author: Swavke, J. Trenctiaru) J.

text:
    In re Simon Hahn, a solicitor of the court of chancery of New Jersey.
    [Argued November 16th, 1915.]
    1. One deprived by order of the court of chancery of his office of solicitor and of the right of exercising to the full extent the office of counselor is aggrieved thereby within 1 Comp. Stat. 1910 p. 450 § 111, authorizing persons aggrieved by any order of the court of chancery to appeal from the same.
    2. Under 2 Comp. Stat. 1910 p. 2278, fixing a fee for the governor for a license to an attorney and solicitor, to appear and practice in all courts, and page 2281, providing for fees for the judges of the supreme court for license to an attorney and solicitor, and page 4054, section’5, providing that any counselor, solicitor or attorney who shall be guilty of malpractice in any of the courts shall be put out of the roll and not thereafter permitted to practice, unless he shall obtain a new license and be again enrolled in due form of law, which is section 5 of the Practice act of 1903, regulating “the practice of courts of law,” and the constitution, protecting the jurisdiction of the court of chancery as existing at the time of the adoption of the constitution, the court of chancery has no jurisdiction to make an order adjudging a solicitor guilty of malpractice and debarring him from practice'as solicitor and counselor in the court of chancery.
    3. An order of the court of chancery debarring a solicitor in chancery from practicing as solicitor and counselor in the court of chancery cannot be sustained under the Practice act, requiring the solicitor to act under the direction of the court, which refers only to causes in which the solicitor is acting, and not to his own disqualification for practicing.
    4. An order of the court of chancery disbarring a solicitor in chancery from practicing as solicitor and counselor in the court of chancery, entered in proceedings not purporting to be proceedings to punish for contempt, is not sustainable as a punishment for contempt.
    5. Whether an order of the court of chancery, disbarring a solicitor in chancery from practicing ■ as solicitor and counselor in the court of chancery, is sustainable as an order suspending him from practicing in the court of chancery until the supreme court has acted under the statute, will not be considered on a motion to dismiss an appeal from the order, but the question can be dealt with only on the appeal itself in determining whether the order shall be affirmed, reversed or modified.
    On appeal from an order of the court of chancery made by the chancellor, whose opinion is reported in 84 N. J. Bq. 523.

    The order appealed from is entitled as above. By its terms it required the appellant to show cause why he should not be adjudged guilty of malpractice as a solicitor or counselor, or be suspended from practice as such or otherwise disciplined and punished for his misconduct, as might be decreed equitable and just. The court of chancery adjudged that he was guilty of malpractice and that for his gross misbehavior in his office of solicitor in chancery, he should be debarred from practice as solicitor and counselor therein. From this order the solicitor appealed. The motion is to dismiss the appeal.

      Mr. Nelson B. Gaslcill, for the motion.

      Mr. Robert II. McCarter (Mr. George W. C. McCarter with him), opposed.
   The opinion of the court was delivered by.

Swavke, J.

The proceedings are not in the nature of proceedings for contempt of court nor mere disciplinary proceedings. The distinction between proceedings to punish for contempt and proceedings to disbar is sufficiently shown by the decision of the United States supreme court in Ex parte Bradley, 7 Wall. 364, and Ex parte Robinson, 19 Wall. 505. We have no doubt that the chancellor has the same power to proceed against an attorney for contempt as against any other person, and that he has the additional power to suspend„_a_^Qlid.to-r or counselor from appearing in the cou^pf_AhaaiceagL4iBiyided he does not go as far astó!ñFfíñge*lipon thejxowers nossessed by the_supreme court at the time of the adoption of the constitution of 1844. This xvould include powerjn suspend until the facts could be presented to the supreme _court for mofeTeverUactiSiT: -Whether an appeal will lie from an order punishing for contempt or even sxxspenfijjigj^solicitor for a limited time as an act of mere discipline is not the question now before us. This order “debars” Mr. Hahn from appearing hereafter in the court of chancery as a solicitor or counselor, and prohibits him from exercising any of the fxxnctions, rights or pidvileges of a solicitor or counselor of that court. We do not knoxv whether’ the selection of the unusual word “debar” -wag merely accidental, or whether it was chosen advisedly in an effort to distinguish the order from the well known, and long-continued procedure of the supreme court not hitherto departed from in the whole history of New Jersey’s jurisprudence, except perhaps in a single ’sporadic case to be mentioned hereafter. That procedure was commonly known as a procedure to disbar. As neither “disbar’1’ nor “debar” accurately expresses the result in technical terms, the mere question of words is not important. Nor do we attribute any significance to the fact that the proceeding "was by its title directed against Mr. Hahn as a solicitor onty, and was for malpractice as a solicitor while the order affects him as a counselor also. The fact that he is prohibited from exercising his rights as a “counselor of this court” is, as will be shown, of more importance. We deal with the substance rather than the form of the order. In substance it has the same effect, if valid, as far as the court of chancery is concerned, as striking the appellant’s name off the roll would have, and the real question now before us is whether an appeal will lie from an order of the court of chancery having that effect.

There is some divergence in the cases as to whether an appeal will lie in such a case where the lower court has jurisdiction. It turns sometimes upon a mere question of procedure, and sometimes upon the statutes of the state. Our statute, dating from 1199 (Pat. L. p. 484 § 59), enacts that all persons aggrieved by any order or decree of the court of chancery may appeal from the same or any part thereof to the court of errors and appeals. Comp. Stat. p. 450 § 111. On the face of it, we think that a man is aggrieved by an order that deprives him of one office, that of solicitor, and prevents him from exercising to the full extent, another office, that of counselor. We need not go so far as the supreme court of Connecticut and hold that the office of solicitor or counselor can fairly be regarded as property. In re O’Brien’s Petition, 63 Atl. Rep. 777, 780. It is enough to say that one holding such an office is as much aggrieved and entitled to appeal to the courts for protection in its enjoyment, as a public officer or the officer of a private corporation is by means of quo warranto, mandamus or certiorari Avith an ultimate appeal to this court. The right of appeal by attorneys from orders of disbarment is well settled by the decision of tribunals of the first authority. In Ex parte Bradley, 7 Wall. 364, a mandamus was issued to restore an attorney and counselor to his office from which he had been removed by an inferior tribunal. Mr. Justice Miller dissented from this judgment of the court but did not question that a state appellate tribunal might entertain an appeal 5 his argument w,as that the supreme court of the United States possessed no such general supervisory power over inferior federal courts as belongs’ to the king’s bench and the appellate tribunals of the states. The jurisdiction of the last named tribunals to review has been exercised in repeated instances. It is enough to cite In re Durant, 80 Conn. 140; Matter of Eldridge, 82 N. Y. 161. The report of the former case in 10 Ann. Gas. 589 is accompanied by a note citing cases in which the appellate jurisdiction has been exercised; in some the facts have been reviewed, and in others the legal errors only. Bar Association v. Greenhood, 168 Mass. 169; 46 N. E. Rep. 568. In the last cited case, the language of the statute was similar to that of our Chancery act above quoted. In England, also, an appeal is allowed from an order striking a solicitor off the roll, In re Hardwick, L. R. 12 Q. B. D. 148; 53 L. J. Q. B. 64.

Whatever doubt there may be as to the right of appeal from a mere disciplinary order, there can be no doubt as to the appealability of such an order as this if the court of chancery was without jurisdiction to make it, since if this court cannot restrain the excess of jurisdiction, no court can, and the usurpation of power, if there is any, would go uncorrected. The supreme court could not act by mandamus as the United States supreme court acted in the Bradley case, because the court of chancery is one of co-ordinate jurisdiction. Only this court can act, and that by way of appeal. The stress of the argument at bar was upon the question whether the court of chancery had jurisdiction. This question we proceed to consider.

