author: Dixon, J.

text:
    Samuel K. Wilson, appellant, v. Trenton Passenger Railway Company (Consolidated), respondent.
    [Filed June 21st, 1898.]
    A corporation having contracted to purchase certain property for a certain amount of its stock, authorized its president to issue the stock and carry out the contract. The president, instead of doing this, purchased the property for cash. — Held, that the corporation could not, in a court of equity, recover the cash paid without offering to return the property or tendering the stock which it had contracted to give therefor, or showing that, through the conduct of the vendor, it had been precluded from doing so.

      On appeal from a decree advised by Vice-Chancellor Emery, whose opinion is reported in Trenton Passenger Railway Co. v. Wilson, 10 Dick. Ch. Rep. 273.

      Mr. Samuel K. Robbins, Mr. David J. Pancoast and Mr. Samuel H. Grey, for the appellant.

      Mr. Frank Bergen and Mr. James Buchanan, for the respondent.
   The opinion of the court was delivered by

Dixon, J.

The transactions which led to the filing of the bill in this cause are stated with much particularity in the preface to the opinion of Vice-Chancellor Emery. For present purposes the following narration will suffice:

In 1891 Lewis Perrine, Jr., and Samuel K. Wilson, the defendant, were stockholders in the Trenton Horse Railroad Company, the Hamilton Township Street Railway Company and the South Clinton Avenue and Broad Street Railway Company, and in March of that year they contracted together to bring about the consolidation of those three companies and the City Railway Company into a new corporation, to be named the Trenton Passenger Railway Company, Consolidated. In pursuance of their contract, all the stock of the City Railway Company, consisting of nine hundred shares, was purchased and delivered to Wilson as security for $129,900, which he advanced to buy it. In September, 1891, the consolidation was effected by the joint agreement of the four constituent companies, acting under the statutes approved February 21st, 1888, and April 16th, 1891. Gen. Stat. pp. 3225, 3229. This agreement provided that the nine hundred shares of stock in the City Railway Company should be convertible into thirteen thousand two hundred and fifty-six shares of stock in the consolidated company, to be issued upon the surrender of the City company shares.

Upon the formation of the consolidated company Perrine was, elected its president, and as such was expressly authorized, by resolution of September 28th, 1891, to take all such proceedings as might be proper or necessary to effect the exchange of stock provided for in the consolidation agreement and to carry out the same.

It may be assumed that the defendant had so participated in the making of the consolidation agreement that he was bound to surrender the City company stock on the terms therein stated, but instead of making the exchange thus contemplated, he and Perrine seem to have at once formed a different arrangement, for, on October 1st, 1891, Perrine delivered to the defendant only 14164/22g shares of consolidated company stock (being the equivalent of one share of City company stock) and gave him, besides, the consolidated company’s note for $130,000, which then represented the.balance of the defendant’s advances for the purchase of the City company stock, and for which he still retained that stock as security. The residue of the thirteen thousand two hundred and fifty-six shares of consolidated company stock, viz., 13.24161/225 shares, Perrine caused to be registered in his own name.

These transactions indicate that, so far as the defendant and Perrine, acting for the consolidated company, could accomplish it, the plan of exchanging stock was abandoned, and in lieu thereof the consolidated company was to pay the defendant his advances, with interest, and receive the City company stock therefor, he to hold the stock as security for payment. The entries contemporaneously made in the books of the consolidated company accord with this understanding.

In January, 1892, Perrine delivered to the defendant two hundred and sixty $1,000 bonds of the consolidated company as collateral security for the same advances for which he held the City company stock, and, in May, 1892, substituted for these bonds the same amount in other bonds of the company. Subsequently, in the autumn of 1892, the defendant surrendered to Perrine, for the consolidated company, the nine hundred shares of City company stock, and Perrine turned them over to the consolidated company. It is beyond dispute that in making this surrender the defendant relied upon the note and bonds of the consolidated company as his security, and that Perrine so understood the transaction.

On August 14th, 1893, a payment of cash was made to the defendant out of the funds of the consolidated company on account of his claim, and between that date and March 5th, 1894, he received from those funds $71,310.48. The balance of the $130,000 and interest he received in August and September, 1894, from the proceeds of the sale of the bonds which Perrine had pledged to him as collateral, the residue of the proceeds going into the treasury of the company.

On these facts the consolidated company filed the present bill, setting up that although these payments of cash and pledge of its bonds were made by Perrine, its president, yet they were unauthorized, to the knowledge of the defendant, and praying that the defendant might be decreed to account for and return to the complainant all the moneys thus received by him. The decree made thereon requires the defendant to repay, unconditionally, to the complainant $183,861.26, being the entire amount of his receipts, with interest, less some conceded credits. From this decree the defendant appeals.

This decree seems to us inequitable.

The primary situation is not a very complicated one. Perrine, the complainant’s agent, authorized to purchase the City company stock from the defendant, and to give him therefor his principal’s stock, chooses to make the purchase and give therefor his principal’s cash. Assuming that the principal is not bound to accede to the purchase thus made, what is its equitable remedy? Plainly, either it must restore the property purchased, or it must tender the stipulated price, its own stock, on demanding the return of its cash. From performing one or the other of these alternatives it can be relieved only so far as it has become unable to perform through the action of the defendant.

It may be conceded that, although the complainant would be entitled to demand the return of its money on restoring the City company stock, yet it cannot be required to make such restoration, for it was entitled to receive, and the defendant was bound to surrender, that stock on the delivery to him of the complainant’s stock. Consequently, although the City company stock is unquestionably within the power of the complainant, it is proper to ascertain what has been done with the shares of the complainant’s stock.

As before stated, Perrine on October 1st, 1891, transferred 14164/225 shares to the defendant, and placed lC.24161/225 in his own name. As Perrine was merely the agent of the complainant, the stock thus placed in his name remained the complainant’s property. On June 1st, 1894, Perrine transferred to the defendant 4,55161/225 shares, thus making four thousand five hundred and sixty-six shares which the defendant has received out .of the thirteen thousand two hundred and fifty-six shares. The rest of those shares were, on December 26th, 1894, sold by Perrine to the Trenton Traction Company for $24 a share, and upon •that sale there is still due about $200,000. If, as seems to be the •case, Perrine never acquired from the complainant a valid title to that stock, the benefits of the sale belong in equity to the •complainant. Therefore, when on January 22d, 1895, the complainant instituted this suit, it might either have demanded from •defendant the four thousand five hundred and sixty-six shares •of stock held by him, and from Perrine and the Trenton Traction Company the price of eight thousand six hundred and ninety shares according to the terms of the sale above mentioned, •or it might have affirmed the defendant’s title to the stock standing5 in his name and have tendered to him an assignment of its interest in the proceeds of the eight thousand six hundred and ninety shares sold, and thereupon have demanded from him the cash which he had received. Evidently this latter alternative was an unprofitable one for the complainant. It required the abandonment of the title to thirteen thousand two hundred and ■fifty-six shares of stock, worth apparently $24 a share, for a claim amounting to less than $170,000. Neither alternative is ■within the scope of the bill of complaint.

The learned vice-chancellor who advised the decree below was not unmindful of the strength of the defendant’s claim that the complainant, in taking from him what its agent had wrongfully given him, should give him, so far as it could, what its agent ought to have given him; but he put aside that claim on the ground that the complainant had, by Perrine’s action on October 1st, 1891, issued all the shares in accordance with the consolidation agreement, and thus had performed its obligation to the defendant. But this ground is certainly untenable. The resolution of September 28th, 1891, gave the control of the stock to Perrine as the complainant’s agent, and after the registration on October 1st, 1891, the stock was in his control as completely as before, and neither the title nor the possession was at all changed thereby. Such also seems to have been the understanding of Perrine, for he knew that on the issue of that stock the defendant was to surrender the City company stock, but he did not intimate that the surrender should then be made. The notion that this registration constituted an issue of the stock to the defendant can rest only on the unsupported assumption that, in a transaction wherein Perrine was acting as agent for the complainant, and the defendant was acting for himself, with adverse interests, the defendant appointed Perrine as his agent also. The express evidence is to the contrary, the defendant denying any knowledge of the registration or issue referred to.

Our conclusion is that, before asking the aid of a court of equity in repudiation of the act of its agent by which it had obtained the City company stock, the complainant was bound to do what it reasonably could to secure to the defendant what he ought to have received therefor. In such cases, even though the defendant has acted fraudulently, courts of equity apply the maxim “ He who seeks equity must do equity,” and will thus secure to the wrongdoer, in awarding its relief, whatever is justly and equitably his due. 2 Pom. Eq. Jur. § 910.

. There are indications in the testimony that the complainant participated in Perrine’s sale of the stock to the Trenton Traction Company to such a degree as may possibly preclude it from transferring to ‘the defendant all that he ought to receive on repayment of the moneys demanded. But, of course, this cannot be judicially determined without the presence of Perrine as a party. It is enough now to decide that, in the pending cause, the complainant has neither averred nor proved the doing of that without which it has no equitable right to the relief sought.

