author: G-rey, Y. C.

text:
    Joseph Loucheim et al. v. Robert Casperson et al.
    [Filed April 19th, 1901.]
    1. AVliere the assignee in a deed for benefit of creditors is dead, or it is charged that in the conduct of the assignment the assignee has perpetrated a fraud, any creditor, whose claim has been proved and admitted, may bring suit to enforce the assignment for the benefit of himself and of the other proving creditors.
    2. Non-proving creditors have no status to be admitted as parties complainant in such a suit, nor can it be extended to enforce claims against the decedent assignor’s estate acquired after the assignment.
    3. An assignment passes title to all the property whereof the assignor is possessed or to which he is entitled at the time of the delivery of the assignment, whether such property is mentioned in the deed or schedules annexed or not.
    4. A subsequent voluntary donee of such property must account for the same to the proving creditors.
    On bill, answer and proofs.
    This bill is filed by the complainant, who is a creditor of Joseph L. Casperson, deceased, for the benefit of himself and all other creditors as shall aid in presenting the suit against Robert Casperson, the son and next of kin of Joseph L. Casperson, and Hannah C. Casperson and William G-. Casperson, executors, &c., of William R. Casperson, defendants.
    The substance of the complaint is that Joseph L. Casperson, in his lifetime, was engaged in the men’s clothing business, in Salem, New Jersey, being indebted to the complainant and various other creditors in several sums, aggregating some thousands of dollars. On February 20th, 1884, he made an assignment for the benefit of his creditors to his brother, William R. Casperson, estimating his estate at tire sum of $4,301. The latter undertook the trust, and stated, by his report and account to Salem county orphans court, that he had realized from the assignment $1,657.27; that the expenses of settlement were $640.87, and that he had a balance of $1,016.40 for distribution among the creditors. The aggregate of proven claims amounted to $2,728.21, the complainant Loueheim’s claim being $422, on which he received as his dividend $157.21. The complainant charges that the assignor, Joseph L. Casperson, for the purpose of cheating his creditors, concealed a large portion of his assets ($2,000, or more, in cash), and arranged with his brother and assignee, William R. Casperson, that the stock and business should be sold at public auction, in large lots, on favorable terms, and be bought in by B. Frank Wood, who should pay nothing therefor, but should, shortly after the sale, convey the property to William R. Casperson, who, as assignee, should charge himself with the price bid at the auction sale, and Joseph should pay it from his concealed assets; that this prearranged programme was carried out, a large part of the stock of the business was sold to Wood at but $931.30, none of which he paid, nor did he take possession, but shortly after the sale conveyed the property to William R. Casperson, who took possession, re-stocked the store, with Joseph L. Casperson as the manager, and the business, thus re-arranged, was so conducted until William R. Casperson’s death, in 1892; that Joseph furnished the money to meet the auction bid from his concealed assets, and advanced $1,500 to William for re-stocking the store, the business being carried on apparently in William’s name, with Joseph as manager, but that, in fact, William was merely a banker for Joseph, who was the real owner, and conducted the business with the funds he had concealed from his creditors, taking the profits and accounting to no one therefor; that Joseph advanced large sums to his son, the defendant Robert Casperson, out of the property he had concealed, thus defrauding his creditors, who, under the assignment, were entitled to these assets. The bill further shows that William died on September 9th, 1892, leaving a will, of which he appointed his wife and son, the defendants Hannah C. Casperson and William G. Casperson, executors, who proved William’s will and undertook to execute it. The executors made no attempt to take possession of the business or stock, but to carry into effect the plan to cheat the creditors of Joseph, they, at his request, conveyed the stock and business to his son, the defendant Robert Casperson, who removed the stock, sold out the business, realizing some $2,200, or more, therefrom, with which he has purchased a house and lot in Camden. The bill further relates that Joseph shortly .after died, at the home of his son, Robert; that he had previously made a voluntary conveyance to Robert of his stock and of his credits in William’s hands; that no letters of administration were taken out on his estate, but that his son, Robert, has recently begun suit to recover an alleged balance of $1,800, claimed to have been due to Joseph, in his lifetime, from William, in his lifetime, and in this suit the above-recited facts were disclosed. To the creditors of Joseph it was then, for the first time, disclosed that, by the collusion of Joseph, William and Robert, they had been cheated in the administration of Joseph’s assigned estate. The bill charges fraudulent contrivance between Joseph, William and Robert Oasperson to cheat the creditors under the assignment; that the assets, concealed as stated, were, and should be held to be, the property of the trust created for the benefit of the creditors of Joseph Oasperson. The prayer is that an assignee may be appointed to carry out and complete the purposes of Joseph L. Casperson’s assignment; that the transfers of property, by which the assets were concealed, may be declared to be void as against the creditors of Joseph, and that Robert may be decreed to hold the money and property acquired of Joseph under the assignment, and that he may account therefor to the complainant and other creditors, or to a new assignee, to be appointed in this suit, and for injunction restraining Robert from prosecuting the suit in the supreme court against William’s executors, and enjoining the latter from paying the moneys claimed in that suit.
    An injunction was allowed restraining Robert from.any proceedings in the supreme court, beyond the recovery and entry of judgment, the issue of execution and levy thereunder, and the executors of William from paying the moneys sued for, to Robert, or to anyone else for -him.
    A large number of creditors under Joseph L. Casperson’s assignment have come in as complainants to aid in prosecuting the suit, and to share in the recovery of assets for the assignment.
    The executors of William R. Oasperson answer the bill, admitting Joseph’s assignment to William, the claim of the complainant thereunder, the accounting for the assigned estate by William, the payment of a dividend, and they deny knowledge of the real facts which led to the assignment, or of the concealment of Joseph’s assets. They admit William’s purchase of the assigned estate, through B. Frank Wood, and that William continued to hold the property until his death, in September, 1892, but they deny knowledge of the circumstances of the transfer to William. They admit that Joseph had the possession of the store, and that he there conducted the business, but have no information as to the details, of the matter. They admit that William was Joseph’s banker, and received the proceeds of sale, paid for purchase of stock, &c., and kept a running account of the moneys deposited with and expended by him in the store until about 1891, when he had $1,673.09 in hand. At tliis time William’s health became poor, and he ceased to keep the accounts, though he received and paid ou,t moneys on account of the store. They admit that they transferred the stock and store to Joseph’s son, Robert Casperson, without any consideration therefor, except that they considered that the transfer settled all claims which Joseph might have against William on account of their business relation. They deny that they hold, or ever did hold, any money belonging to Joseph L. Casperson, or that they participated in any fraud to hinder or delay his creditors, and say that they had no knowledge that Joseph was in debt until, in the suit of Robert against them, he disclosed it.
    Robert Casperson also answers. He admits Joseph’s assignment to William, the accounting and the payment of the dividend. He admits that complainant proved his claim against the assigned estate, and received his dividend. He denies that that assignment was fraudulent; denies that there was any concealment of assets, and declares that the assignment was made in good faith to divide Joseph’s estate among his creditors, and that this was fully accomplished. He admits the sale of a large portion of the stock to Wood, but explains that it was as a means of transferring it to William R. Casperson, and insists that the sale was in good faith, for the best attainable price in cash. He alleges that the-goods were purchased by William in order to transfer them to Joseph; that William advanced the* money therefor, and Joseph afterwards repaid him from the profits of the business. He admits that Joseph successfully carried on the business, and deposited his money with. William as his banker, and received from him the latter’s checks with which to pay for merchandise and other accounts, and avers that at William’s death there was a balance of over $1,500 due Joseph, which has been transferred and is now due to the defendant Robert Casperson. He admits that the goods and stock were not inventoried as part of William’s estate, and that they were transferred to him (Robert), and that he has sold them and realized about $2,200 therefor. He also admits that Joseph voluntarily conveyed all his stock of merchandise and property to him (Robert); that there was no administration -upon Joseph’s estate, and that the defendant has begun the suit in the supreme court to recover from the executors of William a balance of $1,800. The defendant denies that he bought the Camden house with any moneys received from Joseph, and says it was purchased by the defendant a long time before the death of William, with defendant’s own money and money loaned him by his aunt. He-avers that Joseph delivered all of his then estate to his assignee, and insists that the auction sale was in good faith, and in no way made to hinder creditors, &c. He challenges the right of creditors of Joseph to file a bill in this court until they have recovered a judgment, which the3 do not allege has been done, and asks that he have the same benefit as if he had demurred to the bill on this ground.

      Mr. Jonathan W. Acton, for the complainants.

      Mr. I. Oahford Acton, for the executors of William R. Casperson, defendants.

      Mr. William T. Hilliard, for Robert Casperson, defendant.
   G-rey, Y. C.

The pleadings in this cause have been stated with fullness because of the endeavor to bring into the cause matters not properly within the issues joined.