Our method of licensing counselors, attorneys and solicitors is peculiar. From the very beginning of the Province of New Jersey in the time of Lord Cornbury and probably in East Jersey at least from the time of Governor Basse in 1698 {Learn. & 8pm. •338 §11), attorneys and counselors have been licensed by the governor under the great seal of the state. The supreme court never has licensed them nor admitted them to practice. In re Branch, 70 N. J. Law 568, 570, 571. There has never been a suggestion that the court of chancery has licensed solicitors to practice in that court. A careful distinction has been preserved in that court between masters and solicitors. Beginning with 1817 at least, the rules of the court of chancery have provided for the oaths of masters but not for the oaths of solicitors, no doubt because solicitors who were licensed by the governor, were sworn in the supreme court, and there were no solicitors licensed by the chancellor as chancellor. After the new constitution of 1844, there seems to have been some doubt of the power of the chancellor to appoint masters, and in 1845, the legislature enacted that the power should continue in the chancellor. P. L. 1845 p. 161. This was confirmed in 1846. P. L. 1846 p. 188. The act now appears in the compiled statutes. Comp '. 8tat. 3785 pi. 8. There is no such legislation as to solicitors. A claim by the chancellor to appoint or remove solicitors is inconsistent with the language of the governor’s commission. See 70 N. J. Law 570. The mandate of the governor under the great seal, attested by the secretary of state, is addressed to the court of chancery as well as to the supreme court and all the courts of record within the state. In 1748 the colonial legislature enacted a fee bill' (1 Nevill 838; Allinson 160) which gave the governor a fee of twenty shillings for licensing an attorney, and the supreme court a fee of eighteen shillings for “admitting” every attorney, and those provisions, in substance, have remained, on the statute books. No mention was made of any license to a solicitor until the act of 1799 (Pat. L. p. 418) which gives the governor a fee of three dollars for a “license to an attorney and solicitor,” and the judges of the supreme court a like fee in the same language. The language is repeated in the revision of 1877 and is to be found in the compiled statutes of 1910. Comp. Stat. pp. 2278, 2281. The fact that attorney and solicitor were coupled, that a fee was allowed the governor, and a like fee for the same service to the justices of the supreme court, is significant enough; its importance is emphasized by the fact that although the chancellor was then paid by fees and his fee bill was for the first time, as far as appears, provided for by the very same act of 1799, no mention is made of any fee to him for licensing a solicitor. Governor Paterson had himself been governor and chancellor, and was not likely to overlook any of the chancellor’s rights when he was for the first time drawing a fee bill to be provided for that officer by the legislature. It is probable, as suggested in the case of Raisch, 83 N. J. Eq. 82, that in New Jersey as in England in early times, no distinction was made between the practice of an attorney in a court of law and his practice in the cou'rt of chancery. The instances cited by the learned vice-chancellor on pages 114 and 115 point to that. But when Judge Paterson was drawing the fee bill and the Practice act, he wrote with accuracy, and for the first time a fee was provided the governor for a license to an attorney, and solicitor. The license was as it has ever since been a single license to one individual in a double capacity for one fee. See Lynde v. Lynde, 64 N. J. Eq. 736, 747. That the governor in granting the license was acting as governor and not as chancellor also is ’ apparent from the fact that the fee was given him as governor, and not as chancellor; while the fee for such judicial service as was rendered even in the licensing of a solicitor was given to the justices of the supreme court.

Enough has been said to demonstrate the difference between our practice and the English practice. Practitioners in the superior courts in England were admitted by each several court' to practice in that court, and each court had its own roll. 3 Bl. Com. 26. By the act of 2 Geo. II. c. 23 § 20, a sworn attorney in any of the courts of king’s bench, common pleas, &c., might be sworn and enrolled as a solicitor without further fee after an examination of his qualifications to be a solicitor. That act did not give a similar privilege 'to solicitors to act in the law courts, and the omission was corrected by 23 Geo. II. c. , 26, § 15, which ’permitted solicitors to be enrolled as attorneys of the king’s bench or common pleas without fee upon an examination by the judges of the solicitor touching his fitness and capacity to'act as attorney. Under such a system, each , court controlled' its own roll and its own officers, and although ^ an attorney who had been struck off the roll of one court might also be stricken off the roll of another court, this was not always ‘ done. 1 Tidd 89; 1 Arch. 30; In re Richard Peter Smith, 1 B. & B. 522. The power of the English courts was a power to discipline officers of their own appointment by striking names off a roll kept by that very court, not by some other. - In New Jersey the appointment comes not from the court but from the governor; counselors, attorneys and solicitors are more than mere court officers; their commissions run in substantially the same terms and are issued by the same authority and with the same solemnity as our own. They do not in terms require enrollment by the court. That requirement comes from immemorial usage descended from the English practice and implied rather than required by the Practice act. But for the provisions of that act it might be • doubtful whether even the supreme court could nullify the governor’s commission, or whether any action of that character could be of consequence if the governor should choose to issue a new commission. Gould the chancellor, even if he knew an attorney and solicitor to be unfit to practice, refuse to obey the mandate of the governor? Whatever the inherent power of a court may be to punish its officers, it has no inherent power to deprive the governor’s commission of its efficacy to authorize an attorney and solicitor to “appear and practice in all courts of record and tp receive fees therefor, and to require all judges, justices and'Others concerned to admit him accordingly.” The power of the supreme court to deprive the governor’s commission of its efficacy rests on the Practice act of 1799. Section 3 of that act which appears substantially unchanged in the Revised Practice act of 1903 (Comp. Stat. p. enacted that if any counselor, solicitor or attorney-at-law shall be guilty of malpractice in any of the said courts, he shall be put out of the roll and never after be permitted to act or practice as a counselor, solicitor or attorney-at-law, unless he shall obtain a new license and be again enrolled in due form of law. The section is directed against malpractice in “any of the said courts.” The reference is to section 1 of the act, which authorizes every person of full age and sound memory to prosecute or defend any action in any of the courts of judicature of. this state in person or by his solicitor in chancery or attorney-at-law. The reference to “solicitor in chancery” makes it clear that the court of chancery was included among the courts, for malpractice in which an attorney and solicitor could be put out of- the roll. The collocation of sections remained the same until the revision of March 27th, 1874; section 3 became section 5, and the language was changed so as to read, “If any counselor, solicitor or attorney-at-law shall be guilty of malpractice in any of the courts, he shall be put out of the roll.” The words “any of the courts” are as broad as they can well be and the use of the word “solicitor” again shows that the court of chancery was included. So also does the language of section 5' of the revision of 1903, “any court.” Although the title of the Practice act points only to the courts of law, it must be remembered that our constitutional provision as to the title of an act is not found in the constitution of 1776, and the act of 1799 was therefore not objectionable on that score. In 1844, when our present constitution was adopted, the power of the supreme court'under the act of 1799 was settled beyond the power of legislative interference; and the legislature in the revisions of 1846, 1877 and 1903, merely followed the ancient lines.

Judge Paterson prepared also an act respecting the court of chancery which was passed in 1799, a few months after the Practice act. Pat. L. ¶. Jf%8. He made no provision therein for the punishment of solicitors who had been guilty of malpractice. It is almost inconceivable that he would have omitted such a provision in the Chancery act and inserted it in the Practice act if it had been meant that the court of chancery should possess that power. Moreover the language of the Practice act demonstrates that the power was meant to be limited to the supreme court. The only penalty prescribed for misconduct, including as we have said, misconduct in any court, was that the delinquent solicitor should be put out of the roll, and never after permitted to practice. Obviously before he could be put out of the roll, he must be on it. The only roll ever known in New Jersey is a roll kept by the clerk of the supreme court, going back to colonial days, and for many jrears the oath to which an attorney and solicitor subscribed on that roll, has covered his office both as solicitor and as attorney. In re Raisch, 83 N. J. Eq. 97. The oath - has always been taken before the supreme court. The suggestion in the Raisch Case that Judge Paterson, when he drew the Practice act of 1799, either erroneously supposed that the court of chancery maintained a separate roll of its solicitors and that they took their official oath as solicitors before the chancellor in open court, or assumed that this practice (the English practice) would be established forthwith in New Jersey, can hardly be taken seriously. That Judge Paterson, who was a solicitor himself and had already served as chancellor, could have made the mistake of supposing that he had signed such- a roll as solicitor, or that he had had such a roll in his custody as chancellor, when in fact he had not, and that he had taken an oath as solicitor before the then chancellor or that others had taken such an official oath before him when chancellor, in open court, when the fact was otherwise, is to us incredible. The alternative supposition that the English practice would be forthwith established in New Jersey is an impossible supposition since Judge Paterson himself omitted from the Chancery act all provision as to striking solicitors from the roll and carefully inserted such a provision in the Practice act. The language is struck out of the roll, not the rolls.