The decree should be reversed and the bill dismissed.

For reversal — Collins, Depue, Dixon, Garrison, Gummere, Lippincott, Ludlow, Van Syckel, Adams, Bogert, Hendrickson, Krueger, Nixon, Vredenburgh — 14.

For affirmance — None.


source: Caselaw Access Project

license: Public Domain

text:
    The Clark Thread Company, appellant, v. The William Clark Company, respondent.
    [Filed June 20th, 1898.]
    1. When a defendant has infringed a trade-mark belonging to several independent- manufacturers, he should not be required to account to one of those manufacturers for all the profits realized through the infringement; he can be held responsible to each for only so much of the profit as has been diverted from him.
    2. The opinion of Vice-Chancellor Reed in this cause (10 Dick. Ch. Rep. 658) approved.
    On appeal from a decree advised by Vice-Chancellor Reed, whose opinion is reported in Clark Thread Co. v. William Clark Co., 10 Dick. Ch. Rep. 658.

      Mr. Edward Q. Keasbey and Mr. H. D. Donnelly, of New York, for the appellant.

      Mr. Richard. V. Lindabury, and Mr. C. B. Meyer, of New York, for the respondent.
   The opinion of the court was delivered by

Dixon, J.

The original bill in this cause was filed July 17th, 1895, by the Clark Thread Company against the William Clark Company, to restrain the defendant from doing certain acts claimed to be an infringement and invasion of the good will of the complainant as a manufacturer and seller of spool cotton and thread, and to obtain an account with respect to such acts previously done. As the pleadings were finally moulded, a decree rendered June 23d, 1896, in the circuit court of the United States for the southern district of New York, in a cause wherein the Clark Thread Company was complainant, and Herbert Gr. Armitage, an agent of the William Clark Company, was defendant, was set up by both parties as a judicial determination of the scope of the complainant’s right to injunction. No other evidence of its right was offered.

Under these circumstances, we think the definition of the complainant’s right should be expressed, as nearly as may be, in the terms of the federal decree. The chancellor’s decree departs from these terms in what may be substantial particulars, and should be so modified as to secure conformity. Of course, this will not prevent the complainant from showing that acts of the defendant, not disclosed or contemplated in the federal suit, were violative of the right thus defined.

It appears in the case that the Clark Mile-End Spool Cotton Company, as well as the complainant, had the right to call its product Clark’s thread, and to use the word “Clark” upon its labels, and that this right may have been violated by some of the acts of the defendant which infringed the complainant’s right. In this condition of things it seems to us inequitable to hold the defendant responsible to the complainant for all the profits realized by the defendant from its wrongful conduct. Its responsibility to the complainant should be confined to such profits as were diverted from the complainant, and such damages as the complainant otherwise sustained, leaving the defendant answerable to the Mile-End company for the profits unlawfully diverted from it. In this respect, also, the decree should be modified.

With regard to the other points raised by the appellant, we have nothing to add to the opinion of Vice-Chancellor Reed (10 Dick. Ch. Rep. 658), by which we think they are satisfactorily disposed of, so far as their disposition is essential to our decree.

Let the decree below be reversed, and a new decree for the complainant be entered in accordance with these views.

For reversal — Collins, Depue, Dixon, Garrison, Gummere, Lippincott, Ludlow, Van Syckel, Adams, Bogert, Hendrickson, Krueger, Nixon, Vredenburgh — 14.

For affirmance — None.


author: Garrison, J.

text:
    Anna E. Morton, appellant, v. Abby R. Beach, respondent.
    [Filed September 22d, 1898.]
    1. An appeal from a decree directing an account to be taken will not stay the accounting.
    2. The decision of this court in Pennsylvania Railroad Co. v. National Docks Railway Co., 9 Dick. Ch. Rep. 647, does not apply to an appeal from a decree directing the taking of an account.
    3. A decree in chancery made upon a reading of the pleadings, the evidence of witnesses and the arguments of the respective counsel is “made upon the final hearing and determination of the cause,” within the meaning of the one hundred and eleventh section of the Chancery act, and cannot be signed for the chancellor by a master in chancery, under the authority of that statute.
    4. The record of the court below is conclusive evidence of all matters that are properly included in it.

      On appeal from a decree in chancery. (No opinion filed}

      Messrs. Cortlandt & Wayne Parker, for the appellant.

      Mr. Walter J. Knight and Mr. James E. Howell, for the respondent.
   The opinion of the court was delivered by

Garrison, J.

This appeal brings up a final decree of the court of chancery. The first ground taken by the appellant is that the court of chancery was without power to make this decree, because the accounting upon which it was based was had pending an appeal from the interlocutory decree that directed the taking of the account. The original bill was filed to foreclose a mortgage. The appellant answered, setting up that at the time she executed the mortgage she was the wife of the person to whom it was made. Upon this issue an interlocutory decree was entered in favor of the complainant, containing the usual reference to a master to ascertain the amount due upon the mortgage. From this decree an appeal was taken, pending which the accounting was had before the master. After the affirmance of the decree by this court, the record was remitted and the decree final made in the court of chancery in accordance with the account that had been taken pending the appeal. The contention of the appellant is that her appeal from the interlocutory decree suspended the order for an accounting. It is said that the case of Pennsylvania Railroad Co. v. National Docks Railway Co., 9 Dick. Ch. Rep. 647, is a precedent for this position. That case indubitably decided that the mere act of the appellant, in placing before this court the question whether the threatened destruction of its property was justifiable, preserved the property from destruction while the question was under consideration by this court. The opinion further intimated in no uncertain terms that this must be the effect of every appeal if the preservation of the subject of litigation be necessary to the remedy sought in this court. Neither this case nor the principle that it illustrates have any application to an appeal from a decree directing the taking of an account where there is no property to be preserved and no destruction to- be averted. Apart from the supposed authority of this decision there is nothing in equity practice to countenance the contention.

In the English court of chancery the taking of an appeal was, generally speaking, no ground for staying an account. It is so stated by Lord Eldon, in Nerot v. Burnand, 2 Russ. 56. Mr. Daniells says : “ It is not the habit of the court to suspend the taking of an account.” 2 Dan. Ch. Pr. 1470. “The taking of an account will not be stayed pending an appeal.” 2 Sm. Ch. Pr. 70.

In Ratzer v. Ratzer, 2 Stew. Eq. 162, Vice-Chancellor Van Fleet says the complainant is obviously entitled to have the accounting proceed pending an appeal. Upon this branch of the case the appellant must fail.

The decree, however, must be set aside upon the second ground taken by the appellant’s counsel, viz., that it is not signed by. the chancellor or by anyone authorized to perform that duty for him. The decree in this case is signed, “By the statute. H. C. Pitney, master.” The statute referred to is the one hundred and eleventh section of the Chancery act (Gen. Stat. p. 394), which empowers the chancellor, in certain contingencies, to authorize a master in chancery to perform, in his stead, the acts therein specified, “not including the final hearing and determination of causes.” I have examined the original order of the chancellor and find that, in this respect, it follows the statute verbatim. The decree now before us recites that it was made upon the consideration of the arguments of the respective counsel upon the pleadings in the cause and the evidence of witnesses. This describes the “final hearing and determination” of the cause, and as such falls without the statute and the chancellor’s order. It was suggested that this record set forth what had not actually taken place, and that this court should ignore such misdescription as formal and take judicial notice of the ordinary course of foreclosure suits where no one has appeared for the defendant before the master. The proposition is unsupportable. The respondent is bound by the recitals of the decree presented to the master for his signature. The record of the court below is always conclusive evidence of all matters that are properly included in it, and will prevail over incompatible statements-appearing aliunde. If the record be wrong the remedy is to have it amended.

The case of Dunkle v. Rotholz, 19 Atl. Rep. 260, seems to be directly in point, and would be if the case as there reported had any existence. In fact, the filing of that opinion in the supreme court was an inadvertence that was discovered by reason of its publication in time to prevent its insertion in the official reports. The views it expressed were, however, adopted by this court when the question was presented in the same case upon a practice motion, the order of the court being that the plaintiff in error have leave to present the postea to Mr. Justice Reed, in order that he might, by amendment if proper, make it harmonize with the bill of exceptions, which showed a compulsory non-suit, the postea stating that the plaintiff had been called. This amendment was made and the case finally disposed of upon its merits in 24 Vr. 438. The principle is, however, well established and constantly illustrated in practice. In the decree now before us there is not even the shadow of a conflict. It is so framed as to be directly, in the face of the limitation, impressed by the statute upon the authority of the master appointed under it. The record, with this decree annulled, will be remitted to the court of chancery in order that a decree be there made.

The appellant is entitled to costs in this court.

For reversal — Collins, Depue, Dixon, Garrison, Gummere, Lippincott, Ludlow, Van Syckel, Adams, Bogert, Hendrickson, Krueger, Nixon, Vredenburgh — 14.