The first point which should be determined is the challenge of the complainants’ right to file a bill to enforce the assignment until they shall first have recovered- a judgment at law. The question has been settled in this state after some variance of judicial opinion, by the cases of Pillsbury v. Kingon, 6 Stew. Eq. 287, and Kalmus v. Ballin, 7 Dick. Ch. Rep. 296. In the latter case it was determined by the court of appeals that an assignee for benefit of creditors has the right, as a trustee to whom all the property of the assignor has been transferred, to bring a suit in this court to set aside a fraudulent disposition of the assignor’s estate, in avoidance of the assignment, to the extent that the property thus disposed of is needed to satisfy the demand of creditors who have proven their claims. The assignee owes to the proving creditors a duty to recover property thus fraudulently diverted, and upon request that he proceed, and failure to do so, the creditor acquires a status to act in his stead. Ibid. 297. The requirement that the assignee should be requested to proceed is, of course, based upon the assumption that he is living, and that he is not himself a party to the fraudulent disposition of property which is attacked. If the assignee be a participant in the fraud-doing, the creditors who have proved their claims, and have thus become entitled to have the trust performed, may themselves ask the aid of this court to set aside the fraud and secure so much of the property conveyed in avoidance of the assignment as may be necessary to satisfy their claims. They may assert their rights in this way without first obtaining judgment. Terhune v. Sibbald, 10 Dick. Ch. Rep. 237. If the assignee be dead when the fraud is discovered, as in this case, to deny the creditor’s right to sue would be to deny him any remedy.

Several creditors who have not proved their claims under the assignment have obtained themselves to be admitted as complainants, and it is insisted that they have a slatus to have their claims determined and enforced in this suit. It is insisted that they may come in as complainants because the bill is an open one to all creditors of Joseph L. Casperson, &c., and secondly, because this suit is sought to be enforced, not only against the property which passed to the assignee under the assignment, but also against subsequently acquired property of Joseph L. Casperson, against which property (Joseph L. Casperson being dead) the non-proving creditors contend they have a stafois to sue, under the ruling in Haston v. Castner, 4 Stew. Eq. 697. As to the first suggestion, that the non-proving claimants under the assignment may join as complainants, it cannot be-admitted that the original complainant, who has proved his claim to the assignee, and therefore has a status to enforce the assignment, has power, by mere invitation, to enable other creditors not within the trust to join in its enforcement and thereby receive its benefits. As to the other point, this bill is distinctly in its premises and prayer a suit to enforce the assignment, its remedies can go no further than the securing the restoration to the cestuis que brusieni under that trust, of the property of which they have been deprived by the fraud of the trustee. Obviously those not within the terms of the trust cannot share in its benefits, either of procedure or of recovery. This was distinctly declared in Kalmus v. Ballin, 7 Dick. Ch. Rep. 297. The case of Jones v. Davenport, 17 Stew. Eq. 34, in which three suits against the estate of a deceased debtor were heard together, cited to sustain the claim of the non-proving creditors, is not in point. In that case, though heard together, the suits were not consolidated, nor were they settled,' as is contended, by one decree. A careful reading of the last paragraph of the report of the case (at p. 52) will show that the vice-chancellor declared the several parties to be entitled to several decrees, variant in their character, each according to the merits of his separate bill.

The ease of Haston v. Castner, ubi supra, cannot aid the contention of the non-proving creditors, that a creditor-at-large may, without judgment, file a bill to set aside the fraudulent conveyance of the personal property of his deceased debtor. That case is expressly declared to be based on the statute which makes such claims against decedents, when they have been admitted by the executor, to be liens on the lands of the deceased debtor. The statute does not extend to make such claims liens on the personal property of the deceased debtor, and in the present case the deceased debtor, Joseph L. Casperson, does not appear to have owned any lands.

The complainants’ counsel has .also sought to extend the reach of the bill, to make the defendant Robert Casperson liable for damages to the assigned estate, occasioned by the assignee’s misbehavior in so conducting the sales of the assigned goods that ■ their price was greatly depreciated. Whether such a claim could be here entertained at all need not be looked into, for there is no evidence which charges the defendant Eobert Casperson with any liability for a participation in the assignee’s misconduct in conducting the sales. The only basis of claim against Eobert Casperson in this suit is that he became the voluntary recipient of values, which, at the time of the assignment, belonged to that trust, and which were then fraudulently kept back from those entitled to have them, namely, the creditors who proved under the assignment. This phase of the case is hereinafter discussed.

The remaining questions involve points of law and of fact. The bill alleges that J oseph L. Casperson, at the time of making his assignment to his brother, William E. Casperson, fraudulently retained and concealed a considerable part of his assets from his creditors, with the assent of his brother, the assignee; that, at the auction sale of the larger portion of the goods, William E. Casperson, the assignee, procured Wood to purchase the goods, Avithout consideration, who immediately conveyed them to William, without consideration; that William accounted for the purchase-price in his assignee’s account, out of the funds which Joseph retained, and thereafter the store was conducted in William’s name, but all the business was done by Joseph, for his own profit.

The assignment was made on February 20th, 1884. By operation .of laAv it passed all of the property of Joseph D. Casperson to his assignee, William E. Casperson, whether that property was actuality delivered or not. All moneys belonging to J oseph, Avhich he had in William’s hands at that time, passed, by the assignment, for the benefit of the creditors who might thereafter prove their claims. The piano which belonged ■ to Joseph’s Avife, and which, on his death, came to her surviving husband jure mariti, belonged to Joseph at the time of the assignment, and was part of the assigned estate. When Eobert received the $100 for it from the assignee, William E. Casperson, he had no right to the money—it belonged to the assigned estate.

The bill seeks ail accounting only from the defendant Robert Casperson. The prayer does not ask any accounting against the defendants, the executors of William R. Casperson.

The evidence consists of a large number of exhibits, checkbook stubs and other memoranda, as well as parol testimony. The proofs show that for a long time before the assignment J oseph L. Casperson had been accumulating a considerable sum of money in the hands of William R. Casperson. There is also evidence indicating a disposition, on Joseph’s part, immediately before the assignment, to turn his goods into cash. At the time of the assignment this considerable sum of money which J oseph had in William’s hands was neither mentioned in the schedule annexed to the assignment, nor was it subsequently accounted for by the assignee. At the auction sale Wood, at William’s request, bought in a large- quantity of the stock of the store, for which he paid nothing. Wood never, in any way, took possession of the goods, but William, the assignee (who was Joseph’s brother), at once took the goods, opened the store and nominally carried on the business. In fact, Joseph was not only in actual charge, but was recognized by William as the actual owner of the business to the same extent as before the assignment. This mode of conducting the business' continued until September, 1893, when Williain died, and on March 13th, 1893, his executors voluntarily transferred the stock and store business to Robert, the son of J oseph.

Both sides agree that, under this assignment from the executors of William, Robert Casperson took title to the stock in the store, &c. There is no claim or pretence that B. Frank Wood paid anything for his purchase, or received anything for his bill of sale. It is both proven and admitted to have been a mere pretence. Nor is there any claim that Robert paid anything for the assignment of the stock to him. It was a voluntary transfer, without any consideration whatever, and gave -to Robert Casperson the values which his father had in William’s hands, concealed from his creditors, at the time of the assignment, and which were used by William in the purchasing and re-stocking of the goods of the store. The bill of sale from Wood to William R. Casperson, dated March 33d, 1884, is producecl, and the transfer from William’s executor to Robert on-March 13th, 1893, is endorsed on the bill of sale. William R. Casperson, the assignee, did account for the price bid by Wood at the auction sale, but he had Joseph’s money in hand with which to pay it, and it is explicitly proven by Wood himself that he paid nothing for his purchase.

The defendant Robert Casperson, claims that he cannot be called upon to respond for money earned by his father in carrying on the business after the assignment. If this were the whole case, the contention would be good. The proof shows, however, that when, immediately after tlie assignment, the store was re-opened in William R. Casperson’s name, but, in fact, by Joseph, under that cover, Joseph’s money, which had been previously hidden in William’s hands, was invested in the purchase of new stock and other expenditures in carrying on the business.

This money belonged to Joseph’s creditors who proved under the assignment. It remained in the business, and came to the defendant Robert Casperson, in 1893, by the transfer of the business from William’s executors. Robert probably had notice of the fraudulent concealment of assets from the creditors, and of their subsequent use in the business. He was certainly afware of the fact that the store was pretended to be carried on in William’s name, and of the fact that it was really owned by Joseph. He recognized entries on William’s check stubs, as a showing of the moneys that came in from the store, entered on William’s book, and the expenditures therefrom for Joseph’s benefit in carrying on the business. Whether Robert had notice or not of the fraud at the time it was worked is, however, of little significance, for the proof is entirely clear that he was not a purchaser of the stock for value; on the contrary, he was, both from his father and from the executors of William, a mere donee, who paid nothing. It is therefore entirely equitable that Robert Casperson should account for the values which, at the time of the assignment, belonged to Joseph, but which were kept away from his creditors by the fraudulent collusion of Joseph and William, the assignee, and which have since, by voluntary gift, come to him (Robert Casperson).

There is evidence that considerable sums of money were paid to Robert by Joseph and by William, at Joseph’s request, since the assignment, and the complainant contends, that as these were voluntary advances from Joseph from the earnings of the store, in which the assigned estate moneys were invested, Robert should also account to the creditors under the assignment for these advances. The store was not stocked and run solely with moneys concealed from the creditors. It is quite evident that other money, from other sources, must have been put in for the re-stocking of the store. The cash advances to Robert were made from the general profits of the business. Robert’s counsel insists that the assigmnent creditors have no right to call upon Robert for moneys advanced to him by Joseph from the earnings of his business, after his assignment. It is, of course, true that the assignment creditors have no right to the subsequent earnings of the assignor. But the evidence shows that Joseph mixed the concealed assets, which belonged to his assignment creditors, with other moneys, probably borrowed from William, and with his own earnings. The confusion was occasioned by Joseph’s wrongful and fraudulent act. Neither he nor Robert, his voluntary beneficiary, can profit thereby. The creditors, as costáis que irusteni, may, in such cases, either have a return of their principal moneys, fraudulently concealed, with interest, or, if clear proof be made of profits derived from the use of trust funds, they may require an accounting for all profits made by their use. In this case the evidence is not sufficiently specific to define what the profits of the business were. The mere fact that some trust funds were put in the business does not entitle the cesLuis que Irusleni to all the profits of the business.

