author: Stevens, V. C.

text:
    George Pirics et al. v. First Russian Slavonic Greek Catholic Benevolent Society, Under the Protectorate of Archangel St. Michael.
    [Decided March 11th, 1914.]
    1. Where the constitution and by-laws of a benevolent society wére promulgated contemporaneously in Russian and English, the fidelity of the English text could not be questioned after many years, during which the members had the right to rely on its accuracy.
    2. Where, by the practical construction given the constitution and bylaws of a benevolent society, the words “Greek Oatholic,” in the provision naming those eligible for membership, had been for almost twenty years regarded as including members of the Russian communion, members of that communion who had been admitted could not thereafter be expelled on the ground that they were ineligible.
    3. An amendment of the by-laws of a benevolent society excluding from membership therein members of the Russian communion did not authorize the expulsion of members of that communion who had been previously admitted, as it could not have a retroactive effect.
    4. The contract of a society organized to provide sick benefits, pay funeral expenses, and help the widow or others left behind, with members who pay an initiation fee and monthly dues, which are supplemented from other sources, is not an ordinary contract of insurance, and the rights of members unlawfully expelled are not to be decided as though it were an insurance proposition.

      5. An ordinary “contract of insurance” is defined as an agreement to pay a given sum on the happening of a particular event, contingent upon the duration of human life, in consideration of the immediate payment of a smaller sum or a certain equivalent periodical payment.
    6. The property of a society organized to provide sick and death benefits is impressed with a trust for the uses of the society, but the trust is for all the members, and none can be deprived of their interest therein, except as provided in the by-laws.

      7. Where a benevolent society has unlawfully expelled- all those of a certain class, and the remaining members, who are in the majority, desire to continue the society, equity will not exercise its power to dissolve it, but will decree a fair distribution of the property between the expelled members and those who remain.
    8. Mandamus is the appropriate remedy to compel reinstatement of members of a corporation who have been wrongfully expelled, but not in the case of an unincorporated association.

      9. Injunction will not issue to compel the reinstatement of a faction in a beneficial religious society who have been wrongfully expelled after much heat and violence, as to do so would not be consistent with equity.

      Mr. Sullivan and iliV. Dunn, for the complainants.
    ' Mr. L&jferls and Mr. Joseph E. Stride er, for.the defendants.
   Stevens, V. C.

The bill is filed by fifty-two former members of the First Russian Slavonic Greek Catholic Benevolent Society,, under the Protectorate of Archangel St. Michael, and prays for an injunction, a receiver and a. division of the assets among the members of the society, and for further relief.

It appears that on May 2d, 1890, a number of persons of Slavonic origin met in Passaic and adopted a constitution and bylaws as an unincorporated society. This constitution and by-laws was printed in Russian and English. By section 3 of chapter 1 it was provided that “only men of Greek or Roman-Catholic faith and speaking some Slavonic language are admitted as members into the society.” A number of the complainants were original members and all of them were members for five years prior to the filing of the bill on January 24th, 1912.

The complainants, with three or four others, who have been added, were and are members of the Russian Orthodox Church, while the remaining four hundred and sixteen members belong to the Roman Catholic Church. Harmony prevailed until the Russian Orthodox members obtained a priest of their own faith. After that there arose discords, culminating in violence, and the Roman Catholic majority expelled the Russian Orthodox minority on the ground that the latter were ineligible for membership. They took the position that by the words “Greek faith,” in the section above quoted, was meant the faith of Greek Catholics who acknowledge the jurisdiction of the Roman pontiff and not the faith of those who recognize the Russian patriarch as their head. There was conflicting evidence of what was meant by the term “Greek” or “Greek Catholic” Church. Priests of the Russian Orthodox Church testified that it was commonly used to designate their own communion, while priests of the Boman Catholic Church testified that it referred to a church existing in parts of eastern Europe, which was especially designated by that name and which acknowledged the jurisdiction of the pope. The fidelity of the English text found in the book containing the constitution and by-laws was attacked. But as.it was promulgated contemporaneously with the Bussian text, and as both the original members and those who became so afterwards had the right to rely upon its accuracy, I do not think it can now be questioned. Taking the view most favorable to the defendants the expression “Greek or Boman-Catholic” (the hyphen is in the original text) faith is at least ambiguous and by the practical construction given to it for nearly twenty years Bussian Orthodox members were conceded to be eligible. It is too clear for argument that they could not after admission be expelled, because they were such. There were two attempted expulsions. After the first, which was without any ceremony, the by-laws -were amended so as to exclude, in express terms, members of the Bussian communion. A second attempt was then made to expel them on the basis of the.amendment. It is plain that such a by-law could not have had a retroactive effect.

That the expulsion was unlawful was practically conceded when after a several days’ trial the order of reference was agreed to. Tlio question now to he resolved is whether the master’s apportionment of the accumulated fund is correct in principle.

The society is a benevolent society. Its aim is stated in section 2 of chapter 1 as follows:

“Section 2. The aim of the Society is to help sick members and in case of death" to give them a decent and Christian burial; also to help the widow or others left behind by paying to them the benefit as stipulated below, provided they are entitled to such a benefit.”

By chapter 5 it is provided that no person can become a member unless'he is more than eighteen and less than forty years old. By chapter 6 the initiation fees are to vary according to age from one' dollar to five. The monthly dues were one dollar. Section 36 of chapter 7 reads as follows: “Each member of the society who has paid his one dollar regularly every month and kept the rules of this by-laws is entitled to the decided benefit.” A sick member was to have $5 a week. An unmarried man was to have a funeral costing $125 and be accompanied by a band. Members were to be entitled to death and accident benefits. This, without going- into further details, will sufficiently indicate the character of an organization so prosperous that it has accumulated a fund of about $36,000.

The question is, how shall the complainants be made whole for their illegal expulsion? Shall they be compensated, as if this were what defendant’s counsel calls “an insurance proposition,” or shall they receive their fair proportion of what has been accumulated partly by their efforts and contributions ? The master reports that the fifty-two expelled members had each an average membership of nearly fifteen years, while the remaining four hundred and sixteen members had, at the time of the expulsion, an average membership of only eight. Mr. 'Wplfe, the defendant’s expert, computes the loss of the former (on the theory that this is “an insurance proposition”) as amounting in the aggregate to $1,085.60, and this, counsel claims, is the limit of the society’s liability. The wrong-doing majority, while only eight times as numerous, will, 'by such a method of computation, get more than thirty-four times as much of the fund as the wronged minority; and this, although the latter have been connected with the society on an average nearly twice as long as the former. The injustice of this result is alone sufficient to discredit it. The fallacy of the contention lies in the assumption that this is “an insurance proposition.” In no proper sense of that term can it be so regarded. The members have indeed, by reason of the contract inter sese contained in the so-called constitution and bylaws, a right to benefits, but they have also by the same contract an interest in all the property. The ownership of the property of this unincorporated society resides in all the members. There is no provision in the constitution and by-laws which modifies this right.

That the contract of a beneficial society with its members is not ordinarily a contract of insurance was decided by the supreme court in State v. Taylor, 56 N. J. Law 49, 715. The constitution and by-laws of this society do not embody the elements of such a contract. The amounts paid in, in fees and dues, bear very slight, if any, relation to the amount to be paid in case of sickness or death. The death payment seems to be derived, in great part, from a special assessment of a dollar in the ease of a member and of fifty cents in the case of a member’s wife. Chapter 7, section 28. It is admitted that the fund has been increased by means of picnics, balls, &c. Chapter 12, section 91.

Chapter 12, section 90, provides that

“the Society must have an annual convention on which they decide the most important thing and the biggest or smallest sick and death benefit. Or if the property of the Society fell under $500 the members must decide what to do further.”

By the contract itself, therefore, the amount payable for sick and death benefits is subject to annual revision.

The ordinary contract of insurance is defined to be an agreement to pay a given sum on the happening of a particular event, contingent upon the duration of human life, in consideration of the immediate payment of a smaller sum- or a certain equivalent periodical payment. Bliss L. Ins. § 3. How different the contract in question!

The property of the association is, in a sense, as counsel argues, impressed with a trust for the uses of the association, but the trust is for all the members. How can some of the members deprive the others of their interest in it, unless in the manner pointed out in the by-laws ? Can they thereby gain an advantage by their own wrong ?

Equity, says Chancellor Runyon, in Van Houten v. Pine, 36 N. J. Eq. 134, takes cognizance of the affairs of such associations and grants relief by treating them as partnerships or by looking into the scheme and compelling conformity to it or reforming or enforcing it; or if the plan is deemed impracticable decreeing a dissolution and distributing the funds and, speaking generally, it redresses as far as it can, the grievances of the members of these societies who complain to it of injustice affecting their pecuniary interests therein. Bac. Ben. Soc. § 441.

If, says Bacon (section 441),

“a bill is filed to distribute the funds of a voluntary association, formed for social and charitable purposes among its members, a decree will not be granted unless it clearly appears that its operations have ceased, its objects entirely failed and its purposes abandoned.”

