text:
    Margaret D. Merselis v. Thomas C. Van Riper, Mary E. Van Riper et al.
    1. A widow in possession as dowress, under lier right of quarantine, of piemises which liad been mortgaged by her husband while single, is entitled to protect her estate therein by redeeming from such mortgage.
    2. A dowress, in redeeming from a mortgage in order to protect her estate, should, as between herself and the devisee of the fee, pay a proportionate amount of such debt, to be ascertained by apportionment on the basis of the present value of her life estate.
    3. On foreclosure of a mortgage against the widow and the devisee of the mortgagor, where the widow is entitled to dower, which has not been assigned, the proportion of the debt to be borne by each, respectively, must be ascertained according to the life tables, and the premises sold, subject to the dower, to pay the amount fixed as belonging to the devisee to pay, and the widow’s right to be sold to pay the other portion.
    Exceptions to master’s report.
    This is an ordinary bill to foreclose a mortgage made by a man while single, upon a house and lot in the city of Paterson. He afterwards married the defendant Mary E. Van Riper, and died leaving one child, the defendant Mrs. Van Iderstein, having devised the premises to his sister, Mrs. Merselis, the complainant, and two others, in trust for the use of Mrs. Van Iderstein for life, and at her death to go to her children. The complainant, Mrs. Merselis, became the owner of the mortgage by assignment before the death of her brother.
    To this bill the widow alone made answer, and therein set up that, at and before the death of her husband, the premises were occupied in part by her and her husband, and in part by tenants of her husband, and that she remained in possession, by right of quarantine, of that part of the premises which had been occupied by herself and her husband, and that no dower had been assigned to her. She alleges by her answer that there is no practical difficulty in assigning dower to her, and that she is willing to .unite with the trustees of Mrs. Van Iderstein in the expense of putting and keeping the premises in order so that she can enjoy her dower and the trustees have the benefit of a good rent for the balance of the premises. She prays that her dower may be set off to her before any decree of foreclosure be made, and that the mortgage debt may be apportioned between that part of the premises to be set off to her as dower and the remainder, and that she may have an opportunity to redeem her estate of dower upon equitable terms, if such redemption is necessary, or that the encumbrance of the mortgage may be first satisfied from the remainder of the premises, and that her legal and equitable rights may be ascertained with respect to the mortgaged premises and the encumbrance thereon, and if the mortgaged premises shall be decreed to be sold without first setting off dower, that the same may be offered for sale in the first place, subject to her dower, she being willing in such case to bid for the premises the amount due to' the complainant, with costs of suit and sheriff’s fees, and that her right as dowress may in all other respects be protected by the decree of the court.
    A motion to strike out that answer was refused by one vice-chancellor, and then, on an application to another vice-chancellor, an order of reference was made to a master, on the ground that the answer did not set up any defence or present any question except such as was the appropriate subject of reference to a master. The order is special, not only to ascertain and report the amount due to the complainant for principal and interest on her mortgage, but also to report upon “ the other questions raised by the bill and answer filed herein.”
    When the matter came before the master, the widow, by her counsel, attended and submitted an argumentative proposition to him in the presence of the counsel of complainant, which admitted that the complainant was entitled to a sale of the premises in such manner as to insure her getting her money, but that the foreclosure should not be so managed as to cut off the widow’s dower and convert the property into money, if such course could be avoided without risk to the complainant; that the mortgage debt should be apportioned between the estate in fee and the estate for life of the widow, and that each estate should be sold for its proportionate share — that is to say, that the whole property should be sold, and sold subject to the dower right, to raise one share of the debt, and then the dower right should be sold to raise the other portion. If the total realized from both sales is not sufficient to pay the complainant’s debt, then the superior right of the complainant should come in and have the whole estate offered for sale, as the most advantageous mode of sale in order to raise the complainant’s money.
    In other words, the proposition was to ascertain the share of the mortgage debt properly payable by the widow and to sell the fee subject to the estate for life in the widow', to pay the balance, so as to enable the widow to protect her interest by either paying the amount due by her or by buying it in and the widow offered to give a bond, if required, with security, to secure the raising of the entire amount due the complainant, with interest and costs of suit, upon the two separate sales. She also offered before the master, and at the hearing of the exceptions, to pay at once to complainant the amount of the mortgage debt, with interest and costs, and take an assignment of the mortgage and decree, the decree being made in accordance with her insistment of her rights.
    The master declined to adopt this view and reported the amount due, and then, with regard to “all the other questions raised by said bill and answer,” he reported the condition and size of the curtilage — that the value was ample security for the amount of the complainant’s mortgage, and that the premises are so situated that one-third thereof could not be set off without great injury to the value of the remainder, if at all, and that, as a matter of law, in his opinion, the premises should be-sold in one parcel, to raise and pay the amount of the complainant’s mortgage, and free of dower.
    The exception is to this finding.

