author: Pitney, Y. C.

text:
    Frances Craighead v. Ellen M. Pike et al.
    [Submitted April 12th, 1899.
    Decided May 18th, 1899.
    Filed September 26th, 1899.]
    1. Marsh land was purchased by P. with partnership funds, and held in -trust for the benefit of complainant’s ancestor and two others, who were jointly interested with P. in an enterprise to reclaim and sell it. On the death of P. ■one of the cesluis que trustent filed a bill for the purpose of establishing the trust, and the court decreed that the lands were held in trust by P. for a co-partnership composed of complainant’s ancestor, P., and two others, which had been dissolved by the death of P., and that such survivors should have ■charge and control of the lands and title thereto for the purpose of disposing of them and dividing the proceeds among the partners. The enterprise for which the lands were purchased failed and was carried on at a loss. Over twenty years have elapsed since the decree authorizing the sale of the lands by the survivors. There were no partnership debts. — Held, that complainant ■was entitled to a partition setting off her share of the lands.
    2. It is no defence to an application for partition of partnership lands that -the lands which are held by the surviving partners are about to be utilized •at a profit in a manner other than that contemplated by the partnership when formed.
    3. In a bill for partition of lands belonging to a partnership, it appeared that tracts as large as it would be necessary to assign to complainant had been ■sold to individuals. — Held, that the setting off of complainant’s share would ■not be so detrimental to defendants as to warrant a refusal of partition.
    4. The court will refuse to order a sale of partnership lands and payment to ■complainant of her share of the proceeds of the sale of the property in an action for partition, when it appears that the land has been in the market for a long time, and could not be sold without great loss, but will set off to her her share in specie.

      In partition. Heard on bill, answer and proofs.
    (For previous proceedings in the cause, see Craighead v. Pike, 38 Atl. Rep. 296.)

      Mr. Charles L. Corbin, for the complainant.

      Mr. James B. Vredenburgh, for the defendants.
   Pitney, Y. C.

The complainant has established her right in equity to a one sixty-fourth part of the lands and premises described in the bill, and to a one sixty-fourth part of the stock of an incorporated company called the. Irondyke and Land Reclamation Company of New York, which is the owner of a tract of land adjoining that in which the complainant has established her direct equitable interest.

In round figures, the first main tract consists of about twenty-eight hundred acres, and that owned by the reclamation company about seven hundred acres.

. These lands are what is known as salt marsh, and lie on the west side of the Hackensack river, bordering on that river for a distance of between three and four miles, commencing at the Newark plank road on the south, following the windings of the river to Saw Mill creek, thence westerly up the windings of that creek to high ground, and following the high ground southerly until it strikes Frank creek, and following Frank creek to the line of the Delaware, Lackawanna and Western and Pennsylvania railroads, and following the lines of those railroads easterly nearly a mile; then following the line of the Passaic river southerly to a point some distance south of the Newark plank road, and thence northerly to a point on the Newark plank road about half way between the Passaic and Hackensack rivers.

Most of these lands were purchased by Samuel N. Pike from Spencer B. Driggs in August, 1867. Pike purchased and held the title in trust for himself and three others, namely, Joseph Tilney, George W. Kidd and Samuel Craighead. Craighead’s interest was one-sixteenth only. The complainant claims through Samuel Craighead.

The only proof of any special contract between the four original tenants in common as to dealing with this property is found in a contract between Driggs, the original owner, and Pike, dated August 13th, 1867, which recites that Driggs is the inventor and patentee of an improved mode of reclaiming marsh and swamp lands, described in certain letters-patent, which Driggs had recently assigned to the Irondyke and Land Reclamation Company, and that Driggs was desirous of having said tracts of marsh land reclaimed and made arable by means and use of the said patent, and recites that Pike was desirous of acquiring, the lands and of having the same reclaimed by the means and use of the said patent; and Driggs agreed to thoroughly and! completely drain and reclaim said land so as to malee it arable, by the application of the patented apparatus.

The means of reclamation were the building of an embankment around the whole tract where met by the tide, including the two creeks, to wit, Saw Mill creek and Frank creek, said embankment to be fortified by plates of iron extending through the center of it in such manner as to prevent its being undermined by muskrats and the like, and placing at proper points in the embankment sluices provided with automatic gates, which would permit the water to run out at low tide, and prevent it from coming back at high tide.

This work of diking and placing of gates was accomplished at great expense, and has been substantially maintained ever since, with the result that the meadows have been only partially dried; and such drying as' has been accomplished has resulted in the shrinkage of the peaty matter on the surface, so that whereas before the so-called reclamation the surface of the ground was about level with high tide, now over the greater part of the territory the ground is from six inches to two feet lower than high tide, and but for the diking would be covered with water at high tide.

Within a year or two of the launching of the enterprise Pike bought out Driggs’ interest, and thereby Pike, Craighead, Tilney and Kidd became sole owners.

Pike, the original purchaser and holder of this title, died December 7th, 1872, and on the 24th of February, 1874, Géorge W. Kidd, one of the original cestuis que trustent, filed his bill in this court setting up the trust, with the result that on the 15th of March, 1876, a decree was made in that cause by this court reciting the joint enterprise of Pike, Tilney, Craighead and Kidd, and the purchase of the marsh lands on the joint account of the four persons just named, and with an agreement to divide the profits and proceeds of the sales thereof under a partnership agreement by the terms whereof the business of the partnership was to be carried on in the name of Pike and the title to the lands held in his name, but the capital furnished in the proportions therein mentioned, and that the capital thus contributed should be invested in the purchase of marsh lands to be reclaimed and sold and converted into money, and the proceeds and profits, or losses, should be divided among the partners in proportion to their several interests, and distribution to be made as soon as the lands were reclaimed or on the dissolution of the partnership. It further recited the purchase of the lands and the amount of money invested and expended in draining, reclaiming, cultivating and otherwise improving the lands in the lifetime of Pike. The decree then proceeded to declare that the lands were held in trust for a partnership composed of the four persons mentioned; that the partnership was dissolved by the death of Pike, and that thereby the right and duty of maintaining the system of drainage and improvement, settling' up the said partnership affairs, disposing of the partnership assets, converting the same into money, dividing the proceeds of said lands among the parties interested in the said partnership, according to their respective interests as aforesaid, devolved upon the surviving partners; and declared that the surviving partners were entitled to have the legal title vested in them, to enable them to settle up said partnership affairs, sell and convert the said lands into money, divide the proceeds among the parties interested in said partnership, according to their respective interests; decreed a conveyance by the eldest son of SamuelN. Pike to the survivors; and then decreed that the surviving partners do and shall proceed, without unreasonable or unnecessary delay, to settle all the affairs of the said partnership by selling and converting into money the said lands so to be conveyed and collecting and disposing of the other assets.

The only agreement of partnership set out in the bill of 1874, and relied upon to establish it, was a short declaration of trust signed by Pike and annexed to one of the copies of the original agreement between him and Driggs, and that declaration of trust merely states the share which each of the parties had in the enterprise; so that the only place in which the objects of the enterprise are clearly set forth is in the agreement before mentioned between Driggs and Pike.

During the joint ownership considerable tracts of the land were sold off. One hundred and sixty acres just west of the Hackensack river and south of the old Newark turnpike, were sold to the Pennsylvania railroad. Other smaller tracts were sold to other persons; and strips were taken by the Paterson and Newark Eailway. Company, and by the New York and Greenwood Lake Eailroad Company; so that the tract is already divided into several parcels. First is a large tract north of the New York and Greenwood Lake Eailroad Company, between that and Saw Mill creek, which tract is again divided by the old Belleville turnpike. Then south of the New York and Greenwood Lake Eailroad Company, between that and the Paterson and Newark railroad, is another tract which is bisected by the old Belleville turnpike, and by a branch railroad running from the old line of the New York and Greenwood Lake railroad to the Paterson and Newark railroad. Then there is a strip between the Paterson and Newark railroad and the old Newark turnpike, which is again bisected by the Belleville turnpike. Then there is a wedge-shaped piece between the Delaware, Lackawanna and Western railroad and the Newark and Paterson road. Then there is a piece between the Newark and Paterson road and the Delaware, Lackawanna and Western railroad, and between the latter railroad and the Pennsylvania railroad. Then there is a large tract between the Pennsylvania railroad and the Newark plank road. Then there is a tract south of the plank road which has never been reclaimed.

The income from the property is insufficient to maintain it. It costs about $2,000 a year to maintain the dikes and automatic gates, and the income from rents, &c., is barely enough to pay that expense. The taxes of late years, amounting to about $5,000 a year, have been paid by assessments on the owners. There are no assets except the land and the stock of the reclaiming company, and there are no debts.

All the interest of Kidd has passed -to the Pike estate, and that is owned by quite a large number of individuals, descendants of the original Pike, and some of them are infants.

Tilney is dead, and his interest has descended to his children, some of whom are minors.

Several defences are set up. First, that by the original contract between the original owners the premises were excluded from the operation of the ordinary right of partition between tenants in common, and devoted to development in a particular manner and for a particular use, which required that they should be held and owned in a body. That by the decree of 1874 the enterprise was declared to be a partnership and the lands partnership property, which can only be dealt with as such and as a whole; and that the right of the complainant is not an equitable title in the land itself, but in the proceeds of the lands when they shall have been disposed of by the holders of the legal title for the benefit of the partnership.

