text:
    Anna Kappes v. The Rutherford Park Association, Moses Ehrenreich and Walter A. Kipp.
    [Submitted March 17th, 1900.
    Decided May 10th, 1900
    Filed November 17th, 1900.]
    1. H. purchased certain lots from an association, and gave back a mortgage. He afterwards conveyed two of the lots to E. The association foreclosed the mortgage, and E.’s lots were sold thereunder, and bought in by the association. After the foreclosure was begun, E. conveyed the two lots to complainant’s grantor. The association at all times treated its sheriff’s deed as a mere mortgage, never made any claim to the premises, and had been repaid the whole amount due it, after which the association conveyed the lots to W., without consideration, on the representation that he held an outstanding equitable interest against which the association’s deed was a cloud. — Held, that complainant’s title would be quieted as against W.’s claim based on the association’s deed to him.
    2. E. deeded to complainant’s grantor, with full covenants of seizin against encumbrances and of warranty, and with no reservation of, or any undertaking on the part of complainant to pay, an outstanding purchase-money mortgage given by E.’s grantor. The mortgage was foreclosed, and the property bought in by the mortgagee. The mortgagee afterwards deeded to W. for the benefit of E., and W. deeded to K.— Held, that the covenants in E.’s deed to complainant’s grantor operated to extinguish IC.’s claim, and that complainant’s title would be quieted against it.
    3. Where complainant’s grantor mortgaged property for purchase-money, and the property was sold, and bid in by the mortgagee, a recital in the sheriff’s return to the writ of fieri facias that by virtue thereof he sold the lands “after having duly advertised the same,” is not sufficient proof of due advertisement as to make good a title derived from a deed from the mortgagee, as against complainant, suing to quiet title, who purchased on the faith, of a perfect title, assumed possession, and remained therein fifteen years.
    4. The presumption that a sheriff’s deed contained recitals of the proper advertising of property at foreclosure sale, and had attached thereto the affidavit authorized by Gen. Stab. p. 2.9S2 §§ IS, 14, 16, providing that a sheriff’s affidavit, annexed to his deed, that he had duly advertised the property, should be conclusive evidence thereof after seven years, which presumption is claimed to arise from an entry in the sheriff’s book of sales reciting that a deed was made, is equivalent to secondary evidence of the contents of the deed, and is not admissible as a substitute for evidence of proper advertising, in the absence of any evidence accounting for the absence of the deed.
    5. H. purchased lots of E., and gave a purchase-money mortgage, which was foreclosed, and the property bid in by E. A sheriff’s deed to E., which was never recorded, was only evidenced by an entry in the sheriff’s book of sales showing the sale, an acknowledgment thereof apparently signed by E., the description of the property and amount of the purchase-price, and the recital that a deed had been mailed to one who was presumably E.’s agent. Gen. Stat. p. 29S3 §§ 13, Ik, 16, provide that a sheriff’s affidavit, annexed to his deed, that he has duly advertised property sold on foreclosure, shall be evidence of such due advertisement. — Held, that a presumption did not arise from such entry that a sheriff’s deed was made containing recitals of proper advertisement of the property and having-attached thereto the sheriff’s affidavit of due advertisement.
    6. A purchaser at foreclosure sale, who does not record his deed, and fails, for twenty-two years, to make any claim under it, is guilty of such laches as will preclude his grantee from claiming title through such deed against a party purchasing the premises in good faith, without notice, actual or constructive, except such as would have been afforded by examination of the records of the court in which foreclosure took place, and who continues in possession for fifteen years.
    On final hearing on ¡Readings and proofs.

      Mr. John A. Dennin, for the complainant.

      Mr. Edward J. Luce, for the defendant Kipp.
   Pitney, V. C.

The object of this bill is to quiet complainant’s title to a piece of land situate on the corner of Stuyvesant avenue and Rutherford avenue, in the town of Rutherford, Bergen county. The plot is two hundred and ten feet front on Rutherford avenue, and about one hundred and ten feet on Stuyvesant avenue, and contains about forty-three hundredths of an acre of land.

The defendants the Rutherford Park Association and Moses 'Ehrenreich have not appeared. The defendant Kipp was not originally made a defendant because at the time the bill was filed he- had no record or other title, but acquired such title as he relies upon after the filing of the bill, and applied to be made a defendant on such after-acquired title, and was admitted and answered setting it up.

Both parties claim through the association which was confessedly the owner of the property in the year 1869. Previous to that time the association had laid out into building lots a considerable tract of land, comprising that in question, which it owned in that neighborhood, which it numbered and put on the market. The premises here in question comprise two lots adjoining each other, as laid down by the association on a map, and are numbered one to twenty-eight.

The complainant claims title by the following chain:

First. A deed from the association to Philip G. Harmon, dated July 1st, 1869, in consideration of $4,333, conveying eighteen lots of land, including the plot in question.

Second. A deed from Harmon and wife to Moses Ehrenreich (defendant), dated May 9th, 1871, in consideration of $946.43, containing full covenants of seizin and warranty, for the same premises.

Third. A deed from Moses Ehrenreich to George Hild, dated August 26th, 1872, in consideration of $1,550, with like covenants, for the same premises.

Fourth. A mortgage from George Hild and wife to Peter Schneider, dated August 10th, 1873, to secure $18,000, covering the two lots in question and a large number of other parcels of land.

Fifth. .Proceedings in foreclosure on that mortgage by the executor of Schneider, resulting in a decree, sale and deed of conveyance by the sheriff of Bergen county to Katie Kappes, the daughter of the complainant, dated March 4th, 1881, in consideration of $95.

Sixth. A deed dated March 29th, 1883, made by Katie Kull, formerly Katie Kappes, and her husband, to Anna Kappes, the complainant. It is fairly inferable from the evidence that the purchase was actually made by complainant’s husband, and the title put by his direction in his daughter, who, upon her marriage, conveyed to complainant.

Tinder the last-mentioned conveyances the complainant’s husband took possession by renting the premises for agricultural purposes, first to one Johnson, and second to one Kehoe, they paying as rent sufficient money to pay the taxes and assessments on the premises. Complainant’s husband died in 1884, after which complainant continued the same arrangement. Complainant-appears to have paid the taxes, and has produced the vouchers therefor down to about the year 1895. In 1891 she contracted to sell the premises to a party who employed Messrs. Copeland & Luce, solicitors of Rutherford, and solicitors of defendant Kipp, to examine the title, and they declined to pass it on the ground that it was passed away from complainant by foreclosure of a consideration money mortgage which had been given by Harmon to the defendant association, and under which the premises had been purchased at sheriff’s sale by the association, and that, in addition to that, defendant Ehrenreich, a former purchaser, held a mortgage against it unsatisfied of record.

Messrs. Copeland & Luce made up an abstract of the title showing these outstanding claims, which reached the hands of Mrs. Kappes. She is an illiterate German, and did nothing about the matter until the bill in this cause was filed on the 17th of May, 1898.

As before stated, her solicitor made parties to .the suit the Rutherford Park Association and Moses Ehrenreich. Both of those were non-residents of New Jersey, and an order of publication was taken against them June 4th, 1898, returnable August 5th, which order was duly published. ■■

The rights of the association and of Ehrenreich, hereafter to be stated, became vested in the defendant Kipp, as follows: On the 27th of June, '1898, after publication had commenced, Mr. Delos C.' Culver, as president of the association, conveyed the premises in question to Henry Wolf. Moses Ehrenreich and wife, on August 11th, 1898, conveyed their right, title and interest in the premises to the defendant Kipp, who was a partner in (I infer the real estate) business with Mr. Copeland; and on the 2d of September, 1898, Wolf conveyed the interest which he acquired from the association to Kipp.

Kipp’s title so acquired arises in this wise: Harmon, the original purchaser from the association, gave back a consideration, money mortgage on all the lots — eighteen in number — bearing even date with the conveyance to him, to secure the sum of $2,700.

Subsequently, on July 20th, 1872, and some time after the conveyance by Harmon and wife of the two lots in question to Ehrenreich, the association filed a bill to foreclose that mortgage, which resulted in a decree and sale, by the sheriff of all the lots to the association. But it is an admitted fact in the case that the association treated this conveyance as a mere mortgage, and that they were repaid the whole amount due them, and have never made any claim of title to the premises here in question. In fact, the decree in-that cause shows that Ehrenreich, as purchaser of the two lots here in question, had an equity to have the other lots mentioned in the association’s mortgage sold to pay the amount due it before his, Ehrenreich’s, lots were sold; and such is the decree. It provides for the sale of the other lots mentioned in the mortgage to pay the amount due, and if those other lots did not produce enough for that purpose, then, and in that case only, the Ehrenreich lots should be sold; and the sheriff’s deed shows that they were sold to pay a deficiency. In fact, the answer of Kipp sets up a release by the association to Ehrenreich, which has been lost, but no proof was offered at the hearing of the making or loss thereof. But the proof is full and satisfactory that the association had been paid the whole amount of its debt, and such payment was known to Mr. Copeland, and that he in person procured the deed from the association to Wolf by representing to Culver, the president, that he was familiar with the books and affairs of the association, and that it had been fully paid and had no interest in the premises in question, and that the deed to Wolf was asked for in order to protect the title of Wolf, the real equitable owner of the premises. Mr. Copeland and Mr. Culver were fully examined on this 'subject, and Mr. Culver says that he was led by Mr. Copeland to believe that an innocent party who was entitled to a deed from the association had not for some cause received the proper deed to which he was entitled to make his title perfect; and that he would not have executed a deed under any circumstances except under those conditions, had he known anything to the contrary.. Nothing was paid to the association except the ordinary expense of making a deed.

