source: Caselaw Access Project

author: Pitney, V. C.

license: Public Domain

text:
    Margaret Switzer, by her next friend, v. Margaret J. Switzer et al.
    [Decided October 27th, 1898.
    Filed June 10th, 1899.]
    1. A tenant in common, who collected rents of land of all of the co-tenants, and a widow owning a dower interest, should, in accounting with the co-tenants for lands, be credited with one-third of the rents which she paid to the widow.

      2. The rule that a guardian cannot deal with a ward’s real estate does not prevent a guardian from expending rents of the ward’s land in satisfying an encumbrance against it.
    8. Though a ward did not, by her guardian, expressly agree that one collecting rent of her land might apply it to the satisfaction of an encumbrance, she will be bound by such payment, made with the knowledge and acquiescence of the guardian.
    4. A notice by a tenant in common revoking the authority of her co-tenants to collect rents and apply them to the satisfaction of an encumbrance was, together with a bill by the tenant in common for an accounting for rents and profits, sufficient to revoke the co-tenant’s authority, though the notice purported to revoke a power of attorney which had never been executed.
    5. A tenant in common who, with the acquiescence of her co-tenants, collected rent and applied it to the extinguishment of an encumbrance, is not, on an accounting for the rents, entitled to a credit for payment made after her authority was revoked.
    6. A tenant in common who collected rents and took care of the property is not, in the absence of a special agreement, entitled, as against her co-tenants, to compensation fqr services.
    7. On an accounting for rents brought by a tenant in common against the other co-tenants, one of whom collected the rent, the master to whom the reference is made should make an account showing the whole balance due from the tenant receiving the rent, ignoring payments made by her to the co-tenants and a widow holding a dower interest, and another account showing the amount due from her to the widow and each co-tenant.
    On exceptions to master’s report made in pursuance of a reference to take an account of rents and profits received by the defendant Margaret J. Switzer.

      Mr. William J. Meagher, for the exceptant.

      Mr. EredericJc E. Sodge, contra.

   Pitney, V. C.

The complainant, an infant of tender years, her aunt, the defendant Margaret J. Switzer, and her two uncles, Edwin and George Switzer, also defendants, were, from July, 1890, up to the date of the sale of the premises in this proceeding, tenants in common in equal shares of three houses and lots in Essex county, in two of which the defendant Anne Switzer was entitied to dower as the widow of the common ancestor, Henry Switzer, Sr., who died in May, 1890.

The complainant represents her father, Henry Switzer, Jr., who died in July, 1890. One or both of the defendant brothers appear to have been infants at the death of their father.

The defendant Margaret J. Switzer, immediately after the death of her father and brother Henry, took possession of all the premises through the tenants, and rented them and collected the rents, paid the taxes, interest on the mortgage, insurance and repairs up to the time of the filing of the bill, and thence until the accounting. '

The bill was filed January 12th, 1897, praying partition and an account of the rents and profits, and the answer of the defendants on the 15th of April, 1897. Reference was made to Master Knight on May 27th, 1897, to ascertain the state of the title and the propriety of a sale instead of an actual partition. He made his report on the 30th of August, 1897, which was confirmed, and by virtue of it the premises were all sold.

On the 30th of November, 1897, reference was made to a master to state an account between the parties as to the rents, issues and profits of the land, and to ascertain any and all sum or sums due from either of said parties to the other, and report the same to the court. The master made his report on the 18th of March, 1898, and exceptions were filed to it July 22d, 1898.

The bill treated the right of dower of the defendant Anne Switzer as still in existence.

The defendants, by their answer, set up that on the 19th of April, 1895, the widow, Anne Switzer, entered into an agreement in writing with the other defendants and Lydia Switzer, the guardian appointed by the orphans court of the infant complainant, by which the widow agreed to receive from the tenants in common, and the tenants in common agreed to pay to the widow, the sum of $500 in payment for her right of dower in the premises, $200 of which was to be paid down and the balance at the convenience of the heirs-at-law, and upon such payment the widow agreed to execute and deliver a formal release of her dower.

The answer alleged that it was understood and agreed between the guardian of the complainant, who was her mother, and the defendants that the amount of the contract price for the dower remaining unpaid should be paid from time to time as Margaret J. Switzer, who was collecting the rents by a power of attorney from her stepmother and her two brothers, should be able to extinguish it out of the rents and profits, and that at the time of filing the answer about $400 had been paid on account of it and about $100 still remained due.

The hearing before Master Knight was had on several days between May and August, 1897, and on one of the last days of the hearing the defendants produced a formal release of the dower, duly executed by the defendant Anne Switzer to the four tenants in common, acknowledging the payment of $500, and it appeared that of that sum $180 had been paid by Margaret Switzer out of the rents since the filing of the bill.

The premises subject to dower were also subject to a mortgage, and produced at the sale $1,575 above the mortgage.

The widow, at the date of the execution of the agreement, from which time the release took effect, was fifty-three years old, and the master, whose report is excepted to, estimated her dower by the tables to be worth $314. He treated the contract to pay $500 as not binding on the infant, and allowed the defendant Margaret only the amount of the actual value of the dower, $314, as between her and the complainant.

This ruling is the ground of the first exception.

It also appeared that Margaret had paid to the widow before the date of the agreement, as her share of the rents and profits of the lands subject to dower, the sum.of $147.50. This item, as I understand the report, the master has refused to allow her, and exception is also taken to this ruling.

Two or three other exceptions in other matters were taken to the rulings of the master, which may be disposed of simply by saying that I think the master in all the instances except the two just mentioned, was clearly right.

With regard to the exception against the payment to the widow of a part of the net income of the lands subject to dower up to the date of the agreement for the extinguishment of it, I think the master is clearly wrong. The account of the income and outgoes of the property subject to dower should have been stated up to that date, and the accountant credited with the payment of one-third of it to the widow.

With regard to the disallowance to the accountant of any payment to the widow as consideration for the release of her dower beyond its value on the date of the agreement, namely, $314, other and somewhat nice questions arise. Counsel argued this exception on the basis of a lack of power of the guardian of complainant appointed by the orphans court to deal with the real estate of her ward. But there was here no dealing by her with the real estate of the ward except to buy up and attempt to pay off a lien upon it, and in so doing the guardian, so far as she dealt at all with property of the infant, dealt with pure personalty, namely, the infant’s share of the rents and profits of the real estate; and such rents and profits after they accrue are clearly within the power of the guardian. But, in point of fact, there is nothing on the face of the written agreement, nor was any proof offered, to show that the infant’s share of the rents was, by any express agreement, oral or otherwise, made by the guardian, devoted to the payment of her share of the $500. The evidence, however, does show that the affairs of the infant were looked after by her mother and a Miss McCreery, her aunt and a sister of her mother, and that after the appointment of the mother as guardian they both acquiesced not only in the collection of the rents by the defendant Margaret, but also in their application by her towards the extinguishment of the dower in pursuance of the agreement, and that this acquiescence continued up to a short time before the bill was filed, when disputes arose between them, and the guardian served upon the defendant Margaret a written notice revoking her power of attorney to collect rents. This power of attorney the notice declares was dated in April, 1895. Counsel for the defendant Margaret argues that this formal revocation was of no force, because in fact no such power of attorney had been given to Margaret by the guardian. We have seen that such a power was given to Miss Switzer by her two brothers, and it is quite possible that the guardian may have supposed that she had signed it, or, what is more probable, she may have supposed that the agreement of April, 1895, contained such power; and this supposition is fortified by the fact that the notice of revocation refers to a power of attorney dated in April, 1895, which is the date of that agreement. But whatever express authority the defendant Margaret had from the guardian was given to her at the date of the agreement made with the widow; and under the circumstances, I think this formal revocation, taken in connection with the filing of the bill, was full and complete notice to the defendant Margaret that the guardian of the infant revoked all authority, express or implied, on the part of Margaret to pay any money for the infant.