The creditors will receive their equitable rights as nearly as the evidence warrants, by restoring to them from the intermingled property the' amount shown to have been kept from them, at the time of the assignment, with interest from the date of the assignment.

The defendant Robert Casperson strenuously denies that, at the time of the assignment, Joseph had any money’s in William R. Casperson’s hands which were kept from the assignment creditors. One witness who testified to this was Charles Casperson, another brother of Joseph. Charles appears to have been employed as a clerk in the store. But Charles also testifies that William R. Casperson, the assignee, covertly purchased the assigned goods at his own sale by procuring Wood to bid them in. He admits that the goods so purchased were to be held for Joseph, and that the latter always afterwards conducted the business. When this witness was asked who paid for those goods, he said he could not answer the question. Robert Casperson himself testifies that, though the goods were bought under the name of William R. Casperson, they were, in fact, from the time of the auction sale, Joseph’s goods. Robert also admits that, when he finally sold out the business, he received, in all, about $2,200, accruing from different sales of the goods, &c.

The denials of these witnesses that William was, at the time of the assignment, the holder of large sums of Joseph’s money, are of little weight against the contemporaneous memoranda produced, kept by William R. Casperson himself, and admitted by Robert Casperson to state the cash account between his father (Joseph) and his uncle William. These show that, before and at the time of the assignment, William had been acting as Joseph’s banker, and that he then had in his hands a considerable sum of Joseph’s cash which was, by law, part of the assigned estate. As above stated, these moneys were not accounted for to the assignment, but were kept back from the creditors and afterwards used for Joseph’s benefit in carrying on the business. The defendant contends that these moneys were loans by William to Joseph. There may have been loans made by William to Joseph, but there is no sufficient proof of the fact. There is, however, an explicit showing that William had a considerable amount of Joseph’s money for which he did not account. A cash account kept by William on his checkbook covers, and other written memoranda made about the time of the assignment, show that the amount of Joseph’s money in William’s hands was increased shortly before the assignment. These moneys in William’s hands were just as much assets of Joseph’s, which should have been applied for the benefit of the creditors under the assignment, as the stock in the store or other visible property. The title to the moneys of Joseph in William’s hands at the time of the assignment became part of the assigned estate by operation of law. When these moneys were subsequently used to carry on the business, to re-stock the store, which was given to the defendant Robert Casperson, without any consideration paid, he received, to the extent of these values, a part of the assigned estate, which he is bound to return to that trust. The amount which William R. Casperson’s memoranda cash account shows he had in his hands belonging to Joseph at the entry next before the date of the assignment is $1,274.94. Robert, as voluntary transferee of the business, should account for this sum, with interest from the date of the assignment. He has received by the transfer of the business and the payments made, therefrom to him much more than this sum. This, however, with the price of the piano, is, under the pleadings and proofs in this cause, the extent to which the defendant Robert Casperson should respond. If a less sum will suffice to satisfy the claims of the complainant and other creditors which have been proven under the assignment, Robert will, of course, be called upon to pay only so much as may satisfy the balance due on those claims. What the residue owing upon the proven claims is, can be readily ascertained from the statement of the dividend of the assigned estate. The creditors are entitled to so much as will restore to them the amount they have lost by the diversion of the assets of the assigned estate into Robert Casperson’s hands. A receiver will be appointed, if it be necessary, in order to carry into effect the unperformed trusts of the assignment deed.

The evidence does not warrant any decree that the house in Camden was bought by Robert with assets kept from the assignment. Nor is there any evidence which justifies the allowance of an injunction, at the instance of the assignment creditors, restraining Robert Casperson from further prosecuting his suit against the executors of William R. Casperson in the New Jersey supreme court. The complainants do not themselves ask for any accounting to them in that matter. The evidence neither shows that the balance in William R. Casperson’s hands, at the time of his death in 1892,' was part of the original assigned estate, hidden away in February, 1894, nor is it proven, with sufficient particularity, that it was derived from the profits on the hidden moneys.

A decree will be advised according to the views above expressed.


source: Caselaw Access Project

author: Grey, Y. C.

license: Public Domain

text:
    Hiram E. Budd et al. v. The Camden Horse Railroad Company et al.
    [Filed April 27th, 1901.]
    1. A municipal corporation which is empowered by its charter to regulate its streets and to prescribe the manner of their use by any person or corporation, has exclusive power to determine in the first instance how the’ space within the bounds of the highway shall be appropriated to the varied uses of the highway.
    2. A general ordinance prescribing a certain width of the sidewalk in avenues of a certain width, is modified by a subsequent special ordinance, making a different disposition of a particularly named avenue.
    3. A trolley railway track laid in accordance with the direction of the special ordinance will not be enjoined from operation because jjs location works inconvenience and injury to the abutting owners.
    4. If the municipality has so unreasonably appropriated the divisions of the highway as to work injury to the abutting owners, their remedy is not in equity, but in the courts of law which supervise the action of inferior jurisdictions.
    5. A mandatory injunction will not be decreed where the legal rights of the complainants are disputed and unsettled, and where the acts complained of are adequately remediable in the courts of law.
    On bill, answer and proofs.
    The complainants are the owners of, and operators of, a brick-works and yard, with a frontage of two thousand and sizty-six feet on the north side of Ferry avenue, in the city of Oamden, their title running to the middle of the street. The defendants operate a trolley road in that avenue. The complainants allege that Ferry avenue is a public highway but two rods wide; that the defendants have located a number of their poles to carry their wires outside of the lines of the highway, and on the lands of complainants. They further charge that the rails of defendants’ tracks on the north side of Ferry avenue have been so located as to intrude upon and tear up the sidewalk on that side, and that they lie within five and one-half feet of the complainants’ building line, while a general ordinance of the city of Camden requires all streets of the width of Ferry avenue to have at least one-quarter of the width set apart for sidewalk. They admit that this location is claimed to have been made by defendants by virtue of a subsequent special ordinance of the city of Camden, consenting and permitting the defendant company to locate their line of track on Ferry avenue, by name, in- the manner in which they have placed it, but complainants insist that this ordinance is void. They allege that the conduct of the defendant company is destructive of the value, and prevents them from the use, of their property and causes them irreparable loss. The bill prays that the defendants may be decreed to take down their poles and wires and to remove their tracks from within the line of the sidewalk in front of complainants’ property, and to cease operating their trolley line there.
    The "defendants deny that Ferry avenue is but two rods wide, and aver that it is forty feet wide, and has been so used for sixty years. They allege that no sidewalk or curb line was ever made or laid on Ferry avenue, and they deny that they ever tore up any sidewalk of the complainants. They set out their original charter and the several statutes whereby they came into corporate existence, and added powers, and particularly an ordinance of the city of Camden, passed December 30th, 1896, whereby the city council specially consented and permitted them to construct, maintain and operate a single track railway on Ferry avenue, “the middle line of the railway to be eight and one-half feet northward from the middle line of Ferry avenue, which is the boundary line of the city,” &c. They allege that they have constructed and operated their road in accordance with that consent, at great expense, and that complainants stood by and made no objection until months afterwards, and are thereby now estopped in equity to complain. They deny that they have erected any poles on complainants’ lands, of destroyed any of their trees, and aver that all of their poles on Ferry avenue have been erected for years without objection from anyone, and were all erected by lawful authority. They insist that complainants show no equity in their bill of complaint; that their delay has deprived them of any remedy in this court; that they have taken no steps to review the ordinance under which the defendants have built and operated their road; that their remedy, if said ordinance is unlawful, is not in this court, but in a court of law, and the defendants ask the same benefit as if they had demurred to the bill for these causes.
    The ease has been heard on the pleadings and proofs submitted by the parties.

      Mr. Francis D. Weaver and Mr. John W. Wescott, for the complainants.

      Mr. Edward, A. Armstrong, for the defendant.
   Grey, Y. C.

The most important ground of complaint is that the defendants have, without authority, located their tracks on the northerly side of Ferry avenue so that they have intruded upon the sidewalk in front of complainants’ premises, and thereby interfered with their enjoyment of their property. It is not contended that the tracks have been placed outside of the line of the highway, and have intruded upon that portion of the complainants’ lands which is not charged with the public easement. The claim is that the defendants’ tracks, though within the lines of the highway, have been so located there as to intrude upon that portion of the highway which is known as the sidewalk.

The complainants contend that, under an ordinance of the city of Camden, passed December 30th, 1886 (p. 68), in all streets in that city

“of the width of thirty feet and upwards the sidewalks shall be one-fourth of the width of the street on each side thereof in the case of each street respectively.”

They admit that,'by a subsequent ordinance, permission has been granted to defendants to locate their tracks at a certain place within the highway, which would encroach upon the sidewalk location established by the earlier ordinance, but they insist that this subsequent ordinance is void. The complainants also contend that Perry avenue was laid out of the width of two rods, and that it has never been widened, and that therefore the sidewalk must be estimated to be of the width of one-fourth of the two rods. The defendants insist that there has been a widening of the northerly half of Perry avenue, in front of complainants’ premises, to twenty feet, by a dedication by one who previously owned the complainants’ property. They further insist that they have laid their tracks precisely where the later ordinance directs that they be placed.