These facts alone are sufficient to dispose of defendant’s claim of title under the foreclosure of the first (association) mortgage.

But there is another answer, complete in itself, against defendant’s right in that behalf. Ehrenreich’s deed to Hild was for a full consideration, and contained covenants of seizin against encumbrances, and of warranty, with no reservation of, or any undertaking put upon Hild, the grantee, to pay, any part of the outstanding mortgage held by the association. This cast upon Ehrenreich the duty of protecting the purchaser Hild and his assigns against that first mortgage, and made it inequitable in him to acquire any title under it as against his grantee, Iiild, or his assigns. Wolf took the title under the mortgage without payment of any consideration, and upon the express representation by Copeland that it was taken for the benefit of Ehrenreich as the equitable owner. Kipp took title from Ehrenreich with full notice of all the facts, and hence could not, as Ehrenreich’s grantee, make any use as against Hild, or his grantee, of the title under that first mortgage. The result is that when Wolf conveyed to Kipp, the title so conveyed, was at once destroyed and defeated as to complainant as Hild’s grantee. It follows that defendant must rely alone on Ehrenreich’s title arising under another head.

That title is as follows: Ehrenreich, as we have seen, conveyed to Hild on August 36th, 1873, the two lots in question, and the complainant claims through that conveyance; but Hild, on the same date, gave back a consideration money mortgage to Ehrenreich for $775, payable in two years, being one-half of the consideration money mentioned in the deed from Ehrenreich to Hild. That mortgage was prior to the mortgage given by Hild and wife to Schneider fox $18,000 on the premises here in question, and other premises, under which the complainant claims. Such was the state of the record title at the time the bill in this ease was filed.

The theory of the complainant was that the Hild-Ehrenreich mortgage was barred by the statute of limitations at the time she filed her bill, and that the title of the association was in some way extinguished.

It would appear from the evidence of Mr. Copeland that he must have learned some time before the bill was filed, probably in his examination of other titles of land of the association, that the title of the association was satisfied by the payment of the amount of the decree.

If this were all of the case it would seem to me that the complainant’s title would be fully established as against the defendant. Ho proof was offered that the mortgage to Ehrenreich had ever been acknowledged by complainant or those under whom she claims, or that any interest had been paid on it within twenty years; so that the presumption would be absolute that it had been paid, and was, besides, absolutely barred by the statute.

But the defendant Kipp proceeds further and offers in evidence proceedings in this court of a foreclosure of that mortgage (given by Hild to Ehrenreich as part consideration of the purchase-price of the premises on the conveyance from Ehrenreich to Hild), and which, as we have seen, was prior to the mortgage under which the complainant claims. The proceedings show that the bill to foreclose the Hild-Ehrenreich mortgage was filed by Ehrenreich in 1875; that the executor of Schneider, who held the mortgage under which complainant claims, was made a party, and that a decree was duly entered in favor of the complainant; that the executor of Schneider did not appear, and so far as appears was not summoned to appear before the master who computed the amount due and stated the priorities; the order of priorities between the complainant’s mortgage and the Schneider mortgage was not passed upon, but an ordinary decree of foreclosure was made against all the defendants.' The writ of fieri facias was sent to the sheriff (Hering) of Bergen, who returned it with a statement that he had sold the premises to Moses Ehrenreich for the sum of $200, and that he had paid' to G-. E. P. Howard, solicitor of the complainant, the sum of $158.37, which, with the sheriff’s execution fees, amounted to just the sum of $200.

The defendant further claims that a conveyance was made by the sheriff by virtue of that sale to Ehrenreich. Such conveyance was never recorded, and was not produced. Mr. Ehrenreich was not called to prove' that he had ever received it, or had it in his possession, and its absence was not accounted for. But relianee in support of the allegation of its existence is placed upon an entry in the sales-book of Sheriff Hering, in the handwriting of his clerk, who, as well as the sheriff, is dead. The entry contains the conditions of sale, then an acknowledgment signed “Moses Ehrenreieh, New York City,”, that he had purchased the premises for the sum of $200. No proof of the genuineness of that signature was given. Then there is a description of the property, then a statement of the amount of the decree, with interest. Then is found this memorandum opposite the list of sheriff’s execution fees: “Deed mailed to Leicester P. Holme, August 21st, 1876; fees paid.” What connection Mr. Holme had with Mr. Ehrenreieh does not appear. It is fairly inferable, however, that he was an agent of Ehrenreieh, who attended on his behalf, bid in the property, paid the amount so bid, and directed the deed to be sent to him and that it was so done. If so, we may fairly presume that the document reached the hands of' Ehrenreieh.

It appears by the evidence of the complainant that during all the time that she or her daughter held the title and was having possession of these premises, and paying the taxes and assessments on them, no claim was made thereto by Mr. Ehrenreieh, or, indeed, at any time until claim was made herein by the defendant Kipp.

The question is, whether this Ehrenreieh title is superior to that of the complainant, who is, and has been for so many years, in possession.

Phe complainant’s title is one that commends itself to the court. She, or her husband, purchased these premises at sheriff’s sale under foreclosure, in 1881, and had the title conveyed to her daughter, who subsequently conveyed to the complainant. Ninety-five dollars in cash were undoubtedly paid for the premises. The complainant and, presumably, her husband, were illiterate Germans, and it is fair to suppose purchased the premises believing that at a sale under foreclosure the title would be perfect. Such is the common belief and understanding among unlearned people. The great majority of the foreclosures in this state are either under the first mortgage, or bring in the first mortgagees, as parties defendant, so that the title is usually clear. They acted in perfectly good faith in taking possession and fencing in the lot. We may fairly infer from the circumstances that it, in common with the other lots of the tract, laid out to commons until a fence was put up. This was an exercise of ownership Avhich challenged all persons having any claims against it to present them. The complainant is guilty of no laches. On the other hand, Ehrenreich has shown entire want of any diligence to assert his claim.' As has already been observed, there is no evidence to show that he ever asserted any claim to the property, and when he conveyed to Kipp was careful to have inserted by way of interlineation in the deed, which is on an ordinary blank, the words ‘‘the right, title and interest of the parties of the first part in;” and while the deed is one of grant, even the simple covenant against his own acts is erased, and it contains no covenant whatever.

Mr. Copeland denies that he had heard of the complainant’s bill being filed at the time he applied to Mr. Culver for the title of the association, or when he procured Mr. Ehrenreieh’s title; but the remarkable circumstance in the case is that the order of publication was taken on the 4th of June, 1898, and the application was made to Mr. Culver for the title of the association some time before the 27th of June, on which day the deed was executed, and that he was told by Copeland that it was in aid of the equitable title; and yet the deed was made to Wolf, who, as yet, had no interest in the premises; and the title from Ehrenreich, who was, according to the defendant’s theory, the owner of the equitable title, was not procured until the 11th of August. That deed states a consideration of $250. No proof was offered as to what, if anything, was actually paid for it.

It is plain that Mr. Copeland, who had complete knowledge of the claim of the complainant, was the active spirit in procuring the title to his partner in business, Mr. Kipp, from the association and from Ehrenreich, and it is fair to infer that he' first procured that of the association, to be vested in Wolf, so that he could be in a better position to deal with Ehrenreich for his interest.

These facts.show that the title of the defendant is not one which appeals with much strength to a chancellor.

But let us look at it a little closer. As we have seen, the hare legal title outstanding in the association amounts to nothing. The defendant acquired no right in equity against the complainant under that deed. Then the question is whether or not the Ehrenreich title, supposed to be derived under the foreclosure of the (second) mortgage from Hild to him, has any validity, and, if so, whether it has lost its strength by lapse of time. The complainant’s theory is that she bought the legal title, subject to’ the mortgage held by Ehrenreich, as an unforeclosed mortgage, and that she is entitled in law, notwithstanding the foreclosure proceedings under that mortgage, to set up against it the bar of the statute of limitations, for the following reasons — first, that there is no proof, before the court that the sheriff’s sale was properly advertised.

