May 26th, 1913, by Rayot and wife to Hermes.

There is no prayer that the first conveyance, made by Hermes to Rayot and wife on June 22d, 1910 (being the conveyance intended to effect partition), be declared void.

As the question of the validity of the deed of June 22d, 1910, has been argued, I will assume that the bill is broad enough to permit the court to deal with it. The questions arise, was there a valuable consideration to support this conveyance to husband and wife ? and was the deed made to hinder, delay and defraud creditors ?

The testimony is that prior to the consummation of this voluntary partition, Mrs. Rayot refused to execute a deed unless the lands which were to be received by her husband were placed in. their joint names for the protection of herself and her family. This was agreed to; and, accordingly, she joined with her husband and the other devisees in a conveyancé of the entire tract of two and forty-nine one hundredths acres to Hermes; and Hermes, in the partition, conveyed the tract containing less than one and fort}r-nine one hundredths acres to Louis Rayot and his wife; and the deed was promptly recorded. The property, at that time, was vacant land appraised at $3,000. What the value of the portion of the two and forty-nine one hundredths acres remaining (which apparently had a building erected thereon) was, and how that was disposed of, is not shown by the pleadings or proofs.

At the time that this conveyance was made the defendant Louis Rayot was indebted to Ringger & Company and to Thomas Henry in about $5,200. At the same time he owned a Packard automobile, for which he paid $5,600 the year prior, and sold it in 1911 for $2,500. He had properties on Angelica street, Summit avenue and DuBois street, which he sold after this conveyance, and which netted him $11,850, making the total, including his automobile, upwards of $14,000, being almost three times the amount of his debts, excluding the property in question.

In Haston v. Castner, 31 N. J. Eq. 697 (705), Chief-Justice Beasley said: “When the conveyance is not voluntary, but is upon a consideration, then the rule is that in order to overthrow it a fraudulent intent must be made to appear, just as it must be when the debts sought to be enforced have been contracted subsequently to the conveyance.” In that case the court said that “the idea that the conveyance was made with a fraudulent intent was utterly exploded by the admitted circumstances.” At. that time the grantor was not insolvent," but had ample means for the payment of his debts, and was, therefore, under no influence leading him to put the property out of his hands for an illegal purpose. The deeds were drawn by a scrivener of the neighborhood and were recorded. The circumstance that the farms were put to grantor’s children at a considerable undervaluation was, under the circumstances, not unnatural, and could not be a fact of much importance in a transaction attended with so many indications of an honest purpose.

In the case now before us the wife released her dower in other property, the value of which has not been shown; and also by executing the deed which resulted in the voluntary partition, she saved for the parties the delay and expense of a proceeding in partition, all of which constituted a valuable consideration; and, as in the Haston-Castner Case, the husband had more than ample means to pay.all his debts, and the deed was promptly recorded. There is nothing in the case which suggests, even by inference, that at the time that this conveyance was made, on June 22d, 1910, Louis Rayot had the slightest thought of having the conveyance made to husband and wife to hinder, delay and defraud his creditors.

My view, therefore, is that the deed of June 22d, 1910, is valid and should stand.

Touching the question of the improvements placed on the premises after the, conveyance to Rayot and wife, a reference will be made to a master to ascertain the amounts contributed by each in the erection of the building. Post v. Stiger, 29 N. J. Eq. 554; Mertens v. Schlemme, 59 Atl. Rep. 808; Bresnihan v. Sheehan, 125 Mass. 11. And all equities will be reserved on this question until the coming in of the master’s report.

Next, as to the deed from Rayot and wife to Hermes, dated May 26th, 1913: The husband and wife were then seized of the premises in fee. At the date of the conveyance the husband was indebted to Ringger & Company in about $6,600, and to Henry in about $200, and had no other property. On May 23d, 1913, Ringger & Company wrote Rayot touching their bill. On May 26th, 1913, the deed was delivered to Hermes; and on May 27th, 1913, Rayot called on Ringger & Company. The bill of Rayot to Ringger was discussed, and finally fixed at $6,600, for which Rayot gave Ringger three notes of $2,200 each, payable four months after their date. Ringger & Company requested that the notes be made for three months, but Rayot wanted the notes made payable at four months, stating that he might dispose of his Fairview property during that time, and he could then pay the notes. This statement was false and untrue, because at that time he had disposed of the Fairview property. When the notes fell due they were renewed for a further period of four months, Rayot paying $25 on each of two of the notes and $50 on a third with interest.

At the time that these last-mentioned notes were given, he repeated to Ringger & Company his assertion that he had not sold his Fairview property.

On January 27th, 1914, the notes fell due and were not paid.

On March 16th, 1914, Rayot filed his voluntary petition in bankruptcy.

The defendants claim that shortly prior to May 26th, 1913, Rayot and wife made a bargain with Hermes to purchase this property for $12,000 by the payment of $9,600 in cash and the assumption of the payment of mortgages then on the premises for $2,400; that at that time Hermes paid a deposit of $200, for which he took a receipt. This receipt was not produced at the trial, the defendants claiming that it was either lost or destroyed. The title was passed at the office of Mr. Peter Bentley on May 26th, 1913, at which time it is asserted that Hermes paid the balance of the purchase price, $9,400, in cash; that one-half of this sum was received by Mrs. Rayot, and the other half by Mr. Rayot. Mr. Rayot sa3^s that he had borrowed $2,000 from his half-brother, Aimee Gousset, and that after paying this sum and sundry bills, he had left about a thousand dollars, which he kept at home, and disbursed the same for household and other expenses. Mrs. Rayot says that she kept her half at home because she did not trust banks. Barney Hermes sa3rs that he was a bachelor, and had been for a number of years a painter and decorator, occasionally' dabbling in real estate, and that he had accumulated about $15,000, which he -kept in his strong box at home. He, likewise", did not trust banks; although he did have a bank account, the balances from time to time being rather small, but in November, 1911, he deposited $600, which was drawn upon in small sums, leaving, however, a balance of upwards of $400 for more than six months.

Mr. Bentley says that at the time of passing title he did not count the money; he saw a large roll of bills lying on the table; he did not see the money paid. He was engaged at the time in dictating an instrument to enable Mr. Rayot, after the sale, to collect the rents as agent for Hermes, as Rayot lived at the premises and Hermes lived in another town; that while preparing this paper he was in and out of the room.

Mrs. Rayot says that in addition to the half which she so received, she also sold -to Tiffany & Company diamonds for $700, about a year before she testified, which would be about the spring of 1914. These moneys were mingled with her one-half of the purchase price. At the trial she produced in court $2,800 in cash, which she said were the same bills which she received on the sale to Hermes, and of her diamonds, excepting where she had changed bills of large denominations into smaller.