In these two passages lies the solution of the present controversy. This society has broken the contract among its members in a fundamental particular. It has ejected an entire class; the class of those who adhere to the Russian Orthodox communion. The larger class, however, those who adhere to the Roman communion, are in practical control and desire to perpetuate its existence. While it would be within the power of the court to dissolve the society, no such extreme measure is necessary. Justice can be done without distributing its assets in 'tobo. The experienced master, aided by an actuary, has found, by a method he states in detail, which seems to me correct, that the fair share of the expelled members is $8,569.04, and that of the remaining members, $27,437.61. Gonsidering the broad powers that a court of equity has exercised in this class of cases as far back as the time of Lord Eldon (Pearce v. Piper, 17 Ves. 1; Beaumont v. Meredith, 3 Ves. & B. 180), there would seem to be no reason why his recommendation should not be approved.

But it is argued that the complainants should have required reinstatement by mandamus or injunction. Mandamus is the appropriate remedy where the company is incorporated (Sibley v. Carteret Club, 40 N. J. Law 295), but not where it is not. In the latter case, injunction is said to be. Bac. Ben. Soc. § 442. To compel warring religious factions to come together after so much heat and violence would not be consistent with equity. The court, having power to distribute the entire fund among the uhole number of members, cannot lack power to distribute a part of it among a part of the members, if that appears to be the best way of disposing of the controversy. The propriety of some kind o£ distribution is admitted by the consent to the order of reference.

It is argued further that the order of reference is too narrow to admit of this disposition of the matter. The master is required, with the aid of an insurance actuary, to determine “what sum is due each of the complainants who are entitled to partidpate in the fund of the said society,” * * * “regard being had” to four particulars, two of which the master and actuary have in view of the situation deemed unimportant. The real question was and is, what sum is due to those entitled to participate? The subordinate questions, propounded in the order, were added in order that they should not be lost sight of — not that they should be ¡controlling.

That I may not appear to have overlooked the matter, I may say that the bill charges that the society was constituted as an unincorporated society on May 2d, 1890. The answer denies that it was unincorporated and alleges an incorporation on May 13th, 1890, under the name “First t/7w0-Slavonic Greek Catholic Sick Benevolent Church Society of Archangel St. Michael,” the underlined words not appearing in the constitution and by-laws. This shows their adoption on May 2d, and so precedes the alleged incorporation. Neither the name, nor apparently the object, the one being a benevolent, the other a benevolent church society, are the same and no proof is made by defendants either of their identity or even of the certificate of incorporation. Hnder these circumstances, the society cannot be treated as an incorporated one.

I think the master’s report should he confirmed.


source: Caselaw Access Project

author: Stevens, Y. O.

license: Public Domain

text:
    The State, ex rel. Board of Health of Irvington, v. Herman H. A. Schmidt.
    [Decided April 6th, 1914.]
    1. It is not necessary that a public nuisance should be injurious to health; if there he smells offensive to the senses, that is enough, as the neighborhood has a right to fresh and pure air.
    2. By section 28 of the Health act {Comp. Stat. p. 2668) providing that any local board of health, instead of resorting to the summary method of abatement, may file a bill for an injunction to prohibit the continuance of a nuisance “hazardous to the public health,” the statutory test is not injury but hazard. The proof must show a nuisance — not, necessarily, injurious to health but likely to be, or that may by the operation of chance or hazard become so.
    3. A piggery containing throughout the year from fifty to one hundred pigs, large and small, creating an odor perceptible within a radius of one thousand feet under certain conditions of the wind and weather, and growing stronger as the distance from the pen diminishes, possesses the characteristics of a public nuisance, it appearing that the odor pervades a neighborhood made up of dwelling-houses; has caused loss of appetite, headaches. and nausea to several of the neighbors; is at times perceptible in a public street and is instrumental in breeding great quantities of flies which at times are seen to swarm upon the fence bordering the highway, and might, in case of an outbreak of typhoid fever, cholera or some other kinds of disease, act as carriers.
    4. The mere fact that the odor is not noticed by or does not affect some of the neighbors, does not show that it is not a nuisance to others.

      Messrs. Lambert & Stewart, for the complainant.

      Messrs. Bilcer & Bilcer, for the defendant.
   Stevens, Y. O.

That the piggery in question, containing throughout the year from fifty to one hundred pigs, large and small, is a private nuisance is proved beyond question. The contention is that it is not a public nuisance — such a nuisance as is indictable. State v. Du Pont de Nemours Powder Co., 79 N. J. Eq. 32. In State v. Uvalde Asphalt Paving Co., 68 N. J. Law 512, it is said that if the indictment layr the nuisance as being committed near a highway and also near several dwelling-houses, it is sufficient. In Rex v. Neil, 2 C. & P. 485, in a passage quoted in 1 Russ. Cr. & M. *319, Chief-.Justice Abbott said: “It is not necessary that a public nuisance should be injurious to health; if there be smells offensive- to the senses, that is enough, os the neighborhood has a right to fresh and pure air.”

By section 28 of the Health act *( Comp. Stat. p. 8668) it is provided that any local board of health instead of resorting to the summary method of abatement, may file a bill for an injunction to prohibit the continuance of a nuisance “hazardous to the public health.” The statutory test is, therefore, not injury but hazard. The proof must show a nuisance — not, necessarily, injuHous to health but likely to, or that may by the operation of chance or hazard become so.

In the case under consideration the odor is perceptible within a radius of one thousand feet under certain conditions of the wind and weather, and it grows stronger as the distance from the pen- diminishes. It appears to possess the characteristics of a public nuisance, in that it pervades a neighborhood made up of dwelling-houses; has caused loss of appetite, headaches and nausea to several of the neighbors; is at times perceptible in a public street, and is instrumental in breeding great quantities of flies that at times are seen to swarm upon the fence bordering the highway, and might in case of an outbreak of typhoid fever, cholera or some other kinds of disease, act as carriers.

While the evidence shows that the floor of the pen is cemented and that considerable pains are taken to keep it clean, it is nevertheless true, unless I am to discredit the testimony of a considerable number of credible persons living in the neighborhood, that the precautions taken are not entirely effective. The mere fact that the odor is not noticed by or does not affect some of the neighbors does not show that it is not a nuisance to others. I think there must be an injunction.


author: Stevjwts, Y. C.

text:
    James M. Seymour, Jr., v. German-American Insurance Company.
    [Decided April 25th, 1914.]
    Plaintiff had insured premises used as a dwelling-house. Thereafter the premises'were altered to be used for manufacturing oil stones, the insurance policy changed accordingly, and the premium increased. At the expiration of the policy the company sent the plaintiff a new policy insuring the same premises for which it charged the increased premium. Upon this new policy had been stamped a warranty that the building was occupied exclusively for dwellings, but the clause was very much blurred and almost unreadable. The complainant failed to notice the stamped words and paid the premium, and was not advised of the provisions of the clause until after a fire. The agent who stamped the clause upon the policy was not called to explain his action. — Held, that the ease was one of mutual mistake and that the policy should be reformed by striking the stamped words therefrom.

      Mr. Thomas L. Raymond, for the complainant.

      Mr. Murray (of New York), for the defendant.
   Stevjwts, Y. C.

The complainant asks that the contract of insurance appended to his bill be reformed by striking from its face the words, stamped with a hand stamp, “Warranted by the assured that the within described building is occupied exclusively for dwellings above the first or grade floor.”

The premises had been a dwelling-house, and had, in 1909, ■ been so altered that they might be used to manufacture oil stones. Thus changed they had, in March, 1909, been insured for $2,-000 for one year, “while occupied as a dwelling and for manufacturing of oil stones.” The dwelling-house rate of $8.40, theretofore charged, was changed to the factory rate of $20.25. When this policy was about to expire the company’s agent sent to the complainant’s agent a new policy, in which the property was described, as it had been in the former policy and the same increased premium was charged. On this new policy was stamped the above warranty, but very much blurred and almost, if not quite, unreadable. The defendant’s agent transmitted the policy to complainant, who, failing to notice the stamped words, paid the premium and placed the paper in his safe, supposing it to conform in all respects to the one that had preceded it. The agent, who stamped the words, was not called to explain their presence on the paper. The complainant did not know of them until the company refused to pay after the occurrence of a fire. As far as appears, therefore, the company, without any actual request by complainant to renew, and without giving any notice of the cliaage, sent to complainant’s agent, in the ordinary course of business, a new policy, on which it charged and took the increased premium and which was, if its present contention be sound, void ab initio, to its knowledge. I say “to its knowledge” for it had, the year before, been informed of the alteration in the building and in its use and had increased the premium accordingly. It had, in the meantime, received no further .information, and it had no reason to suppose that there had been a change. The facts appear to me to show mutual mistake — mistake by the company’s agent in stamping the objectionable matter on the printed policy — and mistake by the complainant, who supposed that the policy was like the one which had immediately preceded it and who was guilty of no more carelessness than, was Lloyd when he took his deed from Hulick under the supposition that it conformed, to the prior written contract. Lloyd v. Hulick, 69 N. J. Eq. 784. The following cases are in point: Hill v. Millville Insurance Co., 39 N. J. Eq. 66; Thomason v. Capital Insurance Co., 61 N. W. Rep. 843; Fitchner v. Fidelity Association, 68 N. W. Rep. 710; Providence Washington Insurance Co. v. Brummelkamp, 58 Fed. Rep. 918; Pictet Spring Water Ice Co. v. Citizens Insurance Co., 71 S. W. Rep. 514.


author: Steveus, Y. C.

text:
    Henry B. Oerter v. Mary I. Oertel.
    [Decided May 1st, 1914.]
    1. Assuming that the cessation on the wife’s part of sexual intercourse, without more, is sufficient desertion if the husband would take advantage of his wife’s failure of duty in this regard, he must be able to show that he has fulfilled the equally important marital obligation of furnishing her, according to his means, with sufficient food and clothing.