The contract itself, which was signed by the guardian as such, could have no binding effect upon the infant or her estate. It was not made for necessaries, nor was it of a nature that the guardian, virtute officii, had any authority to make, and, as we have seen, it did not, by its terms, authorize the defendant Margaret to make any payments out of the rents. The payments made by Margaret can only be binding on the infant so far as they were knowingly acquiesced in by her guardian. To that extent I think they are clearly binding. The guardian had the right to apply the rents, after they had accrued and been paid, towards the extinguishment of the dower, and this she did by acquiescing in them up to the time of the giving of the notice of revocation. Such acquiescence only extends to the payment of $320, substantially the amount which the master has found to be the actual value of the widow’s dower at the time the agreement was made. The final payment of $180 was made by the defendant Margaret pending the hearing before Master Knight, after the revocation of her authority and under advice of counsel. In that I think she was illy advised, and should have stopped further payments, and have permitted the value of the widow’s dower to be ascertained by a sale of the premises, and then claimed credit for payments already made under the agreement against the amount coming to the widow.

Further, the defendant Margaret claims compensation for services in supervising the property, collecting the rents, paying taxes, &c. No authority was cited in favor of such a claim, founded on such services, in the absence of a special contract, and I can find none. The trend of the authorities seems to be against any such allowance. They are found in 11 Am. & Eng. Encycl. L. 1111.

The report will be referred back to the master to be restated according to these views. The parties seem to have misconstrued the force and effect of the order of reference in this case. The master has failed to state any account whatever, and has contented himself with simply allowing and disallowing certain items in an account presented by the accountant, the defendant Margaret, which was not made a file of the court or in any way a part of the record. He should make up an account showing the balance due from the defendant Margaret on account of all the properties, ignoring any payments made by her to any of the tenants in common or the widow; then make up a separate account between the accountant and the complainant, and also between each of the defendants, if required by them, showing the balance, if any, due from the defendant Margaret to each. She is the accountant, and the money is not due from her to the “ estate of Henry Switzer,” as appears to have been supposed, but is due to the widow and heirs of Henry Switzer, severally.

The order referring it back to the master to have the account restated will declare that the second exception is allowed, and that the other exceptions are overruled.

No costs will be allowed on these exceptions. There appears to be nothing in controversy between the defendants, and the amounts in controversy between the defendant Margaret and the complainant are small, and should have been disposed of by counsel without the quite considerable expense that has been incurred before both masters.


text:
    Alfred L. M. Bullowa, Arthur M. Bullowa and Ernest E. M. Bullowa v. Dominico Orgo and Michael Bilancia.
    [Decided October 28th, 1898.
    Filed June 10th, 1899.
    1. An oral agreement to make sales on commission, and to guarantee payment, is not within the statute of frauds ; and this, though the precise amount to be received for guaranteeing the sales, as distinguished from commissions for making them, does not appear.
    2. Where the surety in a mercantile collector’s bond acknowledged himself indebted in a certain sum, if the collections were not accounted for, his debt became fixed on default of the principal to an amount in excess of the bond.
    3. An equitable mortgage by deposit of title deeds may be created to secure the debt of a third person.
    4. A deposit of title deeds constitutes an equitable mortgage, though accompanied with an agreement to execute a legal mortgage.
    5. Defendants cannot complain that the action should be at law, where complainant seeks to foreclose an equitable mortgage given by one defendant to secure a sum due from the other.
    On demurrer.
    The defendants, Orgo and Bilancia, file separate demurrers to the bill. The pleading by way of demurrer by Orgo is followed by an answer which traverses the allegations of the bill.
    The facts set out by the bill, and admitted by the demurrers, are these: The complainants are merchants, dealers in flour and meal, and on the 20th of February, 1894, entered into an oral agreement with the defendant Orgo, by which Orgo undertook to make sales, on commission, of goods of the complainants, and to guarantee the sales, and had authority to make collections. It was a part of the agreement that Orgo should give security for the faithful performance of the contract on his part. To that end the defendant Bilancia, on the 21st of February, 1894, executed and delivered to the complainants, a bond in the penal sum of $1,000, upon condition, after reciting the contract between Orgo and the complainants, that Bilancia should indemnify and save harmless the complainants from all loss by reason of the employment of Orgo, and that Orgo should pay complainants all moneys due and to become due upon sales made by him, and all moneys collected by him on account thereof. Afterwards, on the 11th of January, 1895, the employment still continuing, Bilancia entered into another bond to the complainants in the penal sum of $2,000, with a like condition in all respects. Shortly after the making of the first bond — February, 1894 — Orgo entered upon his employment and made sales of merchandise, and continued making such sales long after the giving of the second bond, amounting in the aggregate to $14,838.67, and collected from purchasers and accounted to complainants for sums of money amounting in the aggregate to $11,608.17 and no more; he was entitled to credit for commissions and other items to the amount of $1,208.61, leaving a balance due of $2,021.89, which amount is still due and owing. A statement of the account showing that balance was furnished to Orgo and also to Bilancia, and they were requested to pay it, and have failed to do so.
    Further: the complainants had interviews with Orgo and Bilancia with a view of procuring a settlement, and then threatened suit unless the defendants would either pay or secure the amount due. Thereupon, Bilancia told the complainants, through their agent, that he was willing to secure them the payment of the money due, and offered to give a second mortgage upon a house and lot owned by him, situate in the city of Newark, the description of which is set out at length. It was finally agreed between the complainants’ agent and Bilancia, that Bilancia should deposit with the complainants’ agent the title deed or deed for the house and lot, in pledge for the payment of the moneys actually due from Orgo to 'complainants, until a formal mortgage should be executed by Bilancia and his wife to.complainants upon the premises, to secure the complainants the payment of the amount found to be actually due and owing by Orgo, and as security for the execution of a mortgage, and an appointment was made to meet at a certain time and place for the purpose of having the mortgage executed; and in consideration of the pledge and deposit of the title deeds as security for the payment of the amount, the complainants agreed to postpone suit, and did refrain from suing Bilancia on his bond. In pursuance of that agreement, Bilancia did deposit with the complainants’ agent a deed of conveyance made to him of a certain tract of land situate in the city of Newark set out by description in the bill. Several meetings by appointment were -had for the purpose of finally settling the matter and for the execution of the mortgage, and finally a further time was fixed for such execution, to wit, October 28th, 1895, and preliminary to that meeting it was agreed that the complainants’ agent should hold the title deed so deposited as security and pledge for the money then due complainants, and until the final execution and delivery of the contemplated mortgage. Complainants appeared at the time and place fixed, and the defendant Orgo failed to appear, and the defendant Bilancia refused to execute and deliver the mortgage as he had agreed to do, and demanded the return of the title deed, but the complainants’ solicitor refused to deliver it up, and still retains the possession thereof.
    The bill alleges that such deposit amounts, in equity, to a mortgage.
    The bill further alleges that if it should become necessary to take and state an account between the complainants and Orgo of his dealings, that the account will be involved and of considerable amount, and can be better and more expeditiously taken in this court; and prays that Orgo may be decreed to account to complainants for the balance due and owing to them under and by virtue of the agreement, and that the premises described in the deed may be decreed to be subject to a lien and encumbrance to the extent of the amount found to be due from Orgo, and may be sold to pay and'satisfy the same.

      Mr. Herbert Boggs, for the complainants.

      Mr. Ernest V. A. Belfatto and Mr. James M. Trimble, for the demurrants.
   Pitney, V. C.

The first point raised by the demurrers is that the agreement of Orgo to guarantee the sales made by him on account of the complainants, is void under the statute of frauds, because not in writing. But I think the law is the other way, and that the agreement was not within the statute of frauds. The bill distinctly alleges that Orgo was to receive a certain commission, agreed upon between them, as his compensation for selling and guaranteeing. • This makes the contract an original one between Orgo and the complainants in consideration of a benefit and advantage to him, Orgo, therefor. The presumption is that he received a greater commission on the sale as consideration for his guarantee than he would have received if the sales had been made without the guarantee. It is quite unnecessary that the precise amount which he received on account of his contract of guarantee, as distinguished from his services in making sales, should appear. He was, in fact, to receive a consideration, and that consideration is the basis of his promise tb guarantee the debts. In fact, it was the ordinary del credere commission, which, as is well settled, is not within the statute of frauds.

The next point taken was that the deposit of the title deed, under the circumstances alleged in the bill, did not constitute an equitable mortgage, because the debt for which it was deposited was not the debt of Bilancia but that of Orgo.