The complainants, in order to negative the idea that Hermes ever paid this consideration, offered evidence of officials of the treasury department tending to show .that a great number of the bills which she produced had not been issued at the time when the consideration of this deed is alleged to have been paid, and also at the time when she sold the diamond's to Tiffany. Among the bills produced wore six United States National Bank notes of the denomination of $100 each, one of which was issued February 24th, 1914, and five in August and September, 1914; and four gold and silver certificates, of $100 each, which were issued in October, 1913, January, June and August, 1914, respectively •—making, in all, $1,000. There were also seventeen $50 notes which were issued after the date of the transfer to Hermes, making a total of $1,850. Prior to the giving of this testimony, Mrs. Payot testified that she was in the habit of changing large bills for smaller ones from time to time; but, even assuming this to be trae, and the seventeen $50 bills represented bills taken in exchange for $100 bills, and assuming that she was mistaken as to the date when she sold the diamonds lo Tiffany, and that the date was after the date of the issue of seven of the $100 bills, nevertheless there were at least three $100 bills that were clearly issued subsequent to the date of the deed'to Hermes, and which, at least, must be parcel of the moneys paid by Hermes, if defendants’ stories be true. While her testimony was given prior to the introduction of the evidence of the treasury officials, and therefore may not have received from .her the .attention it deserved, nevertheless, as the testimony up to that time indicated that the bills paid by Herme's were not of larger denominations than $100, it would seem important that she should make some further explanation of this apparent discrepancy; but she was not recalled.

Mr. Hermes, as above stated, said at the time of the convejranee he had about $15,000 in his strong box at home, out of which he took the $9,600, being the consideration paid for his purchase. This left him about $5,000 in cash. He was also in receipt of $126 a month rent from the property conveyed, which, after paying the disbursements.on account of the property, left a balance which he might use at least on account of his living expenses. Yet when he testified he produced about $250, which he said was all the cash he had, the remainder of the $5,000, together with the net income from this property, having been used by him during the two years from the date of the conveyance for his living expenses. There is no evidence in the case that Mr. Hermes was a man of such means as to justify such expenditure. He had little, if any, other property outside of this cash. It also appears that on May 6th, 1911, while he had this $15,000 in his strong box, or a large part thereof, he borrowed $200 from the First National Bank of G-uttenberg, giving his mortgage to secure the same, and which sum he p¿id off in installments of $100 each on March 22d and June 18th, 1912. He explains that he thought he could sell the property better with than without a mortgage covering it. In 1906, he also borrowed $1,200, which he says was done to settle his mother’s estate. He testified before the referee in bankruptcy, after which, and before the trial of this cause, he destroyed his bank and check books and stubs, the latter showing for what purpose the money was drawn. The receipt for the alleged deposit of $200 he could not produce; nor was it produced by any of the defendants, they claiming that it was either lost or destroyed.

The defendant Louis Rayot says that in the year 1911 he became ill and began to lose money on his contracts, which, subsequently, resulted in his failure. He was a rather stupid witness, had very little recollection of the source of his receipts and to whom he had paid out moneys drawn from the bank, even where the sums were quite large; he kept no books, and, in testifying, relied solely on such memory as he then had.

On May 22d, 1913, about the time it is alleged he entered into this agreement with Hermes to sell, there appears in the transcript of his account a deposit of $294; and on July 7th of the same year, another deposit of $1,655. He was questioned as to the sources from which he received these payments—whether from contract work or from Hermes as part of the consideration —but he had no recollection on the subject. From the latter date, until the last deposit made in his account on January 22d, 1914, he deposited about $1,200 more, about $540 of which were notes, which, from their odd amounts, would indicate that they were the notes of his debtors. On January 22d, 1914, appears the last draft on his account, $250, which left a balance of twelve cents.

Touching the $2,000, which he says he paid to Aimee Gousset, he says that this sum was made up of a number of loans made to him from time to time. When such loans were made, and the specific amounts, he was unable to state. Aimee Gousset, who would seem to be a material witness to corroborate him on this question, with the idea of establishing the fact at least that the $2,000 was actually paid to him, was not called as a witness in this cause.

The whole story of the defendants is so highly improbable as to be unworthy of belief.

I will advise a decree that the conveyance made by Rayot and wife to Hermes, dated May 26th, 1913, be set aside as against the complainant, to the extent of the claims of Ringger & Company and Henry.


author: Grikkin, Y. C.

text:
    Maryland Casualty Company, a corporation, v. John Hanlon.
    [Submitted June 22d, 1916.
    Decided December 16th, 1916.]
    1. Under a contract of indemnity insurance the claim must be one reduced to certainty in amount. If the contract is ambiguous it should be construed more favorably to the defendant.
    2. The amount of the claim in this case not being certain, the bill is prematurely filed.
    On bill and answer.

      Mr. Arthur T. Dear, for the complainant.

      Messrs. Benny & Gruden, for the defendant.
   Grikkin, Y. C.

The complainant, tty its bill, seeks to compel the defendant to convey certain lands to it under a supplemental indemnity agreement. The defendant, while admitting the agreement, says the contingency has not arisen which gives the complainant this right.

The ease discloses that Lincoln-Stoel-Fleming Company and Joseph A. Morrison, associated (hereinafter called the contractors), had a contract for the construction of certain sewers in district No. 9, town of Greenwich, Connecticut. The contractors, on July 8th, 1915, entered into a subcontract with Gibbons & Hanlon (hereinafter referred to as the subcontractors) for the rock excavation.

To indemnify the contractors, said subcontractors and the complainant gave a bond, dated July 8th, 1915, in the sum of $10,000 to the contractors. On July 7th, 1915, the subcontractors signed the usual printed application for the bond. On July 8th, 1915, John Hanlon, the defendant, one of the subcontractors, signed a memorandum addressed to the complainant as follows:

“X herewith agree, in consideration of the Maryland Casualty Company issuing bond on behalf of Gibbons & Hanlon, to give as further indemnity an assignment of all my right, title and interest in real estate situate 80 and 90 and 124 West Fifteenth street, Bayonne, and 124 West Fourteenth street, Bayonne, N. J., valued at $_20,000, with mortgage of $6,000 thereon.
“Such assignment to be executed in event of claim under bond, and only for an amount equal to legal liability under the bond.
“No prior assignment of above has been or will be made.”

The subcontractors proceeded with the work until about Sep-tember 20th, 1915, upon which date the contractors gave to the subcontractors notice, under article 3 of the contract, that if they did not “proceed to supply sufficiency of properly-skilled workmen and materials and plant of the proper quality, and proseente the work with promptness and diligence, and also settle up the debts already incurred by them” within three days after the receipt of said notice, it would take such action as might be necessary to protect their interests in the matter. This notice was-served on the subcontractors and a copy sent to the complainant.

On September 29th, 1916, the contractors sent a long letter to the complainant charging non-performance by the subcontractors and asking complainant

“to live up to the conditions of your obligation and to at once proceed to carry out the terms and conditions of the contract, the performance of which you have guaranteed.”

On October 2d, 1915, the contractor wrote the subcontractors terminating the employment of the subcontractors, stating that they would hold them and the bonding company liable for their loss and damage. A copy of this letter was also sent to complainant on the same daj', which again called on complainant “to at once proceed to carry out the terms and conditions of the contract.”