For affirmance — None.


author: Collins, J.

text:
    Andrew J. Withrow, appellant, v. Cornelius C. Warner, respondent.
    [Filed June 21st, 1898.]
    Where, in a court of equity, a deed is sought to be set aside as voluntary and fraudulent as against creditors, and the evidence is not sufficient to induce the court to avoid the deed absolutely, but is sufficient to excite a well-grounded suspicion as to the adequacy of the consideration and the fairness of the transaction, the court will permit the conveyance to stand only as security for the consideration actually given.
    On appeal from a decree advised by Vice-Chancellor Pitney, who delivered the following opinion:
    The complainant is a judgment creditor of the defendant Risley Barlow, and by his bill seeks to have set aside a conveyance made by Barlow to the defendant Withrow of premises formerly owned by Barlow, situate in Atlantic City, New Jersey. The allegation of the bill is that the conveyance was made by Barlow to Witlirow for the express purpose of defrauding the complainant and defeating the collection of his debt, and that it was made without consideration paid by Withrow to Barlow; or, if any consideration was paid, still, that Withrow had full notice of Barlow’s object in making the conveyance.
    The proofs fully establish the first of these allegations, viz., that Barlow conveyed the premises to Withrow for the purpose of preventing the complainant collecting his debt.
    The circumstances are these: On or before the 25th of June, 1895, the complainant held the promissory note of Barlow for about $10,000, with warrant of attorney to confess judgment, and Barlow had verbally promised the complainant to convey to him the premises in question in satisfaction of that note. On June 25th, 1895, Barlow conveyed the premises to one Alcorn for'the expressed consideration of $14,000. They were, at that time, subject to two mortgages amounting, principal and interest, to about $7,000 and were worth about $15,000. Barlow swears that Alcorn paid him $1,000 or $1,200 in cash on account of the purchase-money, and agreed to pay the balance.
    On the same day, June 25th, 1895, under pressure, Barlow confessed a judgment' in the Atlantic circuit court, in favor of one Turner, to secure $534.71, debt and costs.
    Immediately after this conveyance, Barlow, Alcorn, complainant and his counsel had an interview with regard to satisfying complainant’s demand, which produced no results, in the course of which complainant charged Barlow,with having made the conveyance to Alcorn for the purpose of defeating complainant’s debt, and Barlow declared that he would do or had done so. On the 29th of June complainant entered up judgment upon his note against Barlow in the court of common pleas of the city of Philadelphia. On July 29th he commenced a suit in the supreme court of New Jersey against Barlow, founded on the Philadelphia judgment. The summons was accompanied with a copy of the declaration and notice, which had the effect of hastening the judgment unless .defence with merits was entered. Immediately after the commencement of this suit, on August 1st, Alcorn reconveyed the premises to Barlow, and on the same day Barlow mortgaged them to one' McCormick to secure $1,733.54. He filed a plea to the suit on the judgment in time to enable the complainant to notice the cause for trial at the Camden circuit, on the 10th of September,. 1895. On the 9th of September, the day before the Camden circuit opened, Barlow, together with his wife, conveyed the premises by deed of that date to the defendant Withrow for the expressed consideration of $11,397.35. This consideration, Withrow swears, was made up of the sum of the several mortgages, judgment and taxes in arrears, with $2,500 added thereto. The deed was recorded on the 10th of September, 1895. The cause of Warner v. Barlow was reached on the list on the 24th of September, verdict for the plaintiff promptly rendered, and judgment entered thereon on the 9th of October. No money was paid at the time the deed from Barlow to Withrow was actually executed and recorded. The defendant Withrow swears that he had paid Barlow $1,150 on the previous 3d of September. A search for judgments in the supreme court was obtained under date of the 6th of September. Mr. Withrow’s counsel in the matter was Mr. Samuel E. Perry, who was also the attorney for Barlow in the defence of the action at law brought by complainant, and is the solicitor of both defendants in this cause. He made the necessary searches, prepared the deed, and attended to its execution and recording. On the 10th of September, the day the deed was actually recorded, Withrow paid Barlow $700 in two checks of $350 each, drawn on two different banks in Atlantic City. On the 14th of September he paid him $500 in tw.o checks, one of $150 and the other of $350, drawn severally on the same two banks; and on the 25th, the day after the verdict was rendered, he paid him $150 in three checks, one of $20, and one of $100 on one bank, and one of $30 on the other bank, making a total payment, proven by checks, of $1,350; and if the $1,150 alleged to have been paid on the 3d of September was actually paid, the payments aggregate $2,500.
    The serious questions in' the cause are — -first, whether the price fixed, $11,397.35, was so much below the ordinary market value of the property as to indicate fraud; second, whether the $1,150 alleged to have been paid on the 3d of September was actually paid or not; third, whether Withrow had notice that Barlow was making this conveyance for the purpose of defrauding his creditors, and fourth, was the conveyance an absolute one or by way of mortgage.
    The only written evidence of the $1,150 payment is a receipt in pencil signed by Barlow, and dated on the day in question, September 3d. Withrow, who is a furniture dealer in Atlantic City, swears that he paid the money to Barlow at his, Withrow’s, place of business, on the day the receipt bears date, in eleven $100 bank notes and one $50 bank note.
    The allegation of such a payment by a man who kept accounts in three different banks in his city, and who was making almost daily deposits in one or the other of these banks, challenges close scrutiny. In fact, I find it difficult to believe. The receipt forms the only contract in writing that was made between the parties, and it reads in this wise :
    “Atlantic City, New Jersey, 9, 3, ’95. Received of A. Withrow $1,150, a first payment on property 1824, 1824J and 1826 Atlantic avenue, balance to make up ¡¡>2,500 to be paid in thirty days.”
    On that same day, September 3d, he deposited in one of his banks $100. On the 10th of September, the day after the deed was executed, and on which he drew the two checks for $350 each, he deposited in one of his banks $600 and in the other $500, both even money. And as he swore that he was in the habit of depositing daily the silver and small bank notes which he received in the course of his business, these deposits of September 10th must have been of large bills, and must have been over and above the alleged payment of $1,150 on September 3d.
    In explanation of his having so large a sum of money in large bank notes in his safe when he was doing business in a town where there were three banks, and keeping an account in each of them, Withrow swears that he frequently received in the course of his business these large bank notes from persons who were stopping temporarily in Atlantic City, and who paid in large notes and not by check, and that he preferred to keep them on hand rather than deposit them, because when he had occasion to pay his bills in Philadelphia or in New York he preferred to pay them in bank notes rather than checks. This explanation is possible, but not probable, and its improbability was pointed out to him at the hearing.
    Then, at a later day, he produced his books of account in court and attempted to show when and from whom he had received several of these $100 notes. He accounted for it in this way: that certain persons paid him accounts due for less than $100, offered him a $100 note in payment, and he paid them the change.
    He said that it was his habit during the summer season, when most of his sales were effected, to save all the large notes in his safe, and deposit in the bank the small notes and silver which he received, and that he kept three bank accounts in order that he might deposit such promissory notes as he had for collection in the particular bank where each was made payable. A close examination of his books did not furnish any evidence of the payment of large bank notes, but simply instances where, by his unaided memory, he was able to swear that he did receive a large bank note in overpayment of his bill, and gave change; and in one case, Snyder’s, he fixed the payment on September 6th. None of his clerks was called to corroborate him in this respect, nor to support his statement that the $1,150 was actually paid, although he says that some of them were nearby when it was paid. In fact, Withrow was called, and,-1 believe, subpoenaed by the complainant, and paid very little attention to, and apparently took little interest in, the defence, which seemed wholly in the hands of Mr. Barlow, who hunted up the witnesses on the part of the defence, and procured their attendance and sat by counsel during the hearing.
    Withrow swears, in effect, that Barlow came to him and requested him to buy this property, and that he applied to Mr. Perry to look after the title, and that he did so; that the deed was drawn and executed under Mr. Perry’s supervision, and sent by him to May’s Landing to be recorded. He swears that he paid Barlow $1,150 in advance of getting the deed, and trusted him ou the sole faith of the receipt above mentioned, and that when the deed was delivered Barlow trusted him without anything to show, except his word, for the balance of the consideration money; and, further, that all these payments were made in the absence of Mr. Perry. His examination as to the time when the receipt was prepared is as follows:

      “Q. When was that receipt given ?

      “A. That receipt was given on the day the money was paid.

      “Q. Not a fresh receipt ?

      “A. No, sir; does not look very fresh.”
    My examination of it at the time, and afterwards in going over the case, results in finding indications that it had been purposely rubbed over by the fingers in order' to give it an old appearance.