Proof of proper advertisement cannot be dispensed with. The sheriff was acting as a mere public agent, and the rule is unbending that, with certain well-known exceptions, of which the present is not one, the deed of conveyance of such an officer is void unless all the necessary prerequisites have been complied with; among these is one that the property should be advertised in a particular manner, and that the sale should be had at a particular time in the day. Woodbridge v. State, Allen, pros., 14 Vr. 262, in the court of errors.

Prior to the passage of the act of March 25th, 1864 (P. L. of 1864 P- 498; Gen. Slat. p. 2982 §§ 18, 14, 16), it was necessary in all cases, in proving title under a sheriff’s sale, to make proof in detail of the required advertisements, unless the sheriff’s deed itself recited the particulars of such advertisement. A mere recital by the officer that he had advertised the property “according to law” was not sufficient. The law on this subject was accurately stated by Mr. Justice Depue (adding what is clearly understood) in the case just cited (at p. 271), as follows: “The recital in a sheriff’s deed, stating the manner in which the advertisement of the sale was made, is prima facie evidence that he has duly advertised the sale [in the manner so recited]; but a recital that he advertised or made sale ‘according to law,’ or ‘pursuant to statute,’ has never been considered as showing compliance with the statute.”

The distinction is between a recital stating in detail the manner of the advertisement, and one stating only that he “advertised according to law.” The latter recital is of no value as proof of advertisement.

The practice of the sheriffs of late days is, in all cases, to recite in the deed the manner in which they have advertised, namely, that they set up notices of the sale in five public places, one of which was in the township where the land was situate, and advertised the same in a certain newspaper for four weeks next before the time of sale, &c., and that the sale took place at the time mentioned, which was after twelve o’clock in the day. These recitals in the deed, when that is produced, have been held, without statutory aid, 'to be prima facie proof, but prima facie only; and such is the character of the recitals referred to by Mr. Justice Depue in the paragraph above cited.

By the act of 1864 provision was, for the first time, made for the sheriff or other officer to make an affidavit, annexed to his deed, that he had duly advertised the premises for sale, and the conveyance, when duly proven and acknowledged according to the statute, became evidence of a good and valid sale; and by the second section of the act just cited the production of the deed, duly proven, is prima facie evidence of the truth of the recitals contained in it; and by the third section of the act it was provided that, after seven years, it became conclusive evidence.

But this act, or any other, does not dispense with the necessity of proof in some legal manner of an advertisement in compliance with the terms of the first section of the act concerning the sale of land. It was even held in Den v. Mulford, 1 Zab. 500, that possession for any period of time less than twenty years under a sheriff’s deed, without proof by recitals or otherwise showing performance of all the necessary prerequisites to a sale, was insufficient to cure the defect.

The only proof of advertisement in this case is found in the return of the sheriff annexed to the writ of fieri facias, and that is this:

“By virtue of the within writ issued and directed in the above-stated cause, I did, on the 17th day of May, 1876, after having duly advertised the same lands and premises, sell at public vendue, at the court house in the village of Hackensack,” &c.

This return merely says “after having duly advertised the same.” Such a recital or certificate, as we have seen, is insufficient, even if it had been inserted in the deed and the deed had been produced.

But it is urged by the defendant that the entries made in the sheriff’s salés-book by his clerk were so made in the due course of his official business, and are sufficient to prove that such a deed was actually made and delivered, and such making and delivery being established, a presumption arises that it contained the usual recitals, and had annexed to it the affidavit required by the act of 1864. But this presumption, assuming for the moment that it is one upon which the court can properly rely, amounts, after all, to no more than proving by inference the contents of a writing. This, according to perfectly familiar principles, can only be done after accounting for the absence of that writing. Here the deed in question which is sought to be established is naturally in the possession of the defendant who claims under it, and nothing can be plainer than that he cannot prove its contents without accounting for its absence. This has not been done. For all that appears it may be in the possession of Ehrenreich undestroyed. No evidence is given of any attempt to find it, nor to lay any other foundation for resorting to secondary evidence of its contents. The absence of this proof is fatal to the defendant’s position. If we had here in evidence by a competent witness full, direct and satisfactory proof of the contents of the deed and the accompanying affidavit, by an examined eopyr, it would be unlawful to use it without first accounting for the absence of the original.

But I do not wish to be understood as assenting to the proposition that, if the absence of the deed itself was satisfactorily accounted for, this court could, under the circumstances of this case, hold that its contents in the particulars here in question— namely, recital of the advertisements, or the making of the affidavit by the sheriff — could be presumed from the entries in the sheriff’s sales-book. The maxim omnia rite acia prcesumuntur does not, I fear, reach far enough for that purpose. I can find no case to warrant its use to raise a presumption that an official document contains certain recitals for the purpose of proving the truth of the facts stated in those recitals, especially where, as here, the party claiming by virtue of the facts so recited has not been in possession or exercised rights upon the strength of those facts. The maxim in question finds its beneficial service in sustaining’ titles under long-continued possession, and has little application to eases like that of the defendant.

It is to be observed that the defendant did not produce to the court, any sample of the deeds Sheriff Hering was in the habit of using.

This seems conclusive against the defendant.

Second. The complainant contends that-the deed not having been recorded or any possession taken under it, the mere proof that a sale was had by the sheriff- does not bind the complainant, who purchased at public sale after the date of the transaction, and without any notice of it, actual or constructive.

Against this the defendant sets up that the complainant is charged with notice of the foreclosure proceedings, arguing that the general doctrine of pendente lite nihil innovetur applies because an action of foreclosure is expressly excepted from the fifty-seventh section of the Chancery Practice act.

It is true that if the complainant, before purchasing at the sheriff’s sale under the Schneider mortgage, had examined the records of this court to see whether or not any decree had been entered against Hild upon the mortgage given by him to Ehrenreich, she would have found the decree in this case. But that does not seem to me to be conclusive on this part of the case. It seems to me that the controlling fact is thet Ehrenreich, after receiving his deed, if he ever did receive it, failed to record it or to make any claim under it for a period of twenty-two years before the complainant filed her bill, which was on the 17th of May, 1898. That in the meantime the complainant had bought the premises at sale under the foreclosure of a subsequent mortgage it is true, but still without any notice of Ehrenreich’s title, except what might have been derived by an examination of the records of this court, and took possession under her conveyance, and continued such possession for a period of over fifteen years. Under these circumstances it seems to me that Ehrenreich is barred by his own laches.

I will advise a decree declaring in favor of the complainant’s title.


source: Caselaw Access Project

author: Pitney, V. C.

license: Public Domain

text:
    The Fairmount Cemetery Association of the City of Newark v. The Trustees of the First Presbyterian Church in Newark et al.
    [Decided April 7th, 1900.
    Filed November 17th, 1900.]
    A church agreed with certain persons, desirous of organizing a cemetery association and laying out a cemetery on land of the church, to convey the land, with the reservation of the right to reserve one-half acre, to be chosen by it, “for the purposes of a church building;” and pursuant thereto it conveyed the land to T. and V., two of the persons, who at the same time executed a declaration of trust, declaring that they held the land in trust for the actual purchasers (naming them), and, as to one-half acre, to reconvey it to the church trustees, when it should be located by them, “for a church site.” Thereafter the trustees located the one-half acre by resolution reciting that they had been requested to locate the site to be reserved for the purpose of a church according to the condition imposed by the resolution of the congregation authorizing the sale. Subsequently T. and V. deeded the land, except the one-half acre, to the cemetery association; the deed reciting, “the remaining half acre * * * having been reconveyed to the * * * church pursuant to the contract; they having located and designated the half acre, agreeable to the condition of the original sale, as that part of said premises which they have, since the conveyance made by them, resolved to reserve for church purposes.” At the same time T. and V. conveyed the one-half acre to the church, the deed reciting that it had been “reserved as a site for a church,” and was reconveyed “for that purpose,” and that “the party of the second part hereby consent and agree that the said premises shall be used and occupied for a church.” — Held, that such restriction inured to the benefit of the cemetery association, as owner of the adjoining land, in the absence of evidence that T. and V. were owners of any such land; that T. and V. had no right to release the church from such restriction; and that, they having given a release, the church would be enjoined from selling the land for any other purpose — the declaration of trust and books of the church not being matters of public record, so as to give notice to a purchaser that the restriction inured to the benefit of the association.
    On demurrer.

      Mr. Edwin B. Williamson, for the demurrants.

      Mr. Joseph N. Tuttle, for the complainant.
   Pitney, V. C.