There are two answers to this. In the first place, the allegation is that a distinct sum of money was due from Orgo to the complainants, which was covered by the conditions of the bonds. That being so, the giving of the bonds made that debt the debt of Bilancia. He acknowledged himself indebted, first in the sum of $1,000, and afterwards in the sum of $2,000, if a certain condition was not fulfilled. That condition was not fulfilled and thereby his debt became at once fixed.

In the next place, I am unable to assent to the doctrine that an equitable mortgage, by depositing title deeds, may not be created in order to secure the debt of a third person. The authorities are not so.

It was faintly argued by the demurrants that the deposit of title deeds with an agreement to execute a legal mortgage, did not constitute an equitable mortgage. But the authorities are the other way. Edge v. Worthington (Lord Kenyon, M. R.), 1 Cox Ch. 211, decided in 1786; Ex parte Kensington, 2 Ves. & B. 79 (at p. 83) (Lord Eldon); Hockley v. Bantock, 1 Russ. 141 (Lord Gifford, M. R.); Keys v. Williams, 3 Younge & C. Exch. 55 (at p. 61) (Lord Abinger, Chief Baron); In matter of Howe, 1 Paige 125 (at p. 130) (Chancellor Walworth); 1 Jones Mort. § 163.

No point was made on the insufficiency of the contract to execute a legal mortgage which accompanied the deposit of the title deed, on the ground that no date was fixed for the payment of the money. In the absence of express contract, the presumption would be that the giver of the mortgage should have a reasonable time in which to pay the money, and in this state one year has become so generally the ordinary time that I think the courts ought to presume, in the absence of express contract, that one year was the time in the minds of the parties.

Another point taken by the demurrants is that the complainants have a complete remedy at law; that as between them and Orgo their remedy is simply an action at law. This view was attempted to be met by the complainants by an allegation in their bill that the accounts were complicated and proper for the action of a court of equity. If the case depended upon that allegation I should doubt its sufficiency. I am inclined to the opinion that the bill should set out more in detail the facts showing the complications which render it proper for a court of equity to intervene. But a complete answer to the objection is that the bill is one to foreclose an equitable mortgage given by the defendant Bilancia to secure an exact sum of money alleged to be due, and admitted by the demurrers to be due, from Orgo to the complainants, and to secure which Bilancia gave his bond and after-wards the equitable mortgage on the land mentioned.

The demurrers are overruled, with costs, with leave to the defendants to answer within thirty days upon payment of costs. The answer annexed to the demurrer of Orgo may stand as his answer.


text:
    The Commissioners of Public Schools of the Town of Phillipsburg v. John E. Stair et al.
    [Decided October 29th, 1898.
    Filed June 10th, 1899.]
    1. A building contract required the contractor to furnish formal releases from materialmen and laborers, up to the time of the several payments, who might have a lien thereon, which was pursuant to P. L. of 1892 ch. 223, which had been repealed before the contract was entered into. The contractor, objecting to the procuring of releases at each payment, agreed with the owners to have the payments deposited in the name of one of the owners, and that then the amount be apportioned among the materialmen and laborers according to their respective claims, and if anything was left to be paid directly to the contractor. This plan was followed up until the last payment, when the claims of the laborers and materialmen exceeded the amount payable; but it was known at the time that the contractor had a claim for extra work not yet finished, and it was supposed that the balance due the former could be paid from such fund. Before the order to pay for the extra work was drawn the contractor became indebted to defendant for materials, only a part of which were furnished for said building. Defendant sued out an attachment against the contractor and attached the money for the extra work, which had been deposited in the hands of said owner. — Held, that the arrangement in regard to making the payments to the owner was binding on the contractor, and hence also on defendant, so as to impress such payments with a trust in favor of the laborers and materialmen as against the creditors at large of the contractor, notwithstanding there was no statute at the time of the execution of the agreement giving the laborers and materialmen a lien on the premises.
    2. The failure of the laborers and materialmen to give the notice required by statute to fix a lien on the money due the contractor, prior to the issuance of the defendant’s attachment, does not deprive them of their rights, since they were justified in relying on the former arrangement, and since the nature of the trust was such as to dispense with notice or other legal action on their part under the Lien law.
    Bill of interpleader.
    The complainants, the commissioners of public schools of the town of Phillipsburg, entered into a contract with one William B. Stevens to erect for them a school building called Sitgreaves School, in the town of Phillipsburg, Warren county. The contract is dated October 30th, 1895, and the contract price was $19,195, to be paid in monthly installments as the work progressed, and provided for the retention of fifteen per cent, until the building was finished. The amount of each monthly payment was to be fixed by a building committee of the complainants instead of the architect.
    The contract was duly filed before the work commenced. It was written on a printed blank framed for use under the supplement to the Mechanics’ Lien act of March 29th, 1892 (P. L. of 1892 p. 358 ch. 223), and contained a clause requiring the contractor to furnish releases from all persons furnishing, materials for and labor upon the building up to the time of the payment and who might have a lien thereon.
    The act of 1892 had been repealed before the contract was entered into.
    The first payment was made directly to the contractor without enforcing the requisitions of the contract in this respect, but at the second payment the contract was- enforced, or attempted to be, and the contractor was unable to procure the releases and make the necessary affidavit. He was a resident of Binghamton, New York, unaccustomed to work under the Lien law of New Jersey, without credit in the neighborhood, and objected strenuously to being compelled to procure formal releases at each payment. The commissioners, the complainants, and their counsel, Mr. Reiley, in order to obviate this difficulty, devised the plan of having an order drawn by the treasurer, in favor of the president, Dr. Reese, for each payment, when its amount was fixed, and by him placed to his individual credit in bank, and then that the laborers and materialmen and the contractor should meet in Mr. Reiley’s office and the amount be apportioned among the materialmen and laborers according to the amounts of their respective claims as certified to by the contractor, and if anything was left after paying them it should be paid directly to the contractor. This plan was cheerfully acquiesced in by the contractor and followed up for the last •three or four payments, the laborers and materialmen at the •same time signing releases for their claims, besides receipting their bills.
    The last payment on the contract proper came due on the 1st ■of November, and a few days after that date all the persons having claims against the contractor on account of work and labor done and materials furnished for the building, with a few -exceptions, met at Mr. Reiley’s office, and it was found that the .aggregate of their claims exceeded the payment by about $700.
    Among those claims was a bill in favor of the defendants Middlebrook & Son, materialmen of Binghamton, New Yorkj for a sum — according to Mr. Reiley’s recollection — of $391, which was presented by the contractor and certified to as correct .after deducting $200 which had been paid by a check of Dr. Reese to Middlebrook & Son on the 11th of September, showing a balance due of $191. The bill in question was left with Mr. Reiley, but was lost by his messenger on the day of the hearing, and the amount is fixed entirely by his memory. No payment was made to Middlebrook & Son out of the final payment due to Stevens. It was, however, known at the time that the contractor had a claim for extra work not yet finished and passed upon by the building committee, and it was supposed •that the balance due the materialmen and laborers, or some portion of it, could be paid from that.
    The bill for this extra work was reported by the committee, and passed upon by the board on the 3d of December, and fixed .at $638.50, and a resolution was passed that an order be drawn by the treasurer in favor of Dr. Reese for that amount.
    In the meantime the contractor had become indebted to the -defendant John E. Stair, a materialman of Easton, Pennsylvania, in the sum of $528.64, of which only $91.30 was for materials furnished to the school building. Stair’s agent was on the alert .and claimed the $91.30, and had some assurance from Mr. Reiley, who manáged the whole affair, that it would be paid out of the amount due for extra work.
    In the meantime the contractor had left the state, and did not appear further in person in the affair;

      Onoor about the day that the order for $638.50 was placed by Dr. Reese to his credit in bank, Stair sued an attachment out of the circuit court of the county of Warren against Stevens, the contractor, as a non-resident debtor, and garnisheed the complainants by proper proceedings.
    On the 14th of December, three days later, the defendant Walters served on the complainants an order in his favor drawn by Stevens, for $26.33, to be paid out of the money in Reese’s hands, and it is admitted that that amount of money was due to Walters for labor upon the building.
    On the 19th of December Stevens drew a like order in favor of the defendants Middlebrook & Son for $342.37; and on the 19th or 20th of December, Middlebrook & Son served on the complainants a notice under the third section of the Lien act for that amount. It was admitted that that sum was due for materials which went into the building.
    The proceedings of Stair in the Warren circuit went to judgment, and he was about to proceed against the complainants as garnishees, when they filed their bill of interpleader in this court, paying the money into court, and bringing in all the parties.
    About the time of the filing of the bill the defendant Thomas served on the complainants a notice under the third section of the Mechanics Lien act for the sum of $46.40.

