text:
    Arthur N. Pierson, trading, &c., v. The Borough of Haddonfield et al. Willits Coal and Lumber Company v. The Borough of Haddonfield et al.
    [Filed February 23d, 1904.]
    1. Any person who furnishes labor or material toward the performance of any contract for a public improvement in a municipality of this state, is entitled to have the benefit of the lien provided by the statute of March 30th,' 1802 {Gen. 8tat. p. B078), to secure the payment of his claim.

      2. The lien attaches from the time of filing the notice with the proper officer of the municipality, whether the whole work be then completed by the contractor or be abandoned by him.
    3. It becomes, under section 5 of the statute, a charge not only on what is due to the contractor at the time the lien notice is filed, but also upon what may thereafter come to be due to him under the contract.
    4. The statute is a public act. The municipality, the contractor and his surety, enter upon the transaction with full notice that persons who may do work or supply material to the contractor for the public improvement about to be constructed, will have the payment of their claims therefor secured by observing the statutory requirements. The right of the surety to be subrogated to the remedies against his principal (the contractor) which the other party to the contract may hold, is subject to the superior rights of the statutory lien claimants.
    5. Where a lien has attached under a statutory notice to moneys earned by the contractor before he abandoned the work, -which moneys are either due or to grow due to him, it will not be divested by subrogating the surety of the contractor to a right which the municipality might have had, if by its engineer it had completed the abandoned work, when in fact it did not so complete it.
    On bill, answers and proofs.
    The bill of complaint in the first of these cases was filed on July 14th, 1902, by Arthur FT. Pierson, a lien claimant nnder the statute of 1892 (Gen. Stat. p. 2078), and makes defendants the borough of Haddonfield (a municipality of this state), which had contracted for the construction of a system of sewer and sewer disposal, and also John Quinlan, the contractor for the work and materials; the City Trust and Safe Deposit and Surety Company of Philadelphia, surety for Quinlan’s performance of the contract, and other parties who assert rights as lien claimants against the portion of the contract price remaining in the hands of the borough of Haddonfield.
    For convenience of reference, the defendant “The City Trust and Safe Deposit and Surety Company of Philadelphia,” will hereinafter be referred to as the “City Trust Company.”
    The bill sets forth a copy of the contract with Quinlan, and of the bill of items of the goods furnished to him by the complainants, together with the credits for payments made thereon, and of the notice served upon the borough of Haddonfield to retain for the complainant Pierson the balance due him, which is alleged to be $3,191.58.
    It alleges that Quinlan began to work on the contract shortly after September, 1901, and continued to work thereunder until the month of April, 1902, at which time there was due to him under the contract the sum of $5,825, which sum, the bill alleges, is still owing by the borough of Haddonfield to Quinlan, and that it is subject to the lien of the complainant; that Quinlan is indebted to the complainant in the sum of $3,191.58 for material furnished to him in the execution of the contract; that on the 17th day of April, 1902, pursuant to a statute of this state passed to secure the payment to laborers, traders, &c., furnishing materials, &c., towards tire performance of any public improvement, approved March 30th, 1902 (Gen. Stat. p. 8078), the complainant filed the proper statutory notice with the borough, claiming a lien upon the moneys remaining in its control. The complainant charges that the City Trust Company claims to be entitled to the moneys in question, and the complainants insist that if it has any lien thereon it is subject to the complainant’s rights therein.
    The bill also sets forth that the Willits Coal and Lumber Company filed, on Ajjril 23d, 1902, a notice of lien for materials furnished to the amount of $881.16; that the City Line Lumber Company filed, on the 19th of April, 1902, a like notice, for materials to the amount of $75.78; that Albert Speth filed, on the 29th of April, 1902, a like notice for labor done to the amount of $14.76; that on June 24th, 1902, James C. Dobbs filed a like notice for material furnished to the amount of $53.60; that H. Fred. Lauer, on the 14th of July, 1902, filed a like notice for material furnished to the amount of $30.
    The bill prays a decree that its claim is a valid lien upon the funds in the hands of the borough of Haddonfield, precedent to all other claims except that of Albert Speth, and that the borough of Haddonfield may be decreed to pay out of the funds due or to grow due on the contract the amount claimed by the complainants, and for further and other relief, &c.
    The borough of Haddonfield, by its answer, alleges that Quinlan, in the month of April, 1902, having at that time been paid all tire money then due him under the terms of his contract, abandoned his work thereunder, and left the borough. That thereupon the City Trust Company (which was the surety to the borough for the faithful performance of Quinlan’s contract) began the completion of the contract after its abandonment by Quinlan. The borough admits that it holds the moneys falling due on the contract after the default of Quinlan, and stands ready to make such payment of the same to such person or persons as the court may in this cause deem to be thereto entitled.
    The City Trust Company answers, admitting that Quinlan entered upon the performance of the contract and continued to perform it until the month of April, 1902, and denies that the sum of $5,825 was then due Quinlan from the borough.
    It alleges that Quinlan abandoned the work before the contract was completed, and that thereunder whatever moneys remained due on the work done or to be done were held by the borough of Haddonfield, to be first applied for the completing of the contract, leaving to the credit of Quinlan only such balance (if in fact any there were) as might remain after meeting all costs, charges and expenses incurred in completing the portion of the contract left unperformed by Quinlan.
    The City Trust Company further alleges that on the 9th of September, 1901, it executed a bond for the suretyship in the sum of $10,000, to the borough of Haddonfield, for the faithful performance by Quinlan of the said contract, and upon the abandonment of the contract by Quinlan the City Trust Company did, with the consent and approval of the borough of Haddonfield, undertake to prosecute the work of completing the contract which Quinlan had abandoned, and is presently engaged in completing the work required by the contract to be done which Quinlan had left undone.
    The defendant the City Trust Company insists that, as surety for Quinlan to the borough of Haddonfield, it is entitled to be subrogated to all the moneys in the hands of the borough of Haddonfield, and that the defaulting contractor, Quinlan, and the complainant and those creditors of Quinlan who claim liens against the contract price for materials furnished or work done for Quinlan before he abandoned the contract, are entitled only to such balance of the contract price as may remain after the contract work has been faithfully completed and paid for by applying thereto the portion of the contract price earned by Quinlan before he abandoned the work; that the right of the defendant the City Trust Company, as surety for Quinlan, to have the contract price applied to the completion of the work is superior to any right or privilege of the complainant or other lien claimants upon the moneys due Quinlan.
    The defendant further claims that a portion of the pipe furnished by the complainant during the prosecution of the work by the defendant the City Trust Company was unfit for use; that the amount due therefor cannot be ascertained until the completion of the work; that the defendant the Willits Coal and Lumber Company removed material from the work after it had delivered the same.
    Tire City Trust Company also denies that any of the statutory lien claimants have a valid claim to the funds remaining in the hands of the borough, and insists that the whole of that fund should be applied to satisfjr the moneys expended by the City Trust Company as surety in the completion of the work.
    The defendants Albert Speth and the City Line Lumber Company answer, setting up their several rights under the statutory notice served upon the borough officers, insisting that the complainant Pierson did not serve a lawful notice of his claim and that he has no lien on the fund, and as to the City Trust Company, insisting that its claim, if any it has, is subject to the liens of the said defendants.
    The Willits Coal and Lumber Company also filed its bill of complaint in this court on July 18th, 1902, against the borough of Haddon field for the payment of the fund. The bill is of substantially the same character as that above set forth. Answers to the same effect as those above recited have been filed thereto by the City Trust Company and other defendant litigants. The same counsel appear in both causes.

      At the hearing it was agreed, by stipulation, that both of said causes should be tried together. Under the pleadings and the above stipulation the two causes have come to a hearing at the same time.

      Mr. William D. Lippincott and Mr. Thomas E. French, for the complainants.

      Mr. David 0. Watkins (with whom was Mr. Lincoln L. Eyre, of the Philadelphia bar), for the .City Trust and Safe Deposit and Surety Company, defendant.

      Mr. William T. Boyle and Mr. Henry S. Scovel, for the borough of Haddonfield, defendant.

      Mr. Francis D. Weaver, for the City Line Lumber Company, defendant.
   Grey, V. C.

The bill in this case is filed under' the Mechanics’ Lien statute of this state “to secure the payment of laborers and other persons who furnish work and materials for public improvements in municipalities of this state,” approved March 30th, 1892. Gen Stat. p. 2078.

The proofs show that a notice was, in accordance with the statute, filed against the fund remaining in the custody of the borough of Haddonfield by the complainants on the 17th day of April, 1902, with the proper officer of the borough, claiming the sum of $3,191.58 from the portion of the contract price due, or to grow due, to John Quinlan, who had. contracted with the borough to construct a system of sewers and sewer disposal for a named price.

The borough of Haddonfield is a municipality of this state. The contract with Quinlan was. made on the 8th day of September, 1901, and required that he should furnish both the work and material for the system of sewage and sewage disposal projected within that borough.

The defendant the City Trust Company, by a bond which accompanied Quinlan’s contract, became surety for his faithful performance of it.

Quinlan shortly after entered upon tire performance of his contract and continued (with a cessation of a few days in Eovembor, 1901), until the month of April, 1902, when he abandoned the work.