The facts disclosed in the bill and admitted by the demurrer are as follows: At and before the 24th of May, 1854, the defendant corporation, a religious society in Newark, was the owner of a tract of land situate in the vicinity of Newark, known as the “parsonage woodland,” and certain gentlemen, a score or more in number, residents of Newark, were desirous to organize a cemetery association and to lay out a cemetery upon that woodland. The parties agreed upon a conveyance by the defendant of the land in question for the sum of $20,000, with the reservation to it of the right to reserve a tract of half an acre to be chosen and located by the church “for the purposes of a church building.” In pursuance of that arrangement a conveyance of the wood-lot was made on the 24th of May, 1854, by the church, to Joseph N. Tuttle and Roswell Van Buskirk, two of the purchasers, as joint tenants, and not as tenants in common, in consideration of $20,000. At the same time, and as a part of the same transaction, Tuttle and Van Buskirk executed a declaration of trust declaring that they held the same, in trust for the actual purchasers, naming them, and as to one-half acre,

“to reconvey the same to the said the Trustees of the First Presbyterian Church in Newark when the said half acre should be located by them for a church site, to be located in the judgment of said trustees on any part of the tract.”

That on the 27th of September, 1854, the board of trustees of the defendant corporation adopted a resolution as follows:

“A request from the purchasers of the parsonage woodland on the South Orange road that the board would locate the site to be reserved for the purpose of a church according to the condition imposed by the resolution of the congregation authorizing the sale, having been laid before the board, it was, on motion, Resolved, that the president locate the site for the church aforesaid on the easterly end of the front line of the said premises, the dimensions of the front and depth of the lot reserved to be determined at his discretion, provided the boundaries so determined by him include a half acre.”

Shortly after the adoption of that resolution the half-acre lot was actually located by metes and bounds.

Afterwards, on the 9th of February, 1855, the projectors of the cemetery, for whose benefit the title was held by Tuttle and Van Buskirk, caused themselves to be incorporated by an act of the legislature under the name and style of The Fairmount Cemetery Association of the City of Newark, and on the 19th of June, 1855, Tuttle and Van Buskirk executed two deeds of conveyance, one to the complainant of the whole premises except the half acre chosen by the church, the exception being in these words:

“The remaining- half acre, part of said premises, having' been reconveyed to the said trustees of the First Presbyterian Church, pursuant to contract, they having located and designated the said half acre agreeable to the condition of the original sale as that part of said premises which they have since the conveyance made by them resolved to reserve for church purposes.”

And -at the same time they made a conveyance to' the defendant of the half acre in question by metes and bounds, which deed contained this clause :

“Being a part of the same land and premises conveyed to the said Joseph N. Tuttle and Boswell Van Buskirk by the said party of the second part on the twenty-fourth day of May, eighteen hundred and fifty-four. And this triangular lot as above described, and which contains by estimate fifty-hundredths of an acre, having since that time been located by the said party of the second part, and reserved as a site for a ehureh, is reconveyed to them for that purpose, pursuant to the understanding and agreement made and entered into between the parties to the original conveyance; and the said party of the second part hereby consent and ayree that the said premises shall be used and occupied only for a church or plaee of worship, and for no other purpose or purposes whatsoever.”

This deed was accepted by the defendant.

Tuttle, one of the grantors in that deed, died on the 12th of August, 1886, leaving Van Buskirk surviving, and after his death Van Buskirk, at the request of the defendant, executed a deed of quit-claim dated February 23d, 1889, by which he released and quit-claimed to the defendant the restriction confining the use of the half-acre lot to church purposes. That release contains a recital in these words:

“And whereas it is desired by the said the Trustees of the First Presbyterian Church in Newark to convey the premises mentioned and described in the last-mentioned deed and hereinafter more, particularly described freed from the condition stated in the last above-mentioned conveyance, and'the said Joseph N. Tuttle having heretofore departed this life, now this indenture witnesseth,” &c.

This release by Yan Buskirk was without the knowledge or consent of the complainant, and the defendant at the time of the filing of the bill was about to sell and convey the half-acre lot free from the restriction contained in the conveyance to it by Tuttle and Yan Buskirk. The prayer of the bill is for a perpetual injunction against its so doing, or making use of the deed of release.

The questions raised are — first, whether or not the restriction in the deed from Tuttle and Yan Buskirk to the church inured to the benefit of the complainant owning the adjoining land; and second, if so, is it a proper case for the interposition of this court ?.

1 am of the opinion that both questions must be resolved in favor of the complainant. It is quite plain that it was part of the original contract of sale from the defendant to the promoters of the cemetery scheme that the lot should be reserved for use for church purposes only. The declaration of trust made by the grantees at the time the deed was delivered to them indicates this, and the resolution of the church as to the location of the half acre also indicates it. Then the church accepted the deed with that restriction in it, and it must have known from the previous declaration of trust that Tuttle and Yan Buskirk were mere trustees, without any personal interest in the premises, and that that restriction .was not for their personal benefit, but for the benefit of the adjoining property. In fact, the benefit of such a restriction must of necessity attach to the ownership of land, and will not be recognized or enforced by any court at the instance of a mere covenantee at large not the owner of any land affected thereby. In the absence, then, of any statement in the bill that Tuttle and Yan Buskirk were at that time individually interested in an’- other land in the neighborhood, except the original wood-lot, which could be affected by the enforcement of the restriction, the presumption arises that the restriction must have been for the benefit of the balance of the originalwoodlot, whether at tire moment of the making of the deed to the defendant for the half acre they were the owners of that lot or not. The fact is, as we have seen, that the two deeds were dated the same day, and executed at the same time; so that in order to give an}r force whatever to the restriction it must have inured to the benefit of the complainant as the owner of the parsonage wood-lot.

Eor these reasons, I am of the opinion that the restrictions inured to the benefit of the complainant.

In the next place it is alleged in the bill and admitted, and in fact must be inferred from the procuration from Van Buskirk of the release of that restriction, that the defendant intends to devote that lot to other than church purposes, and to put it in the market for general sale. Now that will be a. clear breach of the restriction, and the complainant will lose the benefit of the restriction unless it shall be able to prove that the grantee had notice of the restriction put upon the lot, and that it inured to the benefit of complainant’s lands. To do that the complainant must rely upon the notice to the purchaser of the contents of the books of record of the defendant and the declaration of trust, which are not matters of public record, it not appearing that the declaration of trust was ever recorded. The complainant should not be subjected to such a risk.

I am of the opinion that it is, under the circumstances, inequitable for the defendant to make the least use of the Yan Buskirk release, and that the complainant is entitled to a decree that the release is not binding on the complainant, and that the restriction is in full force and effect, and that the defendant should be restrained from making any use of the release, or from conveying or attempting to convey to any person free and clear of the restriction in question.


text:
    The American Pin Company v. Alfred A. Wright et al.
    [Filed November 17th, 1900.]
    Agreement under seal of a debtor that when he shall effect a sale of bis house the proceeds shall be immediately devoted to payment of a certain indebtedness, does not create a lien on the land.
    On demurrer to bill.

      Mr. Edwin B. Goodell and Mr. Frank P. McDermott, for the demurrants.

      Mr. Frank E. Bradner, for the complainant.
   Pitney, V. C.

The facts set out in the bill, stated in the order of time, are as follows:

On or before the 9th of February, 1895, the defendant Wright was indebted to the complainant in the sum of about five thousand dollars, and at that time was the owner of a dwelling-house and lot of land described in the bill; by deed dated February 1st, 1895, and acknowledged on the 9th and recorded on the 11th of February, Wright conveyed the same to the defendant Ames, who, by deed of the same date, acknowledged and recorded at the same time, conveyed the same to the defendant, the wife of Wright, and said conveyances were without any consideration whatever; subsequently, on the 1st of July, 1896, Wright and wife joined in a mortgage of the premises to the defendant Ninde to secure the sum of $10,000; the amount of $10,000 was not due at that time or at any time from Wright to Mnde, but, if anything, a much less sum was due; on the 15th of October, 1896, Wright executed an agreement, in writing, under seal, with the complainant, which admitted that Wright was indebted to the complainant in the sum of $5,024.87, and after providing for a variety of matters not necessary for present purposes to be stated, the agreement contains this eighth and last clause:

“The second party further agrees that in the event that said Wright should succeed in negotiating' his ‘trolley deal,’ so called, in Montclair, N. J., or in selling his house in Montclair, the entire proceeds of either or both of said deals shall be immediately devoted to the payment of the indebtedness set forth in paragraph one in equal amounts to each individual composing the first party.”

The bill contains a general allegation that the conveyance to the wife was made for the purpose of defrauding the complainant as his creditor, and that it, as well as the mortgage to blinde, was concealed from the complainant when the agreement was entered into, and that the amount stated in the agreement is still due the complainant from Wright. The prayer is that the settlement by Wright on his wife may be declared void as against the complainant and other creditors of Wright-who were parties to the agreement above mentioned.

The right of the complainant to relief depends on its establishing two propositions — first, that the settlement of February, 1895, by Wright upon his wife was fraudulent and void as against the complainant, and second, that the clause of the agreement of October, 1896, above set forth, gave it an equitable mortgage upon the premises in question.