While the contractors .allege non-performance of the contract, justifying the service of the notice, the subcontractors aver that while they were doing the work in accordance with the terms of the contract they were wrongfully prevented by the contractors from proceeding further.

In this situation the complainant, declining to carry out the contract on the subcontractors’ account, it was undertaken by the contractors, who, on March 17th, 1916, rendered a bill to the complainant for $12,320.59. This sum is made up substantially of the difference between the alleged cost to the contractor of excavating the rock—about $6.90 a cubic yard—and the contract price, $2.75.

On October 15th, 1915, shortly after the contractor had determined that the subcontractors had abandoned their, work, and before the claim of March 17th, 1916, had been served upon it, complainant filed its bill of complaint, praying (1) that complainant might have a lien upon the premises referred to in the supplemental agreement to secure it against losses incurred and to be incurred under the bond; (2) that the defendant might be decreed to execute to complainant an assignment or other suitable evidence of the transfer of his title as security to the complainant against losses incurred and to be incurred; (3) that the further indemnity agreement be decreed to create and to have created and be established as creating and having created from its date a lien on the premises mentioned in the indemnity agreement, as collateral against the losses sustained and to be sustained by the complainant under the bond.

It may be said, in passing, that there is no proof of actual ' loss having been sustained by the complainant.

After the filing of the bill, and on January 5th, 1916, the contractor began suit in the supreme court in Putnam county, New York, against the complainant and the subcontractors on their bond, which suit is held in suspense pending the completion of the work and the ascertainment of the amount of the claim against the subcontractors.

The question whether the complainant is entitled to enforce the indemnity agreement at this time depends on the construction of the clause thereof, which reads as follows: “Such assignment to be executed only in event of claim under bond and for an amount equal to legal liability under the bond.”

In seeking to interpret the language quoted resort has been had to the bond and application. This application is very lengthy, containing thirteen long, intricate covenants printed in small type; and was evidently drafted by the complainant to overcome the effect of decisions of the type of Jeffers v. Johnson, 21 N. J. Law 73. It sheds little light on the subject; and, as no extrinsic evidence has been offered, the contract must be construed,. considering, first, the situation of the parties, and second, the purpose to be accomplished and when.

The complainant is a surety company engaged in business for profit; the defendant is a contractor whose firm required a bond to obtain a contract. The complainant desired indemnity; the defendant was willing to give it, not on the signing of the bond, but on the occurrence of some future condition. The indemnity agreement covers substantially all- of the property of the defendant.

What did the parties intend when they used the language “such assignment is to be executed only in event of claim under bond, and only for an amount equal to legal liability under the bond?” The bond, which is on the printed blank prepared by the complainant, in the first condition, which deals with default on the part of the subcontractors and the liability of the surety company in case the contractor should complete or relet the contract,- provides that

“all reserves, deferred payments and all other moneys provided in said contract which would have been paid to the principal had he completed the contract in accordance with its terms, shall be credited upon any claim the said obligee may mate upon said surety.”

The second condition provides -“that no claim, suit or action by reason of any default shall be brought against the principal or surety after the 8th day of January, 1916,” and also “that no judgment shall be rendered against the surety”’ (the complainant) “in excess of the penalty of this instrument”—the penalty being $'10,000.' The language “to be executed only in event of claim under bond,” considered alone, is somewhat ambiguous. It might mean either when the claim is asserted or when established by judgment. Taken in the sense used in the first and second conditions of the bond, it may be construed' to mean the actual money demand presented 'by the contractor to the complainant; because the first section provides that certain reserves, &c., should be credited upon any claim the said obligee might make upon the surety. This language imports the idea that the contractor should present his bill for damages and credit on account the reserves and deferred payments, leaving a balance for which it makes its claim upon the complainant. The claim so presented may be disputed, and may not ultimately be sustained for the amount claimed; and yet, in strictness, it may be treated as “á claim under the bond.” But such interpretation does not aid the complainant, because no such claim was presented before the filing of the bill. But any ambiguity seems to be dispelled by the subsequent language, which deals with the amount for which the assignment should be given, viz., “only for an amount equal to legal liability under the bond.” Clearly, the parties did. not intend, on the mere assertion of a claim, before the amount was ascertained, that this assignment should be made, or thejr would have stated the amount with definiteness, e. g., as the penalty of the bond. It must, therefore, be quite apparent that the parties intended that “claim” in the agreement meant one reduced to certainty in amount, which, being ascertained, the right of the complainant to the assignment would automatically vest.

If the contract is ambiguous, it should be construed more favorably to the defendant.

The complainant is a surety company engaged in business for profit, in which the 'risks are carefully calculated, and the premium fixed at a figure to make the business commercially profitable; the bonds, applications and other instruments are carefully prepared by their counsel for their protection; for which reasons it has been held that if the instruments are susceptible of different meanings, that one should be adopted which is favorable to the other party. American Surety Co. v. Pauly, 170 U. S. 133; Tebbets v. Mercantile Credit Co., 19 C. C. A. 281; 73 Fed. Rep. 95; Brandt S. & G. (3d ed.) § 15.

To hold that on the mere assertion of a claim, however ill-founded, the defendant became bound to assign practically all his property to the complainant as collateral to indemnify it against a loss it might never sustain, to ascertain which fact might take several years, and which would virtually take from the defendant the use and disposal of his propertjr for business purposes, or otherwise, and might work an irreparable injury to him, requires that, considering the personality of the parties and the respective businesses in which they are engaged, the agreement should plainty express the intent now asserted by the complainant before it is entitled to relief.

The bill, having been ju’ematurely filed, should be dismissed.


author: Grieein, Y. C.

text:
    Willard Dayton Brown v. East Ridgelawn Cemetery et al.
    [Submitted November 25th, 1914.
    Decided December 2d, 1914.]
    1. The holders of certificates for lots sold and the trustees of the defendant cemetery association are necessary parties to a suit to restrain a cemetery association from applying the' proceeds of lots sold according to a trust agreement.
    2. Bliss v. Linden Cemetery Co., 81 N. J. Eq. 394, approved and followed.
    On demurrer to bill.

      Messrs. Humphreys & Sumner, for the complainant.

      Mr. Merritt Lane, for the defendants East Ridgelawn Cemetery, Herbert B. Gruber and William M. Bonynge.'

      Mr. William F. Gaston, for the defendants Charles M. Howe and Passaic Trust and Safe Deposit Company.
   Grieein, Y. C.

The bill in this cause prays an injunction restraining the defendant East Ridgelawn Cemetery from paying the proceeds of its burial plots to the Passaic Trust and Safe Deposit Company (hereinafter called the trustee), or for any other purpose.than to the perpetual care fund, excepting that it might use said funds to pay the fair value of the cemetery lands which wore conveyed by Gruber to the trustee. It also prays that a receiver be appointed.