      2. Evidence of husband’s means and as to the sufficiency of food and clothing by him furnished to his wife, held to show a very inadequate support, even if he had an old debt to pay, and some other professional expenses.
    3. The wife’s declaration to witnesses that she would not cohabit with her husband any longer, casually uttered in moments of resentment, are not entitled to much weight as evidence of a fixed resolve. They may well have been used in reference to the then .situation.
    4. If the wife’s act was desertion in the first instance, it was the husband’s duty to make proper effort to terminate it by making those advances and concessions which might reasonably have been expected of him, with a view of inducing her to return. The appropriate concession in this case was a more adequate support.
    On petition for divorce.

      Messrs. Raymond, Mountain, Van Blarcom & Marsh, for the petitioner.

      Mr. Cecil H. MacMahon, for the defendant.
   Steveus, Y. C.

This is a suit for divorce on the ground of desertion. The parties were married April 30th, 1901. The desertion is alleged to have taken place in May, 1911. The suit was commenced October 1st, 1913. The act of desertion proved is the cessation on the wife’s part of sexual intercourse, and Rector v. Rector. 78 N. J. Eq. 404, is relied upon. Chancellor McGill held that this was not, by itself, sufficient in Anon., 52 N. J. Eq. 349; and so did Chancellor Zabriskie, in Reid v. Reid, 21 N. J. Eq. 332. Assuming, however, that the Rector Case is authority for the contention that such cessation, without more, is sufficient, it seems to me plain that if the husband would take advantage of his wife’s failure of duty in this regard, he must be able to show that he has fulfilled the equally important marital obligation of furnishing her, according to his means, with sufficient food and clothing. This his wife says lie did not do and this she gave him as her reason for refusing to cohabit with him. She performed, as far as she could, every other marital duty up to a time well within the two-year period.

The complainant is a physician, who for several years past has been earning from •$1,500 to $1,800 per annum. According to his statement, as well as hers, he allowed for their food and for her clothing from $3 to $6 per week: out of which $1.50 was paid for washing. Occasionally, he brought home, he says, something for the table. He paid from $168 to $336 per year for rent (the latter sum partly on his mother’s account), and he paid not more than $150 a year for an office boy. His income was, as he states it, in the year 1911, $1,723, and in 1912, $1,757. Deducting the money paid for rent and office boy, he had left about $1,250, or over $100 a month. It seems to me that a payment of from $1.50 to $4.50 per week (deducting the washing bill) was, considering his means, a very inadequate support, even if he had an old debt to pay and some other professional expenses. Her refusal to cohabit was not, she says, final. It was expressly grounded on his failure of duty in the matter of support. It is true that there are witnesses who swear that she told them she would not cohabit with him any longer. But' her expressions, supposing them to have been stated with entire accuracy, casually uttered in moments of resentment, are not entitled to much weight as evidence of a fixed resolve. They may well have been used in reference to the then situation.

If her act was desertion, in the first instance, then her husband did not use any proper effort to terminate it by making those advances and concessions which, in the language of the cases, might reasonably have been expected of him with a view to inducing her to return. Hall v. Hall, 65 N. J. Eq. 710. The appropriate concession in this case was a more adequate support. I think the petitioner has failed to establish his case.


author: Stevens, Y. C.

text:
    Edmund Wilson, attorney-general, v. East Jersey Water Company.
    [Decided May 1st, 1914.]
    1. The legislature has, by necessary implication from its various acts giving to municipalities a right to obtain a water-supply, granted to them the state’s right in so much water to be taken from the streams of the state as they may need for their lawful purposes.
    2. Municipalities having the right by implied grant from the state to appropriate water from streams for their lawful uses and purposes can, under the express provisions of act 1888 (2 Gen. Stat. 1895 p. 2210 § 40.5), contract with water companies to supply such water, and thus make them their agents or instrumentalities for that purpose.
    3. Under act 1888 (2 Gen. Stat. 1895 p. 2210 § 405), authorizing municipalities to contract with water companies to supply them with water, a water company with whom a municipality has so contracted may contract with other companies for the use of their pipes and pumping systems.

      Mr. Echnund Wilson, pro se.

      Mr. Gilbert Collins, for the defendant.
   Stevens, Y. C.

The questions now to be considered were reserved on the former hearing because of the absence of the municipalities principally affected. These municipalities have been brought in and the case is ready for final determination. The questions reserved were stated in the opinion (Wilson, Attorney-General, v. East Jersey Water Co., 78 N. J. Eq. 330) as follows:

(1) Has the legislature, by necessary implication from its various acts giving to municipalities a right to obtain a water-supply, granted to them the state’s right in so much water to be taken from the streams of the state as they may need for their lawful purposes ?

(2) If such consent has been given, does the East Jersey Water Company stand in the position of acting as the lawful agents of the defendant municipalities in obtaining the supply ? • This second question has been somewhat modified by what has occurred during the progress of the suit.

As to the first question, there can be no doubt. The authorities, cited in my former opinion, lead inevitably to the conclusion that when the legislature has authorized a municipality to procure a water-supply, it has, by necessary implication, granted the state’s right in so much of the water of the stream, from which the supply is to be taken, as the municipality may need. There never has been a direct grant of such right to any municipality and if the grant be not implied, every municipality is now appropriating the state’s right in the water unlawfully. The uniform course of decision is in favor of the implication.

The next question is whether the East Jersey Water Company and those other corporations which are now engaged in bringing the waters of the Passaic to the defendant municipalities are the lawful agents or instrumentalities of the municipalities for that purpose.

The act of 1888 (Gen. Stat. p. 2210) cited at length in my former opinion, authorizes the appropriate municipal authority

“to make and enter into a contract or agreement with any water company or other company, contractor or contractors for one year or a term of years for the obtaining or furnishing of a supply or a further or other supply of water,” &c.

This the defendant municipalities have done. Having done so, they may lawfully take, as against the state, water for “their lawful uses and purposes.” The attorney-general contends, however, that the act is to be construed strictly and that the company having the contract is without authority, as he expresses it, “to farm out its duty or delegate its agency.” But that this so-called delegation is not unlawful, has been very recently decided by the supreme court in cases in which ’some of the very contracts here attacked were the subject of investigation. Paterson v. Kearny, 84 N. J. Law 456; Paterson v. Jersey City, 84 N. J. Law 454.

The East Jersey Water Company was the original owner of the plant and water works at Little Ealls, the point of diversion. Afterwards, by conveyance, undivided interests therein were vested in the Montclair Water Company, the Passaic Water Company and the Aequaekanonk Water Company, which became with the East Jersey Water Company tenants in common thereof. These owners by agreement made December 31st, 1910, gave to the executive officers of the Montclair Water Company

“the charge and management of the joint property and of the pipe lines connected therewith, so far as owned in common, for the purpose of operating the same and delivering the water for each of them into the pipe lines used exclusively by the said parties z-espectively, to the extent of their several requirements.”

The township of Kearny entered into a contract with the East Jersey Water Company in 1895. In 1903 this contract was assigned to the New Jersey Suburban Water Company and the New York and New Jersey Water Company. In 1904 Kearny ratified the assignment and is now receiving its water thereunder. On May 18th, 1911, the East Jersey Water Company entered into a supplemental agreement with the New Jersey suburban company and the New York and New Jersey company by the terms of which the Passaic river at Little Ealls was designated as the source of supply and the East Jersey Water Company was constituted the agent and employe of the New Jersey suburban company and the New York and New Jersey company

“to use its watez- powez-, mains and z-ipaz-ian and othez- facilities to accomplish the diversion which is authorized by said municipal contracts and to receive per million gallons, for the water so delivered through its mains, into the mains of the parties of the second part, the prices prescribed in its contracts as compensation, not for water sold, but for services as agent and for the use of its appliances, water power’, mains and propez’ty in accomplishing the municipal supply which the party of the first part hereby agrees to use and provide for that purpose.”