I am unable to adopt either of these views. The decree does, indeed, use the word “ partnership,” but a careful reading of it and of the agreements upon which it is based, shows that the word “partnership” was not there used in its ordinary signification as describing a trading partnership, but rather a joint venture in which each person was interested in certain proportions, and the surviving partners were directed to proceed at once to close up the affairs and divide the proceeds.

Over twenty years have elapsed and little or none of the property has been sold, most of the parting of title being by condemnation proceedings for railroad purposes. The parties to whom the court entrusted the duty of winding up the affair are all either dead or incapacitated by want of interest from proceeding further with that duty ; the partnership, so called, was declared by the decree to be dissolved, and the survivors acted only under the right of survivorship under the direction of the court. The original trust was a personal one. The parties entered into the arrangement relying on the personal ability of each to assist in carrying it through.

The project as originally launched has proved to be a failure; the land has not been rendered arable or fit for cultivation. The failure is due to several causes. In the first place, the tract is so large that after a rain the water settles and moves to the point of debouche into the river quite slowly, and so rests upon the surface for a long time •, and in the second place, the lowest level to which it can be drained by the contrivance in question is about two feet above low-water mark and only about three feet below high-water mark, which leaves the water-level 'too near the surface to admit of cultivation or drainage. This proximity of the water-level to the surface has been increased by the drying up and shrinkage of the peat surface and consequent reduction of its level.

But it is urged on the part of the defendants that a new scheme for utilizing these lands is about to be developed which will be successful. That scheme, in brief, is to make at least two settling points several feet below tide level and place therein steam pumps, which are to be propelled continuously, and thus the surface drained quickly and to a depth several feet below tide level.

This plan is undoubtedly feasible but is a decided departure from the original scheme and will involve a very large expenditure of money, and was never contemplated by the original tenants in common, and never had the approval of Mr. Samuel Craighead, a part of whose original interest is now held by the complainant.

Clearly, the complainant cannot, against her will, be compelled to submit to the expense of such an enterprise.

I have said the plan is feasible, but whether the result will be profitable is, in my judgment, quite speculative and uncertain. The inclination of my mind is to the opinion that the better plan by which to improve these lands is to fill them up with refuse and coal debris, so as to render them fit' for occupation and use for manufacturing purposes, and sell them out in parcels for that purpose, and this remark applies particularly to all that part that lies north of the Pennsylvania railroad. It is traversed in every direction by railroads and trolleys and macadamized turnpikes, so that lots can be sold off with ready access to means of transportation.

Further, I fail to find anything in the original contract to show that it was the contemplation of the original parties to hold this property to be sold in a single body. They undoubtedly contemplated selling it out in parcels, and supposed that the drainage system to be established would be so far automatic and perpetually self-sustaining as to drain the land and allow it to be held by different individuals in severalty for farming and other purposes, upon some sort of arrangement by which each owner should contribute toward the support of the system. I find it quite impossible to believe that the holding of the premises until they could be sold in a body was in the contemplation of the original parties.

And, upon reflection, I am of the opinion that the situation is not changed if we consider the original joint enterprise as a partnership proper, and these lots as its assets to be disposed of as partnership assets. The rule in this country is well settled that lands held for partnership purposes will be considered as converted into personalty only to the extent necessary to pay the partnership debts. All lands remaining after that purpose is served are liable to be divided in specie by partition proceedings. So that the case, under the view most favorable to the defendants’ contention, stands thus: The complainant is entitled to have the partnership enterprise wound up. Its assets in part consist of lands. There are no debts. Under those circumstances I can see no reason why she should not have her share set off to her in specie. Freem. Co-ten. (2d ed.) §§ 118, 448; Shearer v. Shearer, 98 Mass. 111.

Formerly, the same rule prevailed in England, but latterly the disposition of the English courts has been to hold that land held by partners for partnership purposes is converted absolutely into personalty and must be disposed of as such upon dissolution. Probably the secret of this.tendency of decision is .the disposiljpn of the English courts to avoid the injustice of the English canon of descent of real estate to the eldest son.

The disposition of the law is against holding land to be perpetually free of the right of partition, and the courts have only held such freedom under peculiar circumstances and for limited periods.

The leading case in this country is Coleman v. Coleman, 7 Harris (19 Pa. St.) 100. That was a suit for the partition of the famous Cornwall ore banks and mine hills in Lebanon county, Pennsylvania, which were held under a peculiar agreement sanctioned by a decree m.ade in the last century, and the decision against partition was put on the intrinsic difficulty, if not impossibility, of making an actual partition, and on the feasibility of the property being held in a sort of severalty according to the special agreement mentioned.

Another case is one in England, of Peck v. Cardwell, decided by Lord Langdale in 1839, reported in 2 Beav. 137. There land was bought by four persons and laid out into building lots under a special and particular scheme by which the lots were to be sold for the benefit of all parties, and there was a provision for buying out the share of any one of the parties who desired to withdraw from the enterprise. The agreement is not fully set forth, and the question apparently not much debated or fully considered, the attention- of counsel and court being devoted to another question arising in the cause. Neither of these cases covers the present.

But, in the second, place, the defendants allege, and offer proof tending to show, that these lands cannot be divided or even so small a,share as one sixty-fourth set off without great prejudice to the remainder. The theory of the defence is that it will be unfair to the great majority who desire to keep the whole premises in a body, to take away even so small a portion. I have carefully considered all the evidence on that topic, and I am unable to accede to that contention. It seems to me that there can be no injury to the body of the tract by setting off one sixty-fourth, which will amount to only between forty and fifty acres. Parcels larger and smaller than that were sold voluntarily by the-original joint proprietors, and without any undertaking on the pari of the grantees to contribute towards the expense of sustaining the dikes.

But it is further said that the value of the different portions varies so much that it will be impracticable to set off to the complainant her part so that it will be in value just equal to one sixty-fourth of the whole. Here, again, I am unable to adopt that view. As we have seen, the land is traversed in many directions by railroads, turnpikes and trolleys; and it seems to me that there will be no difficulty in picking out forty or fifty acres or a tract of such size as, in the judgment of three sensible and intelligent commissioners, will amount in value to one sixty-fourth of the whole; for it must be remembered that the commissioners are not confined to laying off a plot which shall be in acres one sixty-fourth of the whole and one sixty-fourth in value. They may vary the size of the lot to make it, in their judgment, equal in value to one sixty-fourth of the whole.

Again, I think it would be a great hardship upon the complainant to compel her to submit to a sale of the whole premises in one block and to take one sixty-fourth of the proceeds. The Pikes and Tilneys have been trying for years to make a sale of these premises in one block, and proceedings in this partition were delayed from time to time upon the statement of counsel that a sale was about to be completed, and yet it never has been completed; and if the premises were decreed to be sold, as at present advised, I would not advise a decree that they be sold in a body but in reasonable parcels, so that each person holding a small share would be able to protect himself.

Upon the whole case, I think it but just to the complainant, and by no means unfair to the defendants, that she should have her one sixty-fourth part set off to her.

The defendants, desiring not to have a partition among themselves but to have the power to sell as they shall be advised, may have a decree to that effect, which may be enforced to suit their convenience.


source: Caselaw Access Project

author: Pitney, V. C.

license: Public Domain

text:
    Holloway W. Hunt, administrator cum testamento annexo of James T. Watters, deceased, v. Seymour R. Smith, administrator of Nancy M. Watters, deceased, Zion Evangelical Lutheran Church of German Valley et al. Zion Evangelical Lutheran Church of German Valley v. Seymour R. Smith, administrator of Nancy M. Watters, deceased, et al.
    [Submitted April 10th, 1899.
    Decided May 25th, 1899.
    Filed September 26th, 1899.]
    1. A will which gives the wife of testator all his personal estate for and during her natural life, and provides that, if needed by her for her comfort and maintenance, she shall use the principal as well as the interest, bequeaths a life estate in the personalty, with a power to use only so much of the principal as is necessary for her comfort and support.
    2. An executrix of a will which gives her a life estate in the real and personal property of testator becomes a trustee for the residuary legatees, on proving the will, and under obligation to keep accurate accounts of the estate, and keep its funds separate from her own.
    3. In an action against an executrix to compel an accounting, she will be required to account for what she actually received, and will not be credited for an amount allowed by the orphans court for uncollectible notes and mortgages inventoried, where it appears that the same were afterwards collected. 4. An executrix who fails to keep an account of the amount realized from the sale of certain personal property in which she ha a life estate, will be charged with the value as inventoried, although part of the property may have been consumed in its use before the sale.
    5. In an action against the estate of an executrix to compel an accounting for assets which came into her hands as executrix, it appeared that she had not kept any account of her trust or of moneys collected. She inventoried several notes as bills receivable of her testator s estate, and on her death only part of them were found in her possession. — Held, that she should not be charged with the collection of the missing notes.
    6. In an action to compel an accounting, brought by the residuary legatees against the personal representative of an executrix under a will which, bj' its terms, gave her a life estate in all. of testator's personal property, and so much of the principal as was necessary for her comfort and maintenance, her estate should not be charged with an amount paid by her out of the funds of her husband’s estate for a suitable residence, but her heirs will be decreed to convey the title thereto to the residuary legatee.
    7. The heirs of an executrix who took title to real estate in her own name in payment of mortgages due to her decedent’s estate, will be decreed to convey such real estate to the residuary legatee under the will of the first decedent, in an action by the residuary legatee against the personal representatives of the executrix to compel an accounting.
    8. Where a trustee commingles trust funds with her own so that they are indistinguishable, and manifestly constitute the greater part of her estate, the cestui gue trust is entitled to precedence over creditors of the trustee in the payment of his claim out of funds in the hands of the trustee’s executor.
    .9.. An executrix, shortly after her testator’s death, deposited a sum of money in her own name, a part of which consisted of a check which was found in testator’s possession at the time of his death and inventoried. It was also shown that shortly after his death she had some valuable bonds in her possession, and that she had, in her inventory, undervalued funds of testator’s estate on deposit in bank. The evidence further disclosed that she had lived with her husband for some time, and might have acquired the amount by the usual perquisites of a farmer’s wife, although at the time of her marriage she had no property which would yield such a sum. — Held, where the residuary legatee had an opportunity to object to the omission of such funds and bonds from the inventory, if improperly omitted, that, in an action to compel an accounting brought by him against the executrix, the fund so deposited and the bonds would not be declared to be the property of her husband’s estate.
    On final hearing on bill, answers, cross-bill and proofs in open court.