It appears from the bill that two separate cemetery companies were organized, under the Rural Cemetery act, on or about September 28th, 1905', with seven trustees each, five of the persons being, trustees in both cemeteries. The bill alleges that these trustees entered into an illegal agreement with Gruber and other defendants which was afterwards consummated in the following manner: Gruber made a deed to the trustee in trust for the East Ridgelawn Cemetery, for one hundred and twenty-one acres, plus, and another deed to the trustee for the use and benefit of the West Ridgelawn Cemetery, for eighty-nine acres, plus, which deeds were made subject to the declarations of trust hereinafter mentioned. The trustee executed declarations of trust touching both tracts, both declarations being alike with only such changes as were made necessary by the fact that in one case the trust was for the East Ridgelawn Cemetery and in the other for the West Ridgelawn Cemetery.

The declaration of trust as to the East Ridgelawn Cemetery substantially provides that the trustee, on the request in writing of Gruber, &c., will convey to the East Ridgelawn Cemetery the lands mentioned in the declaration of trust, said lands to be used for cemetery purposes; "that-the said East Ridgelawn Cemetery shall pay as consideration therefor such amount as it may receive from time to time as the proceeds of sale of said lots or plots in the manner following:” The cemetery is authorized to retain six cents per square foot on the lands sold, pay one-half of the balance to the trustee, and, after deducting what might' be necessary for preserving, improving and embellishing ■ the cemetery grounds, &c., the balance thereafter remaining should likewise be paid to the trustee. The agreement also provides that the proceeds of sale of "sublots or plots is hereby appropriated, and is to be divided by said cemetery into thirteen thousand five hundred shares, to represent which the said East Ridgelawn Cemetery shall issue a certificate, or certificates, to the said trust company,” in the form thereinafter recited, which certificates are negotiable in form. Provision is also made that if the cemetery should fail to perform any of the conditions of the trust agreement, the rents, issues, profit and revenues from the sale of lots and other sources, might be sequestered to compel it to perform. It likewise provides that at the end of every three months, if the trust company has-in its possession a sum sufficient to pay a dividend of at least fifty cents a share, it shall pay such sum per share to the holders of certificates. The certificates so issued were joint certificates, made by the East and West Ridgelawn Cemeteries.

The scheme of the declaration of trust is the same as that referred to in Bliss v. Linden Cemetery Co., 81 N. J. Eq. 394—the certificate holders here corresponding to the holders .of land-purchase shares in the Bliss Case.

The certificate holders are not parties to this suit.

The complainant excuses the omission, to make them parties on the ground that they are held by a large number of individuals, residents and non-residents, numbering more than two hundred, and are so numerous that it would be impossible, practically, or highly inconvenient and expensive to bring them in as parties defendant to this suit; and that Frank, Howe and Bonynge are certificate holders and that their interests are the same as those of the ones omitted; that the trustee is also the trustee of the certificate holders, and that they may be regarded as representing the certificate holders in the suit, and may answer for them.

The trustees of the cemeteries have not been made parties.

In Bliss v. Linden Cemetery Co., supra, Vice-Chancellor Howell held that the holders of the land-purchase shares and the board of trustees were necessary parties, and without them no decree could be made on the bill presented which would be of any material value to the complainant; and he denied the motion for injunction.

Counsel, however, suggests that the number of holders of land-purchase shares in the Bliss Case was not large. I have taken occasion to examine the papers in that case, and find that there were about two hundred holders of land-purchase shares. Both eases, therefore, being quite alike in principle, the demurrers to the bill should be sustained.


author: Poster, V. C.

text:
    Frank B. Allen, executor, &c., of George D. Moore, deceased, v. Harriet E. Moore et al.
    [Decided August 5th, 1916.]
    1. A residuary clause in a will indicates an intention of the testator to dispose of his whole estate.
    2. A lapsed legacy goes to the residuary legatee.
    3. Where legatees predecease the testator, their legacies fall into the residuary estate, and do not become intestate property.
    On petition for construction of will. Heard on bill, petition, answers and stipulation of counsel as to facts.

      Mr. Benjamin J. Fleuchms, for the petitioner.

      Mr. John B. Hardin (of Messrs. Pitney, Hardin & Slcinner), for the defendant Francis D. Stanwood.

      Mr. Alfred F. Slevens, for the defendant estate of Mary S. Moore, deceased.

      Messrs. Lehlbach .& Van t)uyne, for the defendants Adeline H. Walsh and Robert E. Walsh, individually, &c.

      Messrs. McCarter & Bnglish, for the defendants Board of Home Missions of the Presbyterian Church in the Hnited States 'of America and Board of Foreign Missions of the Presbyterian Church in the Hnited States of America.

      Messrs. Gortlandt & B. Wayne Parher, for the defendant Presbyterian Board of Relief for Disabled Ministers, and the Widows and Orphans of Deceased Ministers.

      Mr. Fred G. Stickel, Jr., for the defendants George Moore Beuek, Hattie Beuck Schmidt and Bessie A. Stanaback.

      Mr. Charles B. Clancy, for the defendant Protestant Poster Home Society.

      Mr. Frederick G. Bti/rnham, for the defendant Board of Church Erection.
   Poster, V. C.

The petition in this case is filed by the executor of George B. G. Moore who died October 13th, 1891, leaving a last will and testament dated June 17th, 1889, and two codicils thereto dated, respectively, January 24th, 1891, and October 5th, 1891, which were duly admitted to probate in Essex county. Testator left a widow but no issue.

The will, after directing the payment of debts and funeral expenses, gives a large number of general and specific legacies to relatives and friends of the testator, among them a bequest of $10,000 is given by the fourth clause of the will to George De Graw Moore, a nephew of the testator, and a bequest of $250 is given by the eleventh clause of the will to George Moore,.a great nephew of the testator. George De Graw Moore and George Moore both died in April, 1891, about five months before the death of the testator.

By the twentieth clause of his will testator gave all the rest and residue of his estate, including the interest and accumulations thereon, and also $10,000 of which his sister was to have the income for' life, to his executors' in trust for the purpose of establishing a home for respectable aged people of both sexes, if, in the judgment of his executors, it was deemed advisable to do. so, and if this home was not established within five years from the death of the testator, then he directed his executors "to divide and distribute the said residue pro rata among the legatees above named, and in proportion to their respective moneyed legacies.55’

By the twenty-second clause of the will he directs that for all the purpose of distribution the whole estate, real' and personal, is to be taken and considered as personal property.

By the first codicil some minor changes are made regarding some of the bequests and he authorized his executors in carrying out the trust mentioned in the twentieth clause of'the will to unite with some existing home or institution.

By-the second codicil executed on October 5th, 1891, a few days before testator’s marriage and death he directed:

“First—As to the residue of my estate given to my executors in trust by the twentieth clause of my will—In place of that—I give to my executors in trust the sum of fifty thousand dollars, the interest thereon to' be paid to Mary S. Fitch (with whom I am shortly to be joined in marriage) during her life in semi-annual payments,' the first to begin at six months after my death, and at her decease, said sum of fifty thousand dollars to go as provided in said twentieth clause subject to the same conditions as in said clause mentioned, and also to the modifications of the same contained in the prior codicil dated January 24th, 1891, said bequest to be in lieu of dower in my estate. And in case said residue shall not amount to the sum of fifty thousand dollars then I direct that the other legacies (except that to my sister and that to the Cemetery Company) shall abate in proportion so that at all events the sum of fifty thousand dollars shall be available for said purpose.”