The facts stated show that the settlement of February, 1895, by Wright upon his wife, was fraudulent and void against the then-existing creditors, of whom the complainant was one, and it is probable that it would be void not only against a judgment creditor, but under 27 Eliz. c. 4, sections 13 and 14 of our statute of frauds (Gen. Stat. p. 1604), against any creditor who obtained a lien thereon by any lawful means, and included in that class would be a grantee or mortgagee for value. It is upon that principle that the case of Pillsbury v. Kingon, 6 Stew. Eq. 287, was decided, where it was held that an assignee for the benefit of creditors could file a bill to set aside a deed in fraud of creditors made by the assignor.

So that if the clause in the agreement of October, 1896, above set forth, did create a lien or equitable charge upon the lands in question, the bill, .as I now think, must be held to make out a case for equitable interposition, and the demurrer be overruled.

It will be observed that the clause in question does not make any direct appropriation of the land, but only of the proceeds of the sale, and such proceeds as shall result from a supposed effort of the -debtor, Wright, to negotiate and complete the sale, if Wright “should succeed in selling his house in Montclair.” It is, then, in effect, a promise to devote the proceeds of the sale of his house, when he shall effect il, to the payment of complainant's debt. Is that language sufficient to create a lien upon the house and lot itself as such ?

Now, this question must be determined not by what the court may suppose the parties intended to accomplish, but by what is the meaning of the words used. The effect of the language itself must determine the question. And bearing that rule of construction in mind, I am unable to come to the conclusion that any charge was created upon the land. It amounted to no more than a promise, under seal, to pay to the complainant and the other creditors mentioned in the agreement of October, 1896, the proceeds of the sale of the premises when it should be effected. It gave no right to the creditors to effect a sale, or to compel a sale. That office and duty was left entirely optional with the debtor. He did not even agree that he would proceed and effect a sale at some price. The obligation to pay was contingent upon his own free will. It arose only when he should have sold.

I have been unable to find any authority which has gone so far as to hold an agreement of this kind to amount .to a charge. It is rather to be ranged with that class of cases which amount to no more than a promise to pay out of a fund when received. Of such contracts the editor of White & Tudor’s Leading Cases in Equity (4th Am. ed.) (at p. 1644), uses this language:

“To constitute an assignment, there must be an actual or constructive appropriation which confers a present right on the assignee, although the circumstances may not admit of its immediate exercise. A covenant’ to pay a debt with the proceeds of goods when sold, or out of an outstanding demand when collected, will not operate as an assignment, because it implies that the covenantor is to retain a control over the fund, and that more remains to be done on his part to make the transfer effectual.”

The authorities cited by him at the page above quoted support this statement. And see Lanigan’s Administrator v. Bradley & Currier Co., 5 Dick. Ch. Rep. 201 (at bottom of p. 205). There is nothing in the clause of the contract above cited which would prevent the defendant Wright, on a sale 'of his house, from actually receiving tire money himself from the purchaser. See generally on this subject 3 Pom. Bq. Jur. §§ 1235-1237.

The distinction, when dealing with pure personalty, is between a promise to pay out of the fund after it comes to the hands of the promisor and a direction to the present holder of the fund to pay it or a part of it to another person. The first is a mere promise; the latter is an assignment. In regard to land the distinction is between a mere promise to pay out of the rents or proceeds of sale when received, and a present agreement to devote the land or its rents to the payment of the debt.

The older adjudged cases on this topic are collected by Mr. Powell in 3 Powell on Mortgages (Boston ed., 1828), ch. 23 p. 1019, a, i and c.

In Legard v. Hodges, 1 Ves. Jr. 477, the owner of land covenanted with the trustees of his marriage settlement to raise £10,000 by setting apart and paying to them one-third part of the clear annual profits of his estates in England and the West Indies. Lord Thurlow said: “Excluding that case, none of the rest go to establish a proposition in contradiction to this maxim, which' I take to be universal, that wherever persons agree concerning any particular subject, that in a court of equity as against the party himself, and any claiming under him voluntarily or with notice, raises a trust. These persons have so agreed, and therefore this is a pure trust estate, and they must be declared trustees for one-third of the clear annual profits, and must account from the time of taking possession, having all just allowances.” Here the covenantor, by his deed, gave an equitable right to his trustees to intervene and seize the rents as they accrued. It was a right to invoke the aid of a court of equity to take the rents before they reached the hands of the landlord.

Suart v. Toulmin, reported only by Mr. Powell, was this: Hall, a testator, by his will, charged his real estate with the payment of his debts, and gave his widow a life interest in it. The heir-at-law and widow joined in a promissory note for money borrowed, in which was inserted a clause “out of the estate of the late William Hall.” The vice-chancellor (Leech) is reported to have said: “The question here is merely one of construction. Did the widow and children mean this instrument to create merely a personal obligation, or to operate as an agreement to affect the estate? They promise to pay out of the estate of the deceased father, that is, out of all the estate; and there being now no personalty, this instrument must be held to be an agreement to charge upon the real estate the money advanced.”

The difference between that case and the one under consideration is that there the promise was absolute — to pay out of the estate; while here it is conditional upon the event of the promisor selling his house, unaccompanied by any promise or covenant to make such sale at any time.

Hodgson’s Case, 1 Glyn & J. 13, illustrates this distinction. There the language was:

“As I am entitled to the benefit of any surplus which may remain of the produce of the sale of the premises assigned by Edward Gifford to you by indenture dated, &e., I authorize you to act and sell and pay yourself, out of that surplus, the sum of £250, which is due from me to you, with lawful interest for the same from the date hereof, for cash advanced to me this day on account of my interest in the said premises.”

And it was held to create an equitable mortgage because it gave the creditor authority to proceed and act for himself without further intervention by or aid of the covenantor.

The case of Christmas v. Russell, 14 Wall. 69, although it related to pure personalty, is instructive. Counsel in arguing (at p. 75) quotes Lord Hardwicke as saying (Ridgway’s Cases 194) : “If a debtor promises to pay his creditor out of the money to be recovered in a certain suit, and on the faith of this promise the creditor forbears to sue him, this creates no specific lien on the money recovered.” And Mr. Justice Swayne (at p. 84) sums up the law as follows: “An agreement to pay out of a particular fund, however clear in its terms, is not an equitable assignment; a covenant in the most solemn form has no greater effect. The phraseology employed is not material, provided the intent to transfer is manifested. Such an intent and its execution are indispensable. The assignor must not retain any control over the fund- — any authority to collect, or any power of revocation. If he do, it is fatal to the claim of the assignee. The transfer must be of such a character that the fund-holder can safely pay, and is compellable to do so, though forbidden by the assignor. Where the transfer is of the character described, the fund-holder is bound from the time of notice. A bill of exchange or check is not an equitable assignment, pro tanto, of the funds of the drawer in the hands of the drawee. But an order to pay out of a specified fund has always been held to be a valid assignment in equity and to fulfill all the requirements of the law. These views are fatal to the claim asserted by the complainants in behalf of the sureties on the bond.”

For these reasons I conclude that the covenant in question did not give the complainant a lien upon the land itself, and that the demurrer must be sustained and the bill dismissed, upon the usual terms.


author: Emery, V. C.

text:
    Samuel H. Grey, attorney-general, v. The Greenville and Hudson Railroad Company. Samuel H. Grey, attorney-general, v. The Greenville and Hudson Railroad Company and The Jersey City Belt Line Railroad Company.
    [Filed May 31st, 1900.]
    1. Defendant will not be attached for contempt in laying its tracks across a certain street in violation of an injunction, when it sets up by affidavit that another company has lawfully built and owns such tracks, since such question should be determined on formal issues in a proceeding'in which such other road is a party, and not in summary contempt proceeding.
    2. Gen Stat. p. 2660 ¶ 83 permits a railroad company to construct a line between terminal points named in the articles on the route filed in the secretary of state’s office. Gen. Stat. p. 265Jf ¶ 61 forbids the taking by condemnation of any located route of any railroad except to cross its route, provided that a railroad may be located on the surveyed route of another railroad with its consent. Defendant was enjoined from laying its track over a certain route, but another company constructed a line on the same route, with defendant’s consent. — Held, that these statutes did not authorize the existence of two railroad companies on the same located route, and, defendant having lost its right to occupy the route in question by consenting to its use by the other road, the injunction against it should not be dissolved.
    3. On an application by the attorney-general to restrain a railroad company from the excessive use of power in laying out its track, it is not necessary to prove that injury to the public results from the infringement.
    4. General Railroad law § 11, as amended by P. L. of 1891 pp. 129, 182, provides that a railroad company may, from time to time, either before or after completion of the main line, construct branches, and requires a deposit for each mile to be constructed, and fixes the time within which the branch must be commenced and finished after filing a survey. — Held, under these statutes, that a survey for a branch of a railroad need not be made and filed with the survey of the main line.