      Mr. William H. Morrow, for the complainant.

      Mr. Elmer King and Mr. Willard W. Cutler, for the church.

      Mr. Alfred Mills, for Smith, defendant.
   Pitney, V. C.

The complainant is the administrator cum testamento annexo of James T. Watters, deceased, who died June 11th, 1882, testate of a will, of which he appointed his widow, Nancy M. Watters; his sole executrix, who took possession of his whole estate. On July 27th, 1882, she filed an inventory, showing a personal estate amounting to $17,063.21, composed principally of bonds and mortgages and promissory notes, the interest on which was added up to July 8th, 1882. She settled her account as executrix in the orphans court of Hunterdon county on November 5th, 1883, showing a balance in her hands of $12,365.44.

Mrs. Watters died intestate in October, 1897. Letters of administration were issued by the surrogate of Warren county to the defendant Seymour R. Smith on the 3d of November, 1897, who filed his inventory on the 16th of November, 1897, showing a personal éstate of $11,546.81. Among the items in this inventory are two or three promissory notes, amounting to between $600 and $700, which are found in the inventory of Mrs. Watters, as executrix of her husband’s estate.

The object of the original bill is to hold Mrs. Watters and her administrator as a trustee for the purposes of the will of James T. Witters, for the whole of this personal estate, and also of certain real estate of which she died seized and which it is charged in the bill was purchased with the funds of the estate of James T. Watters.- Her ■ heirs-at-law are parties defendant and have not answered.

Being met with the rule laid down in the case of Bradway v. Holmes, 5 Dick. Ch. Rep. 811, the defendant the Zion church, which is the residuary legatee named in the will of James T. Watters, filed its cross-bill, claiming the whole of the personal estate of Nancy Watters as belonging to it as such residuary legatee, subject to the payment of a few small legacies provided by the will, payable at the death of Mrs. Watters, and also claiming that the lands and real estate previously mentioned, of which Nancy Watters died seized, were held' in trust by her for its benefit as residuary legatee of James T. Watters.

The will of James T. Watters, which gives rise to this controversy, provides in the second and third items as follows:

“Second. I hereby give, devise and bequeath unto my beloved wife, Nancy M., for and during her natural life, all my real estate wheresoever situate, except so much as I may hereafter dispose of in this my will.
“Third. I give and bequeath, in addition to the above, to my wife, all my personal estate for and during her natural life, and if needed by her for her comfort and maintenance, she shall use the principal as well as the interest, except so much as hereinafter disposed of. The above provision for my wife shall, if accepted by her, be in lieu, instead and in bar of her right of dower in my lands and real estate, either by common law or by statute.”

By the fourth to the thirteenth items inclusive, divers small legacies-are given, some to be paid in the lifetime of the widow and others to be paid after her decease.

“Fourteenth. I do order and direct after the death of my wife, all my real estate, not herein disposed of, shall be sold, and the proceeds, together with any undisposed-of personal estate, left by my wife, shall be taken to pay the aforesaid legacies mentioned, which become due on the death of my wife, and if not enough money is realized to pay them in full, then the proceeds are to be divided among the several legatees pro rata.”

Notwithstanding the bold and ingenious argument of the counsel for Mrs. Watters’ administrator, I am unable to feel the least doubt as to the true construction of this will. The bequest of the personal estate was expressly limited to a life estate in the wife, with the superadded power of using so much of the principal as might be needed for her comfort and maintenance. The case is not complicated by a general power of disposition given to the life tenant, and hence is far within the line of authorities furnished by our own reports, commencing with Borden v. Downey, 6 Vr. 74; S. C., 7 Vr. 460, followed by Pratt v. Douglas, 11 Stew. Eq. 516 ; Stevens v. Flower, 1 Disk. Ch. Pep. 340 ; Wooster v. Cooper, 8 Dick. Ch. Rep. 683; Robeson v. Shotwell, 10 Dick. Ch. Rep. 318.

By her appointment as executrix of the will she was made a trustee of the personal estate, and by proving the will she accepted that trust with all its responsibilities, and it at once became her duty to deal with it strictly as a trustee should who was not otherwise interested in the estate, that is, collect the moneys, keep them separate from her own funds, and when re-invested properly ear-mark the securities so that they could be easily distinguished from her own securities, and to keep an account of the receipts and disbursements thereout, so that at her death her dealing with the estate would clearly appear, and securities which she left could be easily distinguished from those belonging to her individually.

Instead of pursuing this course, the proofs show that, from the start, she treated all the assets of the estate as her own individually, mingled the same with her own moneys; opened a bank account in her own name, and took all securities for new investments of the funds of her husband’s estate in her own name; purchased real estate with those funds and took the title in her own name and took conveyances in her own name from mortgagors of premises mortgaged to her husband, in satisfaction of the mortgage debt; so that with the exception of two or three old promissory notes amounting to five or six hundred dollars, which were inventoried by her as part of her husband’s estate and which were found in her possession at her death and inventoried by her administrator, there were no means left for the administrator cum testamento annexo and the residuary legatees to trace the personal estate of the testator, or to know how she had dealt with it.

The administrator cum testamento annexo and the residuary legatees have, at great trouble and considerable expense, shown by actual proofs what moneys were collected in cash by Mrs. Watters from the proceeds of her husband’s personal estate, and in most cases just what disposition she made of the money so collected.

The proofs establish the fact that two certain pieces of real estate of which Mrs. Watters died seized were conveyed to her by the mortgagors of certain mortgages held by her husband and inventoried by her as part of his estate, in payment and discharge of the mortgages, and that a house and lot of which she died seized, situate in Hackettstown, Warren county, and which she personally occupied, was purchased by her shortly after her husband’s death at an expense of $3,900 with moneys which she realized from the choses in action belonging to his estate. One other piece of real property — the Beatty property — of which she died seized she obtained by conveyance from the mortgagor of a mortgage for $800 which she held in her individual name for cash loaned by her, and which it was alleged by the complainant represented money of her husband’s estate which she had loaned to the mortgagor.

It further appeared that she never kept any account as trustee, but, shortly after the proof of her husband’s will, drew from the Hackettstown bank a sum of upwards of $900 standing to bife credit at his death, and deposited the greater portion of it to her own credit, and afterwards placed all moneys received from the proceeds of the estate to her own personal credit, and if she had any moneys of her own, which is denied by the complainant, she mingled them with the moneys of the estate and treated the funds of the estate as her own property.

By means of Mrs. Watters’ bank account and the proof of witnesses, the complainant succeeded in tracing the greater portion of the collections made by her from the personal assets of her husband’s estate directly or secondarily into the investment in the securities which were found by her administrator and inventoried as her estate.

The inventory of her husband’s estate — $17,063.21—was composed of notes and bonds and mortgages (with interest computed to July 8th, 1883, twenty-seven days after the death of her husband) and $855 cash in bank and in the house, amounting to $15,517.21, and farming utensils, implements, horses, cattle, hay and grain, household goods and chattels, amounting to $1,546, including $185 for growing grain in the ground.

In her account, settled in November, 1883, she charged herself with the whole of the inventory, and prayed and received an allowance thereout “for amount of notes and mortgages appraised and uncollectible $3,208.67,” claiming nothing for shortage on the movable chattels. She also obtained credit for the ordinary expenses of settling the estate, doctor’s bill and funeral expenses, and for one or two legacies paid, and $521.26 for commissions, in all $4,697.77, showing a balance in her hands of $12,365.44. It was, however, proven that of that sum of $3,208.67 allowed for uncollectible assets, she actually collected the greater portion in cash. In fact, the proofs account for every item inventoried by her except half a dozen or more small notes amounting in the aggregate to a trifle over $1,000, and of these, three, amounting to five or six hundred dollars, were found among her assets at the time of her death, and were inventoried by her administrator. Of the payment of the remainder of these last-mentioned notes the administrator cum testamento annexo was unable to find any trace, and the notes themselves were not found.