      Mr. Eugene Stevenson, for the exceptant.

      Mr. Henry Traphagen, contra.

   Pitney, V. C.

The question of fact as to the value and situation of the premises was reported on the master’s personal knowledge. Ko evidence was given on the subject of their being so situate that dower could or could not be assigned, except that of Mrs. Van Riper, and her evidence was to the effect that it was practicable to assign dower to her, and this evidence appears to have been undisputed. Her age, also, was given.

The master, however, it is to be observed, does not find that it was impracticable to assign dower by metes and bounds, but, in effect, that such assignment would greatly injure the value of the remainder of the premises.

The right of the widow to have her estate in dower protected in the mode proposed by her seems to be indisputable. 2 Jones Mort. § 1067 ; Opdyke v. Bartles, 3 Stock. 133.

The widow is in possession of a defined portion of the premises, as dowress,' under her right of quarantine. Her possession is a freehold estate. It may continue for her life, and can be reduced in extent only by an actual assignment of dower. She is entitled to have this estate protected by redeeming this.mortgage. As between her and the complainant, she is bound to pay the whole; as between her and the owner of the fee, the amount she should pay is to be apportioned upon the basis of the present value of her life estate. And if the owner of the fee in this case had paid off this mortgage, she would be obliged to pay an amount to be ascertained in the same manner as her share in the proceeds of the sale of the whole premises would be ascertained.

This mode of dealing with the widow’s right of dower in such case was adopted by Chancellor Kent in Swaine v. Perine, 5 Johns. Ch. 482 (at p. 493), and in this state by Chancellor Green in Chiswell v. Morris, 1 McCart. 101. 2 Scrib. Dow. (2d ed.) 696 ; Bell v. Mayor, 10 Paige 49 ; Foster v. Hilliard, 1 Story 77.

I am unable to see any reason why the widow should not be entitled to redeem this mortgage for the protection of her life estate in the premises while she is in possession of a specific portion under quarantine, and before dower is assigned her, precisely as would a grantee by the husband of a portion of the mortgaged premises, subject to a just proportion of the mortgage debt. In such case, the practice is well settled in New Jersey to sell the property in parcels if the complainant is not prejudiced thereby; and the right of a party owning a portion of the mortgaged premises to stop a sale by paying a proper share of the amount due is well settled. Stillman v. Stillman, 6 C. E. Gr. 126; Hoy v. Bramhall, 4 C. E. Gr. 563; Mickle v. Rambo, Sax. 501; 2 Jones Mort. §§ 1063, 1067; Pearce v. Morris, L. R. 5 Ch. App. 226 (1870), where the subject is fully discussed; Howard v. Harris, 1 Vern. 33; Palmes v. Danby, Pr. Ch. 137, where it was held that a dowress redeeming had a right to hold the mortgage against the heir; and see 1 Pow. Mort. *311 et seq. and notes; Saville v. Saville, 2 Atk. 459 (at p. 463); Howard v. Attorney-General, 2 Mod. 174; Coote Mort. *517, *526.

By. strict right, the complainant must not be hindered or delayed in his foreclosure .by any questions arising between the defendants out of dealings with the premises subsequent to the mortgage. But this is a right on the part of the complainant that is seldom used in this state to prevent the defendants from appearing before the master and having him arrange the sale in parcels, provided such a sale does not affect the value of the premises in such manner as to prevent their bringing enough to pay the whole amount due, the time occupied in settling the rights of the defendants inter sese not usually causing such a delay as to seriously interfere with the complainant’s rights.

Strict practice required that the conflicting rights of the several defendants, which arise subsequent to the giving of the mortgage, should be administered and settled upon cross-bills; but it has not been the practice in this state to drive parties to that expense, but a well-settled practice has arisen of settling such rights before the master. At first I was inclined to think that there should have been a cross-bill in this case, but the complainant herself is one of the trustees under the will of the mortgagor and husband of the widow, and as such is the legal owner of' the premises, subject to the dower right of the widow, and there is not the least room to suspect that the rights of the cestioi que trust are being prejudiced for want of her having a day in court.