The estate proving insufficient to pay all debts, legacies and expenses, and to create a trust fund of $50,000 for the benefit of the widow, proceedings were had in this cause whereby directions were given that tire legacies should abate in proportion for the purpose of creating this fund. Moore v. Moore, 50 N. J. Eq. 554.

Mrs. Mary S. Moore, the widow of the testator, died July 11th, 1908.

The executor, in the exercise of his judgment, deemed it advisable not to establish the home for aged people.

On November 7th, T913, the final account of the executor and trustee was duly allowed by the decree of the Essex county orphans court, and the executor now has in hand, after the payment of all debts, expenses and legacies, $21,972.68, to distribute according, as he assumes, to the provisions of the twentieth clause of the will pro rata among the moneyed legatees mentioned in the will.

By the stipulation of counsel three questions, designated therein as “A.” “B” and “C,” were submitted for determination: and on the argument before me by the consent of all parties the following entry was made upon the record:

“The questions referred to in SB’ and ‘C’ in the stipulation were disposed of hy Yice-Chancellor Emery, orally, at the time of the argument before him last summer, and under his oral decision at that time counsel are all agreed that Mrs. Stanwood, under section 23, is entitled to $250, and Mrs. Sarah Walsh is entitled to like amount, and that the proprietors of the Rosedale Cemetery are not entitled to have any further payments made to them beyond what has already been paid, that both the Stanwóod and Walsh legacies are money bequests under the will.”

This leaves for determination the questions raised by the paragraph designated as “A” in the stipulation and which reads as follows:

“(a) Is this sum of $10,250, which was bequeathed to George De Graw Moore, under subdivision ‘fourth’ of said will, and to George Moore under subdivision ‘eleventh’ of said will, and the balance now in the hands of the executor, or any part of it, to be considered to have lapsed into the rest and residue of the estate of the testator, and if so, what part and to whom should it be distributed, or should the testator be - considered to have died intestate so far as these two legacies are concerned, and if so, to whom should the said sums be distributed ?”

These questions arise because of the contention made by the representatives of Mrs. Mary S. Moore, the widow of the testator, to the effect that these two legacies to testator’s nephews, who predeceased him, amounting to $10,250, lapsed by reason of the death of the nephews in the lifetime of the testator; and that these lapsed legacies did not become part of the residuary estate because the nephews were both general and residuary legatees. That they became residuary legatees by reason of the fact that money had been bequeathed to them, respectively, under ■ the fourth and eleventh clauses of the will; and that the second codicil, and the twentieth clause of the will, directed the distribution of the residue among the moneyed legatees named in the will.

The insistment is made that as to these lapsed legacies testator died intestate, and that they are to be distributed under the statute, and that as this was the condition existing at the death of the testator, his widow then, or her representatives now, are entitled to one-half the amount of these lapsed legacies.

Support is sought for this contention in the rule stated in Collins v. Bergen, 42 N. J. Eq. 57, that “when an aggregate fund is given to several persons nominatim, to be divided among them in equal shares, if one of them dies before the testator the share of such decedent will lapse;” and, at p. 60 of this case, the statement is made that “the shares of Harriet Kemble and Rachel . Collins, who died in testator’s lifetime, lapsed, and, being shares of the residue, they did not pass to the other legatees as part of the residue (Hawk. Wills 42), consequently, the testator must be held to have died intestate as to them.”

There is a clear distinction to be noted between the situation presented by the facts in this case,’and that present in Collins v. Bergen, supra, and in the cases cited to support the text in Schoul. Wills (3d ed.) § 519, in which this rule is discussed.

These are cases in which the testator either gave the residue of his estate to certain persons named, or definitely designated, to be divided among them in stated proportions, or cases in which the general legacies lapsed because of their illegality, and not because of the death of the legatee in the lifetime of the testator. In the first class of cases the devises or bequests were held to have been made to individuals and not to a class, and that in the absence from the will of any provision for survivorship or substitution, such devisees or legatees took as tenants in common and not as joint tenants.

In Security Trust Co. v. Lovett, 78 N. J. Eq. (at p. 451), Vice-Chancellor Learning states that the rule applicable to bequests of this kind is that “where a gift Is to several persons by name, a presumption arises, in the absence of contrary intent apparent on the face of the will, that the persons named are to take in their individual, and not their collective capacity, even though the persons as named constitute a class. In such case the bequest lapses as to any one of the persons named who may be dead at the'time of the death of the testator. * * * The presumption referred to, however, is but a rule of construction to be used in the ascertainment of the intention of testator; the presumption is not conclusive. If it sufficiently appears from the will that it was the intention of testator to make a bequest to a class, as distinguished from the individuals who may compose the class at the time the will was made, the death of one or more of the persons before testator will not cause a lapse of any part of the fund, but the survivors of the class will take the whole; such an intention may be manifest even when the persons comprising the class are named.”

In other cases in which this rule has been followed, it has been limited in its operation to legacies that have lapsed by reason of their invalidity, and it has not been extended to cases where the legacy lapsed by reason óf the death of the legatee before the testator, the reason for this limitation being that the will speaks at the death of the testator, when he may be supposed to know of the death of the legatee, and for that reason he is presumed to have intended to include the subject of the lapsed legacy in the residuary clause, but that the same reasoning is not sound in regard to legacies declared void, for, in such cases, testator at his death has thought he had made an effectual disposition of the subject to one and cannot be presumed to intend to give it to another. Lea v. Brown, 56 N. C. 141; Allison v. Allison, 56 N. C. 236.

In this case the deceased nephews of the testator are not specifically named as residuary legatees, nor is any other person so named. By the second codicil, the fund of $50,000, which testator terms the residue of his estate, is to be distributed' in accordance with the provisions of the twentieth clause of the will, and these provisions direct that the residue be divided and distributed pro rata among the legatees named in the will in proportion to their respective moneyed legacies.

To entitle the representative of Mrs. Moore to prevail under the rule of construction they invoke, they must show that testator’s nephews were both general and residuary legatees, that the bequests to them of a share of the residue was to them in an individual and not in a collective capacity, and that testator has not made an effectual disposition of their shares of his estate, and that as to such shares he died intestate.

In ascertaining testator’s intention regarding the distribution of this residue of his estate, it should be borne in mind that he was a competent lawyer; that he had a very extended experience in the construction of wills as surrogate of Essex county for a number of years; that the second codicil, by which he designated this fund as the residue of his estate, was executed some months after his nephews had died; that by this codicil he changed the entire disposition of his estate and indicated that the principal objects he sought to accomplish by his will and codicils were to provide for his sister and his widow, and for the care of his burial plot, and to this end he directed that all bequests given by his will should ábate, if necessary, to carry out these purposes, and he further directed that the provision made for his widow should be in lieu of dower.

He evidently had no intentions of dying intestate, as pointed out by Vice-Chancellor Van Fleet in Moore v. Moore, supra. He not only attempted to dispose of everything he owned, but actually made provisions by the will and codicils disposing of about $108,000, while his estate amounted to but about $60,000.