The situation then, as far as respects Kearny, is as follows: Kearny has, in effect, a contract for a supply of pure and wholesome water with the New Jersey suburban company and the New York and New Jersey company, made pursuant to the provisions of the act of 1888. It has its own distributing system of pipes and mains. These connect with the pipes and mains of the two companies. The two companies have employed the East Jersey company, as their agent, to deliver into their pipes and mains, water to be taken from the Passaic at Little Palls. The East Jersey company, in its turn, with the other companies above named, has employed the officers of the Montclair Water Company to act as its agent in the work of pumping the water from the river and delivering it through the East Jersey company’s mains to the mains of the New Jersey suburban company and the New York and New Jersey company. On this somewhat complicated situation, brought about by the fact that the whole line, extending from Little Palls to Kearny, is made up of sections owned by the different companies, Mr. Justice Swayze, in the case above cited, remarked as follows (84 N. J. Law 458) : “Since the point of diversion at Little Palls is distant from the town (of Kearny) there must be some means of conveying the water to the distributing system of the town. We see no reason why the town may not avail itself of the most convenient method. It might, after it had acquired the right to divert, pump or otherwise convey the water in barrels or tank cars, as is sometimes done with oil and so transport it, but surely it is under no obligation to adopt that expensive method, when a pipe line is available. In effect, as counsel argues, the diversion is a diversion by the municipality. No actual diversion can tale place except as the municipality uses the water. * * * If the municipality has a distributing system so that the water and water rights which it acquires can be made available for the benefit of its citizens; it can make no difference whether it owns its own reservoirs or not. It must be enough that it owns its distributing system. To force municipalities which are as close together as they are in the Passaic valley to have each its own prrmping station, its own reservoir and its own pipe line from Little Palls to the municipal boundary, would be to compel a useless waste of money. Harrison, Kearny and East Newark, for example, are one compact city. We find nothing that would forbid them to have a common pipe line and a common reservoir. If they may do this, the means by which, they may accomplish the and is not material even though that means is the selection of a water company as their common agent.”

The contracts attacked in this suit were the basis of Paterson’s attack and the court found nothing illegal in them. They could not be, as contracts, legal as against Paterson and illegal as against the state. The attorney-general argues that the New York and New Jersey company and the New Jersey suburban company Could not delegate to other companies the duty of bringing water to Kearny. They do .not attempt to do so. That they may perform their own contractual obligation, not having pipes extending the whole distance and a pumping system of their own, they contract for the use of the pipes and pumping system of the East Jersey company. By the supplemental agreement of May 18th, 1911, heretofore referred to, made since my former decision, and no doubt in consequence of it, the East Jersey company renounces, in express terms, all claim to sell water. It agrees to act as the agent of the two companies and to permit them to use its mains and appliances. It asks compensation for this and this only. It no longer asserts or pretends that it is “the owner of various sources of water-supply.” As Mr. Justice Swayze points out, it is really the municipality which is taking and using the water. It is taking it by means of the instrumentalities provided under and pursuant to its contract with the New York and New Jersey and the New Jersey suburban companies.

As the question of the legality of the arrangement made by the municipality with the two companies and by them with the East Jersey compajiy is a purely legal one, and as the supreme court has passed upon it, it is not open to question here.

It is unnecessary to consider the case of the other municipalities separately. As far as the contracts, under which they obtain water are challenged, they stand on substantially the same ground.


text:
    The Essex County Trust Company v. Lorenzo H. Abbey et al.
    [Decided May 5th, 1914.]
    By an agreement in writing dated November 5th, 1909, the defendant Abbey agreed to sell to the defendant Schwerin certain stock, the price to be paid in monthly installments up to April 15th, 1912, at which time “the balance of the principal sum with all accrued interest at the rate of six per cent, per annum, computed quarterly on all balances due after the payments herein provided are made, shall be paid.” — Eeld, that to comply with its terms we must for three months deduct the three preceding monthly payments from the principal sum then unpaid and calculate interest on the remainder from the date of the last preceding quarter.

      Mr. Francis Lafferty, for the complainant.

      Mr. Corra N. Williams, for the defendant Abbey.

      Messrs. Queen & Stout, for the defendant Schwerin.
   Stevens, V. C.

This is an interpleader bill. The controversy turns upon the meaning of an agreement, in writing, hearing date November 5th, 1909, by which defendant Abbey agreed to sell to defendant Schwerin certain stock of the Linden Building and Construction Company. The price was to he paid in monthly installments up to April 15th, 1912. At that time, so the agreement reads,

“the balance of the principal sum, with all accrued interest at the rate of six per cent, per annum, computed quarterly on all balances due after the payments herein provided are made, shall be paid by the said party of the second part to the said party of the first part.”

What does this clause mean ? It must be assumed that the parties contemplated that the agreement would be performed; not that it would be broken. The agreement speaks of quarterly computations and balances due — not one computation or one balance but more than one; and due not by reason of breach but by way of performance. These are to be made from the date of the contract (November 5th, 1909) to the time of final payment (April 15th, 1912). Erom this it follows necessarily, that to comply with its terms we must, every three months, deduct the three preceding' monthly payments from the principal sum then unpaid, and calculate interest on the remainder from the date of the last preceding quarter. Schwerin’s contention is that these computations are to be made only in case there be a default in the payment of installments as they become due, and then only, as I understand the argument, as long as the default continues. But the agreement does not say so. On the contrarjq it provides against default by declaring a forfeiture of all title to or interest in the stock certificate. In addition, it provides that the stock dividends shall, during the period of payment, go to the benefit of Schwerin. It is not usual to give the buyer, either of land or chattels, the enjoyment of the thing contracted for, pending performance, and yet excuse him from paying interest on the unpaid purchase-money.

Schwerin testifies that the real agreement was that he was not to pay interest on balances, but this is disputed by Abbey, and the effect of the evidence would be to vary the terms of the contract, which, on well-settled principles, cannot be done except by way of reformation. No case for reformation is made.


author: Stevenson, Y. C.

text:
    The John Agnew Company v. The Board of Education of the City of Paterson et al.
    [Decided February 13th, 1914.]
    1. Under Municipal Improvements Lien act, act April 19th, 1909 (P. L. 1909 p. £60), providing that the funds of the contractor, due or to grow due under the contract against which liens have been filed, may be released by giving a bond conditioned for the payment of such sums as may be “decreed to be due from the said contractor,” the quoted words do not refer to the chancery suit in rem to determine liens, contemplated by another section of the act, and claimants, under liens released by the giving of such a bond, may not assert, in such chancery suit, any claim to the fund.
    2. Where, by the Municipal Improvements Lien act, act March 30th, 1892 (P. L. 189£ p. 369), before its amendment, all parties who had filed liens were to be made parties in a chancery suit to determine liens, the joinder of claimants covered by a bond, who by provisions of the amending act had no right to the fund, was not improper, as they were proper, though not necessary, parties.
    3. Where a bank loans the statutory limit to a company claiming a lien under the Municipal Improvements Lien act, and the company assigns its claim against the fund to the bank as security, the bank is not entitled to claim that the assignment covered further money loanSd to individual officers of the company to evade the banking law.
    4. An assignment made by a corporation to secure a pre-existing indebtedness, when the assignor is insolvent or in contemplation of insolvency, is void under Corporation act (2 Oomp. Btat. 1910 p. 1638 § 64) and under United States Bankruptcy act, July 1st, 1898, chapter 541 (30 Btat. p. 544; TJ. B. Oomp. Btat. 1901 p. 3418).

    5. An oral promise to assign a claim made before insolvency will not avoid a preference, within Corporation act (2 Oomp. Btat. 1910 p. 1638 § 64) and Bankruptcy act, July 1st, 1898, chapter 541 (30 Btat. p. 544; U. 8. Oomp. Btat. 1901 p. 3418), where the written assignment is made when insolvent.
    6. A foreign corporation, doing business in New Jersey, may not give a preference when insolvent, in violation of the laws of New Jersey relating to domestic corporations in Corporation act (2 Oomp. Btat. 1910 p. 1638 § 64).

    7. An assignment of a claim from a construction company held, under evidence showing that the assignee, after the assignment, reassigned a portion of his claim to dummies, who filed a petition in bankruptcy against the construction company, to be a preference, void under Corporation act (2 Comp. Stat. 1910 p. 16S8 § 64) and Bankruptcy act, July 1st, 1898, chapter 541 (SO Stat. p. 544j Ú- 8. Comp. Stat. 1901 p. 3418).