The result is that the exceptions must be sustained, the proportion of the debt to be borne by the dowress and devisee respectively must be ascertained according to the life tables, and the premises sold subject to the dower to pay the amount fixed as belonging to the devisee to pay, and the widow’s right to be sold to pay the other, the costs to be borne in the same proportion. It will probably not be necessary to make a reference in order to make this ascertainment. The details of the decree will be settled upon notice.


source: Caselaw Access Project

author: Pitney, V. C.

license: Public Domain

text:
    Lee et al. v. The Hubschmidt Building and Wood-Working Company and Aaron Kevitt.
    Machines purchased by a corporation, and adapted to the business which it is organized to carry on — ■“ a general building and wood-working business ”— and placed by it in its mill, and fastened to the building to a certain extent, and not moved about from place to place in actual use, are fixtures.
    On bill, answer and proofs.

      Mr. Thomas N. McCarter, Jr., for the complainants.

      Mr. John B. Humphreys and Mr. George P. Bust, for the defendants.
   Pitney, V. C.

This bill is filed by a mortgagee of real estate to enjoin waste upon the premises. The question is as to whether certain machinery in a building on the premises was a part of the realty, or was personalty and not subject to the mortgage.

The machinery consists of a boiler and engine, shafting leading therefrom, a tenoning machine, a moulding machine, a planer, a cross-cut saw, a lathe, a joiner and a dado machine. These machines were all intended to be used in the preparation and manufacture of rough lumber into various forms and articles used in house-building.

The defendant corporation was organized on the 12th of Octo.ber, 1893. In the certificate of incorporation the purposes for which it was organized are stated as follows:

“The object for which the said company is formed is to conduct a general building and wood-working business, to buy lands and to erect thereon buildings for manufacturing purposes, and machinery necessary and incident thereto.”

The principal stockholders are two brothers by the name of Hubschmidt, who were carpenters and builders, and, before the organization, owned a lot with an ordinary carpenter shop upon it, and immediately after the organization of the company conveyed this lot and carpenter shop to it, and then proceeded to equip it with the machinery in question, which is adapted to carry out the objects of the corporation, namely, “to conduct a general building and wood-working business.”

The cause was first brought before the court upon an application for an injunction, on bill, answer and ex parte affidavits, which resulted in an interim restraint. Afterwards the parties submitted the cause, as on final hearing, upon the pleadings and the affidavits and exhibits for proof. The answer, though not called for under oath, is sworn to, but for present purposes cannot be considered as evidence, since a replication was filed.

With regard to the extent to which the machinery was fastened to the building or the earth, the affidavits are, in some respect's, meagre, but they show that the boiler was merely set upon a solid foundation upon the ground. The engine was fastened to wooden timbers or sills previously sunk in the ground, and then fastened and imbedded in broken stone. The shafting ran from the engine under the floor of the carpenter shop, and the belting and. gearing came up through the floor to the different machines that were located in the room as convenience required, and the machines were fastened to the floor and to the beams in the ordinary way that such machines are fastened by screws and bolts and braces.

The allegation in the affidavits annexed to the answer is that the machines, including the engine, are rather light affairs, and that the fastening was simply to keep them steady, to prevent them from jarring and jumping about when in motion.

Under the case of Blancke v. Rogers, 11 C. E. Gr. 563, unexplained by subsequent cases, I should have said that they were not fixtures. But that case has been explained and its application limited by the recent case of Feder v. Van Winkle, in the court of errors and appeals, reported in 8 Dick. Ch. Rep. 370. I refer particularly to the language of the court found on pages 372 to 375. There is no doubt that the machines here in question may all be taken away and set in another building, but with regard to that quality, Mr. Justice Van Syckel, at top of page 373, remarks that that is not conclusive that they are not fixtures. He says: “A steam-engine, to take on the qualities of a fixture, need not be made specially for the building in which it is planted. It may, like any other piece of mechanism, be removed and used with equal advantage in any other establishment for which it will furnish sufficient power.” And further on he says: “There must be actual annexation, with an intention to make a permanent accession to the freehold, but it is not necessary that there be an intention to make the annexation perpetual.” Then he adds this significant remark: “The intention must exist to incorporate the chattels with the real estate for the uses to which the real estate is appropriated, and there must be the presence of such facts and circumstances as do not lead to, but repel, the inference that it is intended to be a temporary annexation.” Then he says that in Blanche v. Rogers the machines there “ were movable in the building, and were moved about at the convenience of the owner, and run from different parts of the shafting.” He points out that the same was true of the machines in question in the case of Penn Insurance Co. v. Semple, 11 Stew. Eq. 575.