      Mr. John I. B. Reiley, for the complainants.

      Mr. Bartlett C. Frost, for John E. Stair.

      Mr. W H. Walters, for C. D. Middlebrook & Son.

      Mr. Osiris D. 'McConnell, for Henry Thomas.

      Mr. Clarence Walters, for Henry Walters.
   Pitney, V. C.

The principal contest is between tile defendant Stair and the defendants Middlebrook & Son, The contention of Stair is that the clause in the contract requiring releases and affidavits lias no force or effect, because the statute which gave rise to its necessity was repealed before the contract was made, and that under the law as it stood at that time there could be no person having a lien upon the premises; that the arrangement by which the money was placed in Dr. Reese’s hands for distribution among the creditors who had furnished labor and materials was not at all binding on Stevens, the contractor, and did not invest Dr. Reese with any control whatever of the fund, or give him any right to retain it for the benefit of the unpaid laborers and materialmen, as against Stevens personally, and that he (Stevens) could have sued the complainants or Dr. Reese for the money and compelled its payment, and that neither would have had any defence either at law or in equity.

The contention of Middlebrook & Son, on the other hand, is that the clause in the contract is not disposed of by such argument and cannot be dispensed with, but must be given force, and that the arrangement which was acquiesced in by the contractor, that the payments as they matured should be placed in Dr. Reese’s hands, and that he should have a right to apply them to the payment of persons who had done work and furnished materials, was a binding one on Stevens, and was in effect a payment to Stevens, and furnished the complainants with a complete equitable, if not legal, defence to any claim by Stevens or his assignee, voluntary or involuntary, to demand the same until all such meritorious claims were paid, and that the fund in Dr. Reese’s hands became at once impressed with a trust in favor of the creditors, and was in effect a payment to them.

I am of the opinion that the contention of the counsel of Middlebrook & Son is well founded. The whole contract and the conduct of the parties must be construed in view of the evident policy of the Mechanics’ Lien law, and particularly of that section which forbids the making of advance payments. It is clearly the policy of the act that the money due from the owner to the contractor shall be first applied to the payment of all claims for labor done on, and materials furnished for, the building, before the contractor himself or any. of his general creditors shall reach it.

Then, again, it is to be observed that while it is true that, because the contract was duly filed, nobody except the contractor could have any lien upon the building and curtilage upon which it stands, that proposition does not include the contract price in the hands of the owner, and it has been distinctly declared by the court of errors and appeals, in • the case of Slingerland v. Binns, 11 Dick. Ch. Rep. 413, that the laborers- and materialmen do have an “inchoate lien” upon the contract price in. the hands of the owner, to be wrought out by means-of a notice served under the third section.

The argument of the counsel of the attaching creditor eliminates the clause in question entirely from the contract and renders it an absolute nullity. This result should be avoided and the clause given some force if possible. The rules of construction require that. I think this can be done by construing it as, in effect, an undertaking on the part of Stevens that all labor and material going into the building should be paid out of the contract price. Such a stipulation the complainants, in my judgment, had a right to exact. The matter of sentiment, if you choose to call it that, is to be considered. The commissioners might well desire that nobody who worked on or furnished materials to this building should be able to say that they had not received their pay, and a contract to that effect should be enforced. This is the construction which the parties put upon the clause in question, and they enforced it by a substituted proceeding, to which the contractor did not seriously object, but in which he cheerfully acquiesced, namely, the placing of the payments as they matured on the contract in the hands of their president as an individual, to be by him applied to the payment of the claims in question. This acquiescence by the contractor seems to me to raise an equity in favor of all the laborers and materialmen as against the creditors at large of the contractor.. The fund in his hands became impressed with a trust in favor of the favored class of creditors, and that trust enables the complainants to defend in equity against a simple action at law by -the contractor, except as to such sum of money as may remain after paying all the class of creditors just mentioned, and that defence of course extends to the plaintiff in attachment, who is nothing more than an involuntary assignee of the contractor.

It is to be observed that each one of these parties who claim against Stair might have given his claim, legal as well as equitable, preference by giving the requisite notice under the third section prior to the issuing of his attachment, and it was urged that they lost their right, as against the general creditors, by failing to give such notice. But I think this argument cannot prevail for two reasons. In the first place, the arrangement which I have stated, and which was carried out for the last three regular payments under the contract, presumably was made, known to most of them, and they were measurably justified in supposing, and acting upon the supposition, that no notices were required or any other legal steps taken in order to insure them their payment. They had a right to rely upon the money being impounded in Dr. Reese’s hands for their benefit.. And in the second place, the nature of the trust was such as to dispense with any notice or other legal action on their part under the Lien law and placed all on an equal footing in the matter of distribution.

The result is that the claim of Stair must be reduced to $91.30, with his costs in this court. The claim of Walters is allowed, with his costs in this court. The claim of Middlebrook & Son must be reduced from $342.37 by a credit of $23.42, making it $318.95 (besides costs), for the reason that it appears by their bill of items furnished that they credited Stevens on September 12th with $176.58 only, when they were actually paid $200. No reason is given for not giving the full credit. The total amount of the.bill — $518.95—does not agree with the recollection of Mr. Reiley of the amount of the bill furnished him by Mr. Stevens; but that is easily accounted for by the fair inference to be drawn from the dates of the items that the bill produced by Stevens was partial, and that other items were subsequently furnished which appear in the bill exhibited, which is admitted to be correct. The claim of Thomas, amounting to $46.40, with costs, if any, is also allowed.

In my opinion, for the reasons before stated, there should be no preference among these creditors, but all should stand on an equal footing. If the fund in court is insufficient to pay all, then they will be paid pro rata upon the amount of their several claims, with costs. If the fund is more than sufficient to pay them all, then the remainder will go to the defendant Stair.


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    Jeanette A. Allen, Robert H. Kinsey, Thomas J. Kinsey and Robert H. A. Adams v. Oliver M. Arkenburgh and Eliza J. Arkenburgh.
    [Decided November 10th, 1898.
    Filed June 10th, 1899.]
    1. Subject to his own claims for taxes, assessments, &c., paid by him, a testator in New York held land in New Jersey in trust as to four-fifths thereof for persons residing in New Jersey, and as to one-fifth for himself. Under a testamentary power of sale, his two executors sold the land, taking a mortgage thereon as executors for part of the price. The cestuis que trust sued the executors in New York, both as such and individually, to compel a recognition of the trust, and the decree confirmed their liability to first satisfy testator’s claims, which they did, and then to pay the balance, which they were decreed to hold in trust, one-fifth to the estate and the other four-fifths to complainants. Subsequently one executor, at the instance of the cestuis que trust, and in opposition to his co-executor, foreclosed the mortgage. — Held, that a bill filed by the cestuis que trust in New Jersey against the persons who were executors to enforce the New York decree in their favor, and to hold the mortgage fund within the jurisdiction of the New Jersey court, was not a suit against defendants as executors of a foreign testator, of which the court had no jurisdiction, but against them as individuals, since the claim was not against the estate of testator, and, so far as it might be considered such, had been established by the New York decree as a claim against defendants individually.
    2. The suit was properly brought in New Jersey, where the executors disagreed, were constantly litigating, and had been ordered to deposit all moneys received by them as executors with a trust company in New York, from which no funds could be paid except by order of court, and the fund would thus be subject to the risk of being tied up in the trust company, and complainants subjected to expense and trouble in securing an order for its payment to them.

      On demurrer of Eliza J. Arkenburgh.

      Messrs. Guild, Lum & Sommer, for the demurrant.