It has been determined in this state, by the court of appeals, that a controversy of this sort is a matter to be heard in the courts of law. Holmes v. Jersey City, 1 Beas. 310, was a suit of the same character as this cause. It was an effort to restrain a municipal corporation from regulating a street, and from setting a curbstone on a proposed line, because of a dispute whether, by a dedication, the street was of one width or another. In that decision the court of appeals declared that a bill of complaint setting up such a case showed no recognized grounds for equitable relief; that the whole matter turned upon a mere question of law; that if such a bill could be entertained, then every act of a municipal corporation by which the property of a citizen is affected, by the opening, paving or grading of streets, the regularity of buildings, &c., might be the subject of an injunction. Under the peculiar circumstances of that case, and because the equity of the bill was not challenged before the chancellor, the court of appeals entertained the suit, but its ruling, that injuries of the character named must be redressed at law, has since been received and acted upon as the law on this subject. Cross v. Morristown, 3 C. E. Gr. 305.

In the present case the suit is not against the municipality, hut against those who, under its ordinance, appropriating the highway to its various uses, have, as complainants claim, injured them. It is quite obvious that if the party so using the highway is not in excess of the privilege given by the ordinance, the remedy for the supposed wrong must be had in the courts of law, where the unreasonableness or wrongfulness of the grant of privilege may be considered and relief given against any oppression.

The defendants in this case challenge the equity of the bill of complaint, and insist that the complainants' case is within the cognizance of the courts of law, where only they can ask for redress.

The primary inquiry here made should go no further than to ascertain whether the injuries set up in the bill of -complaint are occasioned by some unauthorized action of the defendants, for which no redress can be had in the courts of law.

The proofs show that Ferry avenue was laid out as a country road in 1825, of the width of two rods, and that its northerly half has since become a part of the city of Camden, the center line of Ferry avenue being the boundary line of that city. The general ordinance of 1886 provides that streets of that city, of the width of thirty feet or more, shall have sidewalks of a width equal to one-fourth of the width of the street. Whether this applies to Ferry avenue' at all, when only ■ the northerly half of it lies within’the city of Camden, and whether the ordinance requires the computation of width to be made only from the northerly half of Ferry avenue, which is the only part within the city of Camden, was not argued by counsel. Their attention was given wholly, on this phase of the case, to the question whether there had been an additional dedication or not on the northerly half of that avenue, and to its effect upon the width of the sidewalk.

The actual present physical condition of the avenue at the locus in quo, as to sidewalk, is undisputeclly told by the testimony of the complainant Isaac W. Budd. • He states that there is no sidewalk there—meaning, of course, that there is no constructed sidewalk, separated by a curb or other monumental line from the carriage roadway. He says, speaking of the footway, “it just went promiscuous along there, * * * just like all other country roads—there is no regular side path to it.”

Both parties agree upon the location of the center line of the avenue and also upon the place where the defendants have placed their track. The dispute is as to the width of the northerly half of the avenue.

The maps illustrating the location of the defendants’ tracks show that whether the width of Eerry avenue be computed at thirty-three feet, as the complainants claim it should be, or at forty feet, as defendants contend, the tracks of the defendants have been so placed that they lie in part within the space within which, allowing one-fourth of the whole highway for sidewalk, the latter may at some future time be constructed.

It is plainly to be seen, therefore, that, taking either view of the width of Eerry avenue, the north rail of the defendants’ railway track, located on the north side of Eerry avenue, is laid within the line of the sidewalk on the north side of that avenue, as provided for in the ordinance of December 30th, 1886.

The complainants, in their bill, recognize the fact that the defendants claim to have located their tracks by virtue of the subsequent ordinance of September, 1896, but they deny the efficacy of the ordinance to authorize that location of tracks, claiming that it is void. The defendants justify their location by setting out in their answer that ordinance in full,' with its accompanying map. It is entitled

“an ordinance granting consent and permission to the Camden Horse Railroad Company to build, construct and operate a street railway on Vanhook street, Mount Ephraim avenue, Eerry avenue and Newton avenue, in the City of Camden,”

passed September 9th, 1896. It expressly grants consent and permission to the defendant company to build, construct, maintain and operate a single track railroad on Eerry avenue to Mount Ephraim avenue and along Eerry avenue, in front of complainants’ property, in these words:

“thence eastward still out Ferry avenue in a line so that the middle line of the said railway shall be eight and one-half feet northward from the middle line of the said Ferry avenue, which is the boundary line of the City of Camden, to Haddon avenue.”

All the evidence in the case agrees that the defendants, in locating, constructing and operating their railway in front of the complainants’ property, so far as they have built it, have complied with the requirements of the last-named ordinance. The complainants’ own surveyor declares that the north track of the defendants on Perry avenue is correctly described in this language:

“Eastward still out Ferry avenue in a line so that the middle line of said railway shall be eight and one-half feet northward from the middle line of the said Ferry avenue, which is the boundary line of the city of Camden, to Haddon avenue.”

He says that, so far as the railway is built, he found it laid on the ground in accordance with that description, and that, so built, it brings the northerly rail within five and one-half feet of complainants’ property line, assuming that property line to be parallel with the middle line of Perry avenue, and to be sixteen and one-half feet northward therefrom.

It must be taken to be established that the defendants have built their road in accordance with the requirements of the ordinance of September 9th, 1896, and this phase of the controversy between the parties is therefore limited to the question whether the ordinance of September 9th, 1896, has any validity to prescribe the location of the defendants’ tracks in Perry avenue. The complainants themselves put their case on this ground. They insist that the ordinance of 1896 is void. If this court is to take any jurisdiction of this case because of the alleged offence against the general ordinance of December 30th, 1886, fixing the width of sidewalks, it must be because the special ordinance of 1896, locating the tracks within the line of the sidewalks, is a nullity. It is therefore important to examine into the authority of the council of the city of Camden to pass such an ordinance.

It should be noted that the complainants do not claim that the. challenged ordinance seeks to authorize the defendant company to locate its tracks outside- of the bounds of the highway upon that portion of their property not subject to the public easement. Nor is it asserted that the defendants are not authorized to build and operate a trolley line in the streets of the city of Camden. Nor do the complainants claim that, in this case, there was any omission to observe the prerequisites to the passage of the ordinance granting a permission to lay railway tracks and fixing their location, prescribed by the trolley statutes. Nor is there any contention that, in laying the tracks within the bounds of Ferry avenue, the3 are located in any other place than that directed by the ordinance authorizing their construction. The undisputed proof is that they are laid precisely where that ordinance of 1896 ordered them to be placed. The complainants’ complaint is that the ordinance of 1896 is void, because it directs the construction of trolley tracks within a line where a previous ordinance had located a sidewalk, and thus seriously interferes with the complainants’ convenient enjoyment of their propel^,’ and threatens further injury if the railway be completed on the northern half of Ferry avenue. An inquiry into the power of the city council to pass such an ordinance as that of 1896 will show the rights of the parties.

The revised charter of the city of Camden gives - to its city council the power to regulate, by ordinance, the streets, highways, avenues, &c., in the said city; to prescribe the manner in which an3^ corporation or persons shall exercise any privilege granted to them in the use or in digging up any street, avenue, highway or alley of that city for any purpose whatever. It also authorizes the city council, by ordinance, to widen, level, grade, curb or re-curb, gutter or re-gutter the streets, avenues, highways and alleys of that city and the sidewalks and gutters thereof, or any of them, or any parts or sections of the same, and to prescribe the manner in which any such work shall be performed. Revised charter of the city of Camden, New Jersey (P. L. of 1871 pp.. 225, 226, parís VII. and VIII.), declared to be a public act (p. 260).

Such a grant of power to a municipal corporation enables it to determine the respective widths of the street and the sidewalks, and how the space appropriated to each shall be divided between them. Taintor v. Morristown, Vr. 59. The city council of Camden, therefore, had the power to act upon the subject-matter of appropriating the space within the bounds of the highway to its varied uses. It exercised that power by its general ordinance of December 30th, 1886, prescribing that all streets of a certain class should have sidewalks one-foúrth of the width of the highway. The ordinance of 1896 is a special ordinance, granting permission to the defendant company to build and operate a railway upon certain named streets and prescribing the location of its tracks. Such a permission as is given by this ordinance is required by the act regulating the construction, &c., of street railroads. P. L. of 1896 p. 829. The ordinance mentions Ferry avenue bjr name in its title, and in the body of the ordinance as one of the streets to which it is applicable. Its operation is expressly limited to Eerry avenue and the other specialty named streets. It has a full preamble reciting the performance of the prerequisites named in the above-named statute of 1896 regarding the construction of street railroads. It consents and grants permission to the defendant company to construct and operate

“a single track railway beginning opposite the east end of the turnout on Ferry avenue near Eighth, street, and connecting therewith and extending eastward out Ferry avenue, the middle line of the said track being nine feet northward from the middle line of the present track on Ferry avenue to Mount Ephraim avenue, and thence eastward, still out Ferry avenue, in a line so that tlie middle line of the said railway shall be eight and one-half feet northward from the middle line of the said Ferry avenue, which is the boundary line of the city of Camden, to Haddon avenue.”