The proofs show that the collections in cash from the various securities inventoried amounted to $11,705, including interest (amounting to $52.65) from the date of her husband’s death to the 8th of July, 1882, twenty-seven days, which, with the cash in bank and house, amounted to $12,560.52. Of course, being called to account in this court as trustee, she must account for what she actually received without regard to the allowance by the orphans court. Deducting that sum of $52.65, interest for twenty-seven days, from $12,560.52, leaves $12,507.87 cash received, besides interest from the time of her husband’s death. To that must be added $100.15, cash in the Hackettstown bank over and above the amount inventoried. Add to this the amount of the inventory of movable chattels, $1,546, and the amount received from the sale of wood and timber from the lands of her husband, $936.03, and we have $15,090.05. Against that must be credited the amount allowed her for expenses, legacies and commissions, amounting to $1,489.07, leaving a balance of $13,600.98.

The administrator of Mrs. Watters contends that Mrs. Watters ought not to be charged with the whole amount of $1,546 for goods and chattels charged against her in the inventory, on the ground that she must have used up a part of them for living, and that as to part of the articles she could not in the natural course of things have realized on them, although charged with them.

The difficulty of acceding to this argument is that she is in the position of a trustee who deliberately failed to keep any account. An examination of the inventory shows that the appraisement was made on a basis of moderate prices. A small part consists of consumable articles, and such as were consumed were replaced at once by the products of the farm. There is proof that either in the spring of 1883 or that of 1884 she had a vendue at the farm. No account seems to have been kept, or if any was kept none was produced,o of the proceeds of that sale. She is shown to have been a careful, thrifty woman. The probability is that the sale took place in the spring of 1883, because in that spring she bought a house and lot in Hackettstown for her personal residence and moved there from the farm; so that she probably knew-when she settled her account in the fall of 1883 whether she had met with any loss on the goods and chattels inventoried. I cannot see my way clear to make any abatement from this item.

The complainant contends that in addition to these amounts she should be charged with the amount of the small promissory notes which I have mentioned, none of which were found among her assets at her death, nor were the complainants able to produce any proof of their actual payment. The argument is that the fact that she preserved the notes of the same class that were actually found for so long a time, namely, from 1882 to 1897, shows that she would also have preserved the other notes which were not found if they had not been paid to her, and that the fact that they were not found among her papers is prima fade proof that they were paid, And he argues, and rightly, that it was her own fault in not keeping an account of what she did collect that her estate is now in the predicament in which we find it. While there is much force in this argument, I feel constrained not to accede to it, and to charge her only with what the proofs show she has actually received, namely, with the sum of $13,600.98.

Her administrator claims that against this she should be credited with the cost of the Hackettstown house, and that the residuary legatee should be compelled to take that house as so much cash. The persons in the opposite interest claim that she had no right to invest the money in that house, and that it has very much depreciated in value and should be sold and her estate held liable for any loss. I

I think that the position taken by the administrator of Mrs. Watters is the better one. Her husband intended that she should live comfortably. The farm was a lonesome place for her to live, a long way from church and market, and I think if she had applied to this court it would, under the circumstances, have authorized her to make the investment in a house of the size and character of that in question, placing the title of course in her name as trustee of her husband’s estate. The price at that time was moderate, and if the court would have approved of it at that time, in advance, the rule is that in the absence of special circumstances it will approve of it nunc pro tunc. I therefore think she must be credited with the cost of that house, $3,900, leaving a.balance of $9,700.98 as of the date of her death, and her estate must be charged with interest upon that amount since her death at the average rate which the securities in the hands of her administrator have produced.

Her heirs-at-law must be decreed to convey the house and lot to the church, and the administrator of Mrs. Watters must be decreed to pay, out of the sum of $9,700.98 — the amount due— each of the legacies which are not yet paid, and pay the balance to the church as residuary legatees.

The heirs-at-law must also be decreed to convey to the church the two pieces of real estate which were conveyed to Mrs. Watters in satisfaction of mortgages inventoried by her as belonging to her husband’s estate.

The administrator of Mrs. Watters must be decreed to pay to the complainant, the administrator cum testamento annecco of James Watters, the amount he has collected from securities which came to his hands and which were part of the estate of James Watters.

I think that under the circumstances the estate of Mrs. Watters must pay the costs of these proceedings. The whole occasion for a suit has arisen from her failure to do her duty as trustee in not keeping an account of her transactions, and in mingling the funds of the estate with her own. The will is perfectly clear, and even if it were in any degree doubtful any question arising on it could have been settled at a trifling expense as compared with the costs which have been necessarily incurred by the complainant in hunting up the evidence to make proof of the amount of moneys actually collected by Mrs. Watters from the assets of her husband’s estate.

If the estate in the hands of her administrator is not sufficient to pay the amount I have found due to the complainant' and the legatees, with the costs and commissions and counsel fees of her administrator, then resort may be had to the property conveyed to her by Beatty in satisfaction of a mortgage given to her for money loaned, mentioned in the pleadings.

No proof has been adduced that there are any other debts due from her estate, except what may be considered as preferred debts and are probably already paid, beside those that have been adjudicated upon in this cause. But if there were any other debts, as the great body of her estate came from her husband’s estate and she has rendered it difficult to trace the investments which have been made with her husband’s funds, the residuary legatees of her husband’s estate should, upon well-settled principles, have precedence. Smith v. Combs, 4 Dick. Ch. Rep. 420; Standish v. Babcock, 7 Dick. Ch. Rep. 634.

Eor that reason I think resort may be had, as I have suggested, to the Beatty real estate for any deficiency.

Some discussion arose over some facts to which I have not yet adverted, namely, that shortly after Mr. Watters’ death and before the proof of the inventory, Mrs. Watters deposited to her credit in the Hackettstown bank the sum of $1,875, of which $25 was a check found in her husband’s possession at the time of his death and inventoried, and the balance of $1,850 consisted of cash and check. It was argued that this latter fund was really a part of her husband’s estate and was improperly withheld by her from her inventory. And it further appears. that immediately after the death of her husband she was found in possession of three negotiable bonds of $500 each of the Aquackanock Water Company, on which she received regularly the interest and placed the same to her credit, and subsequently and shortly before her death collected the principal, showing an estate of a little over $3,000, which the complainant, as administrator, argues that she must have got from among her husband’s assets. And he adduces, as an additional circumstance indicating this origin of these funds, that she deliberately undervalued the cash to her husband’s credit in the Hackettstown bank, and put it in her inventory as $815 when it was really $915.

The proof is that at the time of her marriage, about 1870, she had no property whatever; that her father died shortly after and left her the annual income of a certain share of his estate which amounted to between $60 and $80 a year, and which she received for a few years, and then, by a defalcation of the trustee of her father’s estate, the income from that source entirely failed; and it is argued that it is impossible to suppose that she had accumulated this estate in the dozen years that she lived with her husband.

However suspicious these circumstances may be, I cannot hold them as sufficient to charge her estate with any part of the sum just mentioned. It was the duty of these residuary legatees if they had notice, and the presumption is they did have notice, of the terms of the will, to look at that inventory at the time and except to it if it was not complete. Her husband and she had about twelve years of married life, so that he was about forty years old and she was a trifle younger on their wedding day. He evidently was a man of considerable means at that time, while she was poor, and both were thrifty. How as they had no children it was not unnatural that he should give her the ordinary perquisites of a well-to-do farmer’s wife, namely, the proceeds of the dairy and poultry. The income from those sources would easily amount in the twelve years, if carefully husbanded by her, to two or three thousand dollars; and it is by no means improbable that she might honestly have been possessed of $1,850 which she deposited in bank, and also the three Aquackauock water bonds.

But it is further argued on behalf of Mrs. Watters that the amount of her estate shows that she must have spent more than the interest of her husband’s estate in her support, and that on the principle of Cox v. Wills, 4 Dick. Ch. Rep. 573, she was not obliged to take any part of the interest of her own estate for that purpose. There was no proof on that topic and no contention at the hearing that the interest on the personal estate of her husband, with the income from the farm, was insufficient for her comfortable support. Further, it appears that in the last years of her life she made a loan of $2,000 to a relative, secured by an unrecorded mortgage, for which she charged no interest, and that after some five or six hundred dollars had been paid upon it she surrendered and made a present of the mortgage to that relative. That accounts for about $1,500 of her private fortune, which, with the surplus of her personal estate over and above the amount which I have found that she owes her husband’s estate, together with the piece of real estate which she took in payment of a mortgage given to herself, are nearly sufficient to account for the whole of her supposed personal estate.


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    The Hoboken Ferry Company v. Margaret Baldwin, individually, and as administratrix of Ralph Baldwin, deceased.
    [Submitted March 28th, 1899.
    Decided May 26th, 1899.
    Filed September 26th, 1899.]
    The defence of insanity to a sealed instrument is available at law under the plea or replication of non est factum,; hence equity will not intervene at the instance of a plaintiff at law to enjoin the use by the defendant at the trial at law of a release of the cause of action on the ground that it was executed when the releasor was insane, in the absence of proof that fraud was practiced in procuring its execution.
    Heard on bill, answer, cross-bill and replication and proofs in open court.

      Mr. Edidn A. S. Lewis and Mr. John W. R. Besson, for the complainant.