Judge Paterson moreover had a good reason for putting the provision in question in the Practice act. Although the commissions of counselors, attorneys and solicitors were from the governor under the great seal of the state, the practice was to issue the commission on the recommendation of the supreme court, and only on that recommendation. Even the commission to one as solicitor was issued on the recommendation of the supreme court, as soon at least as the commission began to run to the licensee as both attorney and solicitor. It was because the justices of the supreme court did the work that the legislature gave them the fee, making no distinction between attorney and solicitor and giving one fee for the two combined. There was another and a more cogent reason. The evil of the English practice was that a man might be able to practice in one court who had been stricken off the roll of another court. That evil was the natural, almost inevitable result, of each court having a separate roll. That evil Judge Paterson guarded against by providing that for malpractice in any court, the practitioner should be put out of the roll and never after permitted to practice as counselor, solicitor or attorney, unless he obtained a new license and was again enrolled in due form. The evil of having solicitors and attorneys under the control of two distinct courts is well illustrated in the present case. Mr. Hahn’s offence is said to have been committed by him as a solicitor in his practice in 'the court of chancery. The supreme court would have no means of ¡mowing the facts unless communicated to it by the chancellor, as in the Cahill Case, hereinafter referred to, or by some outside agency. The chancellor, by proceeding to “debar” the solicitor, prevents him from practicing in the court of chancery before the supreme court can even direct proceedings to be begun in the supreme court. Under our constitutional provisions, the attorney cannot be put out of the roll without notice and a hearing, and pending the hearing, if the present order is valid, the lawyer, as he is commonly called, may practice in one tribunal and not in another, the very scandal that Judge Paterson’s act would have avoided. One who is put out of the roll of the supreme court is disqualified to practice in all courts; one who is “debarred” as solicitor may still practice in all other courts unless a new proceeding is had against him. Judge Paterson could not have meant that. Again, the provision as to putting counselors out of the roll is contained in the same section as the provision relating to attorneys and solicitors. Whether the attorney and solicitor holds two offices, as the vice-chancellor argues in the Baisch Case, or is one officer with two distinct functions as a justice of the supreme court is also a judge of the oyer and terminer, is unimportant; a counselor certainty holds but one office, that of counselor-at-law. There is no such officer as “a counselor of this court,” to use the words of the chancellor’s order. The office of counselor-at-law cannot be divided by the action of the court of chancery; the governor’s commission requiring all courts to admit him as such cannot be deprived of its efficacy in one end of the state house while it remains efficacious in the other. So far as the present order affects Mr. Plahn as counselor, it is a clear excess of jurisdiction. It is notable that in the case of Cosey, argued at the same time, there was no attempt to “debar” him from practice as counselor; so, that if the ord(sr in his case is valid, although he may not issue a subpoena, he máy, nevertheless, appear and argue before the chancellor as a counselor.

To return to the language of the Practice act of 1799. The provision as to re-enrollment of itself is conclusive against the jurisdiction of the court of chancery. A new license could be obtained only as the old license had been obtained, by a recommendation of the supreme court and a commission from the governor; and that commission would require the chancellor as well as other judges to admit tire practitioner to practice. The control of this new license and re-enrollment would thus be in the supreme court, and the man who had been “debarred” on one day by the chancellor might walk into court .with the governor’s new commission the next week. To avoid that scandal the control was put in a single tribunal, the supreme court. No doubt our whole system of admission to the bar and of disbarment is sid generis, but it has worked well, and, so far as we know, without difficulty for over a century, recognized by the court of chancery as well as by the supreme court, and no question has ever been brought to this court until the present time. We are far from suggesting that any inherent power of the court of chancery is lost by disuse; but when the question is whether the power existed in that court, the fact that it has not been exercised, is a cogent argument against its existence. The argument becomes irresistible when we find that a distinguished chancellor communicated to the supreme court a case of malpractice by a solicitor in the court of chancery “with the suggestion that it was a case for discipline.” In re John Francis Cahill, 66 N. J. Law 527. It is true we are referred in the opinion of the vice-chancellor, in the Raisch Case, 83 N. J. Eq. (at p. 111), to an unreported case, In re Edmunds, where Chancellor Runyon, it is said, expelled from office a solicitor who had forged a decree of divorce. The fact that no opinion is reported, and that the chancellor “stayed the infliction of the penalty,” weakens the value of the case as a precedent even in the court of chancery. We cannot avoid the thought that perhaps he came to entertain doubts of his jurisdiction. The explanation that he was led by considerations of mercy seems hardly adequate in view of the serious nature of the offence—one in which mercy would be misplaced. Such weight as the case might have had in the court of chancery is lost in the face of the subsequent-action of Chancellor Magie in the Cahill Case, and it was never followed until two years ago in the Raisch Case. 'Even the opinion in that case is of no more value as a precedent than the weight, great, to he sure, to be given to the view of the. very learned and able judge who gave expression to it. Confessedly, what he said was merely obiter, since the question of jurisdiction was not raised in the case (see pages 85, 86), and the discussion of that subject, it seems probable, was intended as a foundation for a claim of jurisdiction in the court of chancery that had never been exercised before, with the possible exception of the Edmunds Case. This court is not bound by the Raised Case, nor by the cases in the court of chancery that have followed it during the last two years without any further consideration of the question of jurisdiction.

We have thus far dealt with the question as one of statutory construction. The Raisch Case seeks, however, to vindicate the jurisdiction, on the theory that the power was inherent in the court of chancery when the constitution of 1844 was adopted. This is deduced from the fact that the English chancellor exercised the power over the solicitors in his court. The deduction lacks support in fact. What tire English chancellor did was to strike off the roll, of the coirrt of chancery a solicitor who was enrolled thereon. Precedents antedating the Judicature acts of 1873 and 1875 are given in Seton Dec. 651, 652. There is nothing that we have found or that counsel has cited to show that the English chancellor ever undertook to strike a name off the roll of the king’s bench. The very reason, that the order now brought here for review rejects the precedents of the English chancery and “debars” Mr. Hahn is that the established form of order would be absurd since Mr. Halm has never signed a roll of the court of chancery. A novel term had to be invented for this novel proceeding and he is “debarred.” No power to “debar” was ever asserted'by the English chancery.

But the case is of too much importance to rest the argument upon the novelty of the word used, significant as that novelty is. The jurisdiction of the court of chancery that is protected by the constitution of 1844, is the jurisdiction that existed at that time. This jurisdiction was not necessarily tire same as the jurisdiction of English chancery. So far as the latter depended on English statutes antedating the Revolution, our inquiry must be whether the statute was in force in New Jersey. The regulation of the enrollment, which meant the 'admission to practice, of solicitors was regulated at the time of our Revolution by statutes. The name “solicitors” seems to have arisen in the seventeenth century. Chris. His. Sol. 71. In 1729, the act of 2 Geo. II. c. 23, for the better regulation of attorneys and solicitors was passed. That act required only an oath that the affiant would truly and honestly demean himself in .the practice of an attorney. Chris. 111. We have already referred to the. act at length. It was extended (23 Geo. II. c. 26) so as to give solicitors the privilege to practice in the king’s bench without further fee. The important point is that the practice of solicitors was regulated by statute. By the constitution of 1776 it was provided that so much of the statute law as had theretofore been practiced in the colony, should still remain in force, until altered by the legislature. To make definite exactly what was meant, the legislature, on November 24th, 1792, authorized Judge Paterson, who was then governor, to collect and reduce into proper form all the statutes of England or Great Britain, which before the Revolution were practiced and which by the constitution extended to this state, as also all the public acts passed by the legislature before or since the Revolution which remained in force; and, on March 19th, 1795, authorized him to collect, alter and modify the statutes he had not reported on and to propose to the legislature such bills as to him should appear conducive to the general interests of the state and to the completion of the revisión and system of the laws of this state. Judge Paterson’s work, in pursuance of these legislative mandates, has ever since been treated as a complete system of the statute law of New Jersey, in 1799. Schomp v. Schenck, 40 N. J. Law 195. The omission of the acts of 2 Geo. II. c. 23, and of 23 Geo. II. c. 26, together with the enactment of the Practice act of 1799, make it clear that the English law as to the admission of solicitors was not applicable in this state, and account for the uniform practice with reference to the matter. We find no jurisdiction of such proceedings as this existing in the court of chancery when the constitution of 1844 was adopted.

The order cannot be sustained under the section of the Practice act requiring the solicitor to act under the direction of the court. That, obviously, refers to causes in which he is acting, not to his own disqualification for practicing at all, which is the subject of another clause of the statute. It is, however, suggested that the order made by the chancellor may be sustainable as a punishment for contempt. This amounts to saying that what the court of chancery cannot do directly, it can do indirectly. The distinction between the power to punish for contempt, and the power to disbar, is pointed out in Ex parte Robinson, 19 Wall. 505, and the care our own courts take to avoid, excessive punishment for contempt, is apparent from our opinion in O’Rourke v. Cleveland, 49 N. J. Eq. 577. As far as we know, the power to punish for contempt is limited to fine and imprisonment and does not extend to stripping a man of his means of gaining a living. We need not pursue the subject, since the proceedings do not purport to be proceedings to punish for contempt and there is no adjudication of a contempt..

As the court of chancery was without jurisdiction to make the order, the motion to dismiss the appeal must be denied.

The question whether or not the order debarring the appellant may be held to be an order suspending him from practicing in the court of chancery until the supreme court has acted under the statute is not presented by a motion to dismiss the appeal which is all that is now before us; such a question can be properly dealt with only upon the appeal itself, when-the question will be whether the order brought up by the appeal shall be affirmed, reversed or modified.

Trenctiaru) J.

(dissenting).

I am unable to concur in the conclusion of the majority of the court. I think the court of chancery had jurisdiction to make the order under review. I think it had power to make it substantially, for the reasons given by Vice-Chancellor Stevenson in his opinion In re Raisch, 83 N. J. Eq. 111, in which case an order quite like the one here was made. If, as I think, the court of chancery had power to make such order, it follows, upon well-settled principles, that it is not appealable. I vote to dismiss the appeal.