      5. In the absence of a showing that interference with public travel will result from the construction of a railroad, a preliminary injunction restraining such construction will not be granted on ex parte affidavits, where the answer shows facts entitling defendant to build such road.
    On information and supplemental information.

      Mr. Lindley M. Garrison, for the attorney-general.

      Mr. Charles L. Gorlin and Mr. liolert E. McCarter, for the defendants.
   Emery, V. C.

An order has been made, by consent, consolidating these causes and bringing on together the hearing of three motions made in the causes, as if the motions had been made on a supplemental information against both defendants, with leave to mould the pleadings before entry of orders or decrees.

The motions are — first, an application to attach the Green-ville and Hudson company for contempt for the alleged violation of an injunction or restraining order, dated April 31st, 1900, and which was issued in the first cause before the filing of the answer of that companjr, to the supplemental information in the cause; second, a motion by the Greenville and Hudson company, upon their answer to the supplemental information, to dissolve this injunction directed on the supplemental information ; and third, a motion by the attorney-general, in the second cause, for a preliminary injunction against both railroad companies to enjoin, pending final hearing, the construction of a railroad by either of them across Chapel avenue, a public highway within the limits of Jersey City. The opinion advising the issuing of a preliminary injunction against the construction of a railroad across the avenue by the Greenville and Hudson road gives the substantial facts relating to the situation up to that time, and I will now only state briefly the conclusions I reach upon the motions.

First. The motion to attach for contempt must be continued over until the final hearing of the cause. In these proceedings the allegation on the part of the attorney-general is that the Greenville and Hudson road has, since the restraifiing order, built its branch road across the avenue, in violation of the order. The Greenville and Hudson road, by affidavits, denies that it has built the road across the avenue, and alleges that the belt line road has built and owns the road, and has a lawful right to build it. Whether the belt line has, in fact, built the road, and has the right to build it, is an issue raised on the information subsequently filed against both companies, and it is a question which must be decided in that suit on proofs formally taken in a cause to which both companies are parties. It appears, therefore, that the question of the building of the railroad across the avenue, subsequent to the order, although it may, if built by the Green-ville and Hudson, involve a contempt of the order of the court, is a question which should be decided upon formal issues and proofs rather than on summary proceedings for contempt. If built in violation of the order of the court, the removal of the road would be necessary in order to punish or to clear the contempt, and the belt line company, which is alleged by both companies to have built the road and to be in possession of it, is manifestly entitled to be heard, before any such action is taken, where the claim is apparently made in good faith. This motion will, therefore, stand over, with leave to renew at final hearing upon the proofs then taken.

Second. The motion to dissolve the injunction directed to be issued against the Greenville and Hudson company, upon the answer filed to the supplemental information, must be denied. In its answer to the original information this company set up a location of its route on the route of the belt line company, at the place in question, made with the consent of the belt line, and declared its intention to construct on that location. After this answer to the original information, the order restraining the Greenville and Hudson from building its so-called branch across the avenue was advised upon the supplemental information. A railroad was subsequently constructed across the avenue, and, as is claimed by the Greenville and Hudson company’s affidavits in answer to the contempt proceedings, and by its answer in the suit against both companies, this road was constructed by the belt line on its own location. This location on the avenue at the crossing of the highway is the same location on which the belt line had previously consented that the Greenville and Hudson might construct its branch line. In the answer to the supplemental information against it alone, upon which answer it now moves to dissolve, the Greenville and Hudson still sets up and claims the right to construct its road across the avenue, up in the answer to the original information, which is made part of the supplemental answer by reference. In my judgment two railroads cannot be constructed on the same route, under this consent clause of the General Railroad law, and the actual construction by one road, with the consent of the other, will, in my judgment, determine the rights of location and construction as to both at the place where their routes coincide.

The authoritjr given by the eleventh section of the General Railroad law (Gen. 8tat. ¶. 2660 88) to railroad companies incorporated under it, to construct a railroad between the terminal points named in its articles upon the route filed in the secretary of state’s office, gives an authority, as against the state, to construct the railroad (not exceeding one hundred feet in width, unless required for cuts or embankments) across the public highways on the route as located. The survey and location of a route, and-the filing thereof, gives a right of location and construction which is prior to, and exclusive of, all other locations and construction. Morris and Essex Railroad Co. v. Blair, 1 Stock. 635 (Errors and Appeals, 1854.). This principle has never since been questioned.

The thirty-sixth section (Gen. Stat. p. 2654/. 61), forbids the taking, using or occupying by condemnation by any company formed under the act, of the located route of any railroad except for the purpose of crossing the route, with the proviso that a railroad may be located or constructed on the surveyed route of any other railroad with its consent, and not otherwise.

This provision cannot be construed, either as against the state or landowners on the located route, to authorize the actual construction and existence of two railroads on the same located route, for such power of imposing additional burdens upon the highways or private lands, after a railroad has once been constructed, cannot be inferred by implication. When a railroad, before the construction of its own road, has given its consent to the location and construction of another road upon its located route, the latter company has the statutory right to locate and construct its road on the prior location, and the construction of both roads on the same location not being authorized, it might by actual construction lawfully appropriate the route.

But this consent of the two railroads as between each other being something with which the state has no concern, so long as only one railroad is constructed on the same located route across its highways, it may be released, abandoned and rescinded by the subsequent act or consent of the two railroads. Coe v. New Jersey Midland Railway Co., 4 Stew. Eq., 105, 147 (Chancellor Runyon, 1879).

In the present instance, the Greenville and Hudson, after securing the consent of the belt line company to construct its road on the located route of the latter (across Chapel avenue), has consented to, if it has not actually procured or assisted in procuring, the construction of the road of the belt line road on the location. This, as it seems to me, is, so far as the permission of the state has been given to the construction of one railroad on the located route of another, an abandonment of this privilege of construction by consent. The Greenville and Hudson has no power by statute to construct its road over-the route of any railroad which has actually constructed its road, for the statute allowing one road to construct on the located route of another does not extend to its location or construction on a railroad already built on the location by the road having the prior right. The Greenville and Hudson road, therefore, by this subsequent construction of the branch of the belt line road on the original location thereof, and its own consent thereto, has lost any right which it might have had to cross this highway, in the construction of its own branch upon the route of the belt line road. The motion to dissolve must therefore be denied.

The third question arises on the application for a preliminary injunction upon the information filed against both companies to restrain them from the construction of their respective branch roads across Chapel avenue, either separately or jointly. As to the Greenville and Hudson company, the injunction must be granted for the reason above stated, viz., that its right to construct a branch road across the avenue upon the location of the belt line branch has been lost by its consent to the actual construction on this location by the belt line company of the railroad of the latter company. Having, in my judgment, thus lost, as against the state, any right of construction of its branch, across the highway, an injunction must issue against this excessive use of power, without regard to the question of actual damage. Upon this point I have nothing to add to the reasons given in my first opinion directing a preliminary injunction, except that since that opinion, and in a later English case (Attorney-General v. London and Northwestern Railway Co., 1 Q. B. 78 (1900), the court of appeal has affirmed the rule that on applications by the attorney-general to restrain a public company from the excessive use of power, it is not necessary to prove that injury to the public results from the infringement.

The application for a preliminary injunction to restrain the belt line company from constructing its branch road across the avenue must be denied. Two grounds for injunction were insisted upon at the argument, and were fully argued by counsel on both sides. First. That under the General Railroad law (section 11), there is no right in any railroad to construct branches unless the branches are located at the time -of the filing of the route and survey of the main line. By the eleventh section, as originally enacted (Rev. Stat. p 987), a company incorporated under it, after the survey of its route and the location of “other works, buildings, conveniences, appurtenances and appendages” had been filed, was authorized

“to construct, &c., * * * a railroad * * * between the points named in the articles of association * * * and construct, maintain and operate branches from the main line within the limits of any county through which said road may pass.”

Under this power to construct branches, there might be a question as to whether the branches to be constructed should not be located at the time of filing the survey and location of the main line, especially in view of the fact that the second section of the original act, as amended in 1879 (Sup. Rev. p. 825), required a deposit with the articles of $2,000 for every mile of road proposed to be built, and there was no special provision authorizing a subsequent deposit for branches constructed or proposed to be constructed. But the amendatory act of March 10th, 1891 (P. L. of 1891 p. 129), amends section eleven, and after setting out the entire section as then existing (a portion of the act omitted in Gen. Stat. p. 2660), the amendment changes the original section as to the power to construct branches, by expressly providing (1) that the company may “from time to time,” either before or after completion of the main line, construct branches,” &c., and (2) (P. L. of 1891 p. 182) by providing that the survey of the route of any branch shall not be filed until a deposit of $2,000 per mile, &e., shall be made, and (3) that all such branches shall be commenced within six months from the date of filing the survey thereof, and completed within two years from the date of commencement. This amendment, in my judgment, authorizes the construction of the branch by a separate survey filed after the survey of the main line, and the objection that the survey was not made and filed with the survey of the main line, is not well founded. The second objection made is one of fact, viz., that the road called a branch is not in fact a branch road of the belt line, within the meaning of the Railroad laws. The solution of a question of this character depends manifestly upon the particular circumstances of each case, and where the answer, as here, claims in good faith that the road is a branch which it is entitled to build and shows facts which fairly entitle it to be heard upon this claim, a situation exists which entitled the company to a full hearing, and the question should not be decided adversely to the company upon ex parte affidavits. Whether the construction should be enjoined pending the hearing upon the facts depends largely, if not altogether, upon the character of the interference with public travel pending the hearing, and the necessity of preventing this by preliminary injunction. No such necessity appears to exist in the case, and the preliminary injunction against the belt line company should not be allowed.