The eighteenth section of the borough’s contract with Quinlan is in these words:

“In case of any unnecessary or -inexcusable delay in tlie general conduct oí the work, or in the event of an actual or practical abandonment of the work, the engineer will notify the contractor and the bondsmen in writing to that effect. If the contractor shall not' within five consecutive days thereafter take such measures as will, in the judgment of the engineer, insure the satisfactory completion of the work in the time specified, or in a reasonable time thereafter if he has been permitted to continue beyond the time specified as provided elsewhere in this contract, the engineer may then, by and with the consent of the borough council of said borough, notify the aforesaid contractor to discontinue all work under this contract, and it is hereby agreed that the con-, tractor is to immediately respect said notice and stop work. The engineer shall thereupon have the power to take such and as many persons as he may deem advisable, by contract or otherwise, to work at and complete the work herein described and to use such plant, horses, carts, tools and materials belonging to- or leased by the contractor as he may find on the work and in the yards and storehouses of the contractor, or to procure by lease or purchase other materials, machinery or appliances for the completion of the same, and to charge the expense of said labor and materials, machinery and appliances to the aforesaid 'contractor, and the expense so charged shall be deducted and paid to the party of tho first part out of any such moneys as may then be due to the said contractor under and by virtue of this agreement, or any part thereof; and in case such expense is less than the sum which would have been payable for such work under this contract, if the same had been completed by the party of the second part, the contractor shall be entitled to receive the difference. If the expense is greater, then flic bondsmen will be called upon to make good the difference.”

Pursuant to this clause, when Quinlan abandoned the further performance of the contract, the engineer for the borough gave the first notice by a letter, dated April 16th, 1902, to the bondsmen, the City Trust Company, that the work had been abandoned by Quinlan, and that if such measures as would insure satisfactory completion of the work under the contract were not taken in five daj's the engineer would be obliged to notify the contractor and his surety to cease the work, and that the borough would complete it in accordance with the terms of the contract. Very shortly after this notice was given, the defendant the City Trust Company, the surety on Quinlan’s bond (without waiting for or receiving any second notice to the effect that the borough would proceed to complete the work), made its arrangements.to proceed itself with the performance of Quinlan’s contract. If the borough desired to exercise its privilege to have its engineer complete the work, the contract required that the borough council should consent and that the engineer should give a second notice to the contractor. that he discontinue all work under the contract. This was obviously necessary in order that there should be no confusion, which might arise if the contractor and the engineer were both working at the same time in completing the improvement.

This second notice (preliminary to the assumption of the completion of the contract work by the engineer) was not given. In fact the engineer never undertook to complete the residue of the work which the contractor had left unfinished. The defendant the City Trust Company, surety for Quinlan, acting for him and in his place, completed the performance of the contract work in accordance with his contract.

The City Trust Company claims that the work which it has done in finishing that which Quinlan had left undone was by virtue of a new agreement which it entered into with the borough of Haddonfield. Ho such agreement was made in writing, nor did the borough, by its council, or even by its executive officers, definitely agree at any time with the City Trust Company that it should complete the work. Desultory conversations between the representative of the City Trust Company and the officers of the borough, casually held at various times on the subject of the completion of the work, and the fact that the City Trust Company, acting for Quinlan, actually did it, are claimed to have amounted to a new contract between the borough and the City Trust Company.

It is explicitly denied by the borough officers that there ever was any such new or substituted contract. They testify that the defendant company proceeded with the performance of Quinlan’s contract as his surety, and that no other agreement whatever was made between that company and the borough on the subject. The attending'circumstances support the testimony of the borough officers. No definite terms of any such contract are proven. The defendant company in fact took the place of Quinlan, and in his stead performed his contract as his surety. It carried on the work in every detail as he had agreed to do, and accepted partial payments for work done at various stages in the completion of his contract at the prices agreed to be allowed him by orders or certificates drawn payable to John Quinlan, or bearer.

At the time when the contractor, Quinlan, in April, 1902, abandoned the contract, $2,115.01 was due and payable to him for work theretofore done by him under the contract. This portion of the fund was actually due to Quinlan when the complainant’s lien notice was filed. In addition to the $2,115.01, there was another sum of $3,711.75 which had also been earned by Quinlan by work done under the contract. This was the twenty per cent, retained under section 25 of the contract, which, under section 26, became payable to the contractor within fifteen Jays after the engineer should have certified that the work had been finally completed on the part of the contractor. This is the portion of the fund which when the lien notice was filed was “to grow due” to Quinlan. The fifth section of the statute attaches the lien to “any funds which may be dufe or to grow due to said contractor” from the municipality under the contract. Both these portions of the contract price were earned by Quinlan, and both were, under the operation of the statute, attached by the filing of the complainant’s lien claim. The whole work has now been completed on the part of the contractor, and the complainant’s lien claim, which attached to both the money due and that to grow due, has now fully ripened, and is entitled to be paid by the borough.

By an agreement made between the borough and the City Trust Company since the whole work has been completed and accepted, the sum of $5,000, part of the above total, has been retained to satisfy the lien claimants if they maintain their claims.

The borough asserts no interest in this money, and simply retains it until the court shall determimne ■ who is rightfully entitled to it. The City Trust Company, the defendant who now claims this money, did not do- the work or furnish the material by which it came to be owing. As above stated, this money was all earned by Quinlan, and would now be due and payable to him, save for the statutory liens filed against it.

The defendant company contends that the statute makes no provision for any lien in case of the abandonment of the contract.

The purpose and object of the statute is fairly indicated in its title. It is there declared to be an act to secure the payment of persons employed upon or furnishing materials towwrd the performance of any work on public improvements in the municipalities of this state. The first section also declares that any person doing any work or furnishing any material "toward the performance or completion" "of any contract with a municipality for a public improvement shall have a lien. The right to a lien arises when the work or material is supplied towards the performance of the contract, not when it is completely finished. The second section, in terms, prescribes that the notice of claim may be filed at any time before the whole work to be performed is completed, or within fifteen days afterwards. The right to the lien is inchoate until perfected by the filing of the notice. It is true there can be no compulsion of payment until after the contract is completed, for until that has happened it cannot be known who all the respective lien claimants are, in order to adjudge their claims (section 8), or whether the municipality has any right to retain any part of the contract price to reimburse itself for any losses it may have suffered in completing the work. This necessary postponement of the ascertainment of the respective lien claimants, and of the payment of the portion of the contract price to which they may be entitled, does not prevent the claimant from perfecting his lien on such part of the contract price as may be either due or to grow due to the contractor, for by the express words of the statute (section 5) the lien attaches from the time of the filing of the lien notice, and obviously has effect whether the contractor is proceeding with performance of the contract or has abandoned it. The lien attaches not because of the act of the contractor in having finished the performance of his contract, but because of the act of the lien claimant in furnishing labor or material towards the performance of it and giving notice thereof as prescribed by the statute. The subject-matter of the lien is the fund due or to grow due to the contractor, which means not only what is due to the contractor at the time the lien notice is filed, but also what may thereafter come to be due to him.

The defendant the City Trust Company, surety for Quinlan on his contract, claims that it should be subrogated to the position and rights which the borough of Haddonfield might have acquired under the contract if it had notified the contractor to cease the work and had directed its engineer to complete the performance under section 18 of tire contract. The section provides that if the contractor be noticed to quit all work, the borough engineer might seize the contractor’s equipment and complete the contract work, charging the expenses against any moneys which might then be due to -the contractor under the contract.

The defendant thé City Trust Company contends that, having performed the 'contract according to its terms, it is entitled to apply this fund of $5,826.76 (earned by but unpaid to the defaulting contractor, Quinlan), to satisfy its losses incurred in the completion of the work, and that it is entitled to precedence over the lien creditors in the application of these funds admittedly earned by Quinlan on the contract work. The surety bond given by the City Trust Company contains a provision that if any liability should accrue on the part of the surety by reason of that obligation, after settlement of the same, the surety should be subrogated to the rights and remedies which'the borough would have against Quinlan on that obligation or against any other person.

The equitable principle of subrogation entitles a surety who performs the work upon which his principal has defaulted to have the benefit of the securities and remedies against his prin-' cipal, which the other party to the contract may hold. If the other party never had any security or remedy against the principal, there is nothing to which the surety can be subrogated.

In the present case the complainant insists that the borough did not take the steps prescribed by the contract (section 18), by which its engineer might possess himself of the contractor’s equipment and complete the work, charging-the expenses to him and paying them out of any moneys due -the contractor under the contract; that the borough never acquired the position which by section 18 of the contract might have -enabled it to retain the moneys owing to Quinlan to reimburse it for the losses in completing the contract; that it has no remedy over against Quinlan or the moneys due him to which his surety can be- subrogated. ■ ’

The proofs clearly show that on Quinlan’s abandonment of the work the borough engineer did not undertake to complete it, as prescribed by section 18; nor did the borough make a new contract with anyone else to complete the work. By the express terms of the contract, the right in the borough to retain.and apply Quinlan’s earnings (part of the contract price) was dependent upon the assumption of the completion of the contract work by the borough engineer, and the suffering by the borough of a loss. The selection, by section 18,-of the borough engineer, who was necessarily familiar with the contract work and an expert in the conduct of such business,, as the person who should complete the work in order to entitle the borough to reimburse itself from the moneys due the contractor, was an incident materially affecting the possible loss in finishing the work. The contractor might well say to the borough: “It was my right, if you expected to charge me with any loss in completing the contract work, to have had that work done under the superintendence of the expert agreed upon in the contract.” In fact, the borough engineer clid not undertake the completion of that work, nor has the borough suffered any loss in that matter. The City Trust Company did not wait for this condition of affairs to come into being, but itself, acting for Quinlan, voluntarily completed the work. It may therefore be forcefully argued that the borough has no claim or remedy against Quinlan, or against the fund (part of the contract price) due or to grow due to him, to which Quinlan’s surety can be subrogated.