      Mr. Benjamin A. Vail, for the complainants.
   Pitney, V. C.

The four complainants are residents of New Jersey; the two defendants are residents of the State of New York. Neither of the defendants has been served with process, but each appeared separately and voluntarily.

The object of the suit is to enforce a decree rendered in favor of the complainants against the defendants by the supreme court of New York, and to fasten upon and keep within the jurisdiction of this court a sum of money which is about to 'be paid to the defendants, and which, by the decree of the New York court, was declared to be held in trust by the defendants for the complainants as to four-fifths thereof. The defendant Oliver M. Arkenburgh, under whose immediate control the fund was at the filing of the bill, submitted to the jurisdiction of the court, answered the bill, admitting the complainants’ equity, and the fund was paid into court, all before the defendant Eliza demurred. The payment into court was made in pursuance of an order made after hearing counsel for defendant Eliza.

The ground of the demurrer of the defendant Eliza is that the defendants are sued in a representative capacity, namely, as executors of a will proven in the State of New York, made by a testator domiciled in that state, and hence cannot be called to account in this jurisdiction.

The facts admitted by the demurrer are, that the defendants’ testator, Robert H. Arkenburgh, died seized of a tract of land situate near Rahway, in this state, which he held in trust (subject to certain encumbrances for taxes, assessments, &c., paid by him), as to four-fifths thereof, for the four complainants, and as to one-fifth thereof for himself. After his death and the proof of his will in New York the defendants, who were named as executors therein, by virtue of a power of sale contained therein sold and conveyed the land for $25,000, receiving $2,500 in cash and a mortgage for $22,500 payable, as to the principal, in annual installments of $2,500 or. thereabouts, and which had several years to run. Subsequently one or two of those annual installments were paid to the defendants. After this sale the complainants claimed from defendants recognition of their rights to this fund as oestuis que trust, which claim was recognized by the defendant Oliver M. Arkenburgh, but was denied and contested .by the defendant Eliza, and resulted in a suit in the State of New York against the defendants jointly, both as individuals and as executors, in which .the rights of the complainants were established by a decree dated October 29th, 1895, as shown by a copy of the enrolled proceedings annexed to the bill, and which may be summarized as follows: That on October 21st, 18 95,-the'defendants’ testator, and they as executors, had disbursed for assessments, taxes and other expenses chargeable against the trust estate the sum of $9,115.58, and that they had received from the purchase price of the premises and interest the sum of $6,379.09, leaving due the executors representing the estate of Robert H. Arkenburgh on tne 21st of October, 1895, the sum of $2,736.49 ; that the defendants held, as trustees for the benefit of the complainants and the estate of Robert H. Arkenburgh, the bond and mortgage above mentioned, conditioned for the payment of the sum of $22,500, and that out of the proceeds of the amount yet to be received from said mortgage there should be paid to the estate of Robert H. Arkenburgh the sum of $2,736.49, with interest, and that all the balance should be paid by the defendants as follows: one-fifth to the estate of Robert H. Arkenburgh and one-fifth to each of the complainants.

An appeal was taken from that decree, and it was affirmed by the appellate division of the supreme court, on the 25th of March, 1896.

Between the date of the original decree (October 29th, 1895) and the time of the filing of the bill herein the defendants received certain payments of principal and interest on the mortgage which, in the aggregate, overpaid the balance found due the estate; the amount of such overpayment at the time of the filing of the bill being $1,091.33, of which sum, of course, four-fifths belonged to the complainants.

In February, 1897, the defendant Oliver M. Arkenburgh, at the instance and request of the complainants herein, but against the consent of his co-executrix, Eliza, filed a bill in this court to foreclose the mortgage, claiming it to have become due by reason of a breach of the condition of the bond in not paying taxes, with the result that on the 7th of September, 1897, a decree was made in favor of the said Oliver for the sum of $18,061.49. The case is reported as Arkenburgh v. Lakeside Residence Association, 11 Dick. Ch. Rep. 102. Eliza J. Arkenburgh was made a defendant to that suit. An appeal from that decree was taken by the defendants, which was dismissed on the 1st of March, 1898.

The complainants being in fear that the amount of the decree would be paid to the defendants and removed beyond the jurisdiction of the court, filed their bill in this cause April 6th, 1898, and obtained an order to show cause why the money should not be paid into this court, with the result above stated.

The particular objection which the complainants had to this money going beyond the jurisdiction of the court was that the defendant Oliver and the defendant Eliza had been, since the proof of the will, in constant litigation between themselves as to the administration of the estate, with the result that they are both under orders of the supreme court of New York to deposit all moneys received by them as executors with a trust company in New York, and that no payments should be made out of it by either without an order of that court. The result of this, as the complainants argue, would be that their money would be subjected to the risk of being tied up in the trust company, and they subjected to the expense and trouble of applying to the court for an order for its payment to them.

I am of the opinion that the demurrant’s point that the action is against the defendants in their representative capacity as foreign executors is not well taken. The rule invoked I think has no application to this case.

The suit is not, in any proper sense, against them in their representative capacity. It is not based upon their probate of the will of Robert H. Arkenburgh. It does not seek to interfere with the execution of his will or the administration of his estate. It is not in any sense'a claim against Robert H. Arkenburgh’s estate, or, so far as it may in any sense be considered such a claim, it has been adjudicated upon and finally established by the decree of the courts of his domicile. In my judgment it is properly classed as a claim against the defendants individually, which has been fixed and determined by a judgment and decree of the State of New York.

* I am unable to see how the estate proper of Arkenburgh— the fund of which that estate is composed — will in any sense be liable for the performance by the defendants of any decree which may be made against them herein. Should they receive the fund here in question and divert it to their own individual use, I do not see how anybody representing or having possession of the funds of the Arkenburgh estate can be compelled to make good the default. The action is a simple one to enforce a decree made by the courts of New York against the defendants as individuals and not as executors. The suit in New York was necessarily against them in a dual capacity. It, in effect, asked for an accounting with the estate of Robert H. Arkenburgh as to payments on encumbrances and receipts of principal and' interest, and it prayed for a declaration of the rights of complainants in the proceeds of the sale and conveyance by the executors of the lands held in trust, which proceeds they held as individuals, for it must be observed that the naming them as executors in the bond and mortgage was a mere descriptio personarum and did not vary their rights. They did not hold and claim the mortgage by the force of their letters testamentary, but precisely as if they had invested so much money loaned by themselves. In order to maintain their suit for foreclosure in this court they were not obliged to establish or prove any right or title through the will of their testator, or even to name themselves as executors. The naming them as executors in the bond and mortgage served only as an admission that they held those securities in trust, but after all did not truly disclose the trust.

The rights of the complainants do not depend on the existence or probate of any will or anything contained therein, nor upon the fact that the defendants are or have been acting in a representative capacity; nor, as we have seen, does the enforcement of those rights interfere in anywise with the administration of the testator’s estate. The sole value of the circumstance of their claiming under a will was found in, and expended its force in, showing their capacity to make title to the land, in part payment of which the bond and mortgage were given.

The land which was the source of the fund was situate in this state. The bond and mortgage upon which the decree of the court in New York fastened a trust in favor of the complainants was located in this state. Its enforcement and collection was had in a court of this state, and the complainants are residents of this state. This circumstance seems to render it eminently just and right that the fund should be kept here to aid in the enforcement of the New York decree, and to save the complainants the expense of going into a foreign jurisdiction to enforce their rights, and also the additional expense which will naturally result from the disagreements between the, defendants personally. The authorities show that such circumstances are always considered in determining the question whether the court will assume jurisdiction over foreign executors.

And here it is to be observed that the defendant Oliver, who has the actual custody of the bond and mortgage, and who, at the instance of the complainants as eestuis que trust, enforced its payment by a bill filed by himself alone against the owner of the equity of redemption and the demurrant defendant, has appeared, answered and submitted to the jurisdiction of the court.

The demurring defendant, being a non-resident, was not obliged to appear, and in the absence of a voluntary appearance no decree could have been entered against her personally. So far as she is concerned, any decree that the court could have made would have been harmless.