I am requested by Mr. Justices Garrison and Black, and Judges White, Terhune and Heppenheimer, to say that they concur in this view.


source: Caselaw Access Project

author: Swayze, J.

license: Public Domain

text:
    Franklin Society for Home Building and Savings, respondent, v. John T. Thornton et al., appellants.
    [Submitted December 6th, 1915.
    Decided March 6th, 1916.]
    1. A building and loan association agreed to convey land and subsequently agreed to loan the purchaser money to aid in erecting a dwelling thereon, to be advanced as the building progressed and secured by a mortgage subject to no encumbrance except such as might be waived by the lender. The borrower proceeded with the building but did not comply with the agreement, and secured no deed and executed no mortgage until the building had advanced far enough to entitle him upon compliance with the agreement to receive the first advance; thereupon a deed and mortgage were executed simultaneously; the deed was delivered and the unpaid balance of the purchase price retained by the vendor, and the balance of the amount to be advanced on the mortgage was paid to the vendee.—Held, that to the extent of the unpaid purchase price the mortgage was entitled to priority as a purchase-money mortgage. New Jersey Building Loan and Investment Bo. v. Bachelor, 54 N. J. Bq. 600, approved.
    2. An equitable estate is not subject to a mechanics’ lien. Dalrymple v. Ramsey, 45 N. J. Bq. 494, approved.
    3. Under section 14 of the Mechanics’ Lien act, “advance money mortgages” recorded prior to the commencement of a building, are prior to mechanics’ liens to the extent that money has actually been advanced thereon.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Stevenson, whose opinion is-reported ante p. 87.

      Forelosure of a mortgage. On May 9th, 1911, complainant agreed to convey to Thornton a lot for $1,000, $5 in cash at the signing of the agreement, and $995 on the delivery of the deed on July 1st, 1911. On May 23d, 1911, the complainant agreed to loan Thornton $4,600 to aid in the erection of a dwelling on the lot which he agreed to complete, ready for occupancy, on September 1st, 1911. Upon his proceeding with the erection of the building, and observing the terms of the agreement, the complainant was to advance the $4,600 in three payments. The loan was to be secured by mortgage which was to be a valid lien for all sums advanced, subject to no encumbrance, except such as might be waived by the lender. Thornton proceeded at once, in May or June, to erect the house. No deed was delivered or money paid until October 6th, 1911. On that day the deed was delivered, the mortgage executed, and the first installment of $1,533 paid by two checks to Thornton’s order, one for $995, and one for $538. The check for $995 was immediately endorsed back to the complainant in settlement of the balance due for the purchase price of the land. The check for $538 went into Thornton’s bank account and was mingled with other funds. Payments were made from the account for work done or materials furnished for several buildings then in course of construction, including the one covered by complainant’s mortgage. The $538 was not traced with any certainty to the payments for the last-named building. Subsequently, long after the mortgage was recorded, lien claims were filed by the appellants. The vice-chancellor advised a decree giving priority to the mortgage. The property was sold and by agreement the purchase price is held in the court of chancery subject to the result of the present appeals. It is less than the amount due for moneys actually advanced on the mortgage.

      Messrs. Pendergast & Neumann, for the complainant.

      Mr. Jacob Willard De Toe and Mr. Edgar A. De Toe, for the appellant Myers.

      Mr. Peter W. Stagg, for the appellant Valle.
   The opinion of the court was delivered by

Swayze, J.

The only question raised by the appeals is that of priority between the mortgage and the lien claims. We think the mortgage, to the extent of $995, is entitled to the priority of a purchase-money mortgage. Disregarding mere form, as we ought (Wallace v. Silsby, 42 N. J. Law 1), it is clear that the only way in which the complainant can receive that part of the purchase price of the land is through the mortgage. If we leave out of consideration the passing and repassing of the check, which was a mere ceremony advantageous only as preserving a written record or as a voucher, the complainant delivered the deed and received the mortgage therefor. It was chargeable with the obligation to advance the $4,600 only when Thornton could make the mortgage, as the agreement required, a valid lien, subject to no encumbrance; unless the mortgage secured the purchase price the complainant would retain a vendor’s lien as a prior encumbrance until actual payment thereof. As Chief-Justice Beasley said, in Wallace v. Silsby, we must look at the intent of the parties and the real nature of the transaction.

The parties meant that the land should be paid for. If not paid for by the mortgage, it has not been paid for at all, and the complainant would still have its vendor’s lien. If paid for by the mortgage, the mortgage is pro tanto a purchase-money mortgage. That is so even if the check be regarded as in fact cash advanced on the mortgage and applied to-the satisfaction of the purchase price. Of the cases where mortgages have been given the advantage of purchase-money mortgages, although they do not purport on their face to be such, it is enough to refer to New Jersey Building Loan and Investment Co. v. Bachelor, 54 N. J. Eq. 600, where Vice-Chancellor Stevens, in a lucid and clarifying opinion, applied the rule to a case of priority between a mortgage and mechanics’ liens. In that case, the mortgage was held entitled to priority, to the extent to which money advanced by it went to pay another person, the grantor, for a part of the purchase-money. The mortgage in that case did not, because it could not truthfully, recite that it was given to secure part of the purchase-money. The priority arose from the facts of the case; there, as here, the purchase price could he traced as coming from the mortgagee.

There is another reason, in the present case, for the priority of the mortgage as to the $995. Prior to October 6th, the estate of Thornton was only an equitable estate. It was at best a mere right in equity to a conveyance, notwithstanding the time fixed by the agreement had passed, upon payment of $995. Until that amount was paid he could not have a deed, and therefore could not have a legal estate. His equitable estate was not subject to lien. Dalrymple v. Ramsey, 45 N. J. Eq. 494. (While this case has not been subject to review in this court, it has been cited without question—Davis v. Mial, 86 N. J. Law 167, 168— and the reasoning of Vice-Chancellor Van Fleet'is unanswerable.) The present lien claimants were without remedy until Thornton got a legal title, and he got no legal title except as the result of the transaction of October 6th, by which the mortgage was substituted pro tanto for the purchase price. Before the lien claimants can have equity, they must do equity, and equity requires that the purchase price, without payment of which Thornton and the complainant never meant that any legal estate should pass, be first paid out of the proceeds of sale.

Whether the balance of the fund after payment of the $995 belongs to the mortgagee or to the lien claimants, depends upon the construction of the Mechanics’ Lien act. Prior to 1895, the act provided that.the deed made upon a sale by virtue of the special execution should convey to the purchaser the estate which the owner had in the lands at the commencement of the building, or which he subsequently acquired. Gen, Slat. p. 2068 § 28. Under that act it was necessarily held that the lien claim had priority over a mortgage given after the building was begun. Erdman v. Moore, 58 N. J. Law '445; New Jersey Building Loan and Investment Co. v. Bachelor, supra. (The mortgages in those cases were given before 1895.) This situation discouraged the loaning of money on new buildings. To cure the evil, the legislature enacted, in 1895 (P. L. 1895 p. 846 § 6), that every mortgage should have priority over lien claims, to the extent of the money actually advanced and paid by the mortgagee and applied to the erection of any new building. Gen. Stat. p. 2075 pl. 42. The effect of this was, as the legislature evidently meánt, that mortgages recorded after the commencement of the building, and therefore liable to be cut out by a sale under the lien claim, were protected to' the extent to which the money had actually gone into'the building. Young v. Haight, 69 N. J. Law 453. Section 6 of the act of 1895 now appears as section 15 in the Revised Mechanics’ Lien act of 1898 (P. L. 1898 p. 543; Comp. Stat. p. 3303), and applies to any mortgage registered or recorded prior to the filing of lien claim. The italicized words axe important because they distinguish mortgages given after the commencement of tire building and recorded before the filing of the lien claim from mortgages recorded before the commencement of the building, as to which the legislation has been different. To this legislation we now pass. The twenty-third section of the Mechanics’ Lien act, as revised in 1874 {Rev. p. 673), expressly enacted that the conveyance under the special execution should convey subject to all mortgages and other, encumbrances created and recorded, or registered prior to the commencement of the building. This made it possible to assure a mortgagee of a first lien for advances made after the commencement of the building, provided only the mortgage was placed on record before the commencement of the building. The priority of such mortgages was sustained by the court of chancery. Taylor v. La Bar, 25 N. J. Eq. 222; Platt v. Griffith, 27 N. J. Eq. 207. This state of the law enabled speculative builders to postpone mechanics’ lien claims to mortgages on which nothing had been advanced. The legislature thought this an abuse and corrected it by the act of 1879. Gen. Stat. p. 2071. This act made the lien claims prior to “advance money mortgages,” although the latter might have been recorded before the commencement of the building. The'legislation in that shape proved unsatisfactory, and when the act was revised, in 1898, the act of 1879 was modified. It now appears as section 14. Comp. Stat. p. 8302. By its provisions mechanics’ lien claims are made prior to “advance money mortgages”—“to tlie extent only of the moneys remaining to be advanced by the mortgagee under such agreement.” The effect of this is to protect the mortgagee for his actual advances but to prevent the lien claimant from being postponed to an amount larger than that actually advanced.