It is also to be considered that the right of a surety to be subrogated is not an absolute one, which the surety may enforce at will. All the circumstances which might affect the equities of the parties should be presented. In the present case, while there is proof that the expenditures of the City Trust Company in completing the contract are in excess of the portion of the contract price paid to that company, it is not shown that this will necessarily result in an actual loss to tire City Trust Company, for there is no proof, that that company has no other fund or security from Quinlan to which it may have recourse. In the Hewitt Case, 10 C. E. Gr. 210, this court declared that whether the surety should have all the remedies which the creditor might have enforced depends on whether it is necessary to the protection of the surety that it should be so. The defendant company which undertook this suretyship knows whether it is otherwise protected. It is its duty (when it asks the court to award to it by subrogation a special fund of its principal on which other creditors rely for payment) to prove that it has no other recourse than this fund to save it from loss. No such evidence has been offered. .

Whatever may be the equities of the parties touching the question of subrogation, the principles which in my view must control and determine their rights in this dispute are to be found in the effect and operation of the statute of 1892 above cited upon the matters here under consideration. The defendants’ extensive citations of the decisions in other states upon their statutes are of little aid in determining this cause, which is controlled by the terms of the statute of this state.

The transaction was within the scope of that statute, a public improvement being constructed by a municipality of this state under a contract for work to be done and materials to be furnished. The municipality, the contractor and his surety must be held to have made their contract with knowledge of the fact that this public statute gave to persons who might perform work for or furnish material to the contractor for such an improvement a right of lien upon moneys which might be due or grow due to the contractor under the contract, and that persons who supplied such work and material might rely upon that right of lien to secure payment of their claims. The City Trust Company having with this knowledge accepted its responsibilities as surety, cannot now equitably withstand the enforcement of the statutory lien subject to which it entered into its contract of suretyship. Any other construction of the statutory lien would make the statute a baited trap, inviting workmen and material-men to give credits to contractors erecting public improvements upon the assurance that the payment of their claims would be secured, but depriving them of- their security by the enforcement of a latent equitj', to the creation of which they were not parties, and of which they knew nothing when they gave their credits, which in fact came into existence' (if'it ever did arise) because of circumstances happening long after the claimants’ liens had attached.

I will advise a decree for the complainants and other lien claimants in both suits, in accordance with the views above expressed.


source: Caselaw Access Project

author: Grey, V. C.

license: Public Domain

text:
    Joseph W. Pratt v. Howard Worrell, administrator, &c., et al.
    [Filed March 7th, 1904.]
    1. A testator devised an estate for life in his Westville property to his widow, with an independent power to sell it and to appropriate the proceeds to her own use. He devised the residue of his estate (including the Westville property) to his executor, in trust, and ordered him, on the death of the widow, to sell that property (if she should not in her lifetime have chosen to sell it) and to divide the proceeds among his named relatives. The executor attempted to sell the property during the life of the widow' and to hold the purchase-money for the benefit of the widow'. — Held, the effect of the will wms to create twm succeeding powrnrs of sale, one of which might be exercised during her life by the wndow for hex’ own benefit, the other after her death by the executor for the benefit of others. The executor bad no power to sell during the life of the widow, and he could not, under any circumstances, exercise his power of sale for the benefit of the widow', even by her consent, for the w'ill directs that it be used, not for the widow, but for the benefit of the testator’s relatives.
    2. The executor’s deed recited as his authority to sell a pow'er given him in the W'ill to “sell and dispose of any of the ‘securities’ ” the testator might hold at his death. This power to sell securities did not authorize'the executor to sell the Westville lands. The executor’s attempted conveyance was void.
    3. The executor’s void deed had no effect to convert the equitable interest of the legatees in the property. He cannot compel them to inter-plead with the widow’s representatives as to their contesting claims upon the purchase-money paid for that deed.
    4. If, on the face of a bill seeking an interpleader decree, it appears that other parties than those made defendants have a right to be beard regarding the fund in dispute, an interpleader will not be decreed.
    5. If it appears that the complainant, with x-espect to the fund in dispute, has entered into an independent contract with one defendant, in which the other defendant has neither part nor interest, an inter-pleader w'ill not be decreed.
    On bill, answer and proofs.

      Tlie hill is filed by J. W. Pratt, who is the executor and trustee under the last will of David Bowers, a copy of which is in the words and figures following:
    “I, David Bowers, of sound and disposing mind and memory, for which blessing 1 thank Almighty God, do make and publish this, my last will and testament, this eleventh day of April, anno domini, eighteen hundred and eighty-five.
    “I order and direct all my just debts and funeral expenses be fully paid and satisfied as soon after my decease as can conveniently be done by my executor.
    “X give, devise and bequeath unto my beloved wife, Hannah Bowers, all my household goods and wearing apparel, also the use, rents and profits of my house and lot at Westville so long as she may live, or should she desire and select to sell the same at any time I hereby give her full power and authority to sell and convey the same and appropriate the proceeds to her own use.
    “I give, devise and bequeath unto my executor hereinafter named all the balance of my estate, real and personal, in trust for the following purposes:
    “To collect the rents, issues and profits of the same and pay over the same to my wife, Hannah Bowers, for and during her natural life, and I hereby give full power to my executor to sell or dispose of any of the securities that I may hold at the time of my decease whenever he may deem it to the best interest of my estate and invest the’proceeds in first bond and mortgage securities.
    “Upon the death of my said wife I order my executor to convert my estate into cash and also to sell and convey the house and lot at West-ville, should my wife not have selected to sell it in her lifetime, and out of the amount of all my estate I direct my executor to pay to John Bowers (who claims to be my grandson) the sum of five dollars, and the balance I order and direct to be equally divided between my nephew David Bowers, my grandnephew David Bigley, and my niece Mary Bigley, share and share alike.
    “I hereby nominate and appoint Joseph W. Pratt to be the executor and trustee of this my last will and testament.
    “David Bowers, [l. s.]
    “Signed, sealed, published and declared by the said David Bowers to be his last will and testament in the presence of hs, who at his request and in his presence, and in the presence of each other, signed our names as subscribing witnesses.
    “Isaac P'. ICnisele.
    “H. C. Loudenslager.”
    The will was proven on the 20th day of September, 1886, before the surrogate of Gloucester county hy the complainant, who undertook the burthen of the administration of the estate of the decedent.
    Hannah Bowers, widow of the testator, David Bowers, de- . parted this life on the 21st day of January, 1899.
    The bill of complaint alleges that in the month of June, 1888, Hannah Bowers requested that the house and lot at West-ville, New Jersey, be sold by the complainant, executor and trustee under the will of David Bowers, and the proceeds thereof invested as part of his estate and the income thereof paid to her. That, in pursuance of the expressed wish of Hannah, the complainant, on the 28th da3r of June, 1888, by deed, as executor of David Bowers, granted the premises to Philip A. Mason and Anna Eliza Mason, or the survivor of them, for the sum of $1,140, which sum has since and still remains in the complainant’s hand as executor and trustee of David Bowers, the interest thereof having been regularly paid to the said Hannah Bowers during her life.
    That coincidently with the making of the deed to Philip Mason and Anna Eliza Mason, or the survivor of them, Hannah Bowers executed and delivered to Philip A. Mason and Anna Eliza Mason, or the survivor of them, an instrument in writing whereb3r she released and quit claimed unto them of all manner and right of action of dower which she might have or claim in the premises conveyed, which instrument is recorded in Gloucester county clerk’s office. That said Hannah Bowers died intestate in Philadelphia, and letters of administration upon the estate whereof she died possessed were granted on the 25th day of September, 1899, to one Howard Worrell, who undertook the administration of her estate; that on July 11th, 1900, said Howard Worrell, administrator as aforesaid, brought an action on contract in the supreme court of New Jersey against the complainant for said sum of $1,140, so by the complainant received from the sale of the house and lot at Westville. That the suit in question was not brought against the complainant in his capacity as executor and trustee under the will of David Bowers but against him personally and individually. The complainant filed several pleas to said suit and the cause has been noticed for trial at the Gloucester circuit.
    That Mary Biglejr, mentioned in the will of Bowers, has since intermarried, and her present name is Mary Maher. That Mary Maher, David Bigley and David Bowers, residuary legatees under the will of David Bowers, have notified the complainant that they deny the claim of Howard Worrell, administrator, &c., of Hannah Bowers, deceased, to the .said sum of $1,140, and insist that it is part of.the estate of David Bowers, and that they are entitled to distributive shares thereof.
    The complainant avers that he cannot safely determine which of these conflicting claimants is rightfully entitled to the said sum of $1,140; that he is willing to' pay it to whomsoever is rightfully entitled to receive it, and proffers himself ready to pay it into this court. The bill contains the usual averments of non-collusion and non-indemnification, &c., anti, making defendants Howard Worrell, administrator of Hannah Bowers, deceased, Mary Maher, David Bigley and David Bowers, prays that Worrell may be restrained from prosecuting his suit at law against the complainant; that the complainant may be permitted to pay the $1,140 into this court, and that the defendants may be decreed to interplead touching the claims upon the same, and the complainant be dismissed from further responsibility in the premises.
    The sum of $1,216 (the amount of the $1,140 and interest) has been deposited in court and an injunction has been issued restraining the defendant Worrell from prosecuting his suit.
    The defendant Howard Worrell, administrator of Hannah Bowers, files his answer, denying that the complainant holds, the $1,140 as either executor or trustee under the will of David Bowers, deceased; on the contrary, he avers that the complainant held the same as the property of Hannah Bowers during her lifetime, and that since her death it is part of her estate, which her administrator is entitled to receive. He further alleges that Hannah Bowers, in her lifetime, desired to sell and convey the house and lot at Westville in pursuance of the power of sale conferred upon her by the last will of David Bowers and to appropriate the proceeds thereof to her own use; that she requested the complainant to find a purchaser for the property; that he found such purchaser in Philip A. and Anna Eliza Mason for the price of $1,200; "that it was supposed by both said complainant and Hannah Bowers that, in order to convey title thereof to said purchasers, it would be necessary for said complainant to make a deed therefor as executor of David Bowers, deceased, to said purchasers, and for said Hannah Bowers to release all her right of dower therein to said purchasers.”
    That thereupon, on June 28th, 1888, the complainant, as executor, conveyed said house and lot to Philip A. and Anna Eliza Mason, or the survivor of them, for said sum of $1,200, and at the same time Hannah Bowers released her right of dower therein to the purchasers.
    The answer further claims that Mason and wife paid the purchase-money of the sale to the complainant, as agent for Hannah Bowers; that the complainant then deducted from the purchase-money $60 as commissions for making the sale and paid the balance, $1,140, to Hannah Bowers; that Hannah then returned the $1,140 to the complainant with directions to invest the same for her benefit; that the complainant took the money and since that time it has been in his personal possession and control; that he paid the interest thereon to Hannah Bowers up until the 28th day of June, 1898, and until her decease always treated the said sum as belonging to her and not as a portion of the estate of David Bowers, deceased.
    The defendants, Mary Maher, David Bigley and David Bowers, jointly answer the bill of complaint. They admit that Hannah Bowers requested that the house and lot be sold by the complainant, executor and trustee under the will of said Bowers, and the income thereof paid to her, and that, in pursuance of her wish, the complainant, as executor as aforesaid, sold and conveyed the property to the Masons, and that the proceeds therefrom, $1,140, have since remained in the complainant’s hands as executor and trustee under the will of David Bowers, and still so remain, the interest therefrom having been paid to the said Hannah Bowers. The defendants, Maher and others, admit that Hannah Bowers gave to the Masons the instrument releasing her dower in the property conveyed.
    They deny the right of Howard Worrell to the proceeds of the sale as administrator of Hannah Bowers, deceased, and insist that the said money is part of the estate of David Bowers, deceased, which they are entitled to receive as residuary legatees.
    Uo decree of interpleader has been made. The cause was heard on issues joined by the complainant on the answers of the defendants.