The last section declares that all ordinances and parts of ordinances inconsistent with the provisions of that ordinance were thereby repealed.

This ordinance is, in terms, an act of special legislation, appropriating certain parts of Ferry avenue to certain named usesj to which a highway is devoted.

The rule is entirety well settled in this state that general legislation on a subject must give way to special legislation on the same subject. Taintor v. Morristown, 4 Vr. 61; Mayor of Newark v. Freeholders of Essex, 11 Vr. 597 (Court of Errors). Applying this rule to the subject under discussion, it appears that the council of the city of Camden, upon a matter within the powers granted by its charter, has, in the manner directed by its charter, and in accordance with the provisions of general legislation upon the same subject, granted permission to the defendant company to locate its tracks on the north side of Eerry avenue, and fixed the place where they should be constructed. The defendants have built their railway in exact accordance with the permission.

The special ordinance on this subject must be held to have repealed the previous general ordinance appropriating the lands within the bounds of Eerry avenue to the extent necessary to enable the special ordinance to have effect.

Neither in their answer nor in their argument have the complainants denied that the statutes and ordinances do, in terms, authorize the defendants to do the acts of which complaint is made. The complainants’ objection is that the authorization must be held to be void because the acts permitted work an injury to them in their use of the highway. Where the subject-matter is within the jurisdiction of the municipal-authorities, and their action is in compliance with the statutory mode prescribed to them, and a privilege thus granted is used within the limitations imposed, it is not a ground for equitable relief that the use of the privilege operates as a hardship upon other persons. If an ordinance be unreasonable in its appropriation of the varied uses to be made of a highway, and works loss or-inconvenience to property-holders upon one side of it, their remedy lies in an application to the courts of law, which have power to correct the unreasonable conduct of the municipal body. The supreme court is the supervisor of the action of inferior jurisdictions in all such cases.

There was some claim made in argument that the ownership of the fee in the north side of Eerry avenue gave to the complainants some special rights, as against the defendants’ construction and operation of a trolley railway, on the north side of that avenue, in the matter of access to and use of that highway. It has been settled in this state, by decisions in all the courts, that a street railway is but a variance in the mode of using a highway (Hinchman v. Paterson Horse Railway Co., 2 C. E. Gr. 15; Halsey v. Rapid Transit Company, 2 Dick. Ch. Rep. 380), and that the introduction of the trolley system on city streets is not an invasion of private rights. Kennelly v. Jersey City, 28 Vr. 293 (Court of Errors); Roebling v. Trenton Railway Co., 29 Vr. 667. So long as the defendant company confines its action to the building of its road on the highway within the lines laid down for it in the city ordinances, and 'to the running of its cars thereon in accordance therewith, the complainants and other abutting owners whose teams are impeded in turning from their carriage entranées into the street, or whose passage along the street is delayed by the frequent running of the cars, have -no special rights against the user of the highways. The court of errors, in the Roebling Case, declared that there is no remedy for the abuting owner for annoyances and interferences resulting from a user which is consistent with the legitimate and proper use to-which these public thoroughfares are devoted (p. 674).

The other ground for relief set up in the bill is the claim that the defendant company has located six trolley poles on the north side of Ferry avenue outside of the line of the high-waj' and upon the premises of the complainants. The intrusion is shown, by the testimony of the complainants' surveyor (if it be assumed that the northerly half of the avenue is sixteen and a half feet wide), to be from one-tenth of a foot to one foot and one-tenth of a foot over the highway line and upon complainants' property, with the top of the poles inclining further over towards complainants' property. Whether these poles are within or without the line of the highway depends, of course, upon the purely legal question of boundary, which is disputed and unsettled. If the northerly half of the road is, as defendants claim, twenty feet wide, all these poles are within the highway. If there be a grievance, it is a concluded act of trespass or seizure of lands, for which an action of trespass or ejectment affords a full and adequate remedy. There is no showing of any special equity which would justify the interference of this court by a mandatory injunction for the removal of the poles.

There is also a suggestion that the completion of the defendants’ railway along the whole front of the complainants’ property will raise the grade near their brick-kilns so that the complainants’ land will, at the entrance to the avenue, be several feet below the grade of the avenue. But there is neither allegation nor proof that this raising of the grade is contrary to any city ordinance fixing the grade, and, in the absence of such a showing, the complainants’ inconvenience is one which they must correct by raising the grade of their own property to correspond with that of'the street.

Upon the whole case there is no exhibition of any ground for the action of a court of equity. I will advise a decree that the complainants’ bill be dismissed, with costs.


author: G-key, Y. C.

text:
    Charles W. Horner, administrator, v. Spafford W. Dey et al.
    [Filed April 30th, 1901.]
    1. Under Chancery act, section 152, authorizing an immediate sale in a foreclosure suit of premises likely to deteriorate in value pending the suit, the depreciation in value of a farm attending the removal of crops therefrom, is not ground for an order for immediate sale.
    2. That property mortgaged has decreased in commercial value, incident to a general decrease of farm values, and that the mortgagor did not pay the interest, which was due to failure, in the crops, is not ground for the appointment of a receiver in proceedings to foreclose.
    On bill to .foreclose. Petition for receiver and affidavits in response thereto.

      Mr. Charles K. Chambers, for the complainant and petitioner.

      Mr. Aaron V. Dawes, for the defendants.
   G-key, Y. C.

(orally).

This is the application of the complainant in a foreclosure suit, by a petition here filed (the suit having been just begun), for the appointment of a receiver to take the rents, issues and profits of the mortgaged premises, or for an order, under section 152 of the Chancery act, for an immediate sale of the mortgaged premises, either public or private, the proceeds to be brought into court, subject to the liens and equities of the parties in interest.

I ivill consider first the application for an order for immedate sale under the statute. In such an application, the statute itself provides that it must be shown that the mortgaged premises are of such a character or so situate that they are liable to deteriorate in value pending the suit, or that their preservation or care will be difficult or expensive.

The property must be dealt with according to its nature and character. This is a farm property of some two hundred acres,' used wholly for purposes of agriculture, except, possibly, a small portion of an acre. Farm property does, it is true, increase somewhat in value as the crops mature and decreases in value as they are removed, but such a liability to deterioration is not of the kind which this statute is intended to forefend. The depreciation in value which attends the removal of crops is a natural incident of the use of the property, and has been happening for the last thirty years. The statute plainly intends by an immediate sale to prevent an impending depreciation of some extraordinary character which is threatened before, by the regular course of procedure, a disposition of the property can be effected, such as a dangerous condition of buildings, an abandonment of the premises, or the like. In such cases an immediate disposition of the. property would be made, in the expectation of securing now a price which would be unlikely at the end of the litigation. In this case, if an order were made for the immediate sale of the farm, it would probably be sold in June, too late for the planting of any spring crops by any purchaser and a most unusual time for selling a farm. All persons who are interested in buying farms are, at that period of the year, already fixed in their location. No tenant who is actually in possession would put in any of the crops plantable in May. The result of'such a sale of a farm, instead of a saving of values as intended by the statute, would probably be a great sacrifice of them.

The alternative prayer is for the appointment of a receiver. The only ground advanced for this extraordinary remedy is the claim that the property has deteriorated in commercial value. There is no showing that the property has been permitted to get out of repair or become dilapidated, nor is there any claim of threatened removal of property of the nature of realty, nor of any action, on the part of the party in possession, the effect of which may be to lessen the value of the property. What is alleged-is that the commercial value of farm land has depreciated, and that if this farm is sold to-day it will not produce the amount of the mortgage claim. This insistment is, necessarily, a matter of judgment. The petitioner states his opinion. The proof is that within a short time, he has expressed a contrary view. The affidavits all show that the farm has been kept up, as to fertilization and repairs, to the highest standard. Whatever depreciation it has suffered is not peculiar in any way to it, but is incident to the general decrease of farm values.

. A decrease in the value of mortgaged premises is not of itself a sufficient cause for the appointment of a receiver, even if it approaches the point of being an inadequate security. In the case of Cortleyeu v. Hathaway, 3 Stock. 39, this court declared that a receiver would not be appointed simply because the premises were shown to be an inadequate security, even if it appeared that the mortgagor was insolvent. In Frisbie v. Bateman, 9 C. E. Gr. 28, the court again held that mere inadequacy and insolvency of the mortgagor were not of themselves sufficient. In the present case there is no showing of the mortgagor’s insolvency. It is shown that the holder of the equity of redemption is not the mortgagor. The bond was made in 1856, and the obligor may not be responsible. There is no proof on the point.

A depreciation in value by the act of the tenant in possession, or an act which shows fraud, or makes him chargeable with bad faith-in misappropriating the rents or profits, will, in somd'' cases, lead the court to appoint a receiver. Neither of these conditions is shown in this ease. On the contrary, the proof is the other way. It is shown that the property has been kept by the owner in very good condition, he having, during the past year, expended considerable money in the repair and improvement of the mortgaged premises. He removed manure made on the premises and used it elsewhere. This manure was his personal property; he had a full right to remove it. No fraudulent purpose can be imputed to him because of his exercise of his legal right.

The only element suggested in support of the appointment of a receiver, in addition to the fall in the commercial value of farm property, is that the owner did not pay the interest on the mortgage for the last year. The affidavits explain that by showing that last year the crops failed. Such a happening cannot justify an inference of fraudulent misappropriation of rents and profits. This latter condition may exist where an owner receives income from mortgaged premises and refuses or fails to pay the interest on the mortgage. But no inference of fraudulent purpose can be drawn when it is shown, as in this case, that for more than thirty years- the interest has been promptly paid, and that last year it was not paid because of failure of the crops.