Both section 14 and section 15 appear in the revised act of 1898, and section 28 of that act, which takes the place of section 23 of the act of 1874, enacts that the conveyance under the special execution shall be subject to the lien of any mortgage recorded or registered under the circumstances contemplated by and in conformity with the provisions of section. 14 or 15. Both sections are necessary to the complete scheme of the act. The difference between them is marked. Section 14 deprives the mortgagee of a legal right he would otherwise have by recording liis mortgage before the commencement of the building, and ■protects him only to the extent of actual advances, but it does not require that those advances should have been, applied to the erection of the new building. Section 15, on the other hand, gives the mortgagee a right he would not otherwise have sinc§ his mortgage is not recorded before the commencement of the building, but, in order that be may have that right, he must show that his advances have been applied to the erection of the new building. By section 14, the legislature cuts down a pre-existing right; by section 15 it gives a new statutory right, evidently upon the theory that one whose money goes into the building ought to stand as well as one whose labor or material goes in, even though by the date of record of his mortgage he would not be entitled to it.

The question remains whether the present case is within section 14 or section 15. The facts bring it exactly within section 14. The owner of the lot (the present complainant) disposed of it to Thornton, a builder, and took a mortgage in excess of the purchase-money price and agreed to pay the excess to thé builder from time to time as the building progressed. The mortgage was simultaneous with the deed; as soon as Thornton bad an estate, to which the mechanics’ lien could attach, it was subject to the complainant’s mortgage; he never had in fact more than an equity of redemption. .The right of the complainant at law was prior to the subsequent mechanics’ lien claim, and could only be cut down under section 14, and thereby only to the amount actually advanced. The fact that the buildings had already been begun could not enlarge the rights of the lien claimant. They could not sell the equitable estate, which was all Thornton had when the building was begun. They could only sell the subsequently acquired estate, and that was subject to the mortgage the instant it was acquired. The complainant does not need to rely on the aid of section 15; it stands on its legal rights under section 14. The amount actually advanced, . including the balance of purchase price, was more than the fund in court, and the complainant is entitled to take the whole.

The decree is affirmed, with costs.

For affirmance—The Chirr-Justice, Garrison, Swayze, Trencitard, Parker, Bergen, Minturn, Kaliscit, Black, White, Tebhune, Heppenheimer, Williams, Taylor—14.

For reversal—None.


text:
    William F. Mullin, appellant, v. Annie E. Mullin et al., respondents.
    [Argued November 22d, 1915.
    Decided March 6th, 1916.]
    The complainant, the oldest of nine children, was under age at his father’s death. He conducted his father’s business, that of an undertaker, for the benefit of the family. After he attained his majority, his mother, who was sole acting executrix, agreed with him that the profits of the business remaining after the support and maintenance of herself and the infant children, should belong to the complainant in payment for his services. When the mother died in 1900 complainant was made administrator de bonis non of his father’s estate. The youngest child was then eight years old. The complainant continued to support the minor children.—Held, that he was not chargeable as administrator with the profits of the business during the minority of his brothers and sisters, and that the business became his at the termination of that period from the necessity of the case, especially in view of the act of 1906 prohibiting the conduct of the business of undertaking by any unlicensed person. Held, also, that he was chargeable with the value of the tangible assets of the estate used in the business.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Stevens.

      Mr. Ralph E. Lum, for the complainant-appellant.

      Mr. Michael J. Tans&y, for the defendants-respondents.
   The opinion of the court was delivered by

Swayze, J.

The complainant sought as administrator with the will annexed of Peter M. Mullin, deceased, to account in tire court of chancery. An account was had before a master and he appeals from the decree confirming the master’s report. The fundamental question is whether he is chargeable with the profits of the business of an undertaker, which was conducted by the decedent, complainant’s father, in his lifetime and by the complainant since his death. The facts are as follows:

Peter M. Mullin died November 4th, 1891. By his will he directed that his business be continued for tire benefit of his wife and children under tire direction of his wife and his brother Joseph J. Mullin, who were appointed executors and guardian of his children. He left eight children then living, of whom one has died, and a posthumous son, born April 24th,, 1892. The complainant, the oldest child, was about eighteen.. The widow, Annie E. Mullin, alone qualified as executrix. Upon her death, in 1900, the brother Joseph J. renounced and the. complainant became administrator b& bonis non. He had assisted his father in the business and continued the business after his father’s death alone, or in connection with his brother Joseph L. Mullin. On September 24th, 1895, after the complainant had attained his majority, a formal written agreement was made between the executrix, William E. and Joseph L., for the continuance of the business by William E. and Joseph L., in the name of the estate of Peter M. Mullin, for one year from October 1st, 1895, subject to the right of the executrix to terminate the agreement on one month’s notice. The family of Peter were to be maintained and educated from the net proceeds of the business. The profits, after maintaining and educating the family, were to be divided—three-sixths to William, two-sixths to Joseph, and one-sixth to the executrix. This arrangement did not prove satisfactory. Before the end of the year Joseph left and went into business for himself elsewhere. A new agreement was then made between the complainant and the executrix. This was verbal, and is said by the complainant, in his bill to have been an agreement that the balance of the profits of the business remaining after the support and maintenance of the complainant’s mother and the infant children, should belong to the complainant in payment for his services. In his testimony the complainant said that the agreement was that he was to support the children out of the business, educate, clothe and feed them until they became of age, the profits arising from the business were to be his, and the business was to be his after the children had arrived at their majority. The learned vice-chancellor accepted the version given in the bill. We think, as will appear, that the practical result is not different Avhichever version is correct. The difference is only a natural difference in the recollection or state- ’ ment of the effect of a verbal agreement made many years ago, in a point which at the time was not considered of importance and probably was not definitely in the mind of either party. The agreement was made after due deliberation and consultation of the executrix with counsel and with a brother of the decedent, and we see no reason to doubt the complainant’s statement that he entered into the agreement reluctantly and only at the earnest solicitation of his mother and the priest'of the church he attended. The complainant was a young man, a year past his majority, who had proved his ability to conduct the business sueeessfully for four years, who in that time had built up' a good will for himself, who had another career of promise open to him, who had an interest in his father’s estate, paid to him about the same time, large enough to furnish him with tire small capital needed to carry on the undertaking business. He was giving up such prospects as he might have and was binding himself to a contract which would last until his youngest brother came of age, seventeen years later, when tire complainant would be forty years old. The contract was, obviously, very much for the benefit of the widow and minor children, since they secured an assurance of support and education until each child came of age. The right of the executrix to malee the agreement is challenged by the defendants because it is said it was not for the equal benefit of all the children, but gave the younger children more than their elder brothers and sisters. This is true, but even if that fact would otherwise invalidate,the agreement as to tire complainant, we think it was in the power conferred by the will upon the executrix to continue the business for the benefit of the widow and children under tire direction of the executrix; and that direction was meant to apply not only to the conduct of the business, but to the conduct of the family and the determination of what was for tire benefit of the wife and children. It seems to us that the testator meant to keep' this young family together until each could make his or her own way in the world. It suits the present purpose of the defendants to regard this agreement as merely an agreement for the management of the decedent’s business, and their claim is that the profits of that business, after the death of the executrix when the complainant was appointed administrator, are the property of the estate with which the administrator is chargeable. This view prevailed in the court below. We regret that we cannot reach the same result as the vice-chancellor whose views usually command our assent. The error lies in overlooking the fact that the agreement made between the executrix and the complainant, in 1896, necessarily ran and bound both parties until the posthumous child, born in 1892, attained his majority, in 1913, two years after the present bill uyas filed. The complainant could not, and did not, repudiate or evade his obligation to support the infant children, and now acknowledges it. It is not questioned that lie has performed on his part. This obligation arose out of an agreement which gave him all the profits, and he cannot be held to the performance of the contract on his part and compelled to give up- his own rights thereunder. He was not acting in a fiduciary capacity when he made the contract, and the contract did not terminate when he became administrator. Both he and his father’s estate remained bound. The case is not altered by the fact that his obligation became less as his brothers and sisters one by one attained their majority. The business of the decedent, as distinguished from the tangible assets of the estate to be mentioned hereafter, consisted only of such good will as might attach to the name “Estate of Peter M. Mullin.” We think it doubtful whether in a business of that character, consisting of personal services and evidently dependent largely, if not entirely, upon the personal characteristics of the individual, there could be any good will as late even as four or five years after a man’s death. Assuming that there was, as the filial partiality of the complainant seems to have thought there was when he made the agreement, such good will is, at best, a wasting asset, and must become less valuable with each year-. The value of the business, so far as that value belonged to the estate, must have decreased as rapidly as the burden of the obligation to support the'children. No provision may have been made in express words that the business should be the complainant’s when the youngest child attained his majority, in 1913. Such an express provision was hardly necessary. The successful conduct of a business of that character for more than twenty-one years would, in effect, malee it his, whether the parties so agreed or not, in tire absence of an express covenant on his part not to engage in the business for himself; and there was no such covenant. He would be free to conduct the business in his own name, and we can hardly imagine a business competitor who 'would be willing to pay for the mere privilege to use tire name of a man who had been dead more than twenty-one years. No doubt, the executrix and the complainant looked at the matter practically, and both foresaw that the business would be the complainant’s before the contract terminated, in 1913, if, in fact, it was not already his in 1896.