To hold that testator intended that these lapsed legacies of his nephews should not fall into the residue of his estate, but should go to his widow and next of kin, together with the deceased nephews’ share of the residue, if they were entitled to any, would require the most technical construction of the will and codicils; and would do violence to the manifest purposes of the testator, and would be in conflict with the construction which the widow herself placed upon the testamentary papers.

For seventeen years, from testator’s death in 1891 to her death in 1908, Mrs. Moore enjoyed the income from the fund of $50,000, which had been created for her by the abatement of all the legacies; and by the inclusion therein of the amount of the two legacies in question. During all that period she never asserted that these legacies had lapsed, and that as to them, testator had died intestate, and that she, as a widow, was entitled, under the statute, to one-half of their amount, it was left for her personal representatives to make that claim; and to support it they must take the position that while testator thought the income of $50,000, to which he expressly limited her interest in Ms estate, sufficient for Ms widow, for whose care the second codicil shows him to have been especially solicitous, yet that on the death of his widow he intended to die intestate as to nearly one-fifth of his estate; and that her personal representatives, none of whom are mentioned or referred to in the will or codicils, should have this portion of his estate in preference to his relatives and friends whom he sought to make the objects of his bounty by the provisions of Ms will.

I think it apparent from the will and codicils -that testator did not intend to die intestate as to any part of his estate, and that he succeeded in avoiding any intestacy by the provisions made for the distribution of his estate, including the residue, wMch he directed to be distributed among those to whom he gave money bequests in his will, as a class, and not as individuals, in proportion to their respective moneyed legacies; and that he had a class instead of individuals in mind, in the distribution of the residue, is further apparent by his inclusion therein of Mrs. Stanwood and Mrs. Walsh as moneyed legatees, who otherwise might not have been so regarded, and by the limitation of the amount to be paid to the cemetery company as a residuary legatee to $100, although he had made a moneyed bequest of $400 to the cemetery company by his will.

Another significant circumstance indicating testator’s intent is the fact that the second codicil was made months after the decease of the testator’s nephews, when it is not unreasonable to suppose that he knew of their death, and he evidently thought the provisions he had made in this codicil, and in the twentieth clause of the will referred to therein, were sufficient to dispose of the residue of his estate as he desired, without further direction, and serves to indicate that testator’s original intention was to dispose of the residue to a class and not to particular individuals, and that he was satisfied that he had done so.

From my consideration of this case, I think the correct and controlling rule to be applied is that stated in Tindall’s Executors v. Tindall, 24 N. J. Eq. 512:

“That the residuary legatee is entitled as well to a residue caused by a lapsed legacy or an invalid or illegal disposition as to what remains after payment of debts and legacies.

“Tlie only exception to the rule is that where the words used show an intention on the part of the testator to exclude from the operation of the residuary clause certain portions of the estate, such intention as gathered from the whole will must not be defeated. Or the rule embracing the exception, as stated in some of the books, is that the residuary legatee must be a legatee of the residue generally, and not partially so only.”

This rule rests on the presumption that a testator by incorporating 'in his will a general residuary clause, evidences his intention not to die intestate as to any of his personal property, and it is presumed he took the particular legacy from the residuary legatee only for the benefit of the particular legatee. Giving effect to these presumptions or inferences as to the intention of the testator, which are, of course, prima facie merely, the eases in our state hold that if a legacy of personal property lapses, or proves ineffectual,. the subject-matter thereof will inure to the benefit of the general residuary legatee, if there is one, and not to the testator’s next of kin or heirs-at-law. Sandford v. Blake, 45 N. J. Eq. 248; Barnet v. Barnet, 40 N. J. Eq. 380; Huston v. Read, 32 N. J. Eq. 591; Garthwaite v. Lewis, 25 N. J. Eq. 351; Macknet v. Macknet, 24 N. J. Eq. 277; Shreve v. Shreve, 17 N. J. Eq. 487.

My conclusion is that 'the legacies to testator’s nephews lapsed and became part of the residue; that testator did not die intestate as to any part of his estate, and that the fund now in the hands of the executor, which constitutes the only residue of the estate, is to be divided and distributed as directed by the testator in the twentieth clause of his will, among the moneyed legatees, and not among the testator’s next of kin.


author: Foster, V. C. ■

text:
    Federal Trust Company v. Joseph M. Conklin, assignee.
    [Submitted July 29th, 1916.
    Decided August 5th, 1916.]
    1. Under the law of New York the bankers’ lien upon deposits for money loaned the depositor is recognized.
    2. A court of equity in one state may restrain persons within its control from prosecuting suits in another state on a proper occasion.
    3. A resident of New Jersey appointed assignee for the benefit of creditors by the courts of New York will not be enjoined by a New Jersey court from prosecuting a claim against a New Jersey corporation in the New York courts.
    4. The assignee has a clear right to chose the forum of his action. ■
    5. A further objection to injunctive action in this case is that if the assignee should resign his appointment in New York the injunction would be futile.
    On bill, &c.

      Mr. Waldron M. Ward (Messrs. Pitney, Hardin & Shinner, solicitors), for the complainant.

      Mr. Robert Carey, for the defendant.
   Foster, V. C. ■

The bill in this cause is filed to establish and enforce an equitable set-off, and, incidentally, to restrain defendant from prosecuting an action on an attachment in the supreme court of the State of New York.

The controversy arises out of the following circumstances:

Complainant is a trust company of this state, having its principal place of business in Newark; defendant is a resident of Paterson, in this state, and he also has, and for some years past has, maintained a residence in the city of New York. Defendant is the’ assignee of one Cesare Conti, a resident of the city of New York, -where he conducted a private banking and mercantile business.

On February 4th, 1914, Conti made a general assignment for the benefit of his creditors under the laws of the State of New York, and defendant was designated therein as his assignee and duly qualified as such, and since the execution of the deed of assignment he has been engaged in administering the assigned estate in accordance with the laws of the State of New York.

For a number of years Conti was a depositor in the trust company, keeping a very active account, and the trust company was the purchaser of his notes from time to time. In connection with the purchase of such notes, Conti executed an agreement with the trust company on February 29th, 1912, in which he agreed that “in case of failure or insolvency of the undersigned, all loans and obligations of the undersigned held by the bank shall become immediately due and payable.”

At the time of the execution of the deed of assignment the trust company held two notes made by Conti for $10,000 each, which by their terms had not yet matured; both notes were payable at Conti’s place of business in the city of New York, and at this time there was on deposit with the trust company to the credit of Conti’s account, $8,767.97.

Hpon qualifying as assignee, defendant made demand upon complainant for the payment of this balance to him as Conti’s assignee, and this demand was refused, complainant claiming the right to offset and apply this balance on account of Conti’s indebtedness to it on the two notes. Thereupon defendant, as assignee, began proceedings by- attachment in the supreme court of New York against complainant for the recovery of the amount of this balance; under which proceedings, funds of complainant standing to its credit in a bank in New York City were levied upon, and these funds were subsequently released under bond.