      Mr. John J. Fallon, for the defendant.
   Pitney, V. C.

The question at issue by these pleadings will be best understood by a statement of the facts.

The defendant’s intestate, Ralph Baldwin, was a bridge hand in the employ of the complainant at the Fourteenth street ferry in Hoboken, and on the 27th of November, 1895, he was injured in an accident which occurred at 'that point. The particulars of the accident are set forth at great length in a declaration in an action at law brought by the defendant as administratrix against the complainant annexed to complainant’s bill as a schedule. No proof, however, was given of those particulars at the hearing, and the same was in nowise brought in issue.

The deceased was injured in several parts of the person- and in the head, but walked to the house of his family physician, Dr. Atwell, and thence to his own home, where he was attended by him. He died fourteen months later, on January 20th, 1897. Letters of administration were taken out by the widow, the defendant, May 5th, 1897, and an action at law brought against the complainant in January, 1898.

The deceased was visited at his home by Dr. Fisher, the stated physician in the employ of the complanant, on the 17th of December, 1895, twenty days after the accident, who reported his ease to the officials, and he was placed upon the half-pay list of the company and received such half pay for a period of time.

Some time in January, 1896, Baldwin called on the superintendent of the complainant, Mr. Woolsey, and asked what more than he was already receiving the company was willing to do for him. Mr. Woolsey replied that he would see the officers of the company on the subject and let him know. He did bring the matter to their attention, and they authorized Mr. Woolsey to pay him $300 for a general release, which compensation was fixed on the basis of about six months’ pay, with a verbal promise that as soon as he sufficiently recovered he would be taken back into the employ of the company. Mr. Woolsey thereupon wrote Mr. Baldwin as follows:

“Office of the Hoboken Ferry Company, “ 1 Newark Street, Hoboken, ‘' January 14, 1896.
“Mr. Ralph Baldwin, 889 Park Avenue, Hoboken, New Jersey :
“Dear Sir — Please call at this office to-morrow, Wednesday, at 2:30 o’clock, and have your wife with you. We will then see what we can do in your ease.
“Tours truly,
“ O. W. Woolsey, Supt."

Mr. Woolsey left instructions in his office that if Mr. Baldwin and his wife called in his absence to send them to Mr. Lewis, the solicitor of the company, who had his office in the same building, and communicated to Mr. Lewis the decision of the officers. Mr. Lewis was furnished with the money to pay Mr. Baldwin when he called, and in anticipation thereof prepared a general and special release to be signed by Mr. Baldwin and his wife. Mr. Baldwin and his wife did call at Mr. Woolsey’s office, and, he being absent, they were directed to the office of Mr. Lewis, to which they repaired. Mr. Lewis announced to them what the company had decided to do, protesting at the same time that the company did not consider itself liable for any damages in the case, but were willing to pay $300 upon their signing a general release, which he read over and also fully explained to them. They thereupon executed the release and accepted the money. Mr. Lewis at the same time stated to them that Mr. Baldwin would have his old place whenever he was ready to return to work, and that if he should not be able to perform the duties of his previous position he would probably be furnished with such light work as he could do.

Subsequently, in August, 1896, Dr. Fisher was sent for to see Mr. Baldwin, and found him sinking into dementia and had him placed in a hospital for the insane, where he remained until his death.

After the action at law was brought by Mrs. Baldwin and the defendant, the complainant herein, had pleaded the release, the complainant filed its bill in this cause setting up the circumstances and stating that the deceased left neither father, nor mother, nor brother, nor sister, and that Mrs. Baldwin was his sole next of kin, ahd asking this court to enforce the release in question against her as administratrix as well as personally. The defendant answered, and by a cross-bill asked the court to enjoin the complainant herein from setting up the release as a defence in the action at law, upon two grounds. First, that the deceased, Baldwin, was insane at the time he executed the contract; and second, that the same was procured from herself and her husband by fraud.

At the hearing the complainant’s counsel being advised that it had been misinformed as to the fact that the widow and ad-* ministratrix of the deceased was his only next of kin, but that he left a father and brother surviving him, abandoned the bill and asked for no relief under it; and the only issues considered by the court were those arising on the cross-bill and replication thereto.

At the hearing I held, in substance, that this court would not entertain jurisdiction of the question of insanity and set aside the release on that ground alone, because the plea of insanity would be a good answer in the action at law by way of replication to the plea of the release. But I did admit evidence on that question for the purpose of determining whether or not advantage had been taken by Mr. Lewis and the officers of the complainant company in procuring the release by fraudulent practices upon Mr. Baldwin and his wife at a time when Mr. Baldwin’s mind was in a condition to make him an easy subject for such practices.

I am still of the opinion expressed during the taking of testimony, that if Baldwin was insane at the time of the execution of the release, that defence to it is available at law, and that this court should not interfere with it on that ground.

If he was so insane, then it was not his deed, and proof of his insanity will support the replication of non est factum. 1 Chit. Pl. *483, *484. The defence of insanity differs from that of fraud, which was dealt with by the supreme court in Connor, Administrator, v. Dundee Chemical Works, 21 Vr. 257, which led to the suit in this court between the same parties, reported in 1 Dick. Ch. Rep. 576, and upon which the defendant’s cross-bill is based.

■ That leaves to be determined only the question whether any fraud, actual or constructive, was practiced upon the deceased and his wife in the procuration of the release, and after careful consideration of the evidence I am satisfied that there was none.

Considerable evidence was given as to disturbances in Mr. Baldwin’s mind from the time that he was injured up to and after the date of the release, but it appeared that such disturbances were not constant, and a great part of the time he manifested no signs of mental disturbance — was able to answer questions intelligently and to talk intelligently. Dr. Fisher swears that when he saw him on December 17th he did not see or suspect any mental disturbance indicating a lesion of the brain, and Mr. Woolsey swears to the same thing. The man was able to go about alone, and came to the office of the company once or twice, and in his conversations with Mr. Woolsey manifested no mental disturbance; and on the occasion of the signing of the release there was nothing in his manner or appearance to indicate any mental weakness or want of mental balance. The testimony of Mr. Lewis, and that ,of Mr. Stevens who was present at the time, is quite clear and distinct, to the effect that the release was read over and carefully explained and its effect stated to Mr. and Mrs. Baldwin before it was signed. Mrs. Baldwin appears to be a bright and intelligent woman and to have had her attentiou called to the liability of the company to her husband before the release was signed, because when Mr. Lewis protested on behalf of the company that it denied any liability on its part for the accident, on the ground that if it was the result of negligence it was that of a fellow-servant, Mrs. Baldwin answered that she thought it would be liable for keeping in its employ a deaf engineer.

No officer of the company had any reason to suspect, at the time the release was executed, that there was any weakening of the mind of Mr. Baldwin, and he manifested no indications of insanity. No officer of the company sought out Mr. Baldwin and asked him to settle, but he applied in person to the superintendent of the company for further assistance or compensation, and the letter written to him by Mr. Woolsey was the result of that application. The fact is that neither party supposed at the time that the accident would permanently disable, much less result in the death of, Mr. Baldwin ; and it was not until a long time after the release was signed that anyone made any complaint of the conduct of the officers of the company in procuring the signatures thereto; and it is impossible to believe, after seeing Mrs. Baldwin on the stand and hearing the evidence of Mr. Lewis and Mr. Stevens, that she did not fully comprehend its contents and nature when she signed it. '

For these reasons I am unable to see "that I can grant the défendant any relief on her cross-bill; and as the complainant asks for no relief on its bill, the result is that both suits must be dismissed, without costs to either party, upon the complainant stipulating that the defendant may plead non est factum, or such other pleading as will enable her to set upi insanity as a ’ defence to the release pleaded in the action at law, if she has not already filed such pleading.


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    Walter Scott v. Isaac A. Hall.
    [Submitted April 5th, 1899.
    Decided April 15th, 1899.
    Filed September 26th, 1899.]
    1. A judgment that plaintiff did in fact make a valid and enforceable contract at law is no bar to a suit in equity to relieve him from its effect on the ground of mistake.
    2. A buyer having defaulted in payment of about one-half of the price, the seller, who had reserved the title, agreed to transfer the property for $525 cash, under the impression that the amount due was $650, when in fact it was $950. He discovered the mistake immediately, renounced the agreement, at once returned the check given in payment, and refused to make the transfer. — Held, defendant not having acted on the agreement to such an extent that a rescission would be to his prejudice, that equity would relieve the seller from the agreement.
    Heard on bill and plea.

      Mr. Eugene Emley, for the complainant.

      Mr. Michael Dunn, for the defendant.
   Pitney, V. C.

The complainant, Walter Scott, by his bill asks to be relieved from the effect of an agreement of sale of chattels made by him on February 6th, 1896, to the defendant, Isaac A. Hall, on the ground that the same was entered into by one Thomas, as his agent, while laboring under a mistake of fact.

The plea is to the effect that in an action of replevin brought by complainant against two other persons, not parties hereto, to recover the same chattels, it was adjudged that the chattels did not belong to the plaintiff, the complainant herein.