Moreover, seven years before the agreement expired, the good will of the estate of Peter M. Mullin was ended by legislation. In 1906, an act was passed regulating the business of undertaking, and prohibiting under a penalty any unlicensed person from conducting the business. Comp. Stai. p. 5700. From that time forward, the estate could not legally carry on the business. At that time three of the children were still under age, and their support and education thereafter was entirely due to the earnings of tire complainant.

We have thus far dealt only with the profits of the business as distinguished from the tangible assets that came to the hands of the compMnant as administrator. These assets were subject to the same contract giving the profits to the complainant after supporting the minor children until the youngest attained his majority. The complainant raises no question as to his accountability therefor. In the absence of clearer proof, we may assume that the value when the youngest child attained his majority, in 1913, was the same as at the testator’s death, i. e., $500. On this amount the complainant is chargeable, with interest, from April 24th, 1913, with annual rests.

As to the effect of the releases, we agree with the vice-chancellor.

The decree, so far as it confirms the master’s report and adjudges that the proceeds of the conduct of the undertaking business are a part of the assets of the estate of Peter M. Mullin, and that the legatees are entitled to share therein, must be reversed and the record remitted to the court of chancery for further proceedings in accordance with our opinion.

For affirmance—Black—1.

For reversal—The Chief-Justice, Garrison, Swayze, Trenci-iabd, Parker, Bergen, Kalisch, Terhune, Heppeni-ieimer, Williams, Taylor—11.


author: Trenchard, J.

text:
    Clara D. Hague, petitioner and appellant, v. Henry W. Hague, defendant and respondent.
    [Submitted December 6th, 1915.
    Decided January 28th, 1916.]
    1. To turn separation by consent into a desertion, the complaining party, whether husband or wife, must put an end to the agreement by requesting a resumption of matrimonial cohabitation.
    2. Where the separation is shown or may be inferred to have originated with the wife’s consent, it will become desertion from the time the complaining party makes sincere overtures to terminate it.
    3. It is an inflexible rule in this state that a divorce will not be granted upon the uncorroborated admissions or testimony of a party to the suit, and this applies to every element in the proofs necessary to sustain the decree.
    4. In a suit for divorce the husband is a competent witness on behalf of his wife.
    5. Where the testimony of the wife shows that, after living for a time separate from her husband, she made sincere overtures to terminate such separation and to resume matrimonial cohabitation, and that her husband refused and persisted continuously in such refusal for a period of two years, although he was free and able to resume matrimonial cohabitation if he had desired to do so, and the wife’s testimony is corroborated by that of her husband and another witness, willful,- continued and obstinate desertion justifying a decree of divorce is established.
    On appeal from a decree of tbe court of chancery advised by Vice-Chancellor Backes, whose opinion is reported in 84 N. J. Eq. 674.

      Mr. J. Harry Hull, for the appellant.
   The opinion of the court was delivered by

Trenchard, J.

This is an appeal from a decree dismissing the wife’s petition for divorce in an undefended action.

The ground alleged was desertion in December, 1911. The petition was filed February 27th, 1914. The matter was referred to a special master to ascertain and report as to the truth of the allegations of the petition.

It appeared from the depositions, taken that the parties were married in 1909, and that they lived together as husband and wife for a time with the wife’s parents in Glen Ridge, in. Essex county, and later at various places in the same county. No children were born of the marriage.

The testimony of the wife disclosed the following matters of fact: Her husband was employed in New York City. He drank to excess and neglected her and for long periods did not contribute anything to her support. They were frequently without means of support, except - such as was earned by the wife, and their unpaid bills compelled them to move from one town to another. On the insistence' of the husband’s family they moved into a hotel and she took employment there, and in that way she earned her own living and contributed to his support. The husband’s conduct grew worse, and upon his telling his wife that he “had lost all love for her,” she left the apartment in the hotel and went to live at her father’s house in Glen Ridge, still, however, retaining her employment at the hotel. After a few days the husband left the apartment and went to live at his parents’ home in the same town. The petitioner and the defendant did not see each other again until October, 1911, when the petitioner concluded that she would "overlook everything.” She sought out her husband, calling him on the ’phone, first at his house, and then at his club, and asked him if he would not meet her. He agreed and they met in Montclair. They “talked things over” and she asked him "if he was willing to let by-gones be by-gones,” but he said he “did not know just what he was going to do about it.”' The defendant asked petitioner to meet him in New York City. At that time she was attending night school in New York and he was working there in the daytime. Accordingly they met in New York, went to a hotel, and for weeks thereafter, two of three times a week, she thus met him and stayed over night in various hotels. During this period she again asked him “if he would let by-gones be by-goues,” and make a home for them, and he again said he “did not know just what he would do.” They talked about beginning a home in a furnished room somewhere and he said “we will not say anything to the family now as to what we are going -to do.” She had been spending the evenings with him in order, as she says, that they might “make up” and begin again in a new home. She suggested that they take a room. He agreed that it was the proper thing to do, but “he wanted to do it in an underhand way” and did not want to tell the family. This continued from October until one evening in the last week of December, 1911. They had been to the theatre together. The wife concluded that the defendant had no intention of making a home for her but rather wanted her for “one purpose and that was all,” and that she “was not going to continue in that way.” He wanted her to go to a hotel as usual. What followed may be best stated in her own words:

“I had told him that I was unwilling to go with him to a hotel in.that manner when he was unwilling to furnish a home to live with me as man and wife should. When we separated that night at my cousin’s home, after I had told my husband I was going back there to stay all night, we did not have any argument over that point. I had told him I was. going back there and he escorted me to the house. We did not talk about the matter at the house. Prior to going to my cousin’s house my husband had expostulated with me because I would not go to the hotel with him that night.' In my opinion our more or less intimate relations from the early part of October, 1911, until the night between Christmas and New Year’s, 1912, was on his part simply for that one reason. So I told my husband that night, the latter part of December, 1911, that I was going to my cousin’s house to stay all night, and we did not discuss the matter. We just merely went up to the house and he said ‘Good-bye.’ He did not kiss me good-bye. He just left me and I have not seen him since. I have not made any attempt to see him. My husband has not made any attempt to see me either direct or through my family. No member of his family, so far as I know, have sought any communication with me or with any of my family. I live on Midland avenue, Glen Ridge, N. X, about four blocks south of Bloomfield avenue. My husband lives on High street, Glen Ridge, near Wildwood terrace, which is about three blocks north of Bloomfield avenue, and although I live as near as that to him I have not seen or heard from him from that day until this. My husband is a tennis player, and he goes around in society in Glen Ridge, N. J., very prominently. He belongs to the Glen Ridge Tennis Club and the Montclair Athletic Club. He is supposed to be very popular, and from what I hear he is out a great deal in Glen Ridge and Montclair society.”

The special master, considering the testimony of the wife and that of the other witnesses to which we shall hereafter refer, concluded that a divorce should be granted for the cause of desertion and so reported. But such report was not approved by the vice-chancellor because he thought “the petitioner’s testimony failed to show willful, continued and obstinate desertion her evidence was uncorroborated, and also if she intended to rely upon a constructive desertion, the justifying facts and circumstances of her leaving should have been pleaded.”

We are unable to concur in.the conclusion of the learned vice-chancellor.

It is quite evident that the wife did not rely upon constructive desertion. She does not rely at all upon the separation of December, 1910. The narration of events leading up to and inclusive of that separation merely furnish the background of the petitioner’s right of action.

She bases her right to a divorce upon the ground that she, in October, 1911, realizing that perhaps both had been at fault, sought out her husband and repeatedly, between that time and December 31st, 1911, asked him to live with her again, to begin a home again, even if it was only a furnished room, and that he refused and persisted in such refusal continuously for two years. She therefore relied upon actual desertion, and it was immaterial, except as it tended to explain what happened later, whether the separation in December, 19Í0, was with the consent of the parties, or whether it was justified by the conduct of the defendant.

The question for consideration is, Does the proof as a whole establish an intent upon the part of the husband to desert the wife in December, 1911, and if so, was such intent persisted in against the will of the wife continuously for two years ?