      Mr. Robert 8. Glymer, for the complainant.

      Mr. Joseph J. 8ummerill, for Howard Worrell, administrator, &e., defendant.

      Mr. Robert C. Sparks, for Mary Maher and others, defendants.
   Grey, V. C.

The first question to be determined under the pleadings is whether the complainant has any right to a decree that the defendants shall interplead touching the sum of money in his hands.

It is undisputed that upon the death of the testator, in 188G, his widow, Hannah Bowers, had the enjoyment of the West-ville property until it was conveyed to Mr. Mason and his wife, in 1888, by the complainant as hereinafter named.

It is also- undisputed that the complainant received the moneys for which the several defendants are contending as the purchase-money for the conveyance by the complainant of the Westville property to Philip A. Mason and wife by a deed, made by him on the 28th day of June, 1888, here produced in evidence. The deed purports to- have been made by the complainant as the executor named in the last will of David Bowers, and recites the power given in that will to sell the testator’s “securities.” The manner in which the fund in the hands of the complainant (touching which interpleader is sought) came into being is therefore undisputed. The documentary proofs and the uncontradicted parol testimony are in substantial accord on this point.

The complainant was the executor of the last will of David Bowers, who, it is admitted, died in 1886, seized of an estate in fee in the house and lot, spoken of in this cause as the West-ville property. By his will, David Bowers- devised the “use, rents and profits” of the Westville jnoperty to his wife “so long as she may live,” &c. The legal effect of this devise was to vest in the widow an estate for life in the land itself. Diament v. Lore, 2 Vr. 220; Den v. Manners, Spenc. 142.

The will, in the same paragraph which contains the devise of the Westville property to the wife for her life, gave her a power to sell that property in these words: “Should she desire and select to sell the same at any time, I-hereby give her full power and authority to sell and convey the same and appropriate the proceeds to her own use.”

Under the decisions in this state this power to sell did not enlarge the widow’s life estate into a fee. The court of appeals, in the leading case of Downey v. Borden, 7 Vr. 460, declared that where the quantity of the estate devised is expressly for life, with a power of disposition annexed, only a life estate passes to the devisee and the super-added words will be construed to be a mere power. See, also, Pratt v. Douglas, 11 Stew. Eq. 518; Wooster v. Cooper, 8 Dick. Ch. Rep. 683; Benz v. Fabian, 9 Dick. Ch. Rep. 615.

The testator devised the rest of his real and personal estate to the complainant, his executor, in trust for certain named purposes. This devise carried the fee-simple estate of the Westville property to the executor in trust for the purposes named in the will.

The first purpose of the trust is by the will declared to be to collect the rents, issues and profits of the same and pay them over to the widow during her natural life. This trust was necessarily futile. The testator had already, by his will, by direct gift, devised to his widow a life estate in the Westville property, which entitled her to- the possession and ejoyment of the premises during her life. The -estate devised to the executor was a residue remaining after taking out the widow’s life estate. The executor’s estate began in enjoyment and possession at the-termination of the widow’s life estate. The executor had no right to the possession of the premises during the widow’s life, and therefore could not collect any rents, or pay them over to her during'her life. The trust to collect rents and pay them over to the widow during her life was- therefore void ab mi lio, because impossible of execution.

The will also gives to the exeutor power to sell or dispose of any of the “securities” that the testator may hold at the time of his decease. The terms of the will expressly limit this power to the sale of “securities.” No meaning can be given to the word “securities,” as here used, which would declare it to mean “land.” The power to sell “securities” cannot be construed to enable the executor to sell the testator’s real estate! The testator, in terms, orders the executor to sell and convey. the Westville property as one of the trusts upon which the residue was devised to him. The testator directs the executor to perform this trust after the happening of a certain' event, and that he should distribute the purchase-money arising from his sale among certain named persons. The testator’s directions, specifically applicable, to- a named piece of property, cannot be defeated by selling that property under another and general power, applicable to another class of property, and created for other purposes. The attempt of the executor to sell the West-ville property as a “security” is therefore a nullity.

The direction that upon the death of the widow the executor should convert the whole estate into cash, and “sell and convey the house and lot at Westville, should his wife not have selected to sell it in her lifetime,” plainly indicates that the7testator intended that his executor should sell the Westville property only after the death of his widow, and only in case she had not chosen to sell it in her lifetime. This construction accords with the obvious intent of the testator, as expressed in the whole will. He creates two separate and succeeding powers; one to be exercisecl by his widow in her lifetime, the other by his executor under the trust after the death of the widow. The power given to the widow was intended by the testator to afford her an opportunity, should she desire to exercise it, to sell and convey the property in question in her lifetime, and to take to herself the purchase-money which might arise from such a sale. It is equally apparent that the trust power requiring the executor to sell and convey after the death of the widow was intended to be used to divide his estate among his legatees, and was not to be exercised, until after the widow’s authority to sell should have expired by her death. These two powers were intended to be successive and not coincident in the time of their exercise, and to be used for purposes which were distinct each from the other, and for the benefit of different persons who are wholly unrelated.

That such a trust power as is given to the executor in this will should not be exercised until after the death of the widow is, I think, entirely clear. Sir Edward Coke laid it down as a general rule that where there is a devise for life to A, and a direction that after his decease the estate shall be sold, the exercise of the power must await the decease of A. Coke Litt. 113 a. Lord Hardwicke, in Uvedale v. Uvedale, 3 Atk. 117, interpreting a will then before him, said the words “after her decease” were not put in to postpone the sale, and in view of the special circumstances of that case ordered a sale. His decision has been referred to- as leaving a doubt on the point. Sugd. Pow. *334.

It is quite clear that whenever a power of sale is given by will the determination when it shall be exercised must depend upon the intent of the testator as expressed in that will. Each case must therefore be settled by the terms of the particular will under which the question arises. If the testator intended the sale to be postponed until after the death of the widow, it must be held that the donee of the power could not exercise it until the time had arrived when the testator intended he should.

In the making of the will now under consideration, the testator had in consideration (as above stated) two separate and succeeding powers — one to be exercised by his widow in her lifetime for her own benefit, and the other by his executor after her death for the final settlement and distribution of his estate, in which the widow .had no share. Both the times prescribed for the exercise of these two powers, and the purposes for which they were to be used, show that they were intended to bo successive. The testator conferred no power on the executor to sell until the widow’s authority to sell should have expired by her death. In such a case the period of limitation is of the essence of the power and the executor must observe it; and if he does not, his deed, made in the lifetime of the widow, must be held to be a nullity. Booraem v. Wells, 4 C. E. Gr. 88.