    8. An assignment, by an insolvent corporation, to a party who has no notice of such insolvency, is good as to so much of the consideration as is paid at the time the assignment is made.
    9. The notice prescribed in the Municipal Improvements Lien act, act April 19th, 1909 (P. L. 1909 p. 260), is not to be deemed a pleading which must be drawn with technical accuracy, but corresponds with stop-notices filed under the Mechanics’ Lien act.
    10. A notice under Municipal Improvements Lien act, act April 19th, 1909 (P. L. 1909 p. 260), need not set out the exact legal contract under which claimant filed a lien, and a notice is sufiicient which recites that the materials were “furnished on orders given day by day and subject to a previous quotation of prices.”
    11. Under Municipal Improvements Lien act, act April 19th, 1909 (P. L. 1909 p. 260), providing that a “claimant may file with the chairman or head of the department * * * and with the financial officer * * « notices,” a claimant filing one notice first and one last in point of time is inferior to a claimant filing his notices on both officers before the last notice of the other claimant.
    12. Where a foreign construction company, under contract for municipal improvements, is thrown into bankruptcy, from the time of the appointment of an ancillary receiver in New Jersey with authority to take over assets and providing for an injunction against the payment of such assets, no liens can be filed under Municipal Improvements Lien act against the fund due the construction company from the city, even by laborers, who have, by section 9 of the Improvement act, act March 30th, 1892 (P. L. 1892 p. 372), a. first lien on the fund, regardless of the time when their lien is filed, providing it be filed.
    13. Where a city is enjoined from paying the amount due on a contract for the construction of a high school building, of which the city has had the benefit, until the determination of liens filed against the fund, the city is liable for interest on the amount unpaid at a rate conformable to the rate they would pay to borrow the money to pay the amount as was their custom.
    14. Under Municipal Improvements Lien act, a complainant in a chancery suit to have liens established is entitled to costs and a counsel fee, if successful, out of the fund.
    15. In a chancery suit, under Municipal Improvements Lien act, to determine liens on a fund due a contractor, costs will be charged in favor of successful defendants against defeated adversaries, whose unsuccessful litigation was the sole cause of the costs.
    On final tearing on bills, answers, replications and proofs taken in open court.

      Mr. William B. Gourley, for the complainant, the John Agnew Company.

      Mr. Eclwari- F. Merrey and MY. Thomas F. McOran, for the city of Paterson and the Board of Education of the City of Paterson.

      Mr. Gustav A. Runziker, for the defendant Ingalls Stone Company,

      Mr. Munson Force, for the defendant James Healey.

      Mr. John J. Fallon, for the defendant Eirst National Bank of Town of Hnion.

      Mr. William F. Delaney and Mr. Noah A. Stanclife (of the New York bar), for the defendant Martin S. Payne.

      Mr. David F. Edwards and Mr. Edward Ward McMahon (of the New York bar), for the defendant Erank Miller Lumber Company.

      Mr. William 1. Lewis, for the defendant Joseph Sharpe Con- ' struction Company.
    . Mr. Hugh B. Reed, for the defendant Herringbone Metal Lath Company.

      Mr. William M. Drew, for the defendant Cortlandt Engineering Company.

      Mr. Gaetano M. Belfatto, for the defendant E. G. Ebsary.

      Mr. Albert Comstock, for the defendant Architectural Plastering Company.

      Mr. Frank R. Rail, for the defendant trustee in bankruptcy of the Glen Engineering Construction Company.

      Mr. John Pomfret, for thirty-seven workmen’s claims for wages.
   Stevenson, Y. C.

1. The decree will adjudge that any liens originally acquired by the Ingalls Stone Company and James Healey, by the filing of their respective notices, were released so that they have no participation in the'distribution of the fund. Under the statute, as amended in 1909, these parties are covered by a bond securing their entire claims. The provision for the substitution of a bond for the claimant’s lien, which was injected into the statute in 1909, like many other provisions of the act, is badly drawn. After a careful study of this amendment, I have reached the conclusion that the words “decreed to be due from said contractor under any such claim” do not refer to the suit in remj which may or may not be brought at a later time, after the bond has been given, covering all claims at that time on file, but to any action in any court of competent jurisdiction in which any of these claimants may sue on their bond, or otherwise, for the recovery of their debts mentioned in the notices of “claim” which they filed. The word “decreed” must not be taken in a technical sense. This statute, borrowed from New York, confuses technical terms of law and of equity. The “claimant” in an equity suit is called the “plaintiff.” To allow in this suit m rem, instituted in order to effect the distribution of this fund among parties who have liens upon it, any decree establishing the validity and amount of claims which are-not liens on the fund at all would,’ in my judgment, establish a very incongruous and inconvenient practice. If such a decree could be made it would seem that the surety on the bond should be made a party to the suit. Ho personal decree of any kind is allowable in the suit provided by this peculiar statute. The case of these two claimants from whose liens the funds due and to grow due on the contract have been released, it seems to me, remains precisely the same as if 'after their; bond had been given, which included all liens on the fund which had been created up to that time, no' further liens had ever been filed. Can there be any good ground for holding that these claimants after they had lost their liens on the fund and, as a substitute for such liens, had been protected to the full amount of their respective debts by the bond, could have brought any suit in the court of chancery of New Jersey under this statute, or otherwise, to collect their money or to have the amount due them fixed by a decree? It may be observed that the bond does not merely secure to these claimants the amount which would have been adjudged or decreed due to them from the proceeds of the original contract of the municipality'' if their liens had not been discharged; the bond secures to them the payment of such sums as should be decreed “due from the said contractor under” their respective claims. The claims might aggregate a much larger sum than any sum which was due or could ever become due to the contractor from the municipality. lu such case can there be any question that the remedy of the claimants covered by the bond would be by an action at law to be brought by them or on their behalf, in which the full amount of their claims would be recovered without regard to the amount which they would have recovered on their liens if no bond had been given?

No intimation is made that the joinder of these two claimants, from whose liens the fund in question has been released, was not entirely proper. They may be proper, although not necessary parties. They seem to occupy a position similar to that of encumbrancers who are brought into an ordinary foreclosure suit because their encumbrances stand uncanceled of record, although in fact they have been paid. The mandate of the statute contained in section 7 that “the plaintiff must make all parties who have filed claims * * * parties defendant” applies to the situation of affairs when the statute was enacted in 1892, without any provision for a release upon giving bond.

2. The first lien in point of time claimed upon the fund in this action is that of the Eirst National Bank of the Town of Union, New Jersey, for $15,000 and interest thereon. This lien is claimed under an assignment from the Glen Engineering Construction Company to the said bank, dated September 15th, 1910, delivered on September 16th, 1910. The indebtedness alleged to be secured by this assignment is represented by two notes, one for $10,000 and the other for $5,000. The Glen company exhausted the lending power of the bank available to it under the National Banking act, when it procured the discount by the bank of its note for $10,-000. In this situation of affairs the bank discounted the note of the officers of the Glen company, all parties understanding that the proceeds of the note would be turned over to that company. The bank now asks this court to countenance what it alleges was an evasion of the National Banking act, and to hold that this independent transaction, to which the Glen company was not a party at all, nevertheless must be deemed to have created a debt from the Glen company to the bank so as to bring the same within the operation of this assignment. All this in the face of the fact that the bank refused to loan the Glen company any amount beyond the $10,000 which had been loaned, because it was not lawful for them to make such a loan, and the bank thereupon scrupulously excluded the Glen company from the new loan and made it, as appears by the books of the bank, strictly a loan to the individual who signed the note. Under no circumstances could this assignment on its face be stretched so as to cover any indebtedness beyond the $10,000 which was legally due from the Glen company to the bank.

There has been no argument in regard to the description in the assignment of the money which was thereby intended to be transferred by way of mortgage to the bank, and I shall not deal with this matter.

My conclusion of law and of fact in regard to the validity of this assignment is that it was made to secure a pre-existing indebtedness when the assignor was insolvent or in contemplation of insolvency, and that therefore it is void under the sixty-fourth section of the Corporation act of New Jersey. I also conclude that this assignment is void under the present United States Bankruptcy act.

It is not the purpose of this memorandum to discuss the evidence at length. Not even all the propositions of fact which I find established by the evidence will be set forth. In regard to the oral promise for an assignment of the contract alleged to have been made by the Glen company to the bank when the loan of $10,000 was made, my conclusion is that the evidence is unsatisfactory and entirely inadequate to establish at the present time that any such definite oral contract ever was made. Assuming, however, that such an oral promise was made in consideration of which the bank made the loan, the law is well settled and well founded, in reason that no such oral promise can affect the status of the subsequent assignment made in pursuance thereof, as a preferential transfer under our Corporation act or under the Bankrupt act. We have to deal in this case with the character of this assignment made by the Glen company to the bank on September 16th, 1910, to secure a loan made nearly five months prior thereto without the slightest regard to any oral promise from the Glen company to the bank made at the time the loan was effected, and on the strength of which the loan may have been made.

The assignment is also probably void under the New York statute, but I have not deemed it necessary to decide this point, because in my judgment the law of New Jersey controls in this case.

A foreign corporation, under the principle of comity, comes into New Jersey to do business and makes large contracts for the construction of buildings in New Jersey, in which business it acquires property in New Jersey, and also contracts debts. It would be a most extraordinary result, indeed, if when this foreign corporation becomes insolvent it could still transfer its New Jersey assets acquired in its Nerv Jersey business so as to make preferences among its New Jersey creditors, necessarily disadvantageous to some of them, in defiance of the law which prevents New Jersey corporatións from doing this thing. Our statute expressly provides that “foreign corporations doing business- in this state shall be subject to the provisions of this act so far as the same can be applied to -foreign corporations.” Section 96. There is not the slightest difficulty in applying the prohibition upon preferences contained in section 64 of the Corporation act to a foreign corporation and its assets, of the character and in the situation presented in this case. If the Glen company had not been put in bankruptcy, the statutory action, based on insolvency, &c., provided for in section 65 of our statute, might have been brought and the receiver appointed in such an action Avould have taken possession of all the New Jersey assets, including the right to collect this money from the city of Paterson,' and would have administered the same precisely as they would have been administered in case the corporation had been created under our New Jersey statute.