The facts set out in the bill — and of course admitted by the plea — stated more in detail, are as follows:

The complainant is a manufacturer of printing presses and accompanying apparatus, carrying on business at Plainfield in this state, and in April, 1893, he sold and delivered to a publishing corporation, of which defendant was the president, doing business at Paterson, one or more printing presses and accompaniments (which are the chattels in question) for $1,800, upon the installment plan, employing for that purpose the machinery of a lease which reserved title in the vendor until all installments of rent, so called, were paid. Of that sum of $1,800, $250 was paid in cash,, and the balance of $1,550 was secured by thirty-six notes of $43.05 each, with interest, maturing one in each month from the date thereof, the 15th of April, 1893.

.After seventeen of these notes had been paid the publishing company defaulted, leaving unpaid nineteen notes aggregating $818, besides interest, which, would swell the amount at the date of the transaction in question — February 6th, 1896 — to $950, at least.

Complainant had been pressing for a settlement of this balance, and on the 6th of February, 1896, his collection agent, a Mr. Thomas, called on the defendant, Hall, at Paterson, and arranged with him to sell and transfer the chattels to him, Hall, for $525, which should be in full of the claim of the complainant against the publishing company. Before agreeing to accept said sum of $525, Thomas communicated by telephone with the office of complainant at Plainfield and inquired of the agent there in charge, the amount due from said publishing company upon said notes, and was informed by him that the sum due was only $650. Acting upon that supposition, he made a verbal agreement to sell .the chattels to defendant for $525, which was, as he supposed, a deduction of $125 from the original price. Negotiations for the sale took place at Paterson in the office and presence of Mr. C. D., an attorney-at-law and counsel in that matter for defendant. After the sale was agreed upon the defendant left for his office in the same city and sent a messenger to his counsel with a check for the amount, which was placed at the disposal of Thomas. At that moment, and before the deed of transfer was signed or Thomas had done more than to take the check in his hand temporarily, he was called over the telephone by the agent of complainant, who informed him that a mistake had been made in his statement of the amount due, and that over $950 was due from the publishing company on the contract of sale, and directed him to stop the sale. Thomas thereupon at once notified the defendant’s counsel of the mistake, and that he would not carry out the sale, and refused to accept the check or any payment on account thereof.

The allegation is that Thomas was induced to enter into the agreement of sale for the price fixed entirely upon the basis that there was only $650 due from the publishing company, and that he was governed entirely by the amount of money so supposed to be due, and would not under any circumstances have sold the same for the sum of $525 had he known that the sum of $950 was still due thereon.

The prayer of the bill is that the agreement for sale, of the machinery at the price named may be rescinded and set aside and declared null and void, and that the machinery may be declared to be the property of the complainant and the defendant directed to deliver the possession thereof to him and for other relief.

The plea is that on the 24th of November, 1896, before filing the bill, complainant brought a suit of replevin in the circuit court of Passaic county against one John Tully and one Thomas Murray to recover the possession of the chattels in question, by virtue of which writ the sheriff seized the goods, and immediately after the seizure Tully and Murray made written claim of property to the sheriff, and gave him a redelivery bond, the result of which was that the goods remained in the possession of Tully and Murray; that complainant filed his declaration claiming that the goods and chattels mentioned in the complainant’s bill of complaint were his property, and were taken by the defendants unjustly and detained, &c.; to which declaration the defendants pleaded, denying that the said goods and chattels were the property of the complainant, the plaintiff in that cause.

The plea does not state that the defendants in the replevin suit, Tully and Murray, set up title in themselves.

Afterwards such proceedings were had in the cause that a jury rendered a verdict in favor of the defendants Tully and Murray, and against the plaintiff, Scott, and on the 24th of February, 1898, final judgment was entered in favor of the defendants and against the plaintiff.

The plea further avefs that Tully and Murray on the trial of the cause claimed to have obtained possession of the chattels from and through the defendant Hall, and that the complainant herein insisted that he never sold and delivered said goods and chattels to said Hall, the defendant herein, and that the title and right to the possession of the same at the time of instituting the suit, and at the time of the trial, still belonged to and remained in the said'complainant.

The plea does not state any adjudication that the title was in Tully and Murray, but it appears that they defended on the title of Hall, though Hall was not a party to the suit.

By Consent of counsel, and in order to ascertain the precise issue of fact submitted to the jury, and upon what theory of the law it was presented to them by the learned judge, the stenographer’s transcript of the evidence and the charge of the judge to the jury was handed up to the court. From that transcript it appears that testimony tending to establish the facts set out in the complainant’s bill was admitted by the learned judge,-but that he submitted the case to the jury upon the basis that an oral contract of sale was concluded between Thomas and the defendant in the presence of defendant’s counsel, and that the only ground upon which the complainant;could repudiate that oral contract at law was the statute of frauds, and that the validity of the contract depended upon the question whether Thomas, as complainant’s agent, .had actually taken the check of defendant into his hands and accepted it as a payment for the goods sold, and that question of fact be submitted to the jury. So that the only question submitted to the jury was whether or not the check had been in the hands of Thomas in such a manner as to satisfy the statute of frauds. That issue was found in favor of the defendants. The question whether or-not complainant had a right, under the circumstances, to be relieved in equity from the effect of that contract was not considered or submitted to the jury by the learned judge. All that he could have decided under the charge to the jury was that the complainant could not be relieved at law.

This view shows that the judgment at law cannot be any defence to the complainant’s case in equity, if he have one. And this brings us to the merits of the bill itself. Was there any such mistake as ought to relieve the complainant in equity? It was not seriously disputed at the hearing but that the complainant was the holder of the legal title to the goods; ' That his title was simply that of a mortgagee is quite plain. The publishing company had already paid more than one-half of the original contract price. The object of the agent in pursuing the company and Mr. Hall, its president, was simply to collect the balance of $950 still due. His negotiations were on that basis, and he was willing, for the-sake of cash down, to receive in payment a sum less than that amount. Such were his instructions, but he was not willing or authorized to deduct as much as $425. The transaction was simply that of giving up a bond and mortgage for the payment of a sum less than the amount due.

• Now, it seems to me plain enough that, having agreed upon a sum based on $650 being due, when there was in fact $950 due, this court ought to relieve him from a contract made upon such mistaken basis, unless before notice the other party has so acted upon it as that it would be unjust to him to be compelled to submit to rescission.

Now, in this case notice was given immediately to defendant’s counsel and while the affair was unfinished and not concluded in the manner in which the parties intended to conclude it, for it was their intention that there should be a written transfer of the title. And while we must conclude that the check was, for a short period of time, in the possession and control of the agent, still it was not intended to b taken away by him until he should have executed the written transfer It is plain from the allegations of the bill, which must be held to be true, in connection with the charge of the judge, that Thomas did not feel that he had any right to the cheek until he had executed the written transfer, and in point of fact he never did take it away, but, as was said at the argument, it still remains in the hands of Mr. C. D., the counsel of the defendant, which is presisely the same as being in the hands of the defendant.

Row, I have said that the plea does not show that the defendants in the replevin suit established an actual transfer of title of the goods from the defendant herein to them, or that they assumed the position at all of bona fide purchasers without notice. So that there is no reason to believe that the defendant has in anywise altered his position by reason of the supposed ownership of the goods, but if he has done so he must have done so with full notice that the complainant repudiated the contract and had not in fact received or made use of the check.

Under these circumstances it seems to me clear enough, but contrary to my first impressions, that the plea must be overruled and that the complainant is entitled to a decree.


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    John B. Smith and Lucy S. Billingsley v. Philip Specht and Andrew Ruffle.
    [Submitted February 25th, 1899.
    Decided March 3d, 1899.
    Filed September 26th, 1899.]
    1. Gen. Siat. p. 3359 ¶ 368, giving a tax lien priority over other encumbrances, does not apply to prior liens for taxes held by the state.
    2. Under Gen. Stat. p. 3357 ¶ 354, authorizing the township to become a purchaser at a tax sale, and to thereafter sell the premises for the price paid and subsequent taxes thereon, and paragraph 365, requiring a redemptioner to pay the subsequent taxes in addition to the price for which the lands were sold, a sale of lands by a town for delinquent taxes assessed against them subsequent to a sale thereof to the town for prior delinquent taxes, divests the title of the town under the earlier sale.

      3. Under Gen. Slat. p. 3287 ¶ 33, making the tenant personally liable for taxes on the premises, which he may deduct from the rent after paying the same, a person in possession of lands, enjoying the rents and profits thereof, either as tenant or without attorning to anyone, cannot acquire a title to the premises, as against the owner, by purchasing the outstanding tax title.
    4. Since Gen. Stat. p. 3354 ¶ 888, requiring the redemptioner from a tax sale to pay the price, with costs, expenses and twelve per cent, interest, does not expressly give the landowner the right to come into equity to redeem, equity will compel him, as a condition of permitting him to redeem, to pay all taxes paid by the purchaser, on the principle that he who seeks equity must do equity.
    5. Equity will compel the holder of a tax title, who has been in possession of the premises and received the rents and profits thereof, to account for the same as a condition precedent to his right to compel the owner, in redeeming, to reimburse him for taxes paid while he was in possession.
    Heard on bill, answer, replication and proofs.

      Mr. Charles W. Parker, for the complainants.

      Mr. James P. Northorp and Mr. Davis (of New York), for the defendants.
   Pitney, V. C.