In the case of Snell v. Snell, 11 Stew. Eq. 125, the principle that the intent of the testator (as to the time when a power of sale shall be exercised) must govern was fully recognized, although a sale was permitted in the lifetime of the life tenant. In that case there was a devise of a life estate to the widow, with remainder to the executors, and direction that after the widow’s death they should convert the property into cash, and divide the cash among children when the youngest should have attained the age of twenty-five years. Chancellor Runyon held that with the widow’s consent and release of her life estate to the purchaser, the executor could sell in her lifetime. That the phrase “after her death” (referring to the widow) meant upon or after the termination of her life estate, whether by death or otherwise. The chancellor has himself injected an element of doubt into his decision, for he says that “the possibility that the widow might desire to part with her interest in the property before her death was not contemplated by the testator, and it. seems clear that had he contemplated it he would have provided for the sale of the property by the executor and her together, or by them with her consent.” He tiren proceeds to give to the power by construction the eff ect which he says the testator would have given it had he considered the matter. It is difficult to see how a court can ascribe to a power given by a will, an effect which the testator never contemplated it should have. The Snell Case, whether well determined or not, differs radically from the case at bar, for here the testator, in creating two distinct and successive powers of sale, did contemplate that the widow might desire to part with her interest in the property before her death, aiid prescribed a mode by which that might be accomplished, which mode, the documentary proofs conclusively show, was not pursued. The executor’s deed to Mason and wife must be held to be void, because the executor, during the lifetime of Hannah Bowers, had no power to make any conveyance of the premises.

Hannah Bowers (the widow) did not join the executor in making his deed, nor did she by any writing assent to or approve of it. She did, however (coincidentally with the making of the executor’s deed), execute and deliver to Mason and wife a release of her supposed dower interest in the Westville property. The consideration named is $1. The operative words of her conveyance are “remise, release and forever quit claim unto the said Mason and wife all manner of dower and right of action of dower,” &c. The widow’s release of dower refers to the executor’s deed as made coincidentally with the release, but contains no words which could be held to be an exercise by the widow of her power to sell under the will.

Nothing in this release of dower refers in any way to any power which the widow might have to' sell the property described in her release, or to any estate for life in the entirety of the property which she held by devise under her husband’s will. No writing of any sort, signed by Hannah BoWers, attempts in any way to execute the power given to her in David Bowers’ will.

This supposed release of dower is another instance of the fatuous conveyancing which attended the disposition of this property. When it was made by Hannah Bowers, she had neither right nor 'estate of dower in this Westville property. The sixteenth section of the Dower act declares that where a husband devises lands to his wife, for her life or otherwise, she shall not be entitled to dower in any lands passing by his will unless she refuses to accept the devise to herself within six months after the probate of her husband’s will. Gen. Stat. p. 1278. In this case Hannah accepted her husband’s devise of a life estate to herself without dissenting; she therefore had no dower interest to release, and the paper she executed and delivered to the Masons discharged no claim of dower.

At the time when Hannah Bowers made this supposed release of dower she had an estate for life in the entirety of the premises referred to in the release, and might have conveyed that estate. She also might, had she chosen to do so, have exercised the power to sell and convey those premises given her by her husband’s will, and have appropriated the proceeds to her own use. In fact, she did neither of these things. Her release of her supposed dower right did not pass her life estate in the premises, nor did it execute the power given her by her husband’s will. Nor does it in any way indicate any intention on her part either to convey her life estate or to execute that power. The instrument which Hannah Bowers executed and delivered to the Masons was therefore a nullity. It did not undertake to convey her life interest in the entirety, or to exercise the power given to her by the will, nor did not operate as a release of dower. In truth, it changed no one’s relation to the property with which it assumed to deal.

The result is that neither of the two powers created by David Bowers’ will lias been so exercised that under it title to the premises in question passed to Mr. Mason and his wife. The equity of Hannah Bowers, if she sold in exercise of her power in her lifetime to appropriate the proceeds to her own use, remained unexecuted after the deed to Mason and wife had been made. The equity of the residuary distributees to have the executor sell for their benefit also remained unexecuted. The whole transaction failed — on the part of the executor for want of power to act at the time he acted, and on the part of the widow because she never even attempted to act.

The complainant in this suit mistakenly assumes that by the exercise of one or the other of those powers a good title has been conveyed to Mason and wife, and that the purchase-money paid by them belongs to the persons who may be entitled under either one or the other of these powers. All the defendants accept the theory that an efficient conveyance of the premises has been made to Mason and wife, and that the only question to be settled is who is entitled to the purchase-money.

The answer of the defendant Worrell, the administrator of the widow, declares that she desired to sell and convey the property, under the power conferred by the will, and to appropriate the proceeds arising therefrom to her own use, and requested the complainant (the executor) to find a purchaser, and that the complainant thereupon found the Masons as purchasers, for the price of $1,200. That both the executor and the widow supposed that to pass the title to the property the executor should convey to the purchaser by deed made as executor, and that the widow should release her right of dower.

Neither the deed nor the release of dower, nor’ any other waiting produced in evidence, contains the slightest indication that Hannah Bowsers ever intended to exercise the power .to sell given to her by the will. No parol proof, even, attempts to show that she ever had such a purpose. The executor’s deed, by its .express-words and by every inference that can-be drawn from it, indicates that it was under the executor’s power. ■ to ■ sell “securities” that his deed was made. The deed would, of course, have been no better conveyance if it had recited in .terms the executor’s power to sell after Hannah’s death, for Hannah was alive when -it was made, and that power, as above shown, could not have been exercised during her life. , .

When the executor’s deed and the release of dowfer were made to Mason and wife, all of the parties who then acted — the executor, the widow and Mr. Mason and hiá wifé — executed and delivered and accepted those instruments and paid and received and dealt with the purchase-money upon the assumption that the executor, under the power to sell “securities,” had authority, in the widow’s lifetime, to convey the Westville property; whereas, as is above shown, he had no such power, and the supposed conveyances to the Masons were wholly inoperative and void.

The complainant in the present suit, under this false impression of the legal effects of the transaction above narrated, seeks to compel the representative of the widow of David Bowers, and the residuary legatees under David Bowers’ will, to interplead regarding the disposal of the purchase-money which the Masons have paid for a void conveyance. The complainant has so framed his bill of complaint that the rights and equities of Mason and his wife, who paid the whole of this purchase-money and got no legal title to the property apparently conveyed to them, have not been presented and cannot be considered. They are not parties to this suit. A mere interpleader suit by the executor cannot present their equities. What their relation may be to the purchase-money, still in the hands of the executor, has not been disclosed. Whether the payment by Mr. Mason and his wife was induced by such a mistake as may be corrected, or b}' fraudulent misrepresentations or other incident which maj^ equitably entitle them to the return of the purchase-money, or to a new and effectual exercise of the executor’s power of sale, has not been and cannot be shown in this case. It does appear that, however Mr. Mason and his wife may have been induced to pay the purchase-money to the executor, they got no title for it, and at the time they paid it, could not have had from the executor any title, because he then had no power to sell.

Whoever else may have been at fault in creating this confusion, the executor was certainly the chief actor in the transaction. By his present bill he seeks to protect himself, but gives Mr. Mason and his wife no opportunity to be heard. If an interpleader decree is made, the Masons’ purchase-money will be contended for between the defendants to this suit, to which the Masons are not parties, and they may also lose the property which they thought they had purchased, by a new exercise of the executor’s power after the widow’s death, in the. interest of the residuary legatees.

Where the undisputed facts in a bill for interpleader show that other persons who are not made defendants have rights ox-equities in the fund in dispute, a decree of intex-pleader ought not to be made.

In this case it was the complainant’s own misconduct which led to the dispute touching the sale and 'conveyance of the West-villa property. He ought not to be allowed to dispose of that fund without enabling- all parties who may be interested in it to be heard.

Another ground which disentitles the complainant to an inter-pleader decree is the fact that the undisputed evidence shows that when the purchase-money was paid in cash by Mason and wife to the complainant executor, he actually delivered it to Mrs. Bowers, saying “here is your money;” that she handed it back to the complainant and told him to invest it. The complainant took it and said he would see that it was properly invested and she would get the interest of it. Though ho did not invest it as a separate and distinct fund, he actually paid Mrs. Bowers interest on the money twice a year during her life, up to her death in 1899. The purchase-money was paid in 1888, so that these interest payments by the complainant to Mrs. Bowers continued through eleven years.

Bjr this manner of dealing with this money the complainant appears to have acknowledged that the fund in dispute is held by him to produce an income for Mrs. Bowers. From this point of view the complainant, with respect to this money. entered into an independent undertaking.with Mrs. Bowers; he agreed to receive and invest her money. This appears to have been a transaction between the complainant and Mrs. Bowers only, subsequently to the payment of the purchase-money. In such a case there is no equity entitling the complainant to an interpleader decree. He has acknowledged an independent liability to one defendant in which the other has no interest. Pom. Eq. Jur. *1326; Mount Holly Turnpike Co. v. Ferree, 2 C. E. Gr. 117.