3. The next lien in chronological order alleged to be charged upon the fund in question is that of Martin S. Paine for $4,900 and interest. This lien is claimed under two assignments from the Glen company to Mr. Paine, dated December 1st, 1910. These assignments were executed, acknowledged and delivered at the same time, and thereupon Mr. Paine gave his check for $4,900 to the Glen company, the assignors, to meet a payroll about to come due. The status of Mr. Paine’s claim depends upon quite a large number of facts, circumstances and conditions, the more important of which it may be convenient to set forth herein without undertaking, however, anything approaching a complete examination and discussion of the evidence.

The leading facts above referred to are as follows:

Mr. Paine holds one share of stock, evidently to qualify him to be a member of the board of directors of the Glen company. The treasurer of the compare, Mr. Downey, was his friend, and it appears that through such friendship Mr. Paine was induced to make loans to the compauy. He took no part in the business of the company, and attended very few of the meetings of its directors. On ihe 30th of November, 1910, Mr. Paine’s loans, made in throe amounts during the preceding four months, amounted to $21,000. On the 30th of November, 1910, Mr. Edward Gunnell, as agent for Mr. Paine, procured an assignment from the Glen company of tho "retained percentages” on the Paterson contract amounting, approximately, to $42,813.45, to secure the payment of these three sums of money aggregating $21,000 and interest thereon. Whether Mr. Gunnell had previously had these sums, or a portion of them, nominally assigned to him by Mr. Paine does not appear. At this time Mr. Paine employed Mr. Gunnell to examine the books of the Glen company, and this examination was proceeding during the latter part of November or the first part of December.

It is a significant fact that this assignment to Mr. Gunnell expressly recites that it is "subject and subordinate to the rights acquired by said First National Bank of the- Town of Hnion under” its assignment, and directs and empowers the said bank to nay to Mr. Gunnell, or his assigns, out of all moneys which ihe bank shall collect under its assignment,

“any excess over the amount due to said First National Bank of the Town of Union in accordance with the terms of the said assignment, up to but not in excess of the sum of $21,000 with interest,”

setting forth the three separate loans which aggregate that sum. Notwithstanding this recognition of the validity of the assignment of the bank, counsel for Mr. Paine strenuously argues that the bank’s assignment was an unlawful preference and therefore should he declared void in this suit. But the important point to observe is that Mr. Paine’s representative and agent who procured this preferential assignment on November 30th, 1910, recognizes that the fund already was charged with the indebtedness due to the bank, and no effort was made to show that the amount of this indebtedness — the amount for which the bank claimed to hold the assignment — was not known to Mr. Gunnell or to Mr. Paine. The Paterson contract, therefore, on December 1st, was already covered with mortgages to secure $36,000, or at least $31,000, within the view' of Mr. Paine or his agents whose knowledge is imputable to him.

On December 1st, 1910, the directors of the Glen company, Mr. Alford, the president, Mr. Downey, the treasurer, and Mr. Paine met at the office of Mr. Hardy, who wras Mr. Paine’s attorney. There can be no doubt, I think, from the testimony that Mr. Paine’s accountant- had in part at least examined the books of the Glen company and discovered that its financial condition was perilous, and that Mr. Paine had received this partial report. Mr. Alford testified (at' ¶. 517) that Mr. Paine’s attorney, Mr. Hardy, told him, at the interview or meeting of directors when the assignment was arranged for, that from what he liad learned from the examination of the books, presumably by Mr. Gunnell, it appeared that things “looked rather had,” and Mr. Hajxly further stated that to lend the required $4,900 “might be just losing that much more.” Mr. Paine, on cross-examination, declined to testify whether or not Mr. Hardy had made those statements to him as Mr. Alford stated. He said that he did not “recall.” It may he noted that neither Hardy nor Mr. Gunnell, nor any of the other agents of Mr. Paine -who figured in this case, were placed upon the stand to give their testimony. Mr. Paine appears to be a business man of somewhat large affairs, whose connection with the Glen company was very slight. He operated in getting these assignments through agents who are not brought as witnesses to tell what they learned and what they knew while acting for their principal.

The arrangement made by these gentlemen on December 1st, 1910, and which was immediately carried out, was that Mr. Paine should advance the required payroll ($4,900), and thereupon the company would give to him the. twu assignments (Exhibits 0-8 and G\9). Both of these assignments, as well as the assignment 0 7, made to Mr. Gunnell the day before (November 30th), appear to have been drawn by Mr. Hardy or in his office. All have the same backs upon which Mr. Hardy’s business card is printed. By one of the assignments of December 1st, 1910 (Exhibit C P), all moneys due or to become due to the Glen company upon the Paterson contract were assigned

“as security to said Paine for moneys advanced by Mm to and for tbe benefit of the Glen Engineering Construction Company, and for such moneys as may hereafter be advanced to or for the benefit of said company.”

It will be observed that this assignment on its face did not undertake to secure specifically the new loan of $4,900 contemporaneously made to the company. It covered generally all present and future indebtedness, and for a reason which is not disclosed in the evidence, but may he surmised, it ignored the assignment to the bank.

The other assignment (0 8) executed December 1st, 1910, is to the same effect as its companion, securing “moneys advanced” by Mr. Paine, and “'such moneys as may hereafter be advanced.” This second assignment, however, covers all moneys due and to become due to the assignor on its three contracts in New Jersey —the Paterson contract, the Newark contract and the Staten Island contract. Mr. Paine admits in his testimony that he knew that these were the three contracts that the company was performing in the year 1910, and evades the question whether he knew that they were its only contracts (at p. J/.71). Mr. Alford testifies that when "the assignment was first suggested, he (Alford) asked Mr. Hardy “what value it would be,” and there-argon Mr. Hardy stated “he would take it for what it was worth,” or words to that effect. This was said in the presence of Mir. Paine, and yet Mr. Paine is silent in his testimony in regard to the matter, and Mr. Hardj' is not put upon the stand.

Mr. Paine, having, procured assignments covering practically all the assets of the company on November 30th and December 1st, caused his three notes, which constituted his claim of $21,-000, to he assigned for no consideration, to three agents or dummies of his who thereupon used the same to qualify them to file a petition in bankruptcy on December 9th, 1910, against the Glen compan}c

I have thought it worth while to state some of the facts relating to these Paine assignments in their chronological order, but without further discussion of the evidence, I may state my conclusion of fact that all these assignments were void under section 64 of the Corporation act of New Jersey, and under the provisions of the Bankrupt act prohibiting preferences.

Counsel for Mr. Paine, with great astuteness, undertook to present this case as if the transaction between Mr. Paine and the Glen companjr consisted solely of his making a loan on December 1st of $4,900 to meet a payroll, and accepting for such loan tho assignments which he held. The transaction, in my judgment, will not bear that character, nor do 1 think that Mr. Paine’s situation in procuring an assignment of practically all the remaining assets of this insolvent company to secure $25,-900 of indebtedness is strengthened by the fact that $4,900 of this sum was advanced when the assignments were made. I find that Mr. Paine stands charged with notice that the assignments which he received were unlawful attempts to prefer him to the extent of $21,000 of pre-existing indebtedness. It is true, as decided in Frost v. Barnert, 56 N. J. Eq. 290, that an assignment by an insolvent corporation to a party who has no notice of such insolvency, may he held good as to so much of the consideration as -was paid at the time the assignment was made, while it stands void under our statute as to so much of the consideration as consisted of a pre-existing debt. To hold that Mr. Paine personally and through agents who bound him in the matter had no notice that these assignments were made to him when the Glen company was insolvent, or in contemplation of insolvency, as preferences, over other creditors, would, in my opinion, involve a method of dealing with evidence and human nature contrary to sound rules of law and of common sense.

4. The lien notice of the complainant, John Agnew Company, for $11,933.29, filed November 28th, 1910, which stands first in point of filing, I find substantially complies with the requirements of the statute, and the amount of the claim stands as a first lien on the fund.

The notice prescribed by the statute is not to be deemed a pleading or a pape]1 which must be drawn with technical accuracy, or according to technical rules. It corresponds with the stop-notices filed under the Mechanics’ Lien act. The sufficiency of a notice is mainly to he determined by a consideration of the objects of the notice. The question is, does this paper filed in' these offices convey the information which the statute intends all parties interested shall have. Measured by this -test the notice seems to me to be ample. The argument contra is purely technical. In view of the doubt which has been expressed in regard to whether the notice of lien under the act must contain a statement of the terms, &c., of the claimant’s contract, or of the contract of the contractor with the municipality, the notice of 'the complainant in this case seems to have been drawn so as to describe the terms, &c.. of both contracts. No argument has been made that the notice is defective in respect of the original contract between the board of educaiion and the Glen company. Perhaps counsel have assumed, what seems to me to be the correct view, that the statute intends that the notice shall describe the terms, &c., of the claimant’s contract. Accepting this view for the further' consideration of this case, I think there are grounds for bolding that the statute did not intend to require a claimant, perhaps a business man acting for himself, when drawing a notice of lien, to spell out accurately the exact legal contract into which he entered by means of letters and conversations and under which his material was furnished. I think that the contention on behalf of the complainant is correct that the letters which passed between the complainant and the Glen company, and in pursuance of which the material was furnished, were mere quotations of prices. The notice, in my judgment, correctly states that the materials were “furnished on orders given day by day, and subject to a previous quotation of prices.”