I think it not worth while to discuss the numerous authorities cited on each side. In addition to those, many will be found in the reported arguments of counsel in Brownlee v. Lockwood and wife, 5 C. E. Gr. 239, and in Mr. Stewart’s notes to Van Gieson v. Banta, 13 Stew. Eq. 14, and in Story Confl. L. (8th ed., by Bigelow) §§ 512, 514; and see the editor’s criticism on the Massachusetts cases, in note b to section 514 b, page 731. I have examined the cases with care and find nothing to militate against, but abundant support for, the opinion at which I have arrived, namely, that the demurrer must be overruled, with the usual result. All the cases which seem to support the demur-rant’s position are found upon examination to vary in their circumstances from the case in hand in some essential particular, such as the enforcement of a right depending upon a trust created by a will proven in a foreign jurisdiction, or the administration of an estate held by defendants under a grant of letters testamentary, or of administration by a foreign jurisdiction, or the like.


text:
    Alexander Gray v. Thomas G. Folwell, Susan M. Folwell et al.
    [Decided November 26th, 1898.
    Filed June 10th, 1899.]
    1. When shares of stock, although still standing in the name of the assignee on the company’s books, appear to have been levied upon and sold by a judgment creditor of the assignor, and it is not shown that the purchaser has experienced any difficulty in obtaining a transfer, the title of the purchaser cannot be enforced or the assignee’s lien be removed in an action by the judgment creditor to set aside the assignment as fraudulent.
    - 2. Where conveyed real estate lies outside the state, and therefore not subject to the lien of a judgment obtained within the state, the courts thereof have no jurisdiction to set aside such conveyance as a fraud upon such creditor.
    3. Where a transaction is capable of two constructions, one that comports with honesty and one with dishonesty, the former should be adopted by the courts.

      4. A husband owing §8,000, and having a suit pending against him on another claim, transferred to his wife property, part of which was worth about §4,000, the other part being labor claims against an insolvent railroad of doubtful value, receiving the next day, in consideration thereof, §6,000 from the wife’s separate estate, which was used by him to pay his debts. The wife testified that the money was furnished to buy the labor claims when in fact it was used to repay money borrowed to purchase such claims. The wife supported the family out of her separate estate. She subsequently turned over to her husband the amounts realized on the claims. The husband afterwards paid the judgment rendered against him in the suit pending at the time of the. transfer. — Held, that the transfer was not fraudulent, although the wife may have had notice of the husband’s intent to defeat the debt involved in the pending suit.
    5. Where a conveyance is made for the purpose of defeating a single creditor, who is afterwards paid in full, and there were no other current creditors who might have been hindered or delayed, and there was no immediate intention to engage in a hazardous business and become indebted, a creditor who became so years afterwards cannot set up the old fraud in avoidance of the conveyance.
    6. A husband conveyed directly to his wife all his rights in the estate of his father. Shortly afterwards he made another conveyance to her, through a third person, of certain property received from his father’s estate, covering all the property so received to which his title had been perfected. He afterwards obtained title to certain land in another state, from such estate, but the former conveyance was not recorded in such state. — Held, that there was no conveyance of the property outside of the state.
    7. A husband conveyed property to his wife, who put it in charge of an agent to collect the rents. The husband occasionally managed to collect and retain some of the rents. In letters from the wife to the agent, she instructed him not to allow the husband to collect rents, and stated: ‘ ‘ Please do not pay the bills unless very small, for then it comes off of my income; otherwise, I can get [my husband] to pay ; as the rents are security for debt, I should not pay expenses.” — Held, that the conveyance, though absolute in form, was a mortgage, and a judgment creditor of the husband was entitled to redeem upon payment to the wife of the consideration which she gave, less the net rents and profits and cash which she may have received from the husband on account.

      Mr. John W. Wesoott, for the complainant.

      Mr. Allen B. Endicott, for the defendants Folwell and wife, •ono one appearing for the other defendants.
   Pitney, V. C.

Alexander Gray, the complainant, is a judgment creditor of Thomas G. Eolwell, the defendant, and files his bill against Thomas and his wife, Susan M. Eolwell, and against the firm of Folwell Brothers & Company, composed of William H. Fol-well and several others, asking the aid of this court in the enforcement of his judgment against certain property which he alleges Thomas G. Folwell has conveyed and assigned for the purpose of defrauding his creditors.

The judgment was entered in June, 1890, founded on an indebtedness which, according to the bill, arose on the 11th of April, 1890, but probably, as may be inferred from the evidence, four or five years before that date.

The bill attacks three transactions. First, a conveyance by the defendant Thomas to his wife, Susan, set out at length in the bill, dated January 20th, 1880, upwards of ten years before the recovery of the judgment. This conveyance was made d rectly by Thomas G. Folwell to his wife, Susan M. Folwell, in consideration, as stated, of certain sums of money advanced to him by his wife out of her separate estate, and purports to grant, bargain, sell, assign, transfer and set over to her all his right, title and interest in, to and out of the estate of his deceased father, Robert Folwell, the same being a life estate therein ; also two bonds issued by the city of Camden for $500 each, previously assigned by him as collateral security to the First National Bank of Camden ; and also certain labor claims due by the Philadelphia and Atlantic Railroad Company, certificates of which had been purchased by him to the amount, in face value, of about $13,000.

That conveyance was acknowledged by Folwell, and recorded in Camden county on the 22d of January, 1880.

No other conveyance of this property is set out in the bill, but it appeared in proof that on' the 9th of February, 1880— twenty days later — the defendant Thomas conveyed to Mr. Harned, of Camden, by an ordinary deed of conveyance, certain lands in Camden, which are the lands intended to be conveyed by the previous deed of January 20th, and Harned immediately conveyed the same to Mrs. Folwell.

The allegation is that the first-mentioned deed was made for the purpose of defrauding a certain creditor, to wit, a Methodist church in Camden, which was then suing Folwell in the court of chancery and subsequently obtained a decree against him for some $5,000.

The next matter attacked is an alleged assignment by Thomas G. Folwell to William H. Folwell, of the firm of Folwell Brothers & Company, of four shares of the Second National Bank of Atlantic City, four shares of the Atlantic City Safe Deposit Company, fourteen shares of the Electric Light Company of Atlantic City, together with a lot of unspecified judgment notes, mortgages, book accounts, number and amount and value of which are unknown. The allegation is that such assignments were made without consideration either by William H. Folwell or the firm of Folwell Brothers & Company.

The fact in regard to that matter is that about the 1st of January, 1890, Mr. Folwell was the owner of the shares of stock just mentioned, and had pledged them to a bank in Camden to secure the payment of two promissory notes of $300 each, and the bank held the certificates. He also, as he swears, owed the firm of Folwell Brothers & Company the sum of $400 for borrowed money, in order to secure which he made an assignment to them of the shares of stock so held by the Camden bank, subject, of course, to the prior lien of that bank. Subsequently Mrs. Folwell sent to Folwell Brothers & Company” her check for $600 to pay the Camden loan; and they appear to have paid it, but, as far as appears in this cause, still hold the certificates of stock.

It further appears by a paper handed up after the hearing by the counsel of complainant, and not marked as an exhibit, that these shares of stock, while still standing on the books of the company in the name of Folwell, were levied upon by virtue of an execution issued upon the complainant’s judgment and sold, and purchased by Mr. Wescott and a bill of sale given therefor by the sheriff to him, and that a bill of interpleader was filed by the bank against Folwell, Folwell Brothers & Company and Wescott, to settle the title to the shares of bank stock, with the result that the title was declared to be in Wescott. No proof was offered as to the other shares of stock, or as to any difficulty Mr. Wescott has experienced in obtaining a transfer of those. Clearly, the bill is not framed with the view of enforcing Mr. Wescott’s title thereto, or to redeem them from any lien that Folwell Brothers & Company or Mrs. Folwell may have upon them.

The next matter attacked is an assignment alleged to have been made at, or shortly after, the date of the judgment by Thomas G. Folwell to the defendant William H. Folwell of all his right, title and interest that he then had in and to what is known as the “Bingham estate,” without further description, and the charge is that William H. Folwell holds that property in trust for the judgment debtor. . *

The Bingham estate appears by the proofs to be the interest which Thomas G. Folwell received under the will of his father, Robert Folwell, or else as his heir-at-law, in a piece of land in the State of Pennsylvania, and the allegation is that the conveyance was made without consideration.