      Barlow, upon close examination, failed satisfactorily to show what disposition he made of the $1,150, if it was paid.
    And then there are other circumstances which it is difficult to reconcile with the actual payment of the $1,150 as sworn to. On the 10th of September, the day of the record of the deed, "Withrow made two deposits in two banks of even money — $600 in one and $500 in the other — and then drew against those two banks two checks of $350 each. Now, why was that course taken? Seven days earlier he had paid, as he alleges, $1,150 in bank notes to Mr. Barlow; and why should he make two deposits in bank on the 10th and then draw checks against .them ? Why not make a direct payment of $700 on that day out of the moneys that he deposited in bank? If it be true that he was handling these large bank notes, then we may fairly presume that the two deposits of $600 and $500 were made with large bank notes; but, whether in large bank notes or small, they were still presumably bank notes, and capable of tradition directly to Mr. Barlow without going through the act of depositing and drawing checks against them.
    Another circumstance arrests attention. Withrow swears that at and before the signing of the contract of September 3d, Mr. Barlow stated to him the amount of the encumbrances on the premises, and that they added up, with the $2,500 agreed to be paid, to the exact sum of $11,397.35, and that that sum was the price agreed to be paid for the premises, and subsequently inserted in the deed of conveyance. He says that he relied upon Barlow’s statement, but before taking the deed had it verified by Mr. Perry. That statement was inaccurate, to the extent at least of the interest, several years in arrears, on the complainant’s mortgage, amounting to between four hundred and five hundred dollars. So that Withrow was under no obligation to pay to Barlow the whole sum of $2,500, but was clearly entitled, under the contract, to withhold therefrom enough to pay the interest on _ complainant’s mortgage, or whatever sum was necessary to reduce the whole purchase-price down to the sum mentioned in the deed. And yet, apparently, without any inquiry into the amount due for arrears of interest, he proceeded, after the delivery of the deed, to pay to Barlow the whole amount of $2,500. Now, the question arises, why did he do that?
    Taking ail these circumstances together, the improbability of Withrow’s having that amount of money lying in his safe, of his paying that amount to Mr. Barlow without anything in writing more than the receipt to show for it, and without any inquiry into his circumstances and the encumbrances on the property other than what was stated to him by Mr. Barlow, and the subsequent dealings between the parties and their conduct and behavior before the court, the apparent indifference of Mr. Withrow and the strict attention paid to the case throughout by Mr. Barlow, leaves my mind far from satisfied that any such money was paid.
    But both Withrow and Barlow were called as witnesses by the complainant, who thereby, in a measure, approved them as such. Their evidence is uucontradicted except by the circumstances before pointed out. The courts, in these cases, are not to presume fraud, and there is not the least evidence that With-row knew of Barlow’s fraudulent intentions. He produces the receipt for the money, signed by Barlow, and swears that he paid it, and I feel constrained, notwithstanding the very grave doubts I have entertained, to find, as a matter of fact, that he probably did pay the whole $2,500.
    But that does not dispose of the case. I have said that Barlow’s object was to defraud the complainant. He appears to-have provided for several of his creditors in the mortgage to McCormick, and he swears that the object of making the sale was to get money in his pocket to live upon. The price obtained for the property was $2,000 to $3,000 less than its fair market value. The conduct of the parties in the presence of the court,, the interest taken by Barlow and the indifference manifested by Withrow in the issue of the suit, the fact that an even sum of money — $2,500—was paid for the property over and above the-encumbrances, indicate to my mind that the transaction was that, of a mortgage and that Barlow expects to get some further benefit from the property. A man in his circumstance has no right to give away his property or to sell it at a price much below its-value for the sake of getting ready money and preventing his property going to pay his debts, and I think that when such a case arises the inclination of a court of equity should be to hold .the transaction a mortgage instead of an absolute sale, as was done in the case of Demarest v. Terhune, 3 C. E. Gr. 532.

    I shall therefore advise a decree that the complainant have leave to redeem the property by paying to the defendant 'With-row the sum of $2,500, with interest, the latter to be charged with the rents and profits of the premises in the meantime and credited with the expenses of repairs and taxes. For that purpose an account must be taken. If the complainant shall decline to take such a decree the bill will be dismissed, with costs as to Withrow.
    The complainant accepted the decree offered him and the defendant Withrow appealed to this court.

      Mr. David J. Pancoast, for the appellant.

      Mr. Howard Carrow, for the respondent.
   The opinion of the court was delivered by

Collins, J.

The burden of complaint of the appellant is that, while disclaiming any right to presume fraud on his part, and conceding that there is no evidence that he knew of his grantors fraudulent intentions, the vice-chancellor nevertheless proceeds to deprive him of the fruits of his bargain.

The concession, if warranted, had weight only as against an absolute avoiding of the deed. To work such a result it is necessary that it should appear that the grantee had knowledge of or participated in the fraudulent intent of the grantor; but where, in such a suit as is involved in this appeal, the evidence, though not sufficient to induce the court to avoid the deed absolutely on the ground of fraud, is sufficient to excite a well-grounded suspicion as to the adequacy of the consideration and the fairness of the transaction, the court will permit the conveyance to stand only as security for the consideration actually given.

Such was declared to be the doctrine of courts of equity by Mr. Justice Depue in the case of Muirheid v. Smith, 8 Stew. Eq. 303, 312, decided in this court. In that case the majority of the court had no doubt of the adequacy of consideration or of the bonajides of the deed ; but the doctrine so declared in the opinion read for the minority was not in any way challenged in the opinion read for the court. On the contrary, it was impliedly, if not expressly, upheld. It had been enunciated in almost the same terms by Chancellor Kent in Boyd v. Dunlap, 1 Johns. Ch. 478, and approved by this court in Demarest v. Terhune, 3 C. E. Gr. 532. The only essential difference between the case last cited and that now before us is that in the one the consideration of the deed held to be a mortgage was an antecedent debt, while in the other it is a money payment. This difference does not affect the principle involved. The doctrine declared was, in this court, in the case of Winans v. Graves, 16 Stew. Eq. 263, 276, held applicable to a new consideration. In Demarest v. Terhune, ubi supra, it was adjudged that when the consideration of a conveyance made by a debtor in failing circumstances is shown to be inadequate, the burden of proving bona jides is thrown on the grantee, and that if the honesty of the conveyance is left in doubt, upon the evidence, the sale will be set aside on equitable terms.

Upon the facts proved in this case the appellant has no ground to complain of a decree securing him, as by way of mortgage, the sum he claims to have paid for the property.

It has been suggested that the frame of the bill is not adapted to such a decree. The bill is not quite accurately stated in the opinion below. It simply charges that to prevent the complainant from collecting his debt the conveyances and mortgage recited were given; that “no consideration whatever was paid.or exists or did exist for any of the said conveyances or mortgage,” and that the grantor remains in possession. It prays that “ the said fraudulent conveyances and mortgage * * * may be set aside and declared null and void,” and for other relief.

In Winans v. Graves, ubi supra, it was assumed that such a bill would not warrant the relief there, as in this case, deemed appropriate, although it was intimated that proper amendments-might be made in this court; but it evidently was not noticed by the learned judge who wrote the opinion in that case that in Demarest v. Terhune, ubi supra, it had been directly decided that a like bill was sufficient for the purpose. Chief-Justice Beasley, in delivering the opinion of this court, said : “Nor is the frame of the bill inapplicable to this aspect of the case. It proceeds upon the point of a conveyance without consideration, and which was, on that account, a fraud upon creditors. The case laid, therefore, is partially proved; the conveyance, though not wholly, is in some degree voluntary, and is thus far constructively a fraud, delaying, and if not set aside or controlled, defeating creditors. I do not, consequently, find any difficulty arising from the structure of the pleadings in granting relief in the form indicated,” and it was decreed that the deed should stand as a mortgage.

The relief, therefore, intended by the learned vice-chancellor in the present case should be effectuated, but by inadvertence the-decree has been made too broad. It directs a conveyance to the complainant upon payment of Mr. Withrow’s claim. The-utmost that complainant could ask was a sale of the premises-to pay, first, the Withrow claim, and then his judgment.

Let the decree be reversed, and the cause be remitted with instructions in conformity with this opinion.

No costs will be allowed in this court.

For reversal — Collins, Depue, Dixon, Garrison, Gummere, Lippincott, Ludlow, Van Syckel, Adams, Bogert, Hendrickson, Nixon, Vredenburgh — 13.