For the reason that no sufficient inquiry can be made in this suit into the equities of all the parties interested in the payment, the receipt and the disposition and ultimate distribution of the purchase-money of the Westville property, and because the complainant appears to have entered into an independent liability to one defendant with respect to the moneys in dispute, in which the other has no interest, the complainant’s bill must be dismissed.


text:
    Abraham Anderson v. Anderson Food Company.
    [Filed March 14th, 1904.]
    1. The stockholders of one corporation, by resolution, ordered its directors to buy from another manufacturing corporation “its entire plant, including all of its 'assets,” and to give a purchase-money mortgage upon “its said plant.” Held, this resolution .required the purchasing corporation to give a mortgage covering the entire plant and all of the assets which were purchased under the resolution.
    2. A purchase-money mortgage will not he reformed by striking therefrom a clause mortgaging part of the property purchased, on the ground of the alleged mistake of the mortgagor company, that it did not suppose or intend that the mortgage should include that portion of the property purchased; wheu it appears that the clause in question was intentionally and in good faith inserted by the mortgagor’s attorney, that the mortgagee had always in good faith supposed and intended that the purchase-money mortgage should cover all the property purchased (including the part now sought to be excepted), and did not know until after the mortgage had been made and delivered, that the mortgagor claimed that the portion of the property purchased now sought to he stricken from the mortgage should have been omitted from it. There is no mutuality in -the alleged mistake.
    3. Where, in the usual conduct of the business of a manufacturing company the greater portion of its product must be sold outside of the state in which its plant is located, the deposit of about one-tenth of that product in a warehouse outside of the state, and the use of warehouse receipts ns collateral to its commercial paper, is a part of the conduct ■ of its ordinary business, within a provision in the company’s mortgage, providing that it may “conduct its ordinary business and in so doing dispose of any of the foregoing personal property,” and the mortgagee cannot have a removal of the mortgaged goods from the state for such a purpose, enjoined.
    On hill, answer and proofs.
    The original hill of complaint in this cause was filed by Mr. Anderson, who is the holder of a real estate and chattel mortgage against the property of tlie defendant company, to restrain that company from removing any of the stock, fixtures or personal property referred to in that mortgage, except by selling the same in the conduct of its ordinary business, and also for a mandatory injunction, requiring the defendant to return to its factory in the city of Camden, thirty-five hundred cases of canned tomato soup, alleged to have been wrongfully removed therefrom.
    The whole equity of the complainant’s hill on which he claims a right to restrain the mortgagor from disposing of the personal property is based upon a single clause in the mortgage.
    The instrument in question was made on the 20th day of September, 1901, between the Anderson Food Company (the defendant) and the Anderson Preserving Company. It is a mortgage to secure the payment of $100,000, with interest thereon, at the expiration of ten years from the date thereof, and purports to he a lien upon certain real estate and personal property therein described, one of the items named being the “stock manufactured and unmanufactured, or in process of manufacture,” &c. It contains the following clause:
    “It, however, being particularly understood and agreed that the party of the first part may conduct its ordinary business, and in so doing dispose of any of the foregoing personal property.”
    The mortgage has been assigned by the mortgagee to the complainant in this suit.
    The bill alleges that the defendant mortgagor has removed large quantities of tomato soup, put up in small tin cans, and has caused the same to be stored outside of the State of New Jersey, and the complainant charges that this stock was not removed in the conduct of its ordinary business but in violation of the chattel mortgage and for the purpose of repledging the same in order to raise money thereon, and that the defendant claims the right to remove and to ropledgc all of the said stock of said defendant company.
    The bill was supported by affidavits, and an order to show cause was allowed why an injunction, restraining the defendant company in accordance with the prayer of the bill, should not be awarded the complainant.
    On the coming in of the order to show cause, the defendant filed its answer, admitting the execution of the mortgage in question and its assignment to the complainant; but alleging that it was signed and delivered by mistake and for want of knowledge of its real contents, contending that, by the terms of the antecedent agreements under which the mortgage was made, it should have been drawn as a security only upon the “plant, appurtenances and equipment” of the defendant company, and that, unknown to the defendant, there was inserted in the mortgage the clause making it a lien upon its “stock manufactured and unmanufactured, and in process of manufacture,” and the defendant avers that, immediately on its discovery of the inclusion of its stock in the mortgage, the defendant protested to the complainant that an unfair advantage had been taken and demanded the reformation of the instrument.
    The answer admits the removal of the stock as mentioned ■in the bill, but insists that it was done without any fraudulent intent or purpose and in accordance with the usual custom of the trade in the ordinary course of business for the purpose of raising loans, though it insists that no loan has as yet been made upon said goods, and that it has, under the terms of said mortgage, a lawful right to consign its said goods and obtain loans thereon; and that this course has been, and is, the daily practice of the defendant company and its usual manner of doing business.
    In addition to its answer the defendant company filed a cross-bill, alleging that the mortgage in question was made pursuant to certain preliminary agreements, which did not provide for the mortgaging of its stock of goods, &e., in the manner expressed in the chattel mortgage, and that it was never suggested by the complainant, or his attorney, or by any of the parties to the agreement, that the security should cover the stock; but, on the contrary, it was understood and intended that the proposed mortgage should be a lien on the “plant, appurtenances and equipment” only. That, although it was executed at the office of the complainant’s solicitor, in the presence of the president and secretary of the defendant company, in f-act, neither of those officers read over the mortgage, nor was it read over to them before executing, nor did the officer who took the deposition thereof make any declaration as to the contents of the mortgage. That the officers of the defendant company, supposing it to be a mortgage only on the “plant, appurtenances and equipment” of the defendant company, executed it in absolute ignorance of its real terms; and the defendant charges that the execution of the mortgage as a lien upon the stock of the defendant company was either a mistake or a grievous wrong and fraud upon the defendant company. The defendant avers that, about three weeks after the mortgage was recorded, it casually discovered that it contained the clause making it a lien upon the defendant’s stock of goods, &c. That the defendant’s secretary then protested against the same to the complainant and to his attorney. That the secretary and Mr. Beldon, attorney for the defendant mortgagor, examined the record of the chattel mortgage, and found that it did include the stock, &c., and that this was the first knowledge had thereof. The defendant claims that, in person and by letter, it has ever since protested against the inclusion in the mortgage of its stock of goods, and demanded a specific release of those goods from the' operation of the mortgage.
    The defendant company, under the allegation of its cross-bill, prays that it may be decreed that the mortgage, as executed, is not the act and deed of the defendant company, that the complainant may be compelled to deliver it up for cancellation, or that a decree may be made reforming it by striking out the words “stock manufactured and unmanufactured and in the process of manufacture,” or any other words of like import wherever they may occur in the mortgage, and that the record of the mortgage may be amended in accordance with such decree by again recording the same.
    The answer of the defendant company was supported by affidavits. A hearing was had on tire question whether, in accordanee with the prayer of the complainant’s bill, a preliminary injunction should go restraining the defendant from further disposing of the; stock of canned goods. On that hearing a preliminary injunction was refused to the complainant.
    The complainant has answered the defendant’s cross-bill. He denies that the stock of goods of the defendant mortgagor was wrongfully inserted in the chattel mortgage, either by mistake or by any fraud or contrivance, and states that the mortgage was made to secure part of the purchase-money to be paid for the conveyance of all the assets of the Anderson Preserving Company to the Anderson Food Company, part of which assets was the stock of goods, &c. The clause of the mortgage respecting the items to be included in the mortgage, which the defendant mortgagor challenges, was drafted by Mr. S. W. Beldon, the attorney for the defendant mortgagor, and included the “stock manufactured, unmanufactured or in process of manufacture,” precisely as it is expressed in the chattel mortgage; that it was inserted in the chattel mortgage with the knowledge and assent of said attorney for the defendant mortgagor; that, having been so inserted, it was read in full to Mr. Henderson, the secretary of the defendant mortgagor, who replied that it was “all right.” That the mortgage, as so drawn, remained in the possession of the attorney for the defendant mortgagor, and was by him brought, unexecuted, to the office of the attorney for the complainant, for the purpose of execution and settlement. That there were present at that meeting Mr. Beldon, the attorney for the defendant mortgagor; Mr. Cox, its president; Mr. Henderson, its secretary; the complainant and his attorney, Mr. Harned, and the complainant’s two sons. That the mortgage containing the clause now challenged was produced by the attorney for the defendant mortgagor. That attention was openly called to the fact that it was a chattel mortgage, that an affidavit of consideration was in the presence of the parties dictated, and was annexed to the mortgage by the attorney for the defendant mortgagor, and that it was, then and there, openly declared to all the parties present that the instrument was a mortgage upon the real and' personal property about to be transferred from the Anderson Preserving Company to the defendant mortgagor, to secure $100,000 of the purchase price of the property mortgaged, and that thereupon tire officers of the defendant mortgagor executed the mortgage in question 'with full knowledge of its contents and so delivered it.
    On these pleadings the cause has come to final hearing.

      Mr. John F. Earned and Mr. Joseph E. GasMU, fox the complainant.

      Mr. Schuyler C. Woodhull, Mr. Samuel W. Beldon and Mr. David J. Pancoast, for the defendant.
   Grey, V. C.

The first question to be determined in this cause is that raised by the defendant’s cross-bill, seeking to cancel the chattel mortgage set up in the complainant’s original bill of complaint or to reform it by striking out the words “stock manufactured, unmanufactured and in the process of manufacture.” If the defendant is entitled to this relief, it will so alter the chattel mortgage upon which the complainant bases his equity that he could not be entitled to any injunction which would restrain the defendant mortgagor company from removing and pledging the stock of canned goods, &c., now included within the chattel mortgage. Has the defendant mortgagor shown that its chattel mortgage, as it is now expressed, was made to include the clause affecting the stock of goods by either fraudulent contrivance, or by such a mistake as is correctible by this court?