The case being one where the Greenville and Hudson company is entitled to a speedy review of the legal questions decided, the order for injunction against it will be granted on condition that if it appeals from the order, the attorney-general, if so requested by appellant, shall file his answer to the petition of appeal within five days after service thereof, and accept notice of argument at "the next term of the court of errors and appeals.


text:
    The Madison Athletic Association v. Helen M. Brittin et al., executors of William J. Brittin, deceased.
    [Filed June 19th, 1900.]
    1. A renewal of a lease containing' an option to purchase recited that the lease was renewed “on the same terms and conditions,” and that the-option to purchase was to be exercised only on condition that the lessee would enter into a covenant, to be inserted in the deed, to erect a building on the premises to cost a certain sum. — Held, that this gave an option to purchase, independent of the question whether the option was ipso factorenewed by the mere renewal of the lease “on the same terms and conditions.” — Held, further, that the agreement was not so unconscionable that a court of equity would refuse to compel specific performance thereof.
    2. Equity will not ordinarily enforee specific performance of a covenant by a grantee to build on the premises conveyed, since damages at law for-breach of the covenant are generally an adequate remedy, and the conrt has no power to compel performance of such condition.
    3. Specific performance of an option to purchase, which is to be exercised only on condition that the vendee will enter into a covenant, to be inserted in the deed, to erect a building on the land conveyed, will not be denied as against the vendee on the ground that the remedy is not mutual, when it appears that on a subsequent breach of the covenant adequate relief can be obtained by the vendor by the recovery of substantial damages at law.
    4. Whether, if the damages recoverable at law, although substantial, would still be inadequate for full relief, the specific performance of the-contract to build may be enforced in case of breach, quwre.

    Heard on bill, amended bill, answers, replication and proofs..

      This bill is filed against the devisees of the vendor for specific performance of a written contract of sale, by which, as is claimed, the testator gave complainant an option to purchase lands leased to them by the testator. The lands in question comprise a tract of land in Madison, fronting about three hundred feet on Central avenue and .about five hundred and fifty feet on Brittin street, and were originally leased by testator to complainant by three different leases, each containing a separate option to purchase the portion of the tract contained in each lease. One lease, dated April 12th, 1892, included a lot three hundred and thirty-five feet on Brittin street by three hundred and thirty feet deep, which was rented for five years, from April 1st, 1892, at $75 per year, with an agreement by the lessor to convey to the lessee, for $3,500, at any time during the lease, upon ten days’ written notice. Another lease of the same date and for the same term, and for the rental of $5 per year, demised a lot adjoining the first on the south, being seventy feet on Brittin street by one hundred and seventy feet deep, with an agreement by the lessor to convey to the lessee, for $170 cash and $180 stock of the association, at any time during the lease, upon like notice. About a year later, and by lease dated April 12th, 1893, the lessor demised a third tract adjoining the first tract above mentioned on the north and being one hundred and fifty feet on Brittin street by about three hundred feet on Central avenue, for the term of four years, from April 1st, 1893, at the yearly rental of $20. This lease also contained an option to purchase the property leased, during the term and upon a similar notice. The lessor agreed to convey this third tract for $3,000, free and clear, or, at the option of the lessee, for $2,000, provided the lessee “will erect a club-house upon the said premises, to cost not less than $6,000,” and in the event of the lessee exercising this option, “then the deed shall contain an agreement by the grantee to build a club-house upon said premises.” This lease contained also an option to purchase a portion of the leased property, sixty feet front by one hundred and fifty deep, for $720, free and clear. All of the leases contained provisions allowing the lessee to prepare the grounds, by grading or otherwise, for the games and purposes of an athletic association, and for the erection of build'ings and structures, which might be removed during the leases ■ and within thirty days thereafter. The association took possession under these leases, and prior to April 1st, 1897, had expended between $2,000 and $2,500 in the grading and preparation of the grounds and in the erection of buildings, fences, ,&c. Yo notice of the exercise of any of the options to purchase was given during the term of the leases, nor were the leases themselves renewed before the terms expired. The association, however, remained in possession of all the lands after April 1st, 1897, and, on April 24th, 1897, a renewal for one year was endorsed on each lease and signed by the lessor. The form of the renewal gives rise to one question in the cause. On the first and second leases (dated April 12th, 1892, for five years), in which the option was for a purchase, free and clear, upon payment of a sum fixed, the-renewal was as follows:
    “In consideration of one dollar, ■ the within lease is hereby renewed for the term of one year from the first day of April, 1897, upon the same terms and conditions as therein contained, but it is expressly understood and agreed that the option to purchase may be exercised only upon the condition that the said Madison Athletic1 Association or its assigns, will enter into a covenant, to be inserted in the deed for the'premises, to erect on the premises herein described, or on the premises described in the lease, bearing date April 12th, 1893, a club house to cost not less than six thousand dollars.
    “William: J. Bkittiw. [l. s.]
    “Witness : H. C. Oondit,
    , “April 24th, 1897.”
    The renewal on the third lease (dated April 12th, 1893) was similar, except that the association was to “enter into a covenant, to be inserted in the deed for the premises, to erect on the premises a club-house to cost not less than $6,000.”
    After the execution of these renewals the lessees remained in possession, paying rent, but not exercising any option of purchase before the death of the lessor, in September, 1897. The lessor devised the leased premises to the defendant executors in trust for the other parties defendant. On January 21st, 1898, the association served written notice upon the executors, declaring their desire to exercise their options and to purchase all the leased lands for $5,670 in cash and shares of the association to the amount of $180, with the obligation, on their part, to erect on the premises a club-house to cost not less than $6,000, and requested deeds for premises to be executed with reasonable despatch, and to insert in the deed for the first tract mentioned in the notice (being the tract leased April 12th, 1893) a covenant, on their part, to erect on said premises a club-house to cost not less than $6,000, tendering themselves ready to accept the delivery of the said deed and pay the purchase-money. The defendant executors refused to execute the conveyances or to acknowledge complainant’s right to any conveyance, and the bill for specific performance was filed by the lessee on March 26th, 1898, before the expiration of the leases.
    The answer of the defendants to this bill set up, among other defences, that the renewals of the leases made on April 24th, 1897, did not contain a renewal of the options to purchase contained in the original leases.
    An amended bill was thereupon filed, by which, in answer to this claim of defendants, the complainant, while insisting that the renewals, as executed, extended to the options as well as to the leases, charged that the agreement between it and the lessor was that the option as well as the leases should be renewed, although some uncertainty might have arisen by the inadvertence of the scrivener in not expressly providing in the renewals “that the within lease and option are renewed,” and the amended bill prayed a reformation of the renewals, to conform to the agreement, and a decree for the execution of deeds according to the option and renewals, tendering itself ready to receive the same and pay the full consideration. The answer to the amended bill denies any agreement, upon the part of the testator, to extend the options or any of them; denies that the agreements signed include the options, and set up the statute of frauds as to any agreement outside of the written renewals. The other defences set up by the answers are the mental incapacity of the lessor at the time of signing the renewals, and the unconscionable character of the bargain, it being alleged that the property was worth several thousand dollars more than the price agreed to be paid.

      Mr. Oharles A. Rathbun and Mr. John B. Yreeland, for the complainant.

      Mr. Alfred Mills, for the defendants.
   Emery, V. C.

(after stating the issues).