No sufficient reason has been shown for the appointment of a receiver. The petition should be dismissed, with costs.


text:
    Benjamin Hancock v. Newton Elmer et al.
    [Filed May 9th, 1901.]
    1. A voluntary conveyance of lands made by a debtor, without consideration, is void as against existing creditors, irrespective of the value of the debtor’s interest in the lands conveyed.
    2 A debtor who was under pressure to pay his debt, conveyed all his property, save one piece of land, to his brothers, and then offered this piece, and another lot, part of the land conveyed, upon certain prescribed terms, to his creditor in payment of his debt. When the creditor refused the terms dictated by the debtor, the reserved lot was at once conveyed to one of the brothers, so that the debtor had no property remaining in his name. The brothers knew of this plan when they accepted their conveyances.—Held, that the transaction was a hindering of the creditor in the collection of his claim, and obnoxious to the statute of frauds.
    On bill, answer and proofs.
    The defendant Newton Elmer, for several years before the month of September, 1897, was, with one Albertson, indebted on their joint note to the complainant, Benjamin Hancock, for $875, which, by partial payments, has been reduced to $700. In 1896' Albertson’s wife conveyed a lot of land to Newton to secure him against the Hancock note. Elmer then gave his note to Hancock, and Albertson was released from liability, the express purpose of the conveyance being, as stated, to secure Elmer for undertaking to pay Albertson’s half of the note. In August, 1897, the note, with Hancock’s endorsement, had been discounted by a bank. Hancock notified Newton Elmer that it must be paid. Newton Elmer made no reply, but on the 21st of September, 1897, transferred to his brother, the defendant Ellison Elmer, eighty shares out of eighty-two shares of stock held by Newton Elmer in the Bassett Glass Company, and on the 22d day of September, 1897, for a consideration of $1, conveyed six lots of land to another brother, the' defendant Lafayette Elmer, and on the same day, for a named consideration of $100, conveyed to his brother, the defendant Ellison Elmer, all his remaining real estate, consisting of dwelling-houses, a block of stores, his residence in Bridgeton and other property, except one single lot of land, which was subsequently, on October 7th, 1897, also conveyed to the defendant Ellison Elmer. Shortly afterwards Mr. Newton Elmer sent word to the complainant that he could not take care of the $700 note; that he had made over his property to his brothers, but that he was willing to convey the lot he had retained, at a price and upon terms prescribed by himself, if the complainant would assume the payment of the note then in bank and give it up to him. This the complainant refused to do. „ On October 28th, 1897, the complainant having demanded that Mr. Newton Elmer should pay the note, the latter wrote him, stating,
    “I made you the best proposition which it was in my power to do for you, and as you did not choose to accept it, I have Been compelled to drop the matter.”
    Again, on November 8th, 1897, he wrote to the complainant, acknowledging his indebtedness on the note, and stating the following reasons for his action:
    “Xour notice to me that you insisted upon my releasing you as my endorser and that I must get another endorser, which I was unable to do, forced me to make the best arrangement which I could to pay my debts, and in making such arrangements the best that I could do for this note was the proposition which 1 originally made you through Mr. Sheppard, which was refused by you. As a result of your action, I am now, as I said, in a position where it ¿s impossible for me to do" anything in the matter at this time.”
    The complainant then took the note out of bank, sued upon it and recovered judgment in the supreme court for the sum of $742.99, damages and costs, and issued execution thereon to Cumberland county. A return was made “no goods or lands found.” On February 26th, 1898, the complainant filed his bill of complaint in this cause, setting up the above-mentioned facts and charging that Newton Elmer’s transfer of the glass company’s stock and his conveyance of all Ms lands to Ms brothers Lafayette and Ellison Elmer were fraudulent and for the purpose of hindering and defeating the complainant in the collection of the debt due to him; praying that the fraudulent conveyances might be set aside and declared void, and the lands and stock sold, discharged of any claim thereunder, and the proceeds applied to the payment of the complainant’s debt.
    The defendants Newton Elmer and Ellison Elmer filed a joint and several answer, and the defendant Lafayette Elmer and his wife filed a separate answer, all by the same solicitor. They admit the complainant’s debt, judgment and the conveyances by the defendant Newton Elmer, set forth in the bill of complaint, but they deny the values ascribed in the bill to the premises conveyed, and deny that the conveyances were without consideration, and say that they were for full consideration and in good faith on the part of all the parties to the 'deeds. They expressly deny that these convejrances were made for the purpose of preventing the defendant from collecting his claim against Newton Elmer, or to defraud or cheat him as alleged in the bill. Issue was joined on these pleadings, and the cause has come to a hearing.

      Mr. Waller PL. Bacon, for the complainant.

      Mr. David J. Pancoast, for the defendants.
   Grey, Y. C.

It is admitted, without contention, that the defendant Newton Elmer was indebted to the complainant at the time he made the deeds attacked in this cause. It is also admitted, without dispute, that, shortly after the complainant demanded of Newton Elmer the payment of his debt, the latter conveyed all his property (except one lot hereafter dealt with), by the two deeds in question, one to his brother, the defendant Lafayette Elmer, passing title to six lots of land, the other to his brother, the defendant Ellison Elmer, passing title to twenty-two lots of land. Newton also transferred all of his shares of stock, except two, to his brother Ellison. Of all his lands he retained in his own name but one piece, the Morris avenue lot. The purpose for which he had actually retained this lot is proven. He kept this in order to offer it to Mr. Hancock (with other property which he had conveyed to his brother Lafayette), in satisfaction of Hancock’s debt, upon the latter’s undertaking to assume a $2,000 mortgage. That is, a debtor conveyed all his property away, save one piece, and then turned to his creditor and, in effect, said:

“I have so arranged my property that you cannot apply any of it, save this one piece, to the payment of the claim against me which you hold. If you will take what I offer you upon the terms I dictate, and discharge your claim, well, if not you will not get even so much as I now offer you.”

Upon Hancock’s refusal to accept this proposition, Newton Elmer conveyed this last lot also to his brother Ellison, for a named consideration of $100.

So far as Newton Elmer is concerned, the evidence that this was the situation of affairs is largely in his letters to Mr. Hancock and his deeds to his brothers Lafayette and Ellison.

That such transactions are frauds upon creditors is apparent upon the mere statement of the case. They are within the very words of the statute of frauds: Conveyance made with intent to Cihinder, delay and defraud creditors of their lawful actions.”

The separate answers of the brothers deny that there was any fraud in the conveyances to them, and assert that they were made in good faith and upon full consideration paid. Their relation to the transactions in question must be separately considered.

I will first examine the conveyance to Lafayette Elmer. He was called and sworn as a witness in this cause. His testimony shows that when he accepted his brother Newton’s deed to him for the six different lots of land he knew that Newton was not able to pay his bills, and that he was indebted to Mr. Hancock, and that one of the objects in making the conveyance was to put Newton Elmer in a position to make such offers to Hancock as he might deem favorable to himself. Lafayette accepted the conveyance upon the understanding that part of the property conveyed to him was to remain at Newton’s discretion to be used to settle the Hancock debt. So that, after the conveyance by Newton to Lafayette, the former was, by the bargain between them (if such dealing can be called a bargain), to retain control of at least part of the property conveyed. Lafayette himself swears that incident to the conveyance by Newton to him, speaking of one of the lots conveyed, the former said:

“X want to get Mr. Hancock, if he will, to take this property back, and assume that much of what X owe him. Now, if he does that, I want you to deed it to Mr. Hancock, if he will accept it, and if not it is yours forever for one dollar.”

The consideration for the conveyance of the whole six lots to Lafayette Elmer is expressed in the deed to be the sum of $1. Lafayette testifies that there was an actual consideration in an indebtedness which his brother Newton owed to him. On this point the testimony of Newton and Lafayette is in direct antagonism and is wholly irreconcilable. Newton Elmer swears that the conveyance to Lafayette “was made for the consideration named in the deed,” and that “the deed was not supposed to settle the other indebtedness that I owed him.” The deed itself shows no undertaking on Lafayette's part to pay any of the mortgages on the lands conveyed, nor is there any proof of any act between the parties in the nature of a discharge by Lafayette of any indebtedness owed him by Newton.

The conveyance to Lafayette Elmer referred to in the bill of complaint must be held to have been without substantial consideration, and for the purpose of hindering, delaying and preventing the creditors of Newton Elmer from applying his property to' the payment of his debts.

A much more elaborate defence is made of the transfer of title by Newton Elmer to his brother Ellison Elmer. The shares of stock in the Bassett Glass Works and the twenty-two different lots of land have considerable value. The contention on the part of Ellison Elmer is that he is a purchaser of all that property for full value paid, and without notice of any fraudulent purpose in the conveyance to defeat or hinder the creditors of Newton Elmer.

The evidence shows that Newton and Ellison were brothers. A few years before the transactions attacked in this suit they had been partners in business. At the time Ellison Elmer accepted the transfer of his brother Newton’s glass company shares and the conveyance of substantially all. the land he owned, the two brothers were the owners in common of valuable real estate.