For affirmance — Krueger—1-


text:
    The Avon-by-the-Sea Land and Improvement Company, appellant, v. Ann Finn, respondent.
    [Filed September 30th, 1898.]
    A covenant in a mortgage bound the mortgagee to release any part of the mortgaged premises “ at any time during the existence or continuance ” of the mortgage on tender of a part of the mortgage debt at a rate based on the .quantity of land released. The mortgage being overdue a foreclosure suit was begun, and, after the complainant was entitled to decree, the defendant sold several lots of the mortgaged land, made tender and demanded a release, which ivas refused. Twenty days later the complainant took decree and the property was advertised for sale. Two days before the sale-day the defendant petitioned that the decree might be opened to permit answer and cross-bill, in order to compel a release. — Held, on appeal, that such petition was properly denied.
    On appeal from an order advised by Vice-Chancellor Emery.
    On March 23d, 1882, Thomas W. Finn gave his bond to Ann Swanton conditioned for the payment, on July 25th, 1887, of an indebtedness of $35,000, and secured the same by mortgage of certain lands in Monmouth county. The mortgage contained a covenant, by the mortgagee, to release to the mortgagor, his heirs and assigns, “ at any time during the existence or continuance” of the mortgage, any part of the mortgaged premises on payment therefor, on the mortgage debt, at the rate of $1,000 per acre. On July 26th, 1882, Finn conveyed the mortgaged premises to Edward Batchelor. In 1883 Batchelor, then owning the same and adjoining lands, made and filed a map of the whole, showing streets, blocks and lots, and proceeded to develop the property and to sell lots, which Mrs. Swanton released on request. On June 25th, 1891, Mrs. Swanton assigned the bond and mortgage to Ann Finn. On February 19th, 1892, Batchelor conveyed what remained of the mapped property to the Avon-by-the-Sea Land and Improvement Company. In 1894 and in 1895 that company conducted auction sales, and Mrs. Finn released from her mortgage the lots sold. On May 14th, 1897, Mrs. Finn began foreclosure in the court of chancery. The Avon company, sole defendant, was duly served with subpoena to answer, returnable June 3d, and failed to appear. On September 22d decree was taken to sell so much of the unreleased lands as would be sufficient to raise and satisfy $24,320.40 remaining due upon the mortgage, with interest and costs, and, under execution issued on such decree, the property was advertised for sale on November 22d. Two days before the sale-day the Avon company filed a petition to open the decree and permit answer and cross-bill, in order to compel a release of certain lots represented to have been struck off, at prices not stated, at auction sales conducted by the company in the previous July. It was alleged in the petition that such sales had been made free from encumbrances, with the knowledge of the complainant and without objection by her, but that on September 2d, when she was tendered on her debt the sum of $3,850, being sufficient to pay for these lots at the rate of $1,000 per acre, and to cover all interest and costs, she had refused a release.
    This appeal is from the denial, after hearing on affidavits, of such petition and the discharge of a temporary stay of the sale.

      Mr. Charles L. Corbin, for the appellant.

      Mr. Walter Bogert, for the respondent.
   The opinion of the court was delivered by

Collins, J.

We see no reason to question the propriety of the order from which this appeal was taken. The affidavits disclose no reasonable excuse for the appellant’s inaction between the time of the last sale of lots in July and the tender on September 2d, and no excuse .whatever for permitting the taking of the decree nearly three weeks later and delaying application to open such decree until the eve of the advertised sale. Laches, although not always fatal to an application to open a chancery decree or to an appeal from a refusal to open such a decree (Day v. Allaire, 4 Stew. Eq. 303, 315), is, nevertheless, to be considered, and a decree suffered by default without valid excuse should not be opened, even although strictly there may be a defence, if to permit the decree to stand will work no injustice. Vanderveer v. Holcombe, 7 C. E. Gr. 555; Boynton v. Sandford’s Executors, 1 Stew. Eq. 184; affirmed, 1 Stew. Eq. 592.

The mortgage in this case was long overdue, and the complainant was .even entitled to a decree at the time of the experiment of the auction sales. Neither the fact that the mortgagee had given releases after the mortgage was overdue, nor the fact that she made no objection to the terms of the auction sales, gave the appellant any substantive rights or created an estoppel indestructible by laches. The most that the appellant could fairly have asked was a sale in lots by the map, and for that relief it was not necessary to open the decree. As sale could have been had almost immediately at the time of the application to open the decree, and the appellant could have protected its auction sales by bidding for the lots sold the prices at which it had sold them, it is evident that the purpose of exacting the release was that the appellant might gain the profit on such sales above the sum tendered, thus leaving the mortgagee to the hazard of securing the rest of her debt from the sale of the residue of the lands. We think that a court of equity could not reasonably be required to open a regular decree permitted by the defendant’s laches, in order to help the accomplishment of that result. The equity the appellant had in the mortgaged premises, after condition broken, was an equity of redemption from the mortgage debt— not an equity to compel a release that might impair the mortgagee’s security. If it was desired to protect the purchasers of lots sold at the auction, as far as practicable, that might have been easily accomplished by asking that the other lots should be first sold.

We do not say that timely answer and cross-bill would have availed the appellant. If the peculiar language of the covenant, to release during the “existence or continuance” of the mortgage, may be interpreted to extend the covenant to a time after condition broken, it would hardly carry it beyond the filing of the bill to foreclose. So far as the mortgagee was concerned, that was a decisive step towards devoting the security to the debt. Delay of judicial procedure is mere favor.

The order appealed from will be affirmed.

For affirmance — Collins, Depue, Dixon, Garrison, Gummere, Lippincott, Ludlow, Van Syckel, Adams, Bogert, Hendrickson, Nixon, Vredenburgh — 13.

For reversal — None.


text:
    The Avon-by-the-Sea Land and Improvement Company, appellant, v. Ann Finn, respondent.
    [Filed September 30th, 1898.]
    1. Streets were laid across mortgaged lands, and a map showing the streets and a layout of blocks and lots was duly filed. From time to time lots were sold by the map and released from the mortgage. In a foreclosure of the mortgage, the decree taken by default ordered that so much of the unreleased land as would be sufficient to raise and satisfy the mortgage debt should be sold. At the time set for the sale the landowner asked for a sale in lots as shown on the map, but the sheriff sold in bulk and the mortgagee bought in the property for the amount of the decree. On petition to set aside the sale and affidavits of the opinion of witnesses that the property would bring a larger sum if sold in parcels, the court of chancery ordered a resale in such parcels as the landowner should direct, on terms that security be given that no loss should be sustained by such resale. On appeal from so much of the order as imposed terms — Held, that the terms imposed were equitable and would not be disturbed.

      2. A mortgagee buying at bis own foreclosure sale has the same rights as any other purchaser.
    3. In advertising the adjournment of a sheriff’s sale, it is not necessary to describe the lands to be sold.
    On appeal from an order advised by Vice-Chancellor Emory, who delivered the following opinion :
    The situation of the property in this case was such that a sale in parcels would seem to have been the proper method of sale, or at least that this method, should have been first adopted, in order to see whether the amount Of complainant’s decree would have been raised without selling the entire property. That it should have been sold in parcels seems to have been the judgment óf the sheriff himself at the time of sále, and he did not put the premises up for sale in parcels by reason of the demands of the complainant that it should be sold in bulk. The complainant bought in the premises in bulk for the amount of the decree, with costs and interest, about $25,000, and increased her own bid for the purpose of reaching this amount. The direct evidence on this application as to the value of the property puts it much higher ($69,000) on the present market value of the lots in the vicinity, and, in the opinion of the witness who fixes its value, the property sold in lots would bring more if sold under what he calls favorable circumstances, i. e., if well advertised, sold on the premises and on different days during the summer season.
    While this evidence does not go directly to the real point at issue on these applications, viz., the price which the property would probably bring for cash at a sheriff’s sale, yet it is entitled to due weight on the present application, and, taken in connection with the fact that the property is bf such a character that a sale in parcels instead of in bulk would probably produce the greater sum, that the sale in bulk has realized the entire decree, and that by her purchase in bulk the complainant has cut off the defendants from any possible chance of the benefit of a sale by lots, I think that a resale should be made in order to give an opportunity to sell in parcels, but this resale should only be’ upon proper te'rms as to securing complainant. The property as now sold, and in bulk, has produced the entire amount of complainant’s decree, and while it seems probable that a sale in parcels would produce more than a sale in bulk, and this method should have been first tried, yet the result of a sale in parcels is, from the present standpoint, after all, a matter of opinion or judgment only, and the complainant should not be put to any risk, that on the resale in parcels the property will bring less than her decree, with all costs and interest.
    The defendant, therefore, must give satisfactory bond, with surety against such loss by a resale, and on failure to do so the sale will be confirmed. The form of order for resale, with the-form and condition of the bond, may be settled on any motion-day on two days’ notice.
    Order was afterwards settled as follows:

      “ This matter being opened to the court by Corbin & Corbin, of counsel with the defendant, and it appearing that a rule was heretofore granted directing the defendant to show cause why a resale of the mortgaged premises should not be had, and all proceedings herein stayed until the further order of the court, and after hearing Charles L. Corbin for the defendant, and Walter Bogert, of counsel with the complainant, in opposition thereto;
    “It is, on this thirteenth day of April, A. D. 1898, by the chancellor ordered that the sale of the mortgaged premises, made by the sheriff of the county of Monmouth to the complainant, Ann Finn, on the 17th day of January last, shall be set aside and for nothing holden, if the defendant shall, on or before the 9th day of May, 1898, file with the clerk of this court an undertaking or agreement executed under seal by the defendant, and by a sufficient surety or sureties to be approved by William H. Vredenburgh, Esq., one of the special masters of this court, as to form and sufficiency, stipulating and agreeing that upon a resale of the said mortgaged premises, the same shall produce twenty-six thousand five hundred dollars or such less sum as will upon the day of the delivery of the deed yield to the complainant the full amount of her mortgage debt and all costs of this suit, including costs of the sale heretofore made, and that the damages upon such stipulation shall be ascertained in such manner as the chancellor may direct. The surety or sureties shall be worth at least twenty thousand dollars clear estate, and a bond in the penal sum of $20,000, conditioned as above, may be considered in form as a sufficient undertaking. And it is further ordered, that upon the filing of such stipulation, the sheriff of Monmouth county do proceed to readvertise the mortgaged premises for sale to satisfy the complainant’s mortgage debt, with interest and costs of previous advertisement, and in relation to such readvertisement and further proceedings for sale under the writ, the said sheriff is authorized to act on the instructions of the said defendant, so far as the same may seem proper or judicious to him, provided, however, the sale shall be made before the first day .of October next, and the defendant must, if required by the sheriff, furnish in advance any funds required for advertising or making sale beyond the sums authorized by law to be expended by the sheriff.
    “And it is further ordered, that in making such sale the sheriff sell the said property in parcels, and in such parcels as the defendant may desire, and that either party may apply for further directions.
    “And it is further ordered, that in case the defendant shall fail to file the aforesaid stipulation on or before the 9th day of May next, the sale already made by the sheriff of the county of Monmouth shall stand ratified and confirmed as valid and effectual in law, and that the said sheriff shall proceed to execute a good and sufficient conveyance in law to the complainant of said mortgaged premises.
    “Alex. T. McGill, G.