I think it may be safely said that there is not a particle of evidence in this cause which either shows or tends to show that the mortgagee, the Anderson Preserving Company, or those who acted for it, either as its officers or attorney, ever had any purpose, or even thought of fraudulently introducing the clause in question into the chattel mortgage, and obtaining it to be executed by the defendant mortgagor company, or those who acted for it, without its knowledge or consent. All of the evidence touching the execution of the instrument goes to show that it. came into existence with the clause in question, not by the contrivance or planning of the mortgagee, or those who acted for it, but that the whole mortgage was a subject of conference and examination, at first, between the several attorneys of the mortgagor and the mortgagee; that the challenged clause was particularly referred to between those attorneys before it was inserted in the chattel mortgage, and the draft of that clause was actually made by the attorney for the defendant mortgagor. The instrument was thereafter, by the consent of all parties, retained in his possession unexecuted, with the most abundant opportunity for inspection, correction, change or rejection. It was yet unsigned when brought to the place of meeting for settlement by the attorney for the mortgagor company, and although there is some contradiction as to the definite words used in making known the contents of the instrument at the time it was signed, acknowledged, proven and delivered, yet I am satisfied that its contents were in fact then and there declared and made known in good faith to the parties who, acting for the defendant mortgagor, executed it, and those wlm acted for the defendant mortgagee accepted it, as it is presently expressed.

So far as the crossbill charges or intimates that the mortgagee, or those who acted for it, had any fraudulent intent to insert in that mortgage the clause which the defendant mortgagor now seeks to have excised, or that it was inserted by any fraudulent contrivance, the evidence entirely fails to sustain the allegation.

There is a prayer in the cross-bill which should be shortly noticed. It is asked, as an alternative mode of relief, that the complainant may bo compelled to deliver up the chattel mortgage for cancellation. A decree that the mortgage shall be canceled is impossible under the circumstances of this case. This would require a restoration of the status of the parties which existed when the mortgage was delivered which the cross-bill does not tender. There is nowhere in this case any offer to return to the mortgagee the property which the mortgagor purchased. The evidence shows that this is probably impossible. All parties, since the mortgage was given, have irretrievably changed their positions touching the subject-matter then dealt with. No claim has been made in argument that a cancellation of the mortgage is equitably possible, and this mode of relief must be rejected.

The cross-bill also asks that the chattel mortgage may be reformed by striking therefrom the clause “stock manufactured or unmanufactured and in the process of manufacture,” or any other words of like import wherever they may occur in the mortgage, because it is alleged those words were inserted in the mortgage by a mistake.

The mortgage in question came to be made as follows: The complainant, Mr. Abraham Anderson, was the largest stockholder, so that he entirely controlled the Anderson Preserving Company, which in the year 1901 was engaged in the packing of fruits and vegetables in cans, and the sale of the same. Mr. Anderson and Mr. John T. Cox, in the latter part of the summer of that year, entered into negotiations for the sale by Mr. Anderson of the Anderson Preserving Company to a company, not yet incorporated, to be known as the Anderson Food Company, which would be controlled and managed by Mr. Cox.

Several written agreements were made between Mr. Anderson and Mr. Cox, which, because of disagreements between them, were abrogated, and new contracts made in their stead.

Before the parties had come to an abiding agreement the Anderson Food Company was, on August 15th, 1901, incorporated by Mr. Cox, wlm subscribed for eight shares as an incorporator; Mr. David A. Henderson, who subscribed for one share, and Mr. Yoorhees S. Anderson, who also subscribed for one share. The whole trend of the evidence in the cause shows that the Anderson Food Company was incorporated and controlled by Mr. Cox for the purpose of taking over all of the assets of the Anderson Preserving Company. Mr. Cox elected himself president of the Anderson Food Company; Mr. Henderson, secretary, and Mr. Yoorhees S. Anderson, treasurer.

There were several recessions and changes, and perhaps temporary abandonments of the plan, but the negotiations were as often resumed between‘the parties.

Tlie first action taken by the newly-organized Anderson Food Company, the mortgagor, looking towards the taking over of the property of the Preserving Company, was, by a resolution of the stockholders of the Anderson Food Company, adopted by them-at a stockholders’ meeting held on September 5th, 1901. The resolution is as follows:

“Upon motion, it was resolved and ordered that the board of directors be authorized to purchase from the Anderson Preserving Company its entire plant, including all of its assets, and subject to its liabilities, for a consideration of $1,000 in cash, $149,000 in capital stock for this Anderson Food Company, and a bond and mortgage be given by this Anderson Food Company upon said plant for the sum of $100,000, payable at the expiration of 10 years, with interest at the rate of 5i per annum.”

It will be noted that this resolution, in speaking of the thing to be purchased, refers to the entire plant of the Anderson Preserving Company, including all of the assets, and to a bond and mortgage to be given by the Anderson Food Company upon said plant. It is the fair construction of this resolution that the stockholders of the food company, in directing the making of the mortgage in question (obviously a purchase-money mortgage), intended and expected that the mortgage which they directed to be given upon “said plant" referred to the previously-mentioned preserving company’s "entire plant, including all of its assets." That accords with the recitals of the mortgage itself, which declare it to be “given to secure a part of the purchase-money of the said real estate and personal property.”

It should lie observed that this resolution of the stockholders of the mortgagor company continued in force up to and at the time when the mortgage in question, including the clause now challenged, was executed and delivered.

On the same September 5th the directors of the Anderson Food Company adopted a resolution that the Anderson Food Company purchase the plant and assets of the Anderson Preserving Company, and “make the mortgage authorized by the stockholders," and authorizing the proper officers of the food ■company to execute said bond and mortgage. On September 16th, 1901, the directors rescinded their resolution of September 5th, but the stockholders’ resolution of the same date was never rescinded. Negotiations appear to have been again broken off and renewed between the parties after the food company directors had rescinded their purchase resolution of September 5th, 1901, for there are several later agreements which were abandoned.

Finally, on the 20th of September, 1901 (the same day on which the purchase and giving of the mortgage were concluded), the board of directors of the Anderson Food Company readopted a resolution to purchase, under which the mortgage now criticised was made. The reinstating resolution of the directors is as follows:

“The president stated that this meeting was called to take action with a view of purchasing the plant of the Anderson Preserving Company, and upon motion it was ordered that the hoard of directors purchase the plant and assets of the Anderson Preserving Company and issue therefor $149,000 in capital stock, pay $1,000 in cash, and make the mortgage authorized by the stockholders of $100,000 to the Anderson Preserving Company, and the proper officers are authorized to execute said mortgage.”

This was the final action of the hoard of directors respecting the matter of the purchase and execution of the mortgage. It should bo noted that this directors’ resolution, like the previous one, refers to the stockholders’ resolution, as fixing the character of the mortgage which was to be given, that is, as is above shown, a mortgage upon the entire plant of the Anderson Preserving Company, including all its assets.

These resolutions and agreements to purchase, &c., Mr. Cox and Mr. Anderson appear to have referred to their respective attorneys. Mr. Anderson’s attorney was Mr. John F. Earned, who acted for him and tire preserving company. Mr. Cox’s attorney was Mr. Samuel W. Beldon. Mr. Henderson conducted the active part of the negotiations for Mr. Cox. Mr. Henderson testifies that Mr. Beldon was employed by the Anderson Food Company to draw all the papers.

Mr. Henderson and Mr. Cox, with Mr. S. W. Beldon as their counsel; Mr. Abraham Anderson, and Mr. John F. Harned as his counsel, and Mr. Anderson’s two sons, met on the 20th day of September, 1901, at Mr. Harned’s office for the execution of the conveyances and mortgage in question and the settlement to be made of .the transaction. Previous to this meeting the deed and bill of sale from tire Anderson Preserving Company to the Anderson Food Company, and the mortgage now criticised, had been drawn by or under the supervision of Mr. Beldon, the attorney for the Anderson Food Company, so as to be ready for execution on the 29th of September, 1901. The bill of sale included all of the chattels and personal property belonging to the Anderson Preserving Company, and specially, anrorrg other items, the “stock manufactured or unmanufactured, or in process of manufacture.” The words “stock manufactured and unmanufactured and in process of manufacture,” Mr. Beldon says, were included in the mortgage after a conference with Mr. Harned, and he thinks, but cannot positively say, that there was some independent action of his own touching that clause. Mr. Beldon testifies that “so far as the consummation of the matter is concerned, I rvas practically its engineer, and in consequence of that I drew the papers.” The mortgage, lie says, was drawn in his office, under his supervision and direction, including that part of the mortgage which is now in dispute in this case. Mr. Beldon also says that his impression is that the papers, while yet unexecuted, were left with Mr. Plenderson, but he cannot be sure that the mortgage was one of those papers. Mr. Beldon also testifies that after a conversation with Mr. Harned, he, Mr. Beldon, took the bill of sale (which conveyed the personal property to the Anderson Food Company) and dictated tire portion referring to the personal property which was to be included in the mortgage; and, speaking of the papers in question, which he had thus prepared, Mr. Beldon says: “I don’t think it is possi ble that papers of this importance would have gone out of my office without having been read by me, either every word or substantially through.”

Mr. Cox and Mr. Henderson both deny that the contents of the mortgage were made known at the time of its execution. Mr. Beldon says, regarding the mortgage, that he cannot say that he has any extremely distinct recollection of the execution of the mortgage, but that, according to the best of his recollection, it was not read to Messrs. Cox and Henderson by him, or in his presence, before its execution. Messrs. Cox and Henderson also say that neither they, nor any officer of the Anderson ’Pood Company, to their knowledge, ever consented to the inclusion of the'goods and chattels and the personal property of the company in the mortgage.

Mr. Cox testifies that the protest that he makes is, that the mortgage includes in it the stock manufactured and unmanufactured, or in process of manufacture, and that he thinks the mortgage in all other particulars to be correct. Mr. Henderson, however, seems to contend that the mortgage ought not to have included any chattels whatever. That is the tenor of his letter of November 11th, 1901, to Mr. Anderson and of his present testimony.