The object of the bill is to redeem certain lands in the township of Milburn, Union county, from the effect of a sale thereof by the collector of taxes of that township to the defendant Specht for the term of thirty years.

The taxes for which the lands were sold were assessed in the year 1893, and the sale took place on the 8th of July, 1895, and on the 10th of July, 1895, less than two years after the assessment, a certificate of sale was made and issued to Specht, the purchaser. Within two years of that date, to wit, on the 7th of April, 1897, the complainants tendered the amount bid at the sale, with costs, expenses and twelve per cent, interest, to Specht, and demanded a deed of the premises — all in strict compliance with the ninth section of the act of March 14th, 1879. P. L. of 1879 p. 340; Gen. Stat. p. 3354 338.

Specht declined to accept the money and give the deed required, unless he was paid certain other moneys which he claimed he had paid for taxes levied for other years upon the premises. This the complainants declined to do, and on the 13th of April, 1897, filed their bill: Service was made upon the defendant Ruffle, who was the tenant in possession of the premises. He has not appeared or made answer, and a decree pro confesso has been taken against him. The defendant Speeht, who was not served, appeared by a solicitor, but did not answer until January 25th, 1898.

His answer sets up that since the 8th of July, 1895, the day of the sale to him, he has paid for taxes in arrears on the premises-as follows: the taxes for the years 1890, 1892, 1894, 1895 andi 1896. This, it will be observed, covers all the taxes from and including 1890 to 1896 except those of 1891 and 1893, the latter being those for which the property was sold in July, 1895, leaving the taxes of 1891 yet to be accounted for.

The answer says that Ruffle, the other defendant, is in possession as the tenant of Speeht, and that he made the payment of taxes before mentioned as the agent of Speeht, and that the moneys laid out in paying the taxes were moneys of Speeht.

The answer further sets up, as to the taxes of 1891, that on the 23d of March, 1893 (two years and more before the sale of 1895), the collector of taxes of the township of Milburn sold the premises for the non-payment of the taxes of the year 1891, and that the same were struck off to and purchased by the municipality, The Inhabitants of the Township of Milburn,” for the term of thirty years, and that a certificate was delivered to the township, which certificate on the 6th of March, 1896, for a valuable consideration, was assigned and transferred by the township to the defendant Ruffle acting as the agent of the defendant Speeht, and the consideration therefor was paid by the defendant Speeht to the township through Ruffle as his agent; and further, that in accordance with the assignment of the certificate of sale last mentioned, on the 18th of January, 1898, seven days before the answer was filed, the inhabitants of the township, through its committee, conveyed the lands to Ruffle for the unexpired term of thirty years, and delivered to Ruffle a deed of conveyance for the same, a copy of which is set out by schedule.

The answer alleges that neither the complainants nor any other person ever made any tender for the unpaid taxes of the year 1891, nor any part thereof, to the township, or to the defendant, or to Ruffle, and claims that thereby the title to the premises has become absolute in the defendant for the term of thirty years from the 10th of February, 1893.

At the hearing no witnesses were sworn. The proofs consist wholly of admissions and documents which prove themselves.

The facts developed were that prior to 1880 the title to the premises stood in one Myers Masten, subject to a mortgage held by Thomas H. Smith, the complainant’s ancestor, and that in 1881 Masten bargained and sold the premises to Smith, since deceased, who devised the same to the complainants. The date of the ■devolution of title was not given. Smith, however, permitted Masten to remain in the occupation and use of the premises until he voluntarily left them in the year 1891, when he let them to Ruffle. The date when that letting to Ruffle took place was not given, but the inference would be that it was in the spring of that year, 1891. Ruffle has been in possession ever since, for part of the time as tenant of Specht, as appears by the answer, but when he attorned to Specht does not appear; nor does the character of the premises appear, except that they contain nearly sixty acres of land and are described in the official papers as a farm.” The fair inference from the admissions and statement of counsel is that neither the complainants nor their devisor, Smith, have ever been recognized as landlords or received any rents. The complainants in their bill base their right to relief solely on the statutory provision for redemption. They do not set up want of notice of the sale and surprise, coupled with the smallness of consideration, making together a case for the interference •of the court upon general equitable principles, though the admitted facts indicate that these elements are present in the case.

The first question requiring consideration and decision is the effect of the sale for the taxes of 1891 and the purchase of the premises by the township, and the conveyance by the township to Ruffle, made after the bill was filed.

The conveyance constitutes by its recitals all the proof in support of that sale. Those recitals are an assessment for 1891 against Myers Masten as the owner, the sale to the township on the 23d of March, 1893, and a certificate of sale by the collector delivered to the township committee February 10th, 1893, which, it is to be observed, is prior to the date of the sale (the certificate was not produced), and an assignment of the certificate by the township to Ruffle on the 6th of March, 1896, about eight months after his purchase for the taxes of 1893, but does not state what consideration was paid by Ruffle to the township. It recites proof by affidavit of Ruffle made November 29th, 1897, that the premises had not been redeemed from the sale of 1893. The deed does not recite that at the sale of the premises no purchaser appeared for them, and by reason of the non-appearance of a purchaser the township bid and purchased, although this non-appearance of a purchaser would seem to be a prerequisite to authority in the township to purchase prescribed by Gen. Stat. p. 3357 354. In point of fact the recital is that “no person did then and there agree to take said farm for a shorter term and pay said taxes,” &c.

By paragraph 1 of the original act of 1879 (P. L. of 1879 p. 340) as amended by the act of 1888 (Gen. Stat. p. 3359 368), the lien of the taxes for two years from December 20th is declared to be first and paramount over mortgages, alienations, liens and encumbrances of every kind and nature whatever, and complainants contend that the effect of this provision is to make the title of the purchaser under the sale of 1895, made to pay the taxes of 1893, paramount and superior to any prior liens upon the premises of whatsoever nature^ including the lien of taxes and title of the township. But this position must be taken in connection with the decision of the court of errors and appeals in the case of Trustees of Public Schools v. City of Trenton, 3 Stew. Eq. 667, where it is held that this paramount lien does not affect the right of the state itself or municipality in which the taxes are levied.

By paragraph 354 (Gen. Stat. p. 8857) the township is permitted to purchase the property and to take possession and occupy, and afterwards to sell and convey it to any purchaser who will pay the purchase price and subsequent taxes, and by paragraph 365 (Gen. Stat. p. 3358) after the purchase by the township, subsequent taxes may be assessed in the name of the former owner precisely as if no sale had been made, and the taxes so assessed shall remain a lien on the land and be added to the original purchase-money, and shall he paid before the same can be redeemed. No provision is made for including in the amount to be paid upon redemption any taxes levied prior to those for which the sale is made.

It thus appears that the township had two remedies for the realization of the taxes of 1891, under its certificate of sale— one, to take immediate possession and hold and occupy, and take the rents and profits, and at the end of two years to sell and convey if unredeemed; or second, under paragraph 365, to continue to tax the property to the owner and hold its original certificate of sale, and annex as a condition to the redemption of the property from the original sale the payment of subsequent taxes.

In this ease it seems to have adopted neither of the remedies above suggested, but to have permitted the tenant in possession (who was liable personally under Gen. Stat. p. 3287 33 to pay these taxes) to occupy the premises and to have continued to assess the taxes against the original owner, and then to have made a second sale, at which the landlord of the tenant became the purchaser, and a certificate was issued to him as such.

The question is whether, under these circumstances, the township could itself retain title under the first sale. If it could retain such title, then there were at one time two concurrent outstanding terms of years, held by distinct persons, one by the township and one by Specht. This seems to me a legal impossibility. If the certificate of the township, given to Specht, had any force at all it gave Specht the title to the possession of these premises for thirty years, and such possession was entirely inconsistent with that of the township, and as the township issued its warrant to the collector, authorizing him to make the second sale, it must be held thereby of necessity to have waived its title under the first sale to the beneficial possession of the premises, and such waiver is, in effect, a waiver of its title under its purchase. The assignment of its certificate to Ruffle, in the spring of 1896, upon payment of the taxes of 1891, seems to me not to have altered the situation. The original lien for those taxes expired by limitation of time.

The contention of the counsel for the complainants that the later sale divested the right of the township under the earlier sale, is supported by the authorities. Black (H. C.) Tax T. § 237 and cases cited; Keen v. Sheehan, 154 Mass. 208.

It is alleged that the money paid by Ruffle to the township was the money of Specht, furnished to Ruffle for that purpose, but no proof was made of this. It was admitted generally by the complainants that the payments for the taxes of 1890, 1892, 1894, 1895 and 1896 were made without any specification as to the party by whom they were made. That admission should, perhaps, be construed as proof of the payment of taxes for those years by Specht, but it did not cover the payment for the term of years covered by the salé to the township now in question. The only proof on that topic is found in the deed from the township to Ruffle, which upon its face recites no payment whatever, but simply an assignment by the township to Ruffle of the certificate of sale. That certificate was not produced in evidence.

I have found no provision in the statute for the assignment by the township of a certificate of sale made to it or for any conveyance to be m&de by it to a person to whom it had assigned such a certificate of sale. Perhaps the right to sell the premises given by the statute included the right to assign the certificate.