      “ Respectfully advised,
    “John R. Emery, Vice-Chancellor.’’

    This appeal is taken from so much of the order as imposes terms, and from the alternative of a confirmation of the sale.

      Mr. Charles L. Corbin, for the appellant.

      Mr. Walter Bogert, for the respondent.
   The opinion of the court was delivered by

Collins, J.

This appeal involves the sequel to the order affirmed on the opinion last read. The appellant, by petition, sought affirmatively to have the sale set aside. The order made seems to us entirely equitable. The uniform practice of courts of equity in this country, when a resale of property is ordered because of supposed sacrifice of value, is to impose terms to, at least, secure against loss the holder of the decree; frequently to guarantee a substantial increase of bid at the new sale. Sound policy requires that bidding at judicial sales should be encouraged. Even under our statute prescribing confirmation of foreclosure sales, and requiring, as a prerequisite to such confirmation, proof to the judicial satisfaction that the “property has been sold at the highest and best price the same would then bring in cash” (Gen. Stat. p. 111 pl. 45), this court has held that where there is prima facie proof of that purport, as there was in the case in hand, it is proper to exact security for an increased bid before ordering a resale, although counter-evidence on the subject of value may be strong enough to induce the resale. Rowan v. Congdon, 8 Dick. Ch. Rep. 385. In the case cited the mortgagee had bought in the mortgaged lands for about $10,000. It was proved that a purchaser stood ready to bid $25,000, and was only prevented from attending and purchasing at the sale by a mistake as to time, yet a resale was authorized only on terms that security should be given to bid at least $25,000.

The chief complaint of the appellant is that the sheriff sold in bulk, notwithstanding a request to sell in lots as shown on a map recognized by the parties. A sale in parcels is favored where practicable in foreclosure cases, if thereby the mortgagee’s security will not be endangered, but is not a matter of right. In this case it appears that the mortgagee, by releasing in accordance with the landowner’s filed map, had approved a dedication of streets and a layout of blocks and lots, but that fact did .not bind her to direct the sheriff to sell by the lot or block. The released lots were excepted from the sale by a direct reference to the map, and therefore a sale in bulk with such an exception necessarily preserved the easement of the streets, which is all that could be asked as of legal right. Pending the foreclosure the appellant had struck off at auction some of the lots free from encumbrances, but had as yet given no deeds. Perhaps it would have been convenient to have had those lots sold last, or at least sold separately, and perhaps apart from this feature of the case a sale by lots or blocks would have been advantageous to the landowner and not injurious to the mortgagee; but all this is beside the point. On application to the court, before sale, an inquiry into the proper mode in which to sell could have been had, and order would have been made accordingly, but that course was not pursued by the appellant. The decree was the normal one to sell so much of the unreleased lands as would be sufficient to raise and satisfy the mortgaged debt. In executing such a decree the mode of sale is largely at the discretion of the selling officer. Parkhurst v. Cory, 3 Stock. 233. In this case it seems that but for the contrary insistence of the mortgagee’s solicitor the sheriff might have sold in parcels. He deposes that he was so inclined; but on the other hand, he made his affidavit, on reporting the sale in conformity with the statute and rules of court, that the property was sold for the highest and best price it would then bring in cash, and the sale should not be disturbed on mere conjecture that a sale in parcels would realize more. That the mortgagee was the purchaser does not affect the situation. Such was the case in Rowan v. Congdon, ubi supra. The doctrine was long ago established, with the approval of this court, that a mortgagee buying in at his own sale has the same rights that any other purchaser would have. Currie v. Sisson, 7 Stew. Eq. 578, following Snyder v. Blair, 6 Stew. Eq. 208. We see no reason why the respondent should now be subjected to the burden of separately valuing the parcels in which the appellant desires the lands to be sold. Her decree has been satisfied by a regular sale. The experiment of a sale, by lots ought to be made without risk "or annoyance to her. The appeal is partial only. By the order appealed from, the mode of sale has been placed in the appellant’s control. To permit that order to stand and annul its condition would be unfair. Ho such extraordinary relief as has been accepted would have been awarded except on terms. We are unwilling to approve the relief and override the terms.

The petition charged that the sale was not legally advertised. This point does not seem to have been pressed before the vice-chancellor, but is strenuously urged in this court. The objection is to the advertisement of an adjournment for more than one week. The following is the published notice:

“ADJOURNED SHERIFF’S SALE.
“The Avon-by-the-Sea Land and Improvement Company, at the suit of Ann Finn, stands adjourned to Monday, the 17th day of January, 1898, at the Court-House, at Freehold, in the county of Monmouth, New Jersey, at 2 o’clock p. M.
“Dated January 3d, 1898. Houston Fields, Sheriff.”

The form of this notice is criticised, but the main contention is that the land to be sold should iu some way have been described or identified. Such is not the requirement of the law. After prescribing an original advertisement of sale that shall sufficiently describe the lands to be sold and authorizing adjournment of the advertised sale, the statute thus proceeds:

“If any sale of lands, made under the direction of this act, be adjourned for more than one week, such adjournment shall be published in the same newspapers in which the notice of, sale was published; * * * provided, that in publishing any adjournments, it shall not be necessary to continue the publication of the original advertisement of sale, but a statement of the parties to the cause and the time and place of such adjournment shall be sufficient.” Gen. Stat. p. 2980 § 6.

Reading the caption with it, as we must, this notice, although awkwardly phrased, seems to us to be a publication of adjournment, in full compliance with the statute.

The order appealed from will be affirmed.

For affirmance — Collins, Depue, Dixon, Garrison, Gummere, Lippincott, Ludlow, Van Syckel, Adams, Bogert, Hendrickson, Nixon, Vredenburgh — 13.

For reversal — None.


author: Nikon, J.

text:
    Peter Lawless et al., appellants, v. Sara L. Fleming, respondent.
    [Filed June 23d, 1898.]
    1. The power to direct either party to a suit to give to the other an inspection and copy, or permission to take copy, of any books, papers and documents in his possession or under his control, is inherent in a court of equity, and can be exercised in the absence of any statute conferring such right.
    2. Gen. Stat. p. 2559 § 157 does not apply to a court of equity, the act of which it forms a part being entitled “An act to regulate the practice of courts of law.”
    On appeal from an order advised by Vice-Chancellor Pitney, whose opinion is reported in Fleming v. Lawless, 11 Dick. Ch. Rep. 139.

      Mr. Halsey M. Barrett, for the appellants.

      Mr. Washington B. Williams, for the respondent.
   The opinion of the court was delivered by

Nikon, J.

The bill in this cause, in which the appellants are the defendants, was filed to foreclose a mortgage held by the respondent upon property in Jersey City. A final decree was made on the 25th of January, 1897, and a sale of the mortgaged premises ordered. While an appeal to this court was pending, an application, based upon affidavits that a lost receipt had been found, was made by the appellants to have the record in the cause remitted to the court of chancery for such further action by that court as it might deem fit and just without prejudice to either party, and an order was made to that effect.

Upon the return of the record to that court, a motion was made to open the final decree and permit the petitioners to produce and prove the receipt, alleged to have been lost and after-wards found, for the payment of $2,600 which it was claimed should be deducted from the final decree.

The court of chancery, after a full hearing, denied the prayer of the petition, and an appeal from that order is now before us for review.

The single question on this appeal is whether the vice-chancellor erred in denying that application, and any expression of opinion as to the merits of the case upon the whole record will be carefully avoided. The ground of the refusal rested mainly upon the disobedience of an order in the cause made on the 2d day of December, 1895, upon the application of the complainant, that the defendants

“produce receipts, vouchers or other evidences in writing of the payments by them, or any of them, to James Fleming, of the sum of three thousand two hundred and seventy-two dollars and seventy-two cents, and the sum of three thousand two hundred and twelve dollars and thirty cents, as set forth in said answer, and leave them with Isaac Romaine, Esq., one of the masters of this court, for the space of ten days, subject to the examination of said petitioner.”