With regard to this conveyance, I think that the complainant fails on two grounds. In the first place, the estate lies in the State of Pennsylvania, and is of course not subject to the lien of complainant’s judgment, and it is quite beyond the power of this court to make any decree which will subject it to such lien, or by any decree apply it to the payment of the judgment. Service v. Nelson, 1 McCart. 101. In the second place, the proof is that the land was already subject to a mortgage — how much does not appear — and that it was conveyed by Thomas G. Folwell to his brother William in payment of two notes of $5,000 each which Thomas owed the firm of Folwell Brothers & Company,, of which William H. Folwell was the senior partner. The conveyance was not put in evidence and no proof was made of any fraud whatever. The only evidence given was that of Thomas G. Folwell, who swore to the foregoing facts.

But there is another difficulty in making any decree in this cause affecting any of the rights of Folwell Brothers & Company. The subpoena against them was returned “not found,” and an order of publication was taken against them, but it does not appear to have been published. Subsequently, Mr. Ingersoll, a solicitor of Atlantic City, filed a joint answer for all the defendants, and the clerk filed among the papers an appearance by Ingersoll for these defendants. It afterward appeared that Mr. Ingersoll was not employed by Folwell Brothers & Company, but was employed, if at all, by the defendant Thomas G. Fol-well without their authority, and that they have at all times repudiated his authority to appear for them, and that he has been discharged also by the defendants Thomas and wife, who appeared further on and at the hearing by Mr. Endicott.

Under these circumstances it is doubtful at least, even if a case were made against Folwell Brothers & Company, whether it would be safe to pronounce a decree against them without bringing them into court by further process.

With regard t’o the conveyance made in 1880 by Folwell to his wife, the circumstances are these: Mr. Folwell was, in his youth, a dry-goods merchant, in Philadelphia, and carried on such business up to the year 1872, when he was about thirty-four years old. At that time he was stricken with paralysis, and has been a confirmed paralytic ever since, and has not engaged in any regular business. His wife, the defendant Susan, had a large separate estate of her own, which she received partly from her father, partly from her mother and partly from two aunts, so that she had a considerable income; just how much does not appear. They lived for many years, and still live, in Atlantic City. The defendant Thomas attempted to make some money by buying commercial paper and other pecuniary claims, many, apparently, of doubtful value. Among other operations of that kind, he purchased a large number of certificates of indebtedness to laborers, due by what was then called the Narrow Gauge Railroad Company, which was built some time prior to 1880, which company was embarrassed and finally became insolvent. Many of the certificates were held by shopkeepers and others who had taken them from the laborers. As far as I can gather from the evidence, the face of the claims bought by him was about $13,000, and they cost him about $8,000. In order to obtain the money to purchase these and other commercial paper, he borrowed money of a bank in Camden upon his own paper, endorsed by some good endorser, and also placed some collateral with the notes in the bank. In 1880 he owed $6,000 or $8,000, partly for money borrowed from the banks and partly to merchants along the line of the railroad, from whom he had bought these certificates of indebtedness called “ labor claims.” He possessed at that time a life estate in some fourteen houses and lots in Camden, two bonds of the city of Camden, of $500 each, which were pledged as collateral to one of the banks for notes discounted, and these labor claims, which had cost him about $8,000. At that time, as I understand, the existence of his interest in what was called the Bingham estate was unknown, or at least its value was unknown. He swears that it was not known at the time of the death of his father, but was discovered afterwards.

To secure this indebtedness he made the conveyance of January 20th, 1880, above set forth. On February 9th, 1880, and before any money was advanced by his wife, he made the conveyance of the Camden lots, through Mr. Ilarned, to his wife, also above set forth. The necessity for this conveyance was apparent to any lawyer or good business man. His wife, on that 9th day of February, or within one or two days thereafter, drew eight checks, aggregating in amount $6,223.11, on the Guarantee Trust and Safe Deposit Company of Philadelphia, which was her trustee, which checks were produced and shown satisfactorily by the evidence to have been applied to the payment of her husband’s indebtedness. She subsequently, and within two years, drew many other checks to her husband’s order, amounting to upwards of $5,000, making altogether $11,400 actually paid by her.

The source of these large sums paid by Mrs. Folwell in February, 1880, was the sale by her for $7,000 to the Reading railroad of a house and lot in Philadelphia,, which was consummated on or about January 1st, 1880. Within a couple of years after-wards she received, as proceeds of the collection of the labor certificates, about $5,500, and this payment probably constituted the fund from which she made the additional payments to her husband, going to make up the total of $11,400. She was all the while, as she swears, and in that statement is uncontradicted, supporting the family from her own private income.

The net rental of the houses in Camden varies from $35 to $50 a month, or say from $400 to $600 a year, after paying taxes, insurance and repairs. If her husband had been a man in ordinary health at that time, being forty-two years old, an income of $600 a year would have been worth, in round figures, $3,'400 on a six per cent, basis, and $3,600 .on a five per cent, basis. An income of $500 would have been worth $3,000 on a five per cent, basis, and a little over $2,800 on a six per cent, basis. Mrs. Folwell swears that her husband's life estate in the houses was estimated at that time to be worth about $3,300. The bonds were worth $1,000, making a little over $4,000 as the total value of the property which she received, independent of the labor claims, which latter, as we have seen, netted $5,500. The deficiency in the amount collected on the labor claims was due to the insolvency of the railroad. The total value of the estate and property conveyed to her amounted to between $9,500 and $10,000.

No legal proof was made of any decree ever having been obtained against Mr. Folwell in the suit of the Methodist church then pending against him, but he admitted on the stand that there was such a decree, and declared that he paid it as soon as possible, by money which he received from the Bingham estate. His statement in that regard stands uncontradicted, and it seems that he first received from that estate a sum of .money in cash, and afterwards obtained the title to the land in question in Pennsylvania.

Under these circumstances it would seem that the attempt to declare the conveyance in question void as against future creditors has but little foundation in fact or law.

There was a sort of assumption by counsel for complainant throughout the case that Mr. Folwell was unworthy of belief, and by way of contradicting his evidence, his examination, under a bill filed against him alone, under the eighty-eighth section of-the Chancery Practice act, was offered in evidence for that purpose. I have carefully read his deposition so taken, and do not find any serious contradiction between that examination and his evidence given on this hearing. Other depositions were taken under the discovery suit, but of course were not received in evidence, and his deposition was received simply for the purpose of contradicting him.

At this point I will notice the only attempt to contradict Mrs. Eolwell, namely, that she stated to Squire Cassidy and others that she had advanced these moneys to her husband for the purpose of buying the labor claims. In point of fact the proof shows that a part of the money which she advanced went directly to persons who had sold Mr. Eolwell some of these labor claims and taken his simple note for their price, and with regard to the balance that it went to pay his debts to the banks for money previously borrowed for the purpose of buying such claims. It thus appears that if she intended to be understood as saying that she advanced the money to Mr. Eolwell to buy labor claims, it was simply a misdescription by her of the transaction. In substance her statement was true.

The complainant relies upon certain declarations made by Thomas G. Eolwell some time before the date of the conveyance of 1880, to show that he made that conveyance for the express purpose of preventing the enforcement of the Methodist church decree, should one be obtained against him.

It is a well-settled rule that if a transaction of this character is capable of two constructions, one that comports with honesty and one with dishonesty, the former should be adopted by the court, and I think that the rule is especially applicable to a transaction so old as the one here attacked. Bearing that in mind, I think that all those declarations, even if they had been concurrent with the conveyance, may be easily reconciled with an honest purpose, on the ground that they amounted to no more than a declaration that in case he was unable to pay all his debts — the Methodist church decree and his other debts — he preferred to pay the other debts, which the proofs show were actually paid by Mrs. Fol well’s checks. All of those preferred debts were, in one sense, debts of honor, because those that were not secured by endorsements were incurred under circumstances that made it peculiarly his duty to pay them, and those that were secured by endorsements put him in the same position towards the endorsers.