In construing a statute as clumsily and unscientifically drawn as this Municipal Improvements Lien act, and its amendments, it is oftentimes impossible for the judicial mind to reach a satisfactory interpretation of phraseology employed by untrained minds. The difficulty naturally is greater when the statute is bodily carried from one state, where it belongs and fits into a judicial system, to another state where it does not belong, or to whose judicial system its adjustment is not easily made. Violent wrenches oftentimes are necessary in such cases. Rather than to adopt a. construction of this Municipal Improvements Lien act, which would render a notice of lien like that of the John Agnew Company inoperative, because of a purely technical objection like the one made in this ease, the view might be adopted that the phraseology of the statute, “a statement of the terms, time given, condition of his contract,” refers only to cases where the labor has been done or the materials have been furnished in pursuance of a written contract, or at least a definite and complete oral contract altogether different from the implied contracts under which labor and materials are generally furnished, -which implied contracts embrace and adopt any definite matters which may have been agreed' upon by letters, or otherwise, such as a scale of prices.

The claim of the complainant will stand as proved as a first lien on the fund.

5. The next lien is that of Frank Miller Lumber Company for $10,955.14, filed-December 9th, 1910. The important question's argued on behalf of this claimant related to the validity of the respective assignments to the First National Bank of the Town of Union and Martin S. Paine, wdiich have already been disposed of. No objection is made to the form of the notices or the amount of the claim as proved. The claim will therefore take its place next to that of the complainant.

6. The next claim in order is that of the Joseph Sharp Construction Company for $3,037, filed on December 10th, 1910, at ten-fifty-five a. m. with the comptroller and at eleven-ten a. m. with, the board of education. No attack has been made upon this lien and the amount thereof will be allowed as proved.

7. Next comes the claim of the Herringbone Metal Lath Company for $761.25, filed December 10th, 1910, at eight-fifteen p. m. with the comptroller and at nine-thirty p. m. with the board of education.

8. We find next, two claimants who have a dispute in regard to priority intar sese. The Cortlandt Engineering Company filed a claim of $2,537 on December 12th, 1910, at ten-eight a. m. with the board of education and at ten-fifteen a. m. with the comptroller.

Ered G. Ebsary filed a claim for $900 on December 10th, 1910, at twelve-four p. m. with the comptroller, and on December 12th, 1910, at one-thirty-five p. m. with the board of education. It thus appears that Mr. Ebsary filed his notice with the comptroller before any notice had been filed by the Cortlandt Engineering Company in either office, but that the Cortlandt company completed its lien by filing its notice in both offices before Mr. Ebsary had so completed his lien. Counsel for Mr. Ebsary argues that it is the filing of notice of lien with the comptroller which fastens the lien1 upon the fund. I am entirely unable to adopt that view. When the statute imposes two conditions — prescribes the doing of two things in order that a lien may be created, both the conditions must be performed; both the things must be done. The Lien act which we have under consideration provides that any “Claimant may file with the chairman or head of the department * * * and with the financial officer of said * * * notices setting forth certain facts.” It is the filing of the notices which created the lien, and until the notices are filed no lien exists. The Cortlandt Engineering Company will therefore take the fifth place in the line of encumbrancers, and Mr. Ebsary will stand sixth.

9. The liens of the Architectural Plastering Company for $1,680, and the American Lumber Company for $242.90, take the seventh and eighth places in order, respectively, there being no contest over the notices which created these liens or the amounts secured thereby.

10. The allowance of the eight liens in the order above set forth will exhaust the-fund ($29,639.31) in the hands of the mimieipality, and I am not aware that any questions in respect of validity or priority arise with respect to the long list of claims filed subsequently to these eight. If the eight claims have correctly been established as valid, these subsequent lienors have no interest in the cause.

11. On December 10th, 1912-, an involuntary petition in bankruptcy was filed in New York against the Glen company, and on the same day a receiver was appointed by that court.

On December 12-th, 1910, at four p. m., an order was filed in the clerk's office of the United States district court for the district of New Jersey, appointing an ancillary receiver of the bankrupt estate, and investing such receiver with authority to take possession of the assets of the bankrupt in New Jersey, and enjoining all persons from interfering, &c., &c.

On December 13th, 1910, the ancillary receiver was duly qualified and presumably took such possession of the bankrupt estate in New Jersey as he was able to obtain. The bankruptcy receiver and the bankruptcy trustee are defendants in this suit, and on behalf of the trustee elaborate argument has been made against the validity of the two assignments to the bank and to Paine, respective^, and to the lien of John Agnew Company. It was conceded that the receiver in bankruptcy and the trustee took the fund in question subject to all valid liens acquired by filing notices under our statrrte prior to the entry of the order appointing the ancillary receiver by the New Jersey federal court. Fo argument, except the one on behalf of the labor claims hereinafter considered, was made to sustain the validity' of lien notices filed as prescribed by our law after this order appointing the ancillary receiver was entered. I have, however, made a careful examination of the authorities controlling this question as to the exact date after which no liens could be acquired upon this fund, by filing notices under the New Jersey statute, and it must be conceded that the effect of orders appointing receivers is a subject about which there has been a very wide difference of judicial opinion. We are not, however, dealing with the case of an ordinary receiver appointed by a court of equity under its general equity powers. Tlie cases in different jurisdictions differ as to whether the estate of the defendant is put in custodia legis, when the order for the receivership is made, or when the receiver has qualified, or when the receiver has actually taken possession of the land or goods which he is appointed to receive. The question, before tire court is less difficult because it involves the receivership of the estate of a bankrupt under the United States Bankrupt law. Here, again, we find inconsistent views. There is some authority for the proposition, which counsel-for the trustee in this case, however, does not undertake to sustain, that the assets of the bankrupt are put in custodia legis: practically when the petition is filed so as to prevent the acquisition of liens. A dictum of Chief-Justice Fuller, which has been to some extent discredited, is largely responsible for this view. Mueller v. Nugent, infra.

My conclusion is that an order of the bankrupt court appointing a general receiver of the entire bankrupt estate, directing the deliveiy of such estate to him as far as possible by the bankrupt, and enjoining all other persons from transferring or otherwise interfering with the property, assets and effects of the bankrupt, &c., effects a sequestration of the bankrupt’s estate to such extent as to prevent the acquisition of any new lien. The creation of such a receivership in bankruptcy may be a very serious affair, and bankrupt courts wisely exercise caution in regard to the matter. There is a wide difference between the status of the alleged bankrupt’s estate in its relation to himself and third parties, when merely a petition has been filed against him, and the status of that estate when the bankrupt court has appointed a receiver in order to strip the alleged bankrupt of all his assets and put them into the possession of such receiver. I think, therefore, that the proposition advanced by counsel for the trustee in bankruptcy that this receivership order prevented the creation of all liens by notice under our statute after December 12th, 1910, at four p. m.; is sound law, so that if either by the decree of this court or by the decree of the court of errors and appeals, the lien of the John Agnew Company and the assignment to the First National Bank of the Town of Union should be declared void, a substantial sum would pass to the trustee in bankruptcy, to the exclusion of the long list of lienors whose notices were filed after the order appointing the receiver was entered.

The following are some of the authorities which will exhibit the difference of judicial opinion in regard to the time when an order of a court of equity appointing a receiver, places the property of which the receiver is directed to take possession, in custodia leáis; and also the views which have been entertained or enforced by the United States bankrupt courts in regard to the correspoiiding effect of an order appointing a receiver of the entire bankrupt estate: ' 1 Pom. Rem. §§ 158, 159, with notes and cases cited; High Rec. (4th ed., 1910) § 52; 28 Am. & Eng. Encycl. L. 1095; Edwards v. Edwards, 1 Ch. Div. 454; S. C. on appeal, 2 Ch. Div. 291; Ex parte Evans, 13 Ch. Div. 252; In re Jensen Company, 128 N. Y. 550, 553; L. Love. Bk. § 30; Ibid. 106; Frasier v. Southern Loan, &c., Co., 99 Fed. Rep. 707, 713, 714; In re Laplume, &c., Co., 145 Fed. Rep. 1013; Horn v. Perc Marquette R. Co., 151 Fed. Rep. 626, 633; In re Alton Manufacturing Co., 158 Fed. Rep. 367; Mueller v. Nugent, 184 U. S. 1; 46 L. Ed. 405, 411; York Manufacturing Co. v. Cassell, 201 U. S. 353; 50 L. Ed. 785.