These considerations lead to the conclusion that the conveyance to Ruffle by the township and his assignment to Specht do not give the latter any greater right to the possession of these premises than he had under the tax certificate issued to him upon the sale of 1895.

But I think there is another and perhaps broader ground upon which the title under the deed of the township must fail, except to the extent of being-held as a security for the amount paid on it.

The defendant Ruffle entered into possession of these premises under Masten, who, as now appears, had no title thereto, but was a mere tenant at sufferance of the ancestor of the complainants. It is not shown that he ever paid any rent to Masten, nor when he attorned to the defendant Specht. There is no proof, as we have seen, that the money paid for the tax of 1891 was the money of Specht. The fact that the certificate of sale to the township for the taxes of 1891 was assigned to Ruffle indicates that he paid the amount. Now Ruffle, as tenant, enjoyed the rents and profits of the premises described as a farm. It is to be presumed from the scanty facts in proof that the rents and profits were greater than the amount of the taxes. By section 33 of the act concerning taxes (Gen. Stat. p. 3287), which has been in force for one hundred years, he (Ruffle) was liable to pay those taxes, and after he had paid them was authorized to deduct the amount from his rent, unless by the contract between him and his landlord he had agreed to pay the taxes. The enforcement of the current taxes against the tenant has been practiced hi this state for one hundred years, and this liability was not affected by the tax being levied in the name of his landlord, real or supposed. Morrow v. Dows, 1 Stew. Eq. 459.

But, independent of his liability by the statute to pay the taxes, the mere fact that he was in possession as tenant of Masten or of anybody else, or in possession without having attorned to any person, but all the time receiving rents and profits, prevented him from purchasing the premises at a tax sale and holding them against the real owner. At any rate, it put upon him, and upon Specht claiming under him, the burden of proving that he had paid the rent in good faith to another person, supposed to be the landlord, without claimiug or receiving any allowance for the taxes.

The general principle is that one who is under either a moral or legal obligation to pay the taxes, or is in anywise interested in the premises, cannot buy the tax title and thereby cut off the title of another party interested, .however the interest of either may arise,

The subject is treated by Mr. Black (H. C.) iu his book on Tax Titles (2d ed.) §§ 288, 289; and, while there is some contrariety of decision on the subject, I think the clear weight of authority and the better reasoning are in favor of the rule as stated. Mr. Black says :

“That although it is the duty of the landlord to pay the taxes assessed, in the absence of any agreement to the contrary between the parties, yet the tenant will not he permitted to take advantage of the omission of his landlord to pay the taxes, to terminate the relation between them and obtain title to the land.”

He cites and reviews the authorities, which are numerous.The following seem to sustain the rule as stated:

In Horner v. Dellinger, 18 Fed. Rep. 495, the land was held subject to a perpetual ground rent, and the owner conveyed subject to the ground rent and took back a mortgage. There was no express contract between the owner of the fee and the holder of the rent charge as to the payment of the taxes. While the mortgagor was in possession under his title the taxes fell in arrears, and the premises were sold for their non-payment and purchased by a third party, who held for the benefit of the mortgagee, and. afterwards the mortgagor released to the mortgagee, who thus became re-invested with the title. It was held he could not set up the tax title against the owner of the rent charge. The discussion of the question is found on pages 501 and 502. I think the reasoning of the learned judge is unanswerable.

Gaskins v. Blake, 27 Miss. 675, is an instructive case. That goes the length of holding that if a tenant is indebted to his landlord for any rent in arrears and buys at a tax sale, the presumption will be that he pays the taxes out of the rent due, whether the taxes accrued during the time of his occupancy or not; and it was further held that if he was in possession without admitting any tenancy, as a trespasser, he was also incapable of purchasing the land on a sale for taxes and hold against the true owner. The result is summed up thus by the learned judge; “It is immaterial, therefore, in what light the question may be viewed. If the defendant is treated as a tenant, then his deed clearly gave him no title. If he takes the ground that he was a trespasser, neither the policy of the law nor sound morality will permit such a defence. And finally, if he takes the ground that he supposed himself to be the owner of the land, then, to be consistent with such position, he must admit that it was his duty to pay the taxes, and that the plaintiffs were not in this respect in default.”

In Waggener v. McLaughlin, 33 Ark. 195, it was held that a tenant might buy land sold for taxes accruing during his tenancy without his fault — that is, sold by reason of the default of his landlord — and set up his title thus acquired against his landlord, but that in equity he would be treated as a trustee for the landlord and compelled to allow redemption, and would not be allowed to speculate on his purchase, or receive more than six per cent, interest on the sums paid for taxes, nor penalties and costs on subsequent taxes paid.

In Duffitt v. Tuhan, 28 Kan. 292, the case was this: The owner of a lot of land permitted a poor woman to occupy it free of rent during his pleasure. She, or some one in her behalf, erected a small house upon it, and she occupied it free of rent for upwards of ten years, and without any express covenant on her part to pay the taxes. During that time the taxes fell in arrear, the premises were sold to pay them, and she purchased at the sale. It was held that she could not hold the title against the true owner. The court said that the landlord could hardly have supposed that by permitting the party to occupy the premises free of rent, she would neglect her own possession and fail to pay the taxes, and then attempt to cut off the title of her benefactor by buying at the tax sale. That reasoning applies here.

Lacey v. Davis, 4 Mich. 140, is another case in the same direction.

The subject is elaborately discussed by Chief-Justice Du'rfee, in speaking for the supreme court of Rhode Island, in Hall v. Westcott, 15 R. 1. 373; S. C., 5 Atl. Rep. 629. It was there held that a. mortgagee out of possession cannot become á purchaser at a tax sale of the premises and acquire title against the mortgagor. He put it on the ground that a purchaser who has an interest in the estate such as would entitle him to redeem if sold to another, will be presumed to have purchased it for the protection of that interest or to save it from sacrifice, and will be required to hold it even after the statutory period for redemption has expired, simply as security for his reimbursement. The chief-justice refers to numerous cases, among others Woodbury v. Swan, 59 N. H. 22, in which this language is used: “A mortgagor and mortgagee have a unity of legal interest in the protection of their titles against sales for non-payment of taxes and against outstanding tax titles, and it is not equitable that either of them should act adversely to the other in the acquisition and use of such titles.”

In Laton v. Balcom, 64 N. H. 92; S. C., 6 Atl. Rep. 37, it was held that a husband could not acquire a title by tax sale of the land of his wife. The facts of the case were that the wife was the holder of a mortgage on land of the plaintiff, which she had foreclosed and afterwards released to the mortgagor. While she was such mortgagee the land w'as sold to pay the taxes, and her husband bought the premises. It was held that he could not hold them against the mortgagor.

Langley v. Chapin, 134 Mass. 82, is in the same general direction.

The result of my examination of the authorities is that if I am not justified in inferring that Mr. Ruffle had possession during the calendar year of 1891, yet that he did have possession during the years 1892, 1893, 1894 and 1895, and enjoyed the rents and profits during that time, and that it was not competent for him in the spring of 1896 to accept the (ax title from the township and hold it as against the true owner of the land, except as security for the amount of money he paid. And the result is not changed if we assume what was not proven, viz., that Ruffle bought with the money of Specht and held the title for his benefit, for the transaction occurred after Specht purchased at the tax sale of 1895 and became interested in the property, and therefore incapable of completing his title by taking a tax title.

In any view I can take of the case, I am satisfied that the title of Speeht under the deed from the township cannot prevail.

The complainants next contend that if that deed is out of the way, they are entitled to redeem the sale to Speeht in 1895, upon payment of the amount of the sale, the costs and twelve per cent, interest. It is urged, on the other side, that haying come into a court of equity they must do equity, and must repay Speeht the amount that he had advanced to relieve complainants’ land of the lien of these taxes for all these years.

Complainants contend that the language of the three hundred and thirty-eighth paragraph (Gen. Stat. p. 3354) is peremptory. The language of the act is that upon tender of the money the holder of the tax title shall recover — that is a plain misprint for reconvey ” — and restore to the owner the real estate. But the act does not by express language give the owner any right to come into a court of equity. He may have his remedy at law upon his tender by bringing an action of ejectment, or such other remedy as the law gives. Hence the case is not an exception to the general rule that he who comes into equity must do equity.

For these reasons I think the complainants are entitled to relief only upon terms, if required by defendants, that they shall pay all the taxes from 1890 onward. But, then, the defendants are not entitled to insist upon those terms against the complainants except upon equitable terms upon their part, and those are that they shall account to the complainants as the admitted owners for the rents and profits of the premises in the meantime; for it i s manifestly .unjust that these defendants should enjoy the benefit of the use and occupation of these premises and allow the accruing taxes to fall in arrears and be paid by the landlord. Therefore, if the defendants insist upon imposing on the complainants the terms of paying these taxes, there must be an account of the rents and profits, or rather, of the annual occupation value of the premises. In stating that account the defendants will not be entitled to a credit of twelve per cent, interest on the payments made by them for any of the taxes except those of 1893; and for those, as the complainants have put themselves upon a strict tender under the statute, they must pay the amount which they tendered, without interest.

If the defendants do not press a demand for payment of taxes other than those tendered, then the complainants will be entitled to the precise decree prayed for, with costs.

If the defendants insist upon the repayment of all these taxes, then the matter may be settled by evidence produced in open court without a reference.