They were not only brothers, but were also intimate friends, evidently interested in, and acquainted with, each other’s business. Ellison himself testifies that he had been informed by Newton that he had undertaken to pay the $700 note to Hancock. He also knew that Hancock wanted his debt .paid, and that Newton retained the title to the Morris avenue lot because he intended to use it in aid of a settlement to be obtained from Hancock. For this reason Ellison says he did not at first take title to this lot as well as to the other twenty-two. He knew of the conveyance to Lafayette, for he swears that the reason he did not take title to the six lots conveyed to the latter was that he thought there, was no value in them above the mortgages. It thus appears that all the transfers made by Newton Elmer to his brothers were related to each other, and were substantially one transaction. Each was made in contemplation of the other, by all the parties, and, in making and accepting them, all the parties had in view the effect they would have upon the note which Newton owed to Hancock. When the scheme to force Hancock into a settlement failed, Ellison at once accepted a special deed from Newton, conveying the Morris avenue lot, thus stripping Newton of all title to any property.

We have then this combination of circumstances:, that a debtor who is pressed for payment by a creditor arranges with his brothers to convey all his property to them, save one certain piece, and to offer his creditor certain terms of settlement, including a conveyance to him of this reserved piece and another lot (á part of the property conveyed), and when the creditor refused to accept the terms prescribed by the debtor, the reserved lot is also conveyed to one of the brothers, so that the debtor has no remaining property. This is.clearly a hindering of the creditor from the collection of his debt. In this interference with the legal assertion of the creditor’s rights, those who knowingly accept the conveyancés participated quite as fully as the grantor debtor who made them.. The action of both was necessary to carry the scheme into effect. The common purpose to block the creditor in the pursuit of his lawful remedy exists; each party, in furthering it, performs his proper part. The vendee who acquires title from a debtor in'failing circumstances must not only be a purchaser for value, but also a purchaser in good faith. Second National Bank v. O’Rourke, 13 Stew. Eq. 99. If he has notice of facts which bring home to him knowledge of the fraudulent intent, he participates in the fraud if he passively accepts the transfer of the debtor’s title. New York Fire Insurance Co. v. Tooker, 8 Stew. Eq. 408. Conveyance^ thus made to hinder the recovery of debts are void as against creditors. Livermore v. McNair, 7 Stew. Eq. 478; McKeague v. Armstrong, 5 Dick. Ch. Rep. 310. Conveyances by a debtor made pending a suit against him, or when his creditors are pressing for payment, which embrace substantially all of the debtor’s property, are considered to be tainted with fraud. Christie v. Bridgman, 6 Dick. Ch. Rep. 335 (Court of Appeals).

The consideration of the conveyance of the glass company stock to Ellison Elmer is claimed to have been $2,000, and of the twenty-two lots of lan.d to have been $4,033, and for the one Morris avenue lot $100. The whole of this, except $20 (paid in cash), is claimed to have been allowed as a credit upon debts alleged to have been owed by Newton to Ellison. The $20 paid in cash was of itself an odd incident, if the story of the .Elmers be accepted as-true, for they say that Newton’s debt to Ellison exceeded the valuation put upon the former’s interest in all the property conveyed. If this be true, the $20 cash must have been a pure gift, or else was made to give to the transaction an appearance of good faith. The debts claimed to have been owed by Newton to Ellison were, in part, $2,000 of .promissory'notes made by Newton and endorsed by Ellison. At the time the conveyances to Ellison were made none of these notes had come to.be due. Ellison Elmer himself testifies that the notes were held in bank at the time the conveyances were made, and that he did not pay them at the time he accepted his deeds, hut did afterwards pay them as they subsequently came to he due. In the case of Severs v. Dodson, 8 Dick. Ch. Rep. 639, the court of appeals declared that an accommodation endorser of a promissory note is not a debtor to the holder, in the sense prescribed by the statute of frauds,, until the endorsed note has been dishonored. It seems to follow that such an accommodation endorser, as long as the note remains unpaid, has not become a creditor of the maker. He could only become such a creditor by actual payment of the note. So far as the conveyances depended, at the time they were made, upon this $2,000 worth of commercial paper, they were without consideration, for Ellison Elmer himself expressly testifies that they were absolute conveyances, and not by way of security, and that there was an absolute cancellation of the debt which Newton owed to him to the extent of the values allowed for the equities of the property conveyed. There was, in fact, no actual cancellation, or surrender of these evidences of debt coincident with the delivery of the deed, nor, indeed, so far as the proof shows, at any time since.

Another element that adds to the shade of fraud which extends over these transfers of property is the omission of the defendants, though informed by the issues joined that they were impugned for fraud, to call as witnesses those persons who aided them in drawing and witnessing the transfers, and who could explain the nature of the transactions. Neither the draftsman who drew the deeds, the officer who took the acknowledgments, nor the person who witnessed the execution of the most important exhibits was called to testify. The hasty way in which the transfers were made and accepted—twenty-nine pieces of property passed, without examination of titles or for encumbrances, almost immediately that their conveyance was proposed—is another indication of fraudulent intent. The testimony shows also That the grantor (Newton Elmer) himself took the custody of the deeds upon their execution, and himself carried them to the clerk’s office for record and paid the charge therefor, thus indicating, after the title passed from him, a continuing interest in the property.

Upon the question of the valuation of the property conveyed there is considerable dispute in the testimony. The weight of the evidence shows that the South Laurel street stores, the most valuable single tract, have been substantially undervalued in the estimate made for the purpose of conveyance to Ellison Elmer. Several of the other properties have been placed at figures much less than their actual value, certainly much less than the whole amount due to the complainant. The value put upon the glass company’s stock was also substantially less than its real value.

Some claim has been made by the defendants that the transactions in question must be dealt with as purchases of land, and that a difference of opinion as to value of the land conveyed, where some valuable consideration was paid, will not raise a presumption of fraud, and cases are cited to sustain this view.’ The evidence of both Newton and Ellison Elmer goes, however, to insist that the transfers made were in pajrment of debts owed by Newton to Ellison'—not sales of lands. If, in paying a debt in money, Newton had given $1 more than the amount of the debt, the pajunent would have been, to that extent, as to creditors, a fraud. The debtor has no greater right to give away value in lands than he has in money. If there was more value paid than was due, the overplus was in fraud of creditors. It need not have been so large as to be held unconscionable to justify the challenge of the transaction by creditors.

Upon the whole case there has been a showing that all the transfers and conveyances challenged by the bill of complaint were executed with a purpose and upon an understanding, common to the defendants Newton Elmer and his brothers to interfere with and prevent the collection of the debt then existing and due from Newton Elmer on the note since put in judgment by the complainant, Benjamin Hancock. There should be a decree that these conveyances are void as against the debt due the complainant, Hancock, for which he has recovered judgment, and that the property so transferred should be sold and the proceeds applied to the satisfaction of the complainant’s claim, with costs of the suit to be awarded to him.

I will advise such a decree.


author: Gkey, Y. C.