The right of the court of chancery to make such an order cannot be questioned, and-has long been settled both by established custom and well-known authority. It is one of the inherent powers of a court of equity.

It will be necessary first to consider whether the appellants did, in fact, refuse to comply with the order of the court. Counsel have mutually agreed that the evidence furnished to this court in the argument of the whole case shall be used as the record on this appeal, and a resort to this evidence is required in determining this question'.

In the answer of the defendants it was alleged that there had been paid by the defendant Peter Lawless certain sums of money “for which he had vouchers ready to be produced and proved.” This was a positive declaration to the court that the vouchers would, if required, be produced and proved, and the order of the court in answer to the complainant’s petition was to produce these receipts, vouchers and other evidences in writing, “ as set forth in the answer.” The order was broad enough in its terms to require the production of whatever was in the possession of the defendants as evidence of the payments claimed to have 'been made. There is no ambiguity in the language of the order, and its purport is clear. It is admitted that the order was duly served. The only paper produced in obedience to this order was one general receipt for the payment of four separate sums of money, aggregating $6,485. There was no dispute about two of these payments, one of $1,400 and one of $800; but the other two payments claimed, one of $1,685 and one of $2,600, were earnestly contested, which resulted in their dis-allowance by the court in the final decree. The complainant’s -case was prepared in the belief that this one paper or “ omnibus receipt,” so called, lodged with the master, was the only evidence in the possession of the defendants of the payments alleged to have been made. But in the progress of the case, the defendant Peter Lawless testified that he had previously held separate receipts for the four payments mentioned, and that they were given to his attorney, O’Sullivan, who in turn testified that he took them to the office of Eomaine, in Jersey City, accompanied by Mr. Manning, one of the attorneys of record in this cause. But it is admitted they were not left there, but were taken away and afterwards lost by O’Sullivan while in a state of intoxication. Eomaine, the master, on the other hand, says that he never saw the alleged four separate receipts, or any paper except the one deposited with him, on which the four payments were written, although something may have been said in his office about other receipts. Taking only the evidence of the defendants’ witnesses as to what occurred at the master’s-office, it is an admission that the defendants’ attorneys had with-them the receipts and vouchers that had been called for by the-court’s order, and that they were requested by the master to leave-with him all the papers they had relating to the case, and that after deliberating on the subject they refused to leave any of them except the one containing a statement of the four payments before referred to.

The voluminous testimony pertaining to the alleged loss of the separate receipts, and to the character of the single paper left with the master, need not be reviewed in this inquiry, as those matters relate to the merits of the whole case. It is sufficient to say that the result of a careful examination of that part of the record which pertains to the non-production of the required receipts and vouchers, leads us to the conclusion that there was a studied attempt to evade the plain mandate of the court, and a deliberate refusal to comply with its order. No other conclusion can, we think, be drawn from the evidence.

It is now set forth in said petition that one of the lost receipts has been returned to one of the attorneys of the defendants in an anonymous letter. By whom, where, or under what circumstances it was found, remains a mystery. No reason is given why the finder should desire to conceal his identity or maintain such secrecy. But these facts only render the case a very peculiar one, and certainly form no basis for judicial action in the present situation of the case. They do not affect in any way the substantial issue raised by this appeal, which is whether the petitioners wilfully refused to obey an order of the court to produce certain papers and vouchers. It is admitted by the petitioners that this receipt now said to be found was in the possession of the counsel of the defendants at the time the order was made; that it was taken in pursuance of that order to the office of Romaine, in whose custody they were commanded to leave it that the master advised them to deposit it with him, and the request was deliberately refused. The present mysterious discovery cannot alter these admitted facts, which form a part of the evidence in the case. We therefore hold that there was no error in the refusal of the vice-chancellor to open the decree.

But the inability of the defendants to now offer this receipt in evidence or use it in the case is only a necessary consequence of the court’s exercise of its inherent right to refuse for good and sufficient reasons to open the decree, and does not rest upon any statutory prohibition by reason of Gen. Stat. p. 2559 § 157. The title of that act is “An act to regulate the practice of the courts of law,” and its provisions do not relate to a court of equity. By the incorporation of the act of 1855 (P. L. of 1855 p. 668) into the revision of March 27th, 1874, its operation is limited to courts of law. To hold otherwise is to maintain that the body of an act may conflict with its title. If this section can be applied to a court of equity, other sections of the Practice act might be applied contrary to the purpose of the act as expressed by its title.

The vice-chancellor also decides that the court ought, in the exercise of a sound discretion, to refuse.to open the decree in this case, and we express our concurrence in that conclusion. In Warner v. Warner, 4 Stew. Eq. 549, in the course of some very cogent reasoning on the subject of opening a decree, the late Vice-Chancellor Van Fleet said: “lam sure it cannot be granted without giving litigants a most dangerous license under which they will be at liberty to experiment and trifle with the administration of justice as their caprice or interest may dictate.” This language is peculiarly applicable to the present case.

The court can, of course, punish the party refusing to comply with its order as for a contempt, but this is not obligatory. While all the proceedings in a cause are under the direct control of the same court, the imposition of this penalty can be properly left to the discretion of the judge.

The order of the court of chancery should be affirmed and the record in the cause returned to that court.

For affirmance — Collins, Depue, Gummere, Lippincott, Ludlow, Van Syckel, Hendrickson, Nixon, Vredenburgh — 9.

For reversal — Dixon, Garrison, Adams, Bogert — 4.


author: Adams, J.

text:
    Charles E. Meding, receiver of the Butler Silk Manufacturing Company, appellant, v. Joseph C. Todd, respondent.
    [Filed September 20th, 1898.]
    1. The receiver of an insolvent corporation was directed to pay a dividend on each claim, duly proved to his satisfaction. R., a creditor, duly filed her claim under oath, alleging that the corporation was justly indebted to her in the sum of §10,000 for money loaned, with interest, and that said indebtedness-was evidenced by a chattel mortgage and four promissory notes of said corporation, the particulars of which were specified in the proof of claim, and that an interest in said claim, to the extent of §5,000, had been assigned by her to T., as collateral security, and that the claim was presented on behalf of T. as-well as on her own behalf. T., who was also a creditor, duly filed a claim under oath upon another promissory note of the corporation, but made no proof of his interest in said indebtedness of §10,000. In point of fact, as is shown by the evidence in the cause, the claim proved by T. was the indebtedness to which his interest in the claim proved by R. was collateral. The proofs on file did not disclose this fact. The receiver paid to R. the dividend on the entire indebtedness proved by her claim, and to T. the dividend on the claim proved by him. T. sued the receiver, to compel him to account for the share of T. in the payment so made to R. — Held, that said two claims on file afforded to the receiver satisfactory proof that the dividend on the entire indebtedness of §10,000 was payable to R. as to part thereof in her own right and as to the remaining part for T.
    2. A creditor of an insolvent corporation, in order to entitle himself to a dividend, must do more than put the receiver upon inquiry as to his claim. He must duly file sworn proof, in itself satisfactory. If he fails to do so he cannot, after another creditor has been paid a dividend on satisfactory proof, hold the receiver accountable for the whole or any part of such dividend, upon the ground of notice of the existence and particulars of his own claim, derived from circumstances extrinsic to the proofs on file.
    3. It does not appear that, in this case, the receiver had such notice.
    On appeal from a final decree advised by Vice-Chancellor Pitney, whose opinion is reported in Todd v. Meding, 11 Dick. Ch. Rep. 83.

      Mr. Eugene Stevenson, for the appellant.

      Mr. Joseph P. Osborne, for the respondent.
   The opinion of the court was delivered by

Adams, J.

The appellant, Mr. Charles E. Meding, who was a defendant below, is receiver of the Butler Silk Manufacturing Company, an insolvent corporation. The bill was filed by Mr. Joseph C. Todd, a creditor of the company, to compel the receiver to account to the complainant for his share in a certain dividend paid by the receiver to Miss Madeline A. Roe, another creditor, which' share should, it is said, have been paid by the receiver directly to Mr. Todd. There was the usual order to limit creditors in insolvency. Miss Eoe and Mr. Todd have filed with the receiver separate claims under oath.'

Miss Eoe’s proof of claim reads as follows:

Minnie A. Eoe, of full age, being duly sworn, on her oath says that the Butler Silk Manufacturing Company, of which Charles E. Meding is receiver, is justly indebted to this deponent in the sum of ten thousand dollars and interest thereon at the rate of six per cent, per annum from the ninth day of May, 1893, for so much money lent and advanced by this deponent to the said The Butler Silk Manufacturing Company. The deponent further says that, as evidence of the said indebtedness and as security therefor, she holds a chattel mortgage made by the said company to her, bearing date the ninth day of May, 1893, which is recorded in the clerk’s office of the county of Passaic, in Book E of Chattel Mortgages, on page 421, &c., and that, as further evidence of the said indebtedness, she holds four promissory notes made by the said company, of which the following are true copies. [Here follow copies of notes for §2,503.34, §4,100, §1,300 and §566.67.] Deponent further says that an interest to the extent of five thousand dollars in said claim has been assigned by her to J. C. Todd, as collateral security; and this claim is presented on behalf of said Todd as well as on her- own behalf.”