It is now sought to have the defendant, as assignee, permanently restrained from the prosecution of the attachment proceedings in the State of New York, and to compel him to litigate in this court his differences with complainant. This relief is sought on the theory that under the law of New York in force at the date of the assignment, a debtor of the assignor cannot set-off against his debt an unmatured debt due him from the assignor. In re Bluestone, 155 N. Y. Supp. 161; Crosby v. Bank of Niagara, 154 N. Y. Supp. 883; Frank v. Mercantile National Bank, 182 N. Y. 264; Fera v. Wickham, 135 N. Y. 223; Paoli v. East River National Bank, 155 N. Y. Supp. 245. And that if it should be held by the New York courts that the agreement made by Conti on February 29th, 1912, did not cause the two notes to mature as a result of his insolvency and assignment, the complainant would be unable to set off Conti’s indebtedness due to it on the two notes, in the attachment proceedings instituted by the assignee; while it is claimed that such unmatured indebtedness could be offset in this court, upon equitable principles, even if this court should construe this agreement unfavorably to complainant’s contention, that under the terms of the agreement the two notes held by complainant had matured because of Conti’s insolvency and assignment.

Complainant contends that it would be unconscionable to permit defendant to prosecute his attachment action in the courts of New York and thereby subject complainant to the risk that it might be held in such proceedings that its notes were unmatured and were therefore not the proper subject of an offset.

Complainant further contends that it has a banker’s lien on Conti’s deposit, and that this action should be regarded as one to establish and foreclose this lien. Assuming this to be so, the New York cases cited show that such lien, if it exists, will be recognized and protected by the courts of New York as fully as would be done by the courts of this state.

There is no doubt about the power of a court of equity in one state to restrain its citizens, or other persons within the control of its process, from prosecuting suits in other states, if the prosecution of such suits is contrary to equity and good conscience, and to the injury of others. In such cases the court acts m personam. Margarum v. Moon, 63 N. J. Eq. 586, and cases cited. ■

In the present case, Mr. Conklin, individually, is not sought to be restrained; it is against him in his capacity as assignee of a New York estate, which he is administering, under the authority of the laws and the control of the courts of that state, that the injunction is sought. Individually, Mr. Conklin is domiciled in this state; officially, as assignee, his domicile is in New York.

The attachment ease pending in the New York supreme court was instituted by him as assignee and not in his individual capacity. As assignee it was his right and duty to resort to the aid of the court to collect the insolvent’s estate; and the fact that he chose a court in New York which may entertain a different view of the law regarding complainant’s right to set-off against the debt due the assignor the debt owing by the assignor to complainant, from that which it is thought the courts‘of this state ma}’’ hold, does not present any grounds for the interference of this court in the matter. Certainly, the defendant has the same right to select the court in which he thinks his contentions and his view of the law will be sustained, that complainant has to select a court in which it thinks it can defeat these contentions, or can obtain the benefit of a different rule of law.'

If complainant’s agreement with Conti means what complainant claims, and that under its terms the notes of Conti which it holds are matured, and not unmatured obligations, and that therefore they are the proper subject of an offset in the court of New York and of this state, why should it ask this court to interfere on the assumption that the courts of New York will not correctly and justly decide the rights of the parties F

The relief it seeks is,' in effect, asking this court to assume that the courts of New York will not properly construe its agreement with Conti, and will unjustly and unlawfully deprive it of its defence in the attachment proceedings.

In Standard Roller Bearing Co. v. Crucible Steel Co., 71 N. J. Eq. 61, Chancellor Magie said:

"The right of one claiming to be a creditor to pursue his debtor in any court of competent jurisdiction selected by him ought not to be interfered with by an injunction, unless it is made to appear clearly that the alleged creditor is using the process of the courts in an inequitable and unconscionable manner.”

In affirming the case of Title Guarantee and Trust Co. v. Trenton Potteries Co., 56 N. J. Eq. 441, the court of errors and appeals, by the opinion of Mr. Justice G-ummere (now chief-justice) , held:

“The respondent, having selected a court of,the domicile-of the appellant as the forum in which to try the matters in issue between them involved in the suit brought by it, is entitled to have .those matters finally determined in that forum, provided the appellant can, in its defence in that suit, show the real agreement between the parties as fully as it would be permitted to do in its suit brought here for the -reformation of the written contract.”

It has not been suggested in this case, and it does not appear, that complainant cannot, in defendant’s attachment suit in New York, show in its defence the real agreement between itself and the assignor, Conti, in relation to the maturity of the notes held by it.

In the case of Bigelow v. Old Dominion Copper, &c., Co., 74 N. J. Eq. 457, Chancellor Pitney, after an exhaustive review of the authorities (at p. k78), held that—

“Equity will not interfere with the right of any person to bring an action for the redress of grievances—the right preservative of all rights—except for grave reasons, and on grounds of comity, the power of one state to interfere with a litigant who is in due course pursuing his rights and remedies in the courts of another state ought to be sparingly exercised. The courts of New Jersey ought not to assume, directly or by indirection, any appellate jurisdiction over the courts of Massachusetts, nor proceed in giving judgment here upon the idea that the courts of. that commonwealth are in the least degree incompetent or unwilling to do full and complete justice in all eases that are fairly within their jurisdiction.”

Another reason suggested for denying complainant the relief sought is, that this court should not issue an injunction which it has not the power to enforce.

As has been shown, jurisdiction over Mr. Conklin, personally, is obtained merely as an incident to his residence in Patersón, in this state. His failure to prosecute the attachment case, or to otherwise collect and administer the estate assigned to him, would doubtless result in his removal as assignee; and his resignation or removal from his position as assignee would render the restraining order of this court a nullity. It would not be operative or enforceable against his successor or assignee unless such successor happened to be a resident of this state—a most unlikely possibility, in view of the fact that the courts of New York in appointing a substituted assignee would not, without some special reason required it, select a non-resident of that state for such position.

My conclusion is that the case does not show that defendant is acting unconscionably in prosecuting the attachment proceedings in New York, or that complainant cannot have the full benefit of its defence in such proceedings; and that complainant has in no way shown that it is entitled to have this court assume jurisdiction over the matters in controversy and to have defendant enjoined from prosecuting his action thereon in the courts of New York.

A decree will be advised that the bill be dismissed, with costs.


author: Foster, V. C.

text:
    The Fourteenth Ward Building and Loan Association of the City of Newark v. Joseph R. Potter et al.
    [Submitted June 9th, 1916.
    Decided June 30th, 1916.]
    1. Where under the ordinary tax clause in a mortgage, the mortgagee paid taxes and entered into a further agreement with the mortgagor that he should repay such advances in monthly installments. After default in such monthly payments, and notice of foreclosure for such default, a suit to foreclose the mortgage is not prematurely brought.
    2. Where the by-laws of a building and loan association provided a fine for failure to pay dues and interest, and a mortgage held by it provided that on failure to pay dues and fines the principal should become due, the fines for defaults are not a lien on the realty.