I think his conduct in devoting his property to the payment of those debts was perfectly justifiable. At that time no doubt it was problematical whether he would ever receive anything on account of the debt certificates which he had purchased on speculation, so that I am unwilling at this length of time to convict him of any actual fraudulent intent in that transaction.

But granting that he did intend to defeat the Methodist church debt, that intention must be brought home to the defendant Susan Folwell. The complainant attempts to accomplish this by proving a conversation that occurred with Folwell in his house, in the presence of his wife, some time before the transaction. There is no satisfactory evidence that she fully understood this conversation if she heard it accurately, but only that she might have done so. She denies all knowledge of anything of the kind, and the whole conversation may have passed from her mind before the conveyance was made.

But grant that she did have notice of the particular fraudulent intent to defeat the Methodist church, still I am of the opinion that the payment of upwards of $6,000, shown to have been made at the date of the transaction directly to the extinction of the honest debts of Mr. Folwell, is sufficient of itself to protect her to the extent of such payment. I so held in the recent case of Joseph M. Smith & Co. v. O’Brien and Boisaubin, 12 Dick. Ch. Rep. 365.

The case here made differs from those (of which Green v. Tantum, 4 C. E. Gr. 105, is the leader) where full value in cash is paid for property conveyed to the grantee with the knowledge that the grantor intends to make such disposition of the proceeds of the sale as to put them beyond the reach of his creditors. Here the money was devoted to the payment of honest debts, and to that extent the conveyance must be upheld.

But I am not satisfied that the defendant Susan had any notice whatever of any fraudulent intent on her husband’s part. She denies it positively, and the concurrent conduct of the parties shows a complete absence of any fraudulent intent, because the money presently paid at the time of the transfer went, as I have said, to the payment of honest debts.

The subsequent payment by Mrs. Folwell directly to her husband of between $5,000 and $6,000 does not appear to have been made as a part of a fraudulent scheme to defraud creditors, present or future. Folwell’s prompt payment of the church decree when it came against him tends strongly to show that his object in the start was simply to secure his favored creditors in case he could not pay all. When it appeared that he was able to pay all he did so promptly.

And it is to be observed that the case as presented is entirely free from any appearance of a fraudlent scheme concocted to put a man’s property out of his hands, with the view of presently obtaining credit and running in debt in hazardous business transactions, and thereby preserving his property from the risk of such transactions. It is in favor of persons who have become creditors under such or similar circumstances that the rule that a conveyance may be fraudulent as to future creditors is to be invoked. The subject is discussed in Beeckman v. Montgomery, 1 McCart. 106 (at pp. 111, 112). On the latter page Chancellor Green remarks: “ The deed was made on the eve of the grantor engaging in mercantile business, which would require for its successful pursuit both capital and credit.” And see, further, what was said by Master Wilson in Cramer v. Reford, 2 C. E. Gr. 367 (at pp. 381, 382).

I can find no authority for the position that where a conveyance is made for the purpose of hindering a single creditor, who is afterwards paid in full, and there were no other concurrent creditors who might have been hindered or delayed, and there-was no immediate intention of engaging in hazardous business and becoming indebted, a creditor who becomes so years after-wards can set up the old fraud in avoidance of the conveyance.

It was urged that the fact that Mrs. Folwell turned over to her husband substantially all the proceeds of the debt certificates, as fast or faster than she received them, is a mark of fraud, and that she is therefore to be charged with them. The fair inference is that, at the time the conveyances of January and February, 1880, were made, the value of the debt certificates was entirely speculative, and they were thrown in merely as additional security. The only thing which she received, that she knew at that time to be of certain value, was the life interest in the Camden houses, and the Camden bonds, amounting, as we have seen, to about $4,000. . For this she paid down over $6,000 to her husband’s creditors. She was entitled to retain out of the proceeds of the debt certificates over $2,000 to make up for the deficiency in value of the other assets as compared with the amount that she paid on his debts, and if she intended simply to be paid the value of what she purchased, she had no right to retain the balance of the debt certificates. In point of fact, however, she paid them all to her husband. But, as I infer from the whole transaction that they were received merely as additional security, I can see no fraud in her turning over the proceeds to him. Such payment harmed nobody, and manifested honesty rather than dishonesty.

It is further urged that, by the strict terms of the direct conveyance of January 20th, 1880, made by her husband to her, his interest in the Bingham estate was included, as it must have passed to him by a clause in his father’s will which is exhibited in evidence. At that time, as has been observed, it was unknown that the Bingham estate would prove of any value. In fact, his title to it was perfected afterwards. But be that as it may, in law the conveyance directly to the wife was quite futile. It was prepared by Folwell himself, executed and put upon record before any money was paid, and, when the contemplated transaction came to be carried out, the defect in the conveyance was discovered, and an effectual conveyance was made through Mr. Harned, in which only the Camden houses and lots are mentioned, and a reading of the description contained in the deed shows that the parties had in mind only the Camden lots. That deed of January 20th does not appear to have ever been recorded in Pennsylvania or any use of it made there. This shows that it was not intended as a cover of the Pennsylvania property. If such had been the intention, it would have been recorded there, and if the whole transaction was intended to put all of Folwell’s property out of his hands, then when the formal conveyance was made through Harned the Pennsylvania property would have been mentioned and the deeds have been recorded in Pennsylvania as well as in New Jersey. In fact, the Harned deeds never were recorded, but Mrs. Folwell took immediate possession of the Camden houses through Squire Cassidy, the agent who had them in charge. He swears that, by direction of Mr. Folwell, he paid to her the rents from that time on. So far, then, as these conveyances go, they left the Pennsylvania property open and free to Mr. Folwell’s creditors, and the complainant herein is at liberty to proceed against that property in the proper .forum.

It is further said that her husband continued to use the premises as his own, with her consent. They consist of fourteen very small, old and dilapidated tenement-houses, which rent from $5 to $8 a month each, and were in the hands of Squire Cassidy as agent to let and collect the rents. He swears that he recognized Mrs. Folwell as the owner and accounted to her therefor from 1880. But it does appear that on one or more occasions Mr. Folwell intervened and managed to collect some of the rents, and that his wife complained of it.

Several letters written by Mrs. Folwell to Cassidy were exhibited in support of the allegation that Folwell continued in control. In one of those letters, dated June 11th, 1888, she writes to Squire Cassidy about one tenant who claimed to have made a payment. She says: “I do not doubt he paid it, and Mr. Folwell used it. He is in the habit of doing so if he can. I want you to take charge of the houses.”

In another letter, dated June 24th, 1888, she writes:

“In regard to Scbedeker, I will stand by you, and want him either to pay the rent to you or move out, whichever suits him best. I do not think Mr. Folwell will bother about it.”

Another, dated six days before — June 18th — in which she writes about the amount due from Schedeker, and says:

“ Mr. Folwell says he received §60 in the winter and kept it. I have had §72 rent and §22 just paid. Please take care of the houses and collect the rent, and please do not pay the bills unless very small, for then it comes off of my income, otherwise 1 can get Mr. Folwell to pay; as the rents are security for debt, I should not pay expenses. Please let me know if you receive this.”

The indication from that letter is that she held the property as security for money loaned, and the others indicate that Mr. Eolwell had been in the habit of collecting somé of the rents and giving an oversight to the property. I see nothing in them to show that Mrs. Folwell did not claim to have title of some kind to the premises. The one letter shows it to be that of a mortgagee, and Squire Cassidy swears that she so stated to him in conversation.

The utmost that the correspondence shows in complainant's favor is to give him the right to redeem and a right to an account between Folwell and his wife as to the rents of the property. The complainant does not ask that remedy. The ease was not put upon that ground.

Still, I think that if complainant desires he is entitled to redeem on paying Mrs. Folwell what is still due to her from her husband, and may have an inquiry by a master and an account to ascertain that amount. But in taking the account the master should be directed to allow Mrs. Folwell for all payments which she has made to or on behalf of her husband up to the time of the filing of this bill, charging her of course with the net rents and profits of the premises and any cash which she may have received from her husband on account of the indebtedness from him to her.

Unless the complainant shall take such a decree within twenty days after being served with request to do so, the bill will be dismissed.