We are constrained to think that these questions must be answered in the affirmative.

We have no doubt that the separation of 1910 was the result of the inconsiderate conduct and talk of the husband and his unjustifiable failure to furnish reasonable support for the wife. We may, however, assume that the separation in 1910 was by consent. To turn such a separation into a desertion, the complaining party, whether husband or wife, must put an end to the agreement by requesting a resumption of matrimonial cohabitation. Chipchase v. Chipchase, 48 N. J. Eq. 549; Reece v. Reece, 34 N. J. Eq. 32; McGean v. McGean, 63 N. J. Eq. 285; Currier v. Currier, 68 N. J. Eq. 7; McAllister v. McAllister, 71 N. J. Eq. 13.

But even where the separation is shown or may be inferred to have originated with the wife’s consent, it will become desertion from the time the complaining party makes sincere overtures to terminate it. Hankinson v. Hankinson, 33 N. J. Eq. 66.

In the court below it was thought that the petitioner’s testimony as to the desertion was not corroborated.

It is, of course, an inflexible rule in this state that a divorce will not be granted upon the uncorroborated admissions or testimony of a party to the suit, and this, applies to every element in the proofs necessary to sustain the decree. Hires v. Hires, 61 N. J. Eq. 491; Sterling v. Sterling, 71 N. J. Eq. 59; Foote v. Foote, 71 N. J. Eq. 273; Howard v. Howard, 77 N. J. Eq. 186.

But in the present case there was, under the rule stated, ample corroboration of the petitioner.

Mr. Brown, the brother-in-law of the petitioner, testified that he was present at the marriage of the petitioner and the defendant; that at the time of the marriage and continuously down to the commencement of this suit both parties resided in Glen Ridge or nearby in Essex county; that defendant did not support the petitioner and that she supported herself; that from October, 1911, to the present time both petitioner and defendant have resided in Glen Ridge within a few blocks of each other, but separate and apart, the wife living in the same household with Mr. Brown, and the husband elsewhere; that in October, 1911, the petitioner decided to make an attempt at a reconciliation with her husband; that nevertheless they continued to live apart; that he has seen them both quite frequently since October, 1911; that he has seen and talked with the defendant ofttimes at his place of business in New York, and ofttimes at his club and at social functions in Glen Ridge, and that during all that time the defendant has never mentioned his wife, and has made no effort to effect a reconciliation and has contributed nothing to her support; that defendant was without any physical disability; that during her entire married life the petitioner has been compelled to support herself through her own exertions, notwithstanding the fact that her husband had ample earning power and was employed.

Nor is that all. The petitioner subpoenaed her husband before the master and his testimony was taken. He testified that since March, 1911, he has lived in Glen Ridge with his parents in the same town where his wife is living with her parents. He further says:

“I remember October, 1911, my wife telephoned to me. She telephoned to me at the Montclair Athletic Club. She asked me what I was going to do that afternoon and she spoke to me in a friendly way. I said I was not going to do anything, and she asked,me if I did not want to take a walk. I told her I would, and we met each other and took a walk. I had not had any communication with my wife prior to that time except a short note. Prior to the time she telephoned to me I had seen her on the train two or three times. My wife and I lived together as man and wife just prior to December, 1910. In October, 1911, the telephone conversation took place, and then the walk we took together that afternoon was the first time I had any communication with my wife since December, 1910. At that time I do not remember whether my wife asked me if I was willing to let by-gones be bygones. I can say that she did not make that statement. The afternoon we took a walk we were together about an hour and a half. I then saw my wife again about a week after we took that walk together. Prom that time until some time in December, 1911, I saw my wife about four or five times. On two occasions we were together in the city of New York at the Park Avenue Hotel. My wife spoke to me about beginning a home again in a furnished room. I told her we would not say anything just then as to what we were going to do. We never began a home again, as man and wife, in a furnished room. I never went to my wife and asked her to come back to me and make a home again. We saw each other a number of times between October, 1911, and the latter part of December, 1911. One evening during the week between Christmas, 1911, and New Year’s, 1912, we went to the theatre together. After we separated that evening I did not see my wife again until about a week ago at a social function in the town of Glen Ridge. During all these two years I have never gone to my wife and asked her to come back to me. I have not contributed anything 'to her support for over two years, not since December, 1910. I have lived continuously in Glen Ridge, N. J., since December, 1910, with the exception of those three months I remained in that apartment in Montclair, N. J. I went from the apartment in Montclair to 92 High street, Glen Ridge, N. J., to live with my mother and sister, and have lived there to this day. My wife has lived in another part of Glen Ridge, N. J., as far as I know. I have never made any offer to provide a home for her in all that time, nor have I contributed to her support all that time. I think it is true that I have lost my love for my wife. I do not propose to live with her, and I suppose the desertion is intentional on my part in a certain way for a great many reasons. There is no arrangement between my wife and me to get this divorce. She has done all this on her own responsibility and without any arrangement with me.”

Of course the husband is a competent witness for the wife in a suit for divorce. Schaab v. Schaab, 66 N. J. Eq. 334. We are satisfied in this case that there is no collusion. We see no reason either to reject the husband’s testimony or to regard it with suspicion. It is evident that he testified not from choice but by compulsion. No doubt he is indifferent to the result of this proceeding, as he has been to the comfort and welfare of his wife from the beginning.

Considering the proofs as a whole we are satisfied that in October, November and December, 1911, the wife sincerely endeavored by every means in her, power to put an end to the then existing separation. She repeatedly requested the defendant to provide a home for her and resume matrimonial cohabitation, and he neglected and in effect refused so to do and persisted in such refusal continuously for the term of two years, although free and able to resume matrimonial cohabitation if he had desired to do so.

The court below seems to have found the husband “was anxious and willing that they should live together as man and wife, but she was not.”

We are unable to reach such conclusion and find no testimony which will support it. It is true the wife said that “when I talked to my husband in October, 1911, and.suggested that we live together again, he was anxious to start a home again.” But this pretended “anxiety” of the husband is shown to have been a sham by his subsequent conduct in insisting upon clandestine meetings only in chance hotels, and his entire failure to comply with his wife’s most reasonable request to openly resume cohabitation if only in a furnished room. “Actions speak louder than words.” The petitioner seems to have been a refined, intelligent, industrious and self-respecting woman. It was entirely unnecessary for the defendant to tell her in so many words that he had no intention of resuming cohabitation with her on a basis that would enable her to retain her self-respect. She correctly interpreted his conduct and discerned his purpose. With respect to the suggestion that the wife was not willing to live with her husband as his wife, we must say that in our opinion it finds no support in the evidence, and the contrary is clearty shown to be the fact.

These views lead to a reversal of the decree below and the granting of a final decree of divorce to the petitioner and appellant.

For affirmance—The Chief-Justice, Sway;ze, Kalisoh, Black, Teri-iune, Hbppenheimer—6.

For reversal—Garrison, Trenchard, Parker, Bergen, Minturn, 'Vredenburgi-i, White, Williams, Taylor—9.


author: Bergen, J.

text:
    Francis C. McMahon et al., complainants-respondents, v. The Pneumatic Transit Company et al., defendants-appellants.
    [Argued November 30th, 1915.
    Decided March 6th, 1916.]
    1. The fact that a corporation purchased property from another corporation, holding a controlling interest in the purchasing company, at a greater price than the seller paid, is not alone sufficient to charge the directors of the purchasing company with actual fraud under section 491 of the Corporation act.

      2. To support a preliminary injunction restraining the delivery of stock issued for property purchased upon the ground of overvaluation, the moving affidavits must show facts from which actual fraud in making the valuation may be inferred. There must be some fact tending to show overvaluation aside from the difference in price paid by the seller and the valuation fixed by the purchaser as a basis for stock issued therefor unless the difference be so great as to indicate a fraud.
    3. Where a stockholder attends a meeting of the stockholders of a corporation, and votes to issue stock in consideration of property to be purchased, with knowledge of the facts, and allows two years to elapse during which the contract of purchase has been substantially carried out, and the property purchased used by the purchaser, without protest on his part, he is not entitled in equity to have the sale set aside upon the ground of overvaluation of the property, in the absence of proof tending to show that the action of the directors, which he as a stockholder approved, was a fraud upon him. He having approved the valuation is bound by it unless he shows that his action was induced by some fraudulent representation, or the concealment of some material fact by the directors.
    On appeal from a decree of tbe court of chancery advised by Vice-Chancellor Learning.

      Mr. Dougal Herr, for the appellants.

      Mr. Thomas E. French, foi' the respondents.
   The opinion of the court was delivered by

Bergen, J.