      On bill to foreclose.

      Mr. Richard Hartshorné (Messrs. Biker & Biker, solicitors), for tbe complainant.

      Mr. William A. Lord, for the defendants.
   Foster, V. C.

This is an action to foreclose a mortgage dated October 11th, 1913, given by the defendants Joseph E. Potter and wife, to the complainant to secure the payment of a loan of $4,000 with interest, covering lands in East Orange. At the time of obtaining the loan Potter subscribed for twenty shares of complainant’s stock, and assigned this stock to complainant as collateral security for the loan.

On February 7th, 1914, the defendant Dora Katz purchased the mortgaged premises subject to complainant’s mortgage.

The defendant Dora Katz did not pay the taxes assessed upon the mortgaged premises for the year 1914, and, at her request, and in accordance with the terms of an agreement dated August 3d, 19.15, made between the complainant and the defendants Dora Katz and Herman Katz, her husband, complainant, on August 5th, 1915, paid the taxes for the year 1914, amounting to $79.49 and interest.

This agreement, after reciting the execution of the mortgage from Potter and wife to complainant, proceeds with the recital and terms thereof as follows:

“And which said mortgage contains the covenants that the said Joseph R. Potter * * would pay the taxes * * * levied upon the premises * * * at a time when the same should become due and payable, and also the covenant that upon default in the performance of said agreement to keep the premises free and clear from all taxes * * * it should be lawful for the association * * * to pay .all charges for said taxes * * * and the sum * * * so paid should be a lien upon said mortgaged premises payable on demand, with lawful interest, secured by said mortgage, and that should such default in the payment of said taxes * * * continue for the space of three months from the time when the same became due, the principal sum of sa,id mortgage should, at the option of the said association, * * * become due and payable immediately thereafter.”

The agreement further stipulates that the association, at the request of Dora Katz and her husband, has agreed to advance $79.49 to pay the 1914 taxes, and that they agree to accept such payment of the taxes

“under the terms of said mortgage and agree to pay to said association the sum of $79.49 and interest and costs to the date of payment, * * * in monthly installments of $16 payable on or before the third Monday of each and every month, until the said sum, advanced * * * by said association with the interests and costs due thereon, is fully paid and satisfied; * * * that the said mortgage shall remain to the said association with all the privileges thereunder as though the said payment had not been made. And it is further agreed that should any of the said monthly installments not be paid at or on the third Monday night of each month when due, that the balance of said $79.49 thus remaining unpaid shall become due and payable at once, and the principal sum of said mortgage or other money due thereunder at the option of said association shall be due and payable.”

On September 28th, 1915, complainant notified Mrs. Katz, in writing, that unless the monthly installments, on account of these taxes, were paid for August, September and October, at the October meeting, foreclosure proceedings would be ordered. No attention was paid to this notice, and none of the tax installments were paid, and because of the non-payment of the installments on account of these taxes and the non-payment of said taxes when due, the directors of the association, on October 25th, 1915, at a regular meeting, exercised the option of the association and ordered the mortgage to be foreclosed to collect the amount advanced for taxes, and the balance remaining due on the loan, together with interest, fines, &c.

At the monthly meetings in August, September and October, 1915, Mrs. Katz duly paid complainant $40.40 for the installments for dues, interests and premiums due on the mortgage loan; and at the November meeting she tendered $40 in payment of the dues and interest for that month and the tender was refused.

The defendants contend (1) that this suit' to foreclose the mortgage has been prematurely brought, and (2) that if complainant is entitled to a decree, the claim for fines, amounting to $36, should not be included therein.

The first contention is based on certain provisions of the mortgage, and it is claimed that under these provisions, if defendants did not pay the taxes for 1914, complainant was obliged to do so, and that complainant was then obliged to demand repayment from defendants, and if they failed therein and remained in default for three months from the date of such demand, then complainant could foreclose its mortgage; and, as the taxes were paid by complainant on August 5th, 1915, and this bill was filed before the expiration of three months from that date, or before any demand had been made upon the defendant Katz to repay complainant for the taxes paid, that the complainant is without right under the mortgage to maintain this action.

This contention is without force; it ignores the provision of the agreement above set forth and is contradicted by the provisions of the mortgage, which requires defendants, as owners of the property, to pay the taxes when due; and which further provides that

“upon such failure * * * to pay any taxes * * * as herein covenanted * * * the aforesaid principal sum of money shall at the option of eomplainant be due and payable immediately.”

Complainant exercised its option and duly notified defendants that it would foreclose its mortgage if the tax installments were not paid at the October meeting.

The objection to including in the decree for complainant the claim of $36 for fines imposed for non-payment of installments for dues, interest, &c., is based on the contention that the terms of the bond bind the obligor and his heirs, executors and ad-' ministrators, to pay fines that may be imposed on him or his assigns as the holders of the shares of stock, but does not bind his assigns, and that as Mrs. Katz acquired title to the mortgaged premises after several mediate conveyances, and never had. theobligor’s stock actually transferred to her on complainant® books, she is in no way obligated to pay fines to the association,, and they cannot be imposed upon her.

By the condition of the mortgage it is expressly provided that; if the mortgagor, his heirs * * * and assigns, shall regularly pay monthly installments of $40 per month on the third Monday of every month, and shall also pay * * * all fines * * * which may become due and payable from * * * or charged or imposed upon the mortgagor or his heirs or assigns as the holder of such shares, pursuant to the constitution and by-laws of the association, then the mortgage and bond were to become void.

The association’s constitution and by-laws, article 2, sections 5 and 6, provide that if any shareholder neglect or refuse to pay the monthly dues, or interest, every person so neglecting or refusing shall incur a monthly fine of ten per cent, (on the amount of dues payable each month), said fines to be noncumulative and to be collected in the same manner as dues and interest, and provides that- any payment shall be first applied to the payment of dues, interest and fines, in the order in which they have accrued.

The mortgage further provided that upon default by the mortgagor or his * * * assigns, in the payment * * * of any money therein covenanted to be paid as dues, interests or fines, and should such default continue for three months, the principal due on the mortgage shall, at the option of the association, be immediately payable.

It will be observed that there is nothing in any of these provisions of the bond and mortgage or of the constitution and bylaws making the fines part of the debt secured by the mortgage, and authorizing the sale of the mortgaged premises to enforce their collection. Assuming the fines have been properly imposed, and that default has occurred in their payment, results only in holding that then complainant, at its option, .could consider the principal debt due and could proceed by foreclosure to collect it with interest. This is all the bond and mortgage and the provisions of the constitution and by-laws referred to therein authorize it to ,do. There is nothing in any of these provisions ■showing an intention to make the fines imposed a lien under the mortgage, collectible’by the foreclosure thereof, or to take the ■case out of the rule stated in Bowen v. Lincoln Building and Loan Association, 51 N. J. Eq. (at p. 280), and in Egg Harbor Building and Loan Association v. Baake, 72 N. J. Eq. 603.

A decree will be advised for complainant for tbe amount owing for principal and interest, and also for the taxes and interest, but not including the claim for fines.