No evidence of mistake upon the part of either the lessor or lessee in reference to the form of the renewal has been offered, and in the absence of evidence showing a mutual mistake of both parties, the agreements for renewal cannot be reformed, but the rights of the parties, so far as they depend on the form of the contract, must be determined by the construction of the agreement as it stands. These agreements for renewal do include an option to purchase the property, of which the lease is renewed by express terms. It is true that in the writing itself the only express subject of “renewal” is the lease, and if this “renewal,” eo nomine, were the only basis for the option, there might perhaps be a question whether a mere renewal of a lease “upon the same terms and conditions,” would include an option to purchase contained in the lease. But the further clause contained in the renewal as to the option to purchase, is itself an agreement that the option to purchase mentioned in the lease, and thereby referred to, may be exercised upon certain conditions. This express' stipulation in the agreement of renewal, therefore, gives the option, independent of the question whether the option was ipso facto renewed by the mere renewal of the lease, upon the same terms and conditions. Upon the question as to the lessor’s mental capacity to sign the renewals, I reach the conclusion that this defence is not sustained. While the lessor was a very old man and in a failing condition, the evidence of Mr. Condit, with whom the transaction occurred, satisfactorily establishes the lessor’s mental and business capacity, and that the renewals were made by the lessor in the exercise of due deliberation and judgment. Testator’s son Henry, in whom the testator had great confidence, and who had with his father settled the terms of the options, originally declined in April, 1897, to advise his father in reference to the renewals, because the original options had given rise to disputes in the family and Henry told his father that he must exercise his own judgment. Mr. Condit’s evidence upon the subject of his dealings with the lessor impressed me as truthful, and taken in connection with the other evidence in the case, as to the lessor’s mental capacity, I do not think it has been overcome by the evidence produced by the defendants, and this defence should therefore be overruled. Eor do I think that the defendants have established that the bargain was unconscionable. The admissions of the complainant in a circular issued by it in the fall of 1897, show that a bona fide offer for $10,000 had been made for the land, but this offer was based on the condition of the land as improved by the association, at an expense of about $3,000 (not including buildings), and from the evidence it would seem probable that the value of the land for building lots increased somewhat after April, 1897. The value of the whole tract in April, 1897, free and clear, and for the purpose of dividing and selling for building lots, according to the evidence of the most reliable witnesses, ranged from about $7,000 to $8,000, according to complainant’s witnesses, to $9,000, according to defendants’ witnesses. The sum of $5,670 in cash and $180 in stock was therefore considerably below the actual value of the property, and if these payments had constituted the entire consideration to the lessor, there would be some question as to giving the aid of a court of equity to compel the conveyance. But an important part of the consideration to the lessor was the obligation imposed on the grantee to erect a club-house on the premises costing a considerable sum — $6,000. Such erection, if made, would (or might) increase the value of lessor’s other property in the neighborhood, and the evidence of Mr. Condit, as well as the change of the options for the first two tracts leased, show that the lessor relied on this erection of the club-house as a material part of the consideration. As such, it would fairly be an element in the bargain between the parties, reducing the cash price to be paid. What amount of reduction from the cash value should be made, was a question the decision of which should be left to the lessor himself, with whose decison on this point the court should not interfere, unless it is made to appear that the reduction was clearly inequitable. I cannot conclude upon the evidence presented that the reduction from the cash value of the property, made by the testator, in view of the erection of a club-house on the premises, for the ultimate benefit, as he supposed, of his remaining property, made the bargain an inequitable or unconscionable one, and this defence is therefore overruled.

These conclusions dispose of all the questions formally presented by the pleadings and argued by counsel, 'but my consideration of the case suggests two other questions arising in the case, the decision of which may affect the complainant’s right to specific performance.

The erection of a club-house, as clearly appears by the evidence, was a material part of the consideration to be performed by the complainant, and the complete performance of the contract of sale on the part of the complainant would be secured only by such erection.

The erection of the club-house by the grantee was a material consideration in the lessor’s mind in making the contract, and not the mere insertion in the deed of a covenant to erect, leaving him to sue for the indefinite or uncertain damages arising from a breach of covenant. This intention of both parties, that the-building should be erected and that the parties should not be left merely to the remedy for a breach-of the covenant, would seem to be fairly implied from the whole transaction, and is clearly shown by the lease giving the original option for the third tract. This agreement expressly provides as part of the agreement for the option, that the reduced cash price is to be made, "provided the association will erect a club-house upon the premises,” &c., and the agreement for the insertion of the contract in the deed is then also made. But the deed not having yet been actually made or accepted, and the vendee having applied to a court of equity to compel the specific performance of the contract for purchase, the performance on the vendee’s ■ part of this agreement to build, would seem to be essential.. Mutuality of right to specific • performance of a contract is necessary, in order to complete equity, and, as is well settled, such mutuality is secured by the filing of the bill by the vendee in the case of an option to purchase, where the whole consideration is paid or secured to the vendor on the delivery of his deed. The cases cited by complainant’s counsel fully establish this rule. But where a material part of the consideration for the deed remains to be rendered thereafter by the. vendee, under a covenant to be inserted in the deed, then the mutuality of the right to specific performance of the contract for purchase may depend upon the question whether the covenant to be inserted in the deed can be thereafter specifically enforced against the vendee. If not, the question arises whether in this suit a specific performance should be decreed against the vendor. From the disclosures made in the evidence, it would appear that it is within the bounds of possibility that the association may either not build or not maintain the club-house on the premises.

In this aspect of the case, therefore, two questions arise. First. Whether specific performance can be enforced against the vendee of the covenant to build, in the form agreed on, which fixes no time and is definite only in respect to cost; and, if such specific performance cannot be decreed, then, Second. Whether a specific performance in this suit must not be denied on the ground of want of mutuality. These questions fairly arise and must be settled in this suit, and inasmuch as they have not been argued by counsel, I will hear further argument on these points reserved.

(These were afterwards argued by the same counsel.)

ITpon the points which were reserved for argument by my former opinion in this case I reach the following conclusions, after considering the arguments and briefs of counsel:

The doctrine of the later cases is that the court will not, ordinarily, enforce specific performance of building contracts, not only on the ground that damages at law are generally an adequate remedy, but also on the ground of the inability of the court to see that the work is carried out. Ryan v. Mutual Tontine, &c., Association, 1 Ch. 116, cases cited at p. 128 (1893); Beck v. Allison, 56 N. Y. 366 (1874); Pom. Spec. Perf. §§ 23, 312.

One exception to the general rule has been established in England, in cases where a public company takes lands from a landowner on the terms of carrying out certain works, as part of the agreed compensation (Ryan v. Mutual, &c., Association, supra, 128), but I have not been referred to any cases establishing an exception to the general rule, in cases of private purchase, where the future erection of building by the grantee on the lands conveyed is a substantial part of the consideration. But while it may be doubtful whether a specific performance can be decreed of the covenant by the grantee to build upon the premises conveyed, I conclude that this doubt should not in the present case deprive complainant of its right to specific performance on the objection that the remedy of specific performance is not mutual. The covenant to build was intended by the parties to be carried out after the conveyance of title, and not as preliminary to such convejrance, and while the actual future erection of the building was in the minds of the parties an essential part of the consideration, which induced a reduction in the cash price to be paid, yet I am satisfied, upon further reflection, that in such cases it must be taken to have been contemplated by the parties, that the conveyance of title was to be made to the grantee before the erection, and that the grantor’s security for the subsequent erection of the building was intended to rest upon the good faith of the grantee and the obligation of his covenant to build, to be inserted in his conveyance. In case of a breach of the covenant, these rights of the grantor are to be protected by an action for damages or for specific performance, and these rights, so far as relates to a specific performance, must be left for determination hereafter, if occasion arises.

Covenants for building upon or otherwise improving lands which are sold, to some extent, on the faith of the covenants, are so frequent and advantageous, especially in relation to the sale of urban and suburban property, that it would seem to be unreasonable and prejudicial to remove agreements for sale of land, containing such covenants, from the operation of the usual rule entitling the parties to specific performance, for the sole reason that the court may not afterwards be able to specifically enforce the covenants. The main object of the contract— the purchase and sale of land — is specifically and mutually carried out according to the usual rule and according to the expressed intent of the parties, by the decree for a conveyance containing the covenants for future building expressly provided for, and this should be directed, if the covenant, which is found to form a substantial part of the consideration, would be effective for the substantial protection of the grantor, either at law or in equity. If upon the breach of such covenant substantial damages could not be recovered, nor specific performance decreed, then, in my judgment, it would not be equitable to compel a specific performance of the agreement to sell, and decree for performance should not be granted. In the present case, it seems to me that upon breach of the covenant to be inserted in the deed, substantial damages at law would be recoverable, one element thereof being the difference between the actual market value of the lands and the cash price actually paid, or at least such part of the difference as can be fairly attributable to the vendor’s reliance on the covenant. In Soames v. Edge, Johns. 669 (1860) (heard on demurrer), B having agreed to build a house on land of A’s and to accept from A a lease of the land and house, which lease A agreed to grant when the house should have been built, it was held, on B making default in building, that A was entitled to damages for the non-building (which under the English statute was recoverable in equity), and also specific performance of the contract to accept a lease.

I express no conclusion upon the question whether if the damages recoverable at law, although substantial, would still be inadequate for full relief, the specific performance of the contract to build may be enforced in ease of breach.

The form of decree will be settled on notice, if necessary.