12. Lai’ge numbers of claims for wages were filed under our statute on different dates, from December 17th, 1910, to Eebruary 4th, 1911. These claims, of course, do not get the benefit 'of the amendment of our Municipal Improvements Lien act passed in 1911 (P. Ij. 1911 p. 777), giving such claims priority to assignments, but they do have the full benefit of section 9 of the act which gives them priority to liens for materials effected by notice. If, therefore, no bankruptcy receivership had intervened, these liens for wages would have been created, and would have been entitled to the priority which the statute gives them. I think, howevei’, that no liens were effected by the filing of these notices by the laborers, who are the claimants, because the subject-matter of the lien (the fund) was in custodia legis and under the control of the bankrupt court,'and therefore the filing of the notices was entirely inoperative. This is not the case which has frequently p7.izzled the courts where A has a lien prior to B, and B has a lien prior to C, and C has a lien prior to A. The laborers in this case never secured any lien. They had the power to acquire liens only while the fund was subject to the creation of liens under the statute. A number of causes may intervene which will prevent a claimant from obtaining a lien which if once obtained would he prior to other existing liens. If, before these notices for wages were filed, the prior liens were all paid or discharged by bond, and the entire fund due and which could become due on the contract was paid to the contractor, the subsequent notices filed for wages would establish no lien. It must at all times be borne in mind that it is now settled that neither laborers nor materialmen have any inchoate lien dating from the time when the materials were furnished, or the labor performed, or from the time when payment for such materials or labor became due. The lion is' created only by the filing of the notices and takes effect from the completion of such filing in the two offices named.

The argument on behalf of the liens for wages is made that the Agnew and Miller notices, assuming that these notices, or either of them, created a valid lien, prevented the portion of the fund applicable to the satisfaction of such lien from falling into the hands of the court of bankruptcy, and left such portion beyond the custody of the.bankru.pt court, and so subject to the labor liens which were subsequently filed. This argument is ingenious, but I do not think that it is sound. The lien created by the effectual filing of notices under the statute, whether for materials or labor, attaches to the whole fund. If the bankruptcy receivership had not intervened, the Agnew and Miller notices would rest upon the whole fund, one being superimposed upon the other, and the labor liens, if created thereafter, would under the statute cover the whole fund underneath both the Agnew and the Miller claims. The effect of section 9 'of the statute is to give the laborers the first lien on the fund without regard to the time when their notices may have been filed, provided such notices are filed so as to create any liens whatever. According to the theory, which I think prevails in the federal courts, which have the final determination of this question, the order appointing the bankruptcy receiver placed the whole fund in custodia legis, notwithstanding the fact that the trustee in bankruptcy has come into this court for the determination by this court of the validity and extent of the liens upon the fund which was part of the bankrupt estate, and notwithstanding the adjudication by this court that the trustee takes nothing because the liens which are established by the decree of this court exhaust the fund.

The result is that the laborers must be referred to the bankrupt court for such remedy as they may there have.

13. A decree in accordance with this memorandum may be settled on notice, and upon such settlement all questions relating to costs, and also any other questions arising in this complex litigation not covered by this memorandum, may be disposed of.

Fotice of settlement of the decree having been given, further argument was had, and thereupon the vice-chancellor furnished to counsel the following supplementary opinion:

The questions relating to the charge and allowance of interest in this case are difficult. It is well said, in 16 Am. & Eng. Encycl. L. 922, that “there is no subject in the law with reference to which there is greater conflict and confusion in the cases than that of interest.” Unless a case be found which is a conclusive authority establishing a precedent, the safest way for a court of law or equity is to decide all questions pertaining to interest according to the plainest and simplest considerations of justice and fair dealing. I.do not think that there is any case in New Jersey which controls any of the points relating to interest, to be adjudicated in this case. Perhaps the most helpful judicial deliverances for present purposes are to be found in the opinions of Chancellor Magie, then Mr. Justice Magie, in Board of Freeholders v. Veghte, 7 N. J. L. J. 145, and Chief-Justice Ewing in the old case of LeBranthwait v. Halsey, 9 N. J. Law 4. It should be borne in mind that the whole tendency of courts of law and courts of equity for a considerable period of time, has been to break away from hard and fast rules and charge and allow interest in accordance with principles of equity, in order to accomplish justice in each particular case. In deciding these questions of interest in this case which came up on the settlement of the decree, I am more inclined to take the course indicated because two oi the parties whose interests are largo in this litigation have positively announced their intention to appeal. My adjudication now to be made, as well as the adjudications which have been already made in this cause, will therefore be reviewed by our court of last resort.

1. My conclusion is that the city of Paterson justly should be charged four per cent, interest on the fund from1 the date about which there is no dispute. The city had this great and valuable public building — the High School building — in its possession, and enjoyed its use during the period covered by this litigation. It is true the payment of the money was stopped by an injunction, but the case is not like that with which Chief-Justice Ewing had to deal, because it appears from the statement in open court, of the city counsel, and the fact is notorious, that the city of Paterson did not retain this money in its treasury. The city, as counsel stated, expected to, borrow the money whenever it was called upon to make payments unless the time for such payment happened to come when the city wras in funds. The city borrows money at four per cent, in anticipation of its taxes, and then repays the money so borrowed when the taxes come in. For all moneys on deposit in the banks the city receives two per cent. No evidence was offered to show during what periods the city has been paying four per cent, or receiving two per cent. It is true that the city has not received this money from the parties or from any persons for their use. The injunction simply stopped the city from paying its own money, and, ordinarily, as appears from the LeBranthwait Case, no interest would be chargeable. But the city has profited by this injunction, in my judgment, to the extent of four per cent, at least, excepting during brief periods the extent of which has not been the subject of evidence. Perhaps it would be more accurate to say that the city has had the use of this school building in which these moneys in litigation belonging to these claimants have been expended. It has enjoyed the property into which the claimants have put their money, and the value of such enjoyment certainly can safely be held to include four per cent, interest on the money which the city has not been required to pay. If the city had seen fit'to borrow this money at four per cent, and pay it into-court, it might easily have taken that course, and notwithstanding what Chief-Justice Ewing says, I think that the ability of the city thus to discharge itself for the interest is a matter to be taken into consideration.

The gist of the topic under discussion can perhaps be summed up best in the proposition that the city of Paterson, during all this period, has had the use of $29,696.31 worth of this High School building, and this property in fact belonged to these claimants in the sense of having been created by their contributions of labor and materials, while the city has not lost the use of a dollar of its money. I cannot distinguish between the use by the city of a fund belonging to these claimants out of which a just claim for interest would arise, and the use of this property into which the money of the claimants has gone. To give the city the free use of the school building while the claimants lose all interest on their money, possibly may be supported by a technical line of reasoning based on ancient and conflicting authorities, but, in my judgment, to permit this to be done, would be inconsistent with the broad principles of justice which at the start I stated would be controlling in this case.

2. Each claim which has been allowed will have four per cent, per annum added. If the city should be obliged to pay five per cent., or the so-called legal rate six per cent, interest, all the claims in like manner would be allowed five per cent, or six per cent. I do not think ihat it would be just to compel the city of Paterson to pay six per cent, interest when it has been able at all times to borrow at four per cent. Nor' do I think that the claimants are entitled to greater interest than that which is charged against the city. One or more of the large claimants offered in open court to waive all claim for interest, but no agreement was reached on that subject. It is notorious that money has been worth only four or five per cent, in the way of interest. What the money of these materialmen and contractors might have been worth to them in their business of course is a matter not to be considered.

3. The complainant will be allowed costs and a counsel fee of $200 out of tire fund.

4. The costs and reasonable counsel fees of the defendants who, according to the decree of this court, are successful in their struggle over the fund, will he charged against their defeated adversaries. These costs, expenses of litigation, rendered necessary by the contest to establish claims of defendants, upon the fund which this court has rejected, should not be allowed to deplete the fund so as to cut off or diminish the amount which any claimant would have received if the defeated contestants had not prosecuted their unsuccessful litigation. A large part of the testimony in this case, I think the greater part of it, was taken in the contest which the two assignees made to establish claims which, according to the decree of this court, are without legal foundation. I am unable to discover any ground on which it could be deemed just either to deny the successful defendants their costs, including reasonable counsel fees, in accordance with the present practice of the court, or to permit this substantial amount of money to be taken out of the fund instead of from the parties whose unsuccessful litigation was the sole cause of the outlay.

5. I do not find that the stenographer’s bill was made tire subject of discussion. There is an amount still due. This item can he eared for in a variety of ways. The stenographer’s entire bill is a part of tire expense of taking the testimony, and an apportionment of this expense must be made so as to determine how much shall be charged against the unsuccessful defendants.

6. I think that the foregoing covers the various points which were raised and discussed on the settlement of tire decree. A new draft may he made and submitted to me as soon as convenient for counsel to meet. I can attend to the matter at Jersey City at ten a. m., on October 28th, or on October 30th. Counsel may also appear next Monday, October 27th, but that is a motion day, and it is impossible to say when during the day the matter can property and conveniently be taken up. My intention is to have the decree actually put in final form while counsel are together, , and I know of no reason why it should not be then and there advised. Subject to arrangements of counsel, I will appoint the final settlement of the decree for October 30th.