text:
    George H. Craft v. Philip Schlag et al.
    [Filed May 20th, 1901.]
    1. Admissions of fact contained in an unsworn answer of a defendant may be used by the complainant as evidence.
    2. Statements in an answer not under oath for the interest of the answering defendant cannot be considered as evidence for such defendant.
    .3. The mere liability of a surety to pay his principal’s debt cannot, as against the principal’s existing creditors, be deemed a valid consideration for the absolute conveyance by the principal of substantially all his property to the surety.
    4. A surety, or one under an undischarged liability for another, may take a mortgage upon any or all the principal’s property for the purpose of securing the surety against loss on his liability. Such a taking of security does not hinder other creditors of the principal from collecting their claims, in the sense prohibited by the statute of frauds.
    5. An absolute conveyance, whereby the title to substantially all the .principal’s property is transferred to a surety (who has not satisfied his liability), for a named valuable consideration, which was not in fact paid, is a hindrance to the existing creditors of the grantor principal and is obnoxious to the statute of frauds.
    On bill, answers and proofs.
    On April 14th, 1899, the complainant recovered a judgment, before a justice of the peace of Gloucester county, for $183.15, damages and costs, against the defendant Philip Schlag. This judgment was docketed in Gloucester county common pleas on the 18th day of April, 1899. In the following May Schlag appealed from this judgment to the court of common pleas. On September 16th, 1899, Schlag conveyed three tracts of land in Gloucester county to the defendant Frank B. Ridgway, for the named consideration of $1,500. On the 19th of September, 1899, this deed ivas recorded in the Gloucester county cleric’s office. On June 29th, 1900, the appeal was heard and a new judgment was rendered therein in favor of the complainant and against Schlag for $168.59, damages and costs. The complainant files his bill, setting up the above-named facts and charging that the conveyance from Schlag to Ridgway was without adequate consideration, and upon an agreement between them that the property conveyed should be used to pay certain debts of Schlag and to return the surplus to him, and that the conveyance was made to hinder and defraud the complainant in the collection of his claim against Schlag. The complainant prays that the defendant may discover what was the consideration of the deed from Ridgway to Schlag, and that the lands conveyed to Ridgway may be decreed to be Schlag’s property, notwithstanding the deed, or that Ridgway may be decreed to hold the lands conveyed in trust for the complainant, the creditor of Schlag, and that they may be sold upon an execution issued under the judgment of the complainant recovered and entered on appeal, or by the decree of this court in this cause, and that out of the proceeds of such sale complainant may be paid the sum of his judgment,- with interest and costs, with a general prayer for other and further relief.
    The defendants Ridgway and Schlag file separate answers, but by the same solicitor. They admit the judgment before the justice of the peace, the appeal and the new recovery for the lesser sum in the court of common pleas. They deny that there was no adequate consideration for the conveyance to Ridgway, and that there was any agreement between Ridgway and Schlag that the property conveyed should be used to pay certain of Schlag’s debts and return the surplus to him. They deny that the conveyance to Ridgway was made for the purpose of hindering the complainant or other creditors of Schlag in the collection of debts which Schlag might owe them.
    Both defendants, in their answers, go beyond mere denial of inadequacy of. consideration, and state, in response to the charges of the bill, what they claim to have been the actual consideration of the deed to Ridgway. They say that, in 1895, Schlag, as administrator of one Jane S. Sheets, had given bond for $5,000 for the faithful performance of his duties; that Ridgway, with two other persons, became sureties on that bond. The defendant Ridgway states, in his answer, that he “continued to be, and still is, liable on said bond;” that the other sureties on the bond had become insolvent and worthless, and that the whole responsibility had fallen upon Ridgway, and had been assumed by him prior to the making of the deed; that Schlag, as administrator, had become indebted to the Sheets’ estate in a large sum of money ($2,000 or more), which the defendant Ridgway would have to pay, as Schlag had no .estate of his own, other than the properties named in the bill of complaint and the equity in another small property not conveyed to Ridgway.
    The answer of the defendant Ridgway alleges that, by an order of the orphans court of Gloucester county, Schlag was discharged of all liability as administrator, except the accounting of the property of the estate which had not been accounted for and the paying over to his successor the securities and properties' of the estate; that, in pursuance of an order of the court, made June 28th, 1900, Schlag filed his final account, which was approved, whereby it appeared that there was due to him from Schlag, as administrator to the Sheets’» estate, the sum ■of $2,332.84, for which amount the defendant Ridgway says he became, and was, liable on the bond of Schlag as administrator. The defendant Ridgway further answers that Schlag, knowing that the real estate named in the hill of complaint mentioned would not produce sufficient money to liquidate the amount for which he (Ridgway) was liable upon the bond, proposed to him to convey the properties named in the bill, further stating that if the property conveyed was insufficient to save him harmless, that he (Schlag) would pay the deficiency as soon as he was able to do so. The defendant Ridgway further states, in his answer, that, realizing that this was the only chance he had to save himself from complete loss, he agreed to take the conveyance, which, he says, was made unconditionally and absolutely, the only agreement being that Ridgway should take the proceeds arising from the sale of the property to reimburse himself for the losses which he would necessarily incur because he had become surety on Sehlag’s administrator bond, and that the latter would, when he was able, pay to Ridgway any deficiency. The defendant Ridgway denies that the property will produce an amount sufficient to pay the sum owing by Schlag to the estate for which he (Ridgway) was liable, and which he must pay. The defendant Ridgway further denies that the conveyance was made for the purpose of hindering the complainant in the collection of his debts against Schlag.

      Mr. Samuel II. Richards, for the complainant.

      Mr. Robert S. Olymer, for the defendants.
   Gkey, Y. C.

The statements of the consideration of the deed from Schlag to Ridgway, made by these defendants in their answers, are admissions as to facts within their knowledge put in issue by the charges in the bill, and though answers are invited without oath and are not sworn to, the facts admitted are conclusive against the defendants who state them in their answers. Hyer v. Little, 5 C. E. Gr. 445. Though unavailable collaterally, such admissions may be useful to the complainant in the pending cause. Manley v. Mickle, 10 Dick. Ch. Rep. 567 (Court of Appeals). The decisions of this state abundantly recognize the evidential force of an answer as an admission in favor of a complainant. Ibid., and cases there cited.

The proofs taken at the hearing are quite meager in their disclosures of the facts' of the transaction, but, when coupled with the admissions contained in the defendants’ answers, the ease presents this condition of facts: The defendant Schlag was indebted to the complainant, whose claim was in a pending suit, which came to judgment in a justice’s court against Schlag, and was docketed in the common pleas. An appeal was taken and, pending the appeal, Schlag conveyed the lands named in the 'bill of complaint (being all he possessed, save an equity of trifling value) to Ridgway. The latter, in his answer, states the consideration of this deed. It appears that Ridgway was a surety on Schlag’s bond as administrator, and was liable to be obliged to make good a balance decreed to be due from Schlag to the distributees of the estate of which he was administrator. There is no claim that Eidgway paid the money for which he was liable; on the contrary, his answer admits that he is yet liable for it, but to secure Eidgway against loss Schlag made the deed and Eidgway accepted it. Both insist that the conveyance was absolute, and that the value of the property conveyed is less than the amount for which Eidgway is liable, but both agree that Eidgway has paid nothing, and that the terms of the conveyance were that Schlag should, whenever financially able, pay to Eidgway such additional sum as the property may fail to discharge.

Examining the transaction in the aspect insisted upon by defendants as an absolute deed, it is admitted that the only consideration for it was Eidgway’s liability as surety on Schlag’s bond as administrator of the Sheets’ estate. Neither Eidgway nor Schlag has, in any way, changed his position to this liability because of the deed. Before the deed-was made to Eidgway, Schlag was liable for the whole debt owing to the Sheets’ estate. He still remains so liable, Eidgway was Schlag’s surety on that liability. He still remains surety, and has not fulfilled his contract by satisfying the debt for which he is surety. He may never satisfy it. If he should meet with financial reverses before he pays the Sheets’ debt, all his property, including that conveyed to him by Schlag ('if this be held to be an absolute conveyance), may be swept from him, and that debt may never be paid by him. The deed to Eidgway was not a conveyance in consideration of a previously owed debt. Schlag owed, and will owe, nothing to Eidgway respecting the Sheets’ estate until Eidgway shall have actually paid the money due that estate.

Passing upon the transaction as an absolute conveyance, the deed to Eidgway was without consideration. It is, 'therefore, of no significance whether the property conveyed was adequately valued or not. Nothing was, in fact, paid for it. A debtor may not, as against his creditors, give his property away without a consideration, whether it be of great or of little value.

The docketing of the first judgment was notice to Eidgway, when he subsequently took his deed, of the complainant’s claim against Schlag. The subsequent setting aside of that judgment, in rendering the new one, did, by operation of law, discharge the land from lien, bnt it did not take from Bidgway the knowledge, which he previously had, of the existence of complainant’s claim. Bidgway himself, in his answer, shows that, when he took his deed, he knew that Schlag was in financial distress.' He justifies his taking that deed for that very reason. He says that he (Bidgway) “was the only person who signed the Sheets’ bond who possessed any financial responsibility.” Schlag was one of the signers, and Bidgway therefore asserts that Schlag had no financial responsibility when the deed was made. Bidgway further answers that, “realizing it was the only chance he had to save himself from complete loss,” he consented to take the deed.

It is not, however, in a case of this kind, where no consideration for the conveyance passes, essential to the complainant’s success that he prove that his debtor’s voluntary donee knew, when he accepted the gift, that there were unpaid claims against the debtor. When a debtor gives all his property away, it is no answer as against a creditor then holding a claim, who invokes the protection of the statute of frauds against such a gift, for the debtor’s voluntary donee to say: “I have received your debtor’s property as a gift, but when I took it I did not know he owed any debts.”

The defendants claim, in their answers, that the property conveyed is not equal in value to the amount which the defendant Bidgway is obligated to pay on his liability on the Sheets’ bond, and that the sale was unconditional and absolute. The answers not being under oath, the allegations therein contained have no evidential effect, and are mere declarations made by the defendants in their own interest. The defendant Bidgway, •who knew the whole mattér, did not go on the stand to prove these assertions. His omission to do so was made the basis of an argument by the complainant against the good faith -of the defence. The allegations stand unproved and cannot be considered. In view of the entirely voluntary character of the conveyance, they would have been no defence if proven.

The transaction between Schlag and Bidgway, if the latter did not wish to pay the Sheets’ bond, should have been a mortgage, given upon Schlag’s property to indemnify Ridgway from the possibility of loss because of his obligation upon that bond. This would have secured Ridgway a prior lien on Sehlag’s property, in case he should afterwards pay Schlag’s debt, to the extent of his payment. It would not have hindered or interfered with Schlag’s creditors in applying the residue of his estate in payment of their claims. The taking of an absolute deed conveying all of Schlag’s property which had any value, expressing a substantial consideration, which was, in fact, never paid, was an interposition of a hindrance which manifestly prevented Schlag’s creditors from collecting, by due bourse of law, his debts owing to them. It is because of this condition that this suit in equity is brought.

The defendants, although their answers admit a. situation which shows the invalidity of the defence, have all through this litigation and in final argument insisted that the deed to Ridgway must be recognized as an absolute conveyance; that only such fraud as involves moral turpitude can deprive that deed of that effect. I am unable to accept this view. The case appears, in some of its essential features, to be similar to Moore v. Roe, 8 Stew. Eq. 90, though it differs in the fact that in that ease there was an actually existing previous debt, which was set up as the consideration for the conveyance of all the debtor’s property at an insufficient valuatioh. -In the present case there was neither value given to the grantor, nor any existing debt, owing by him to his grantees, which was, either in whole or in part, satisfied as the consideration for the conveyance.

The deed to the.defendant Ridgway has been shown to have been intended to hinder the collection of Schlag’s debts, and must be declared to be void, under the statute of frauds. The property conveyed should be sold to pay the complainant’s judgment, interest and costs.

I will advise such a decree.