These gentlemen, representing the defendant company, do not seem to agree as to what was actually intended and understood by them to have been included with the mortgage. Mr. Henderson appears to object at one time to including any chattels within the mortgage, and at another time, by his,later letter of March 10th, 1902, he only objects To the including the specific chattels, the stock, &c. Mr. Cox objects only to the inclusion of the stock and makes no objection to the other chattels named in the mortgage.

Mr. Hamed’s testimony agrees with that of Mr. Beldon, that the deed,, the bill of sale and the mortgage were prepared by Mr. Beldon. While they were in course of preparation, he called on Mr. Beldon and the following conversation took place between them. Mr. ITarned says:"

“We took up the subject of inserting in the mortgage a description of the personal property. I told him [Beldon] that I understood that under a fair interpretation of the intention of the parties it [the mortgage] was to cover the property that was being sold; that it was necessary to give any validity to the mortgage; it would necessarily have to be a purchase-money mortgage, as no money was passing between the parties, only property, and that.it should cover the property that was actually being transferred; he agreed with me in that; he understood that to be the intention of the parties, and called a stenographer, picked up the bill of sale, which he had lying with the other papers, and read from the bill of sale a description of the personal property in the bill of sale and directed that that be inserted in the mortgage; he then said that a mortgage of that kind would interfere with the management of the business unless they were authorized in some way to dispose of it; I said that seems reasonable, and then he added the form authorizing the disposal of the property in the ordinary course of business, remarking at the time that he had some kind of a form of his own that he used in those cases.”

I do not understand Mr. Beldon’s testimony to contradict this testimony of Mr. Iiarned as to the manner in which the clause which is now questioned came to be inserted in the mortgage. There are portions of it which Mr. Beldon says he does not recall. .

Mr. Hamed further narrates the manner in which these papers, having been prepared by Mr. Beldon, were executed. Mr. Harned testifies that in' the presence of Mr. C-ox, Mr. Henderson and Mr. Beldon, he held up the bond and mortgage, and said that it was a purchase-money bond and mortgage upon the real estate and personal property that had just been transferred by the preserving company to the food company. The mortgage was then proven by the affidavit of Mr. Henderson, as secretary of the food company, Mr. Iiarned taking his affidavit as master.

I do not understand the testimony of Mr. Beldon 'to contradict this narrative of Mr. Harned as to the mode in which the chattel mortgage in question was executed. Mr. Beldon says he knew the paper was a chattel mortgage; knew that as such it required an affidavit.

The foregoing narrative of the evidence shows that the mortgage in question was drawn by the defendant company’s own attorney as a purchase-money chattel mortgage, and the very clause regarding the stock, &c., which the defendant now seeks to strike out was specially considered and inserted by that attorney because he agreed that it was understood to be the intention of the parties. The mortgage, after it was so drawn and before it was executed, was in all probability left with Mr. Henderson, the defendant’s acting business man, for examination and approval. Its contents were openly declared in the presence of all the parties and their attorneys at the time it was executed, and its execution was proven by the same Mr. Henderson, by his sworn affidavit annexed to the mortgage.

Is it reasonable to declare that a paper so prepared, examined, considered and approved was executed in mistake ?

There certainly was no mutuality in any mistake. Mr. Anderson declares he made no mistake. The Anderson Preserving Company got what it expected — a purchase-money mortgage for a part only of the price upon all the property which it conveyed. Mr. Anderson swears he never agreed to accept, nor would he have accepted, anything else than a mortgage which covered the whole of the property which was conveyed by the preserving company to the food company.

Before the preserving company’s sale, all its stockholders, including Mr. Cox as one, gave a written consent. Mr. Henderson witnessed it. It is in these words:

“We, the undersigned, nil of the stockholders of the Anderson Preserving' Company, do hereby agree and consent to a sale by the Anderson Preserving Company of all its personal property and real estate, buildings, improvements, good will, stock, fixtures, machinery and assets to the Anderson Food Company, for the sum of $250,000, and to receive back in part payment therefor a purchase-money mortgage of $100,000 upon the Anderson Food Company assuming all the indebtedness and obligations of the Anderson Preserving Company.
“.Toxin T. Cox,
“V. S. Anderson,
“A. Anderson,
“L. W. Goldy,
“R. Li. Anderson.”
“Witness — David A. I-Ienderson.”

On obtaining the written consent of its stockholders, the preserving company adopted this resolution:

“Resolved, That this company sell to the Anderson Food.Company all its personal property and real estate, buildings, improvements, good will, fixtures, machinery and assets, for the sum or price of two hundred and fifty thousand dollars, one hundred thousand dollars of which is to be paid by a purchase-money mortgage -upon the property above sold; one thousand in oasli, and one hundred and forty-nine thousand dollars in stock of the Anderson Food Company at par, upon the Anderson Food Company assuming all the indebtedness and obligations of the Anderson Preserving Company.
“Resolved, That the officers of this company be and they are hereby directed to carry out the terms of this resolution.
“Resolved, That the mortgage of $100,000 made by the Anderson Food Company to the Anderson Preserving Company, when executed, be assigned to Abraham Anderson, in payment to him for one thousand shares of the capital stock of this company by him held and surrendered.”

It is very difficult to believe that Mr. Cox, who consented in writing, that the Preserving- Company should have a purchase-money mortgage of $100,000 upon the Anderson Food Company, was under a mistake in giving for the food company precisely such a mortgage to the preserving company. Yet that is what he presently claims was done.

The preserving company’s sale, as is shown by its above-quoted resolution, was to be made on the terms that it was to be paid in part “by a purchase-money mortgage upon the property above sold/’

The defendants make their claim of a mistake because in collateral agreements made between Mr. Anderson and Mr. Cqx, not between the mortgagor and mortgagee companies, the reference to the mortgage to be made, did not specifically mention that it was to be a purchase-money mortgage upon all the goods sold. These collateral agreements of the individual parties certainly cannot lie permitted to alter the terms of the corporate contracts executed with all the formalities pursuant to written resolutions of the contracting companies.

In Aller v. Crouter, 19 Dick. Ch. Rep. 381, Chancellor Magie declared that reformation of a conveyance will not be decreed except on clear proof that by mutual mistake of the parties thereto the conveyance expresses something which they did not intend, or omits to express something which they did intend.

In the present case there is scarcely a pretence that there was any mutuality in the alleged mistake. The above-quoted resolutions of the respective acting companies show that both intended to make the mortgage what it presently is.

The defendant mortgagor has proven no such certainty of mistake or agreement of its own witnesses of what was intended to be done as will support a decree of reformation. Courts of equity do not grant the high remedy of reformation upon a probability, or even upon a mere preponderance of evidence, but only upon a certainty of the error. 2 Pom. Eq. Jur. § 859; 1 Story Eq. Jur. § 157. The weight of the evidence tends to show that the instrument challenged does in fact, in the particular in which it is criticised, express what the parties thereto intended it should, when it-was made and delivered.

The cross-bill must therefore be dismissed.

The mortgage remaining unchanged and forceful as a lien upon the personal property of the defendant mortgagor, it is still to be considered whether the complainant is, on his original bill, entitled to restrain the defendant from removing any of that personal property, &c., according to the pra3'er of his bill.

The clause under which the defendant justifies its removal of the cases of tomato soup referred to in the bill of complaint, is as follows:

“It, however, being particularly understood and agreed that the party of the first part may conduct its ordinary business, and in so doing dispose of any of the foregoing personal property.”

Under this clause the defendant company admits that it had deposited a portion of its manufactured goods in warehouses outside of the State of New Jersey, and that it intends to raise money thereon by using warehouse receipts as collateral to its commercial paper.

The question turns in -great part upon the meaning of the words “conduct of its ordinary business.” These do not relate, as has been argued for the complainant, to the business previously done on the same premises by the Anderson Preserving Company. The context shows that it is the business of the party of the first part, the Anderson Food Company, which is referred to. When the mortgage was made, this company had never conducted any business. Therefore, the permission authorizes the mortgagor to conduct such ordinary business as it might do in the future. Necessarily, the character of the business to be done must be regulated by its nature, and the persons with whom and the places where, and the circumstances under which it must in the future be conducted.

It clearly appears that the quantity of canned goods produced by the mortgagor was so great that it was impossible that all or even a major part of them could be sold or disposed of in this state. The places of sales of such products were practically the whole of the-United States. In conducting such a business there would naturally and ordinarily be periods when sales would be very slow and prices low, and when at the same time cash money must necessarily be instantly had. Such a condition of affairs would seem to invite the holder of a stock of such goods to store them and use the storage receipts as a means of temporarily raising the needed cash. When prices revived and sales again became brisk, the goods thus saved from compulsory sacrifice might be advantageously disposed of.

This was almost precisely the situation which has provoked the complainant’s action. He insists that by the terms of the mortgage the defendant mortgagor can only dispose of the stock by an absolute sale. This course would much more effectually take the goods from the complainant’s control than would a pledging of them. Under the circumstances above noted, it might ruin the defendant’s business.

The proof is substantially undenied that the course pursued by the defendant was free from any fraudulent intent to remove the goods. Only about one-tenth of the stock was stored. There was a sudden exigency, and no cash. The course taken was the usual one among manufacturers -who have more stock on hand than money at call.

It must be held that the disposal made of the cases of tomato soup by the defendant was in the conduct of its ordinary business. The complainant’s original bill of complaint must therefore be dismissed.