[Here follow the signature and jurat.]

Mr. Todd’s proof of claim reads as follows :

“Joseph C. Todd, being duly sworn, on his oath says that the Butler Silk Manufacturing Company, of which Charles E. Meding is receiver, is justly indebted to deponent in the sum of five thousand dollars, principal of a promissory note made by the said company, dated June 8th, 1893, and also in the sum of one dollar and sixty cents for notary’s fees for the protesting of the said note, and that interest on said note and protest fees, from December 11th, 1893, is due also thereon.”

[Here follows a copy of the note, with the signature and jurat.]

By order of the court of chancery, made in the insolvency proceedings, dated May 21st, 1894, the receiver was authorized and empowered (to quote the words of the order) “ to distribute to the creditors of the said insolvent corporation, who have duly proved their claims to his satisfaction, a dividend of twenty per cent, upon each claim so proved.” Thereupon, the receiver, in June, 1894, gave to Miss Roe his check for $2,071, being twenty per cent, on her $10,000 claim, with interest, and took her receipt in the following words:

“Patekson, N. J., June 4th, 1894.
“ Deceived from C. E. Meding, receiver, two thousand and seventy-one 00-100 dollars, in settlement of 20 per cent, dividend from estate of Butler Silk Mfg. Co.
“§2,071. Minnie A. Roe.”

The receiver also gave to Mr. Todd his check for $1,000.32, being twenty per cent, on his claim of $5,001.60, and took his receipt in the following words:

“Patebson, IT. J., June 4th, 1894.
“Deceived from C. E. Meding, receiver, one thousand 32-100 dollars in settlement of 20 per cent, dividend from estate of Butler Silk Mfg. Co.
“§1,000.32-100. J. C. Torro.”

The checks were duly paid within a few days of their date. More than eight months after, by notice dated February 11th, 1895, Mr. Todd demanded of the receiver one-half of the dividend of twenty per cent, that he had paid to Miss Roe, who had, in the meantime, become insolvent. Subsequently, Mr. Todd filed his bill in this suit, by which he asserts his right to recover back from the receiver one-half of the amount of the payment to Miss Roe, upon the ground that her proof exhibited not a claim of $10,000 due and payable to her, but a claim of $5,000 due and payable to her, and another claim of $5,000 due and payable to Mr. Todd, as her assignee. The learned vice-chancellor adopted the latter view and advised a decree for the complainant.

We do not assent to this conclusion. Miss Roe’s proof of claim, considered in itself, was, so far as it touched Mr. Todd, merely notice to the receiver that as to one-half of the debt she was acting in a certain capacity. To that extent the claim was proof of right, not a demand under it. So considered, the document was complete; on any other view it was partial and misleading. It would be harsh to hold the receiver personally liable to Mr. Todd for a claim that he did not himself take the trouble to prove, and that he did not mention in the proof of claim that he did file. The allegation that Miss Roe had assigned to Mr. Todd a $5,000 interest in her claim as collateral security, is well enough as an intimation that to that extent she was not acting in her own right, but is inadequate if put forward as a claim of right in Mr. Todd, upon which he might demand payment from the receiver. Collateral to what? No particulars are given by which the receiver could determine the extent of Mr. Todd’s right. A prudent receiver, whose duty it was to be satisfied before he recognized a claim, might well say that the proof thus furnished was unsatisfactory as the basis of any payment to be made by him to Mr. Todd, but that it did establish to his satisfaction Miss Roe’s right to receive for herself a dividend on the sum of $5,000, and to receive for Mr. Todd, as collateral to some unexplained principal account with him, and subject to the state of that account, a dividend on the further sum of $5,000. That the construction of this document for which Mr. Todd contends might, in an easily supposable case, have involved the receiver in difficulty, becomes manifest when it is observed that, as appears from the whole record, the claim to which this interest was collateral was the very claim of $5,000 of which Mr. Todd made proof. If, therefore, the receiver had treated the allegation by Miss Roe of Mr. Todd’s collateral interest as of itself satisfactory proof of a claim upon which a dividend was due and payable to him, and had acted upon that construction of its meaning, he would have paid Mr. Todd too much, if the dividends had come to more than fifty per cent. For example, if the receiver, instead of paying a dividend of twenty per cent., had paid a dividend of fifty-five per cent., Mr. Todd would have got one hundred and ten cents on every dollar due him.

The respondent, in order to lay a broader foundation for his claim, seeks to charge the receiver with notice and consequent knowledge of certain facts extrinsic to the sworn proof. It is said that the assignment by Miss Roe to Mr. Todd of an interest to the extent of $5,000 in her $10,000 claim was effected by a certain instrument, dated August 7th, 1893, recorded in the office of the clerk of Passaic county, on August 7th, 1893, in Book Z of Assignments, page 386, &c., by which Miss Roe transferred to Mr. Todd a one-half interest in a chattel mortgage made by the Butler Silk Manufacturing Company to her, dated May 9th, 1893, to secure payment of $10,000, recorded in Book E of Chattel Mortgages for Passaic county, on pages 421, &c., together with a one-half interest in the money due and to grow due thereon, with interest; that this assignment was made as security for an indebtedness of $5,000 due from the company to .Mr. Todd; that this indebtedness of $5,000 is the same indebtedness that Mr. Todd proved and that the receiver must have known all about this, because on August 31st, 1893, he had filed his bill in the court of chancery of New Jersey to set aside this chattel mortgage, which result was secured by decree, signed May 16th, 1894, and subsequently affirmed upon appeal. The facts appearing of record are correctly stated. The point of that suit, however, was the validity or invalidity of the chattel mortgage, not the relation of the respective interests of those who claimed under it. The case is reported in 8 Dick. Ch. Rep. 350, and turned on the construction of the Chattel Mortgage act. Neither in the opinion of the learned vice-chancellor nor in the opinion read in this court is anything said about the relative rights of Miss Eoe and Mr. Todd, who filed a joint and several answer, and had the same counsel, and fought together against their common foe, the receiver. The only allusion to the matter is found in the statement of facts introductory to the vice-chancellor’s opinion, where it is said, by way of explaining how Mr. Todd came to be a defendant, that in December, 1892, Miss Roe had endorsed a note made by the company, for its accommodation, to Mr. Todd, its landlord, which note was renewed when due, with a lil,s:e endorsement, and that Miss Roe assigned a half interest in the chattel mortgage to secure him for her endorsement. Neither the date nor the amount of the note are stated. The bill and answer in this former litigation have been made evidence in the case under consideration. "Very little light on the point is to be obtained from either of them. The bill alleges upon information that the assignment was made to Mr. Todd in payment of or as security for an indebtedness of $5,000 due from the corporation to said Todd, and leaves him to show what the true consideration of the assignment was, if any existed. It is not said that the indebtedness was represented by a note. The answer merely admits the assignment, and says that Mr. Todd is a joint owner of the chattel mortgage with Miss Roe. Manifestly, the rights and claims of Miss Roe and Mr. Todd, inter sese, assumed no great importance in that controversy. It is not necessary or even natural to suppose that the receiver’s attention was particularly directed to that subject. If, when he received the two sworn proofs of claim, he had sat down, collated the bill and answer in the former suit and the statement prefixed to the vice-chancellor’s opinion, and then examined the accounts of the company, he might have reached the conclusion that the note proved by Mr. Todd represented the indebtedness of $5,000 which was collaterally secured by Miss Roe’s assignment of her half interest. But why .should the receiver be at trouble to learn what it would have been so easy for Mr. Todd, in'his proof of claim, to tell him, and what sort of notice is that which leaves the person notified to find out so much for himself? It might, indeed, serve to put the receiver upon inquiry, but on no plausible view of a claimant’s duty would this be enough. We think that notice to the receiver was not clearly proved.

In our view; however, this is not a case to which the law of notice is applicable. What the receiver was entitled to, under his order, was sworn proof in itself satisfactory; not sworn proof in itself unsatisfactory, supplemented by inferences, more or less debatable, as to what might, could or should be the state of his knowledge and information derived from other sources. To adopt the latter view of a receivers rights would make vague what should be definite. In matters of this kind a strict rule is desirable for the protection of official trustees and personal representatives, who should not be lightly charged with knowledge and consequent accountability as to contingent, collateral and qualified interests that may be mentioned in claims properly proved before them. These considerations lead to a reversal of the decree and a dismissal of the bill.

For reversal — Collins, Dixon, Garrison, Gummere, Krueger, Lippincott, Van Syckel, Adams, Hendrickson, Nixon, Vredenburgh — 11.

For affirmance — Ludlow—1.