This is an appeal from an order made by the chancellor, as advised by a vice-chancellor, allowing a preliminary injunction restraining the Pneumatic Transit Company, hereinafter called the Transit Company, a corporation of the State of New Jersey, from issuing to the International Pneumatic Tube Company, hereinafter called the International Company, a corporation of the State of Maine, certificates for ten thousand shares or any other number of shares of the preferred capital stock of the Transit Company, and from paying, or attempting to pay, to the International Company, or anyone for it, any dividend or dividends thereon, and also restraining the International Company from assigning, transferring or attempting to assign or transfer the said stock, and from encumbering it in any way. The bill was originally filed by Francis C. McMahon and Clifford P. Allen, Charles E. Stevenson being subsequently admitted as a complainant by order of the court. McMahon is the owner of ten shares, Allen of four shares, and Stevenson of twenty-five shares of the stock of the Transit Company, the par value being $10 a share, out of the total issue of approximately $1,500,000. The order rests upon the affidavits of McMahon, Allen and Stevenson, annexed to the bill of. complaint. At the time the action now complained-of was taken by the Transit Company, Stevenson was one of the directors of the Transit Company, and, subsequently, became, and now is, the treasurer, not only of the Transit Compairy, but also of the International Company. The substantial charges of the bill of complaint are, that the Transit Company had a contract with the government of the United States for operating pneumatic mail tube service in the city of Philadelphia, and desiring to acquire a license to use additional appliances protected by letters patent and applications for other patents, owned or controlled by the International Company, made an agreement with it to purchase the right to use such appliances in connection with its mail tube service then in operation within the city of Philadelphia, and also within twenty miles of the city hall, in Camden, New Jersey, and to pay therefor ten thousand shares of the preferred stock of the Transit Company; that this action was submitted to the stockholders of tire Transit Company at a regular meeting, and then by them ratified and confirmed; that the complainants McMahon and Stevenson were both present at the meeting and voted for the resolution, McMahon moving its adoption, Allen, the other complainant, not being then, a stockholder. The basis of the injunctive relief sought seems to be that as the International Company had paid but. $47,000 for the control of the rights in all of the territory covered by the patents, the payment of $100,-000 in stock for their use in a limited territory was a fraudulent overvaluation of the property for which tire stock was to be issued. The learned vice-chancellor put his conclusion upon the ground that there was an overvaluation of the property because the patents had cost the seller but $47,000, and the purchase was accomplished through the.complete dominion and control of the International Company over the Transit Company. This is not, in .our opinion, sufficient to overcome the judgment of the directors of the Transit Company, as to the value of the property, which judgment, by the terms of the statute, is conclusive in the absence of actual fraud. Corporation act, Comp. Stat. p. 1630 § 49; Donald v. American Smelting and Refining Co., 62 N. J. Eq. 729. In order to justify the allowance of an injunction, the affidavits upon which the application is made should disclose the material facts which should be verified by the oath or affirmation of some person who has a knowledge of them, the common form of verification not being sufficient. Youngblood v. Schamp, 15 N. J. Eq. 42. The gist of the complaint is, that in purchasing a license to use the rights held by the International Company, there was an overvaluation. If this be not so, then it is of very little consequence whether it be true or false, that it was- brought about through the stock control of the Transit Company by the International Company, for no harm was done that would induce the court of equity to interfere, and the fact that the Transit Company paid in stock more than the rights has cost the International Company is not of itself conclusive proof of actual fraud. There is nothing to be found in the affidavits annexed to the bill of complaint to support any finding of actual fraud. The affidavit of McMahon shows that he was present at the stockholders’ meeting and voted for the resolution, and while it neglects to state, as set out in his bill of complaint, that lie “seconded said resolution,” that fact was within his knowledge, and his affidavit states that the matters set forth in the bill are true so far as they relate to his own acts and deeds. His affidavit further sets out that he did not understand that one

“John E. Milholland was in any way interested in the matter, and from representations made at the meeting, supposed that the exclusive right and license proposed to be purchased from the International company was worth $100,000; that he did not know the International company had agreed to buy all the.rights in the United States and elsewhere for less than half of the sum it was proposed to transfer the right within twenty miles of Oamden and in Philadelphia to the Pneumatic Transit Company;”

that since that time he had learned that the whole matter was a scheme of Milholland by which the stock was to be issued to tire International Company “for the Philadelphia rights to the worthless tunnel patents.” There is no fact in this affidavit which tends to show that the property purchased was overvalued, nor any fact from which the presence of actual fraud can be inferred. The affidavit contained references to Milholland, who was neither a director or an officer of the Transit Company, from which it may be fairly deduced that deponent’s conduct is actuated by enmity against Milholland rattier than by the alleged overvaluation of the property purchased, but whether this be so or not, there is no fact set forth tending to show actual fraud, nor from which it can be inferred that the rights purchased are not worth the price paid, beyond the fact that it was more than they had cost the vendor, which, standing alone, would not be evidence of actual fraud. The statement in the affidavit that the rights were worthless is of no evidential value; it is simply the expression of an opinion without a fact stated to justify it. The affidavit of Allen is a mere verification of the bill of complaint and states no fact material to the determination of the question presented, and is of no consequence in the present proceeding. Nor does the affidavit of Mr. Stevenson throw any light on the question of value, or state a fact from which actual fraud in valuation can be inferred. The affidavit is very carefully drawn and excluded all facts, if any exist, relating to actual fraud in valuation. He admits that he was present, at the special meetings stated in the bill of complaint, at which was considered the purchase of the tunnel rights—that is, the license, and that the proceedings at said special meeting ave correctly set forth, in the bill of complaint. He further says that efforts had been made by Milholland to have issued the ten thousand shares, of the Pneumatic Transit Company to the International Company and the payment of dividends on that stock, and that he has refused to consent to the issuing of the stock and has voted against paying dividends thereon. He further says that the tunnel rights have not been transferred by any transfer, in writing, so far as he knows. There is nothing in this which tends to show that the rights purchased and for which the stock was to be issued are not worth the par value of the stock. Mr. Stevenson was in a position to know all the facts concerning the transaction. He was present when the resolution to purchase was adopted, and he does not deny that he was fully informed of all the facts upon which he based his action in approving of the purchase, nor does he undertake to explain why with this knowledge he permitted the two companies to act upon this contract for over two1 years without making any complaint, and we cannot resist the feeling that his affidavit is disingenuous and superficial, and that it does not frankly state all of the facts of which he has knowledge. We find nothing in these affidavits to support a finding that the action of the board of directors, approved by the stockholders, was in excess of their powers or from which actual fraud may be inferred. This is an action between stockholders in which a very small interest is assailing the purchase of property by the board of directors, approved by tire complainants as stockholders, in which the right of no creditor is affected, and we are considering the case from that standpoint as distinguished from the rights of creditors. But this is not all of the case, for the defendants, by their answering affidavits, show that, after the action of the board of directors was approved by the stockholders, tire Transit Company actually executed the certificates of stock; they were signed by the tiren treasurer, Mr. Murra3r, and sent to the president of the Transit Company, who signed them, but, through some error on the part of his clerks, were not returned for delivery and were not found until December, 1914, rvhen they were discovered in the safe in the president’s office, and the matter then was called to the attention of the present treasurer of the company, Mr. Stevenson, in order that the transaction might be completed, who, although he was one of the directors of the Transit Company and voted for the resolution at a meeting held in his office, and who drafted the resolution adopted by the stockholders, took the position that the lapse of time had vitiated the agreement. The affidavits further show that the Transit Company offered to sell their plant to the United States government, and that the license purchased by the issue of the stock as aforesaid is indispensable to the proper operation of the underground transportation of mails, parcels and freight, and this, in part, because of the adoption of the parcel post system by the mail department of the United States government. It is quite manifest, from reading these answering affidavits, that the rights purchased with the stock greatly add to the facilities of the Transit Company, and there is every reason to believe that it will greatly enhance its earning capacitjq and was necessary to the successful operation' of the service required.

It also appears that in the negotiations with the government of the United States for the sale of the entire plant, tírese rights were valued at $100,000. Under all these circumstances, it is not at all clear, at least not sufficiently so, as to warrant an injunction on the ground that there was such an overvaluation of these rights as to support a finding that in making the purchase the directors were guilty of the actual fraud which the statute requires in order to set aside their judgment which it makes conclusive in the absence of such fraud.

We also think that where, as in this case, the complainants were present and voted for the resolution, and with knowledge of the fact that for more tiran two year’s the two companies had been operating under the purchase, and during all that time stood by and made no protest, they are now estopped, in the absence of proof tending to show that the action of the directors was a fraud upon them, to deny the force and effect of their conduct, relying upon which the two- defendant companies have availed themselves of the terms of the contract, which in equity has been executed. Having approved the valuation, they are bound by it unless they show that their action was induced by some fraudulent representation, or the concealment of some material fact, by the directors.

The order appealed from will be reversed and set aside, with costs.

For affirmance—None.

For reversal—The Ci-iiee-Justice, Garrison, Trenoi-iard, Bergen, Minturn, Black, Wi-iite, Teriiune, Heepenheimer, Williams, Taylor—11.