Then we have the case of Speiden v. Parker, 1 Dick. Ch. Rep. 292, also in the court of errors and appeals. Speaking of the implements in that case, Mr. Justice Van Syckel, in Feder v. Van Winkle, says: “Not one of the implements involved appeared to have been specially adapted to the place in which it was used — some were set in the earth — and all could have been removed and applied to the prosecution of a like business elsewhere. The decision,” he says, “ must rest upon the facts that the appliances were actually annexed; that they were adapted to and used m the business for which the realty was held by the owner; that a common purpose was to be promoted by attaching the chattels to the freehold; that the just inference was that the annexation was intended to continue so long as the business was prosecuted on those vremises, aud that the enterprise was intended to be permanent in the sense in which that term is used in business transactions — permanent as contradistinguished from temporary.”

Applying those principles to this case, I come, not without some hesitation, to the conclusion that the articles in this case are a part of the realty. The period of time for which this company was organized was fifty years. It deliberately purchased these machines, which were adapted to the business which it was organized to carry on, to wit, “ a general building and wood-working business,” and proceeded to place them in this building. They were all fastened to the building to a certain extent; none of them were moved about from place to place in actual use, and these circumstances lead to the just inference “ that the annexation was intended to continue so long as the business was prosecuted on those premises, and that the enterprise was intended to be permanent in the sense in which that term is used in business transactions.”

It is true that the defendants, the manufacturing company, and their assignee, Kevitt, to whom they have attempted to convey these articles of machinery, declare positively that it was not their intention to annex to the freehold, but I cannot take such declaration as sufficient to overcome the just and necessary inference to be drawn from the circumstances above stated.

I will advise a decree for an injunction to continue until the complainants’ mortgages are paid and satisfied.


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    William Duffy v. John Kelly and The Bavarian Brewing Company.
    A lease provided that ,the tenant should have the option of extending the same for another term, “ unless the landlord shall pay a fair price for the building,” to be erected by the tenant, provided three months’ notice be given by either party before the expiration of the lease. — Held, that a suit by the landlord, who had elected to purchase the building and had given the required notice, to enforce such provision, was in effect a suit for specific performance, which equity, after fixing the fair value of the property, would enforce.
    The suit is in the nature of one for specific performance. The complainant, by his bill, sets out that he is the owner of a lot of land in Hoboken, known as No. 165 Newark street, and that on the 2d of October, 1891, he demised the same unto one Adolph Horn, for the term of five years from that day, and the lease contained a clause in these words:
    “And it is further agreed that the tenant shall have the option of extending this lease for the further period of five years for the same rent, unless the landlord shall pay a fair price for the building that is to be put on the premises by the tenant, provided three months’ notice in writing is given by either party before the expiration of this lease.”
    The bill further sets out that a building was erected on the premises by Horn, who occupied the same, and, in the year 1894, assigned the leasehold interest to the defendant John Kelly, who took possession and has occupied as assignee; that subsequently Kelly executed a chattel mortgage on the premises to the defendant the Bavarian Star Brewing Company, to secure $700; that on the 30th of June, 1896, and more than three months before the end of the term created by the lease in question, the complainant gave written notice to Horn and Kelly that he had elected that the lease should not be extended for the further term of five years, but that the same should terminate and come to an end on the 2d day of October then next, and that the complainant was willing to pay a fair price for the building erected thereon by Horn, and that Kelly was notified to quit and surrender the premises at the end of the term. .
    The bill further alleges that a fair price of the building was $250, and that complainant tendered that amount to Kelly, but that Kelly refused to accept it. Complainant tenders himself ready and willing to pay to Kelly, or to the mortgagee, as the court may decree, such sum as the court shall deem a fair price for the building, and- he alleges that he cannot safely pay to either without the consent of the other, except by the direction of this court.
    The defendants have answered separately. Kelly admits the material allegations of the bill, except the'cost of the building and the value of the property. He alleges that the building originally cost $1,000, and that it is worth that now. He admits the mortgage, and that the full amount of $700 is due upon it. Finally, he takes the point in his answer that this court has no jurisdiction, and that the complainant has full remedy at law.
    The answer of the brewing company admits simply that it had notice of the clause of renewal in the lease; sets up that the whole amount is due, with interest, on the mortgage, and prays such relief as the court may deem equitable and just.
    There is no allegation in the pleadings that Kelly ever gave complainant notice, as required by the lease, that he elected to renew the term for five years, and no evidence of any such notice was produced.
    Evidence was gone into as to the value of the building. The witnesses for the complainant placed it at about $250, or a little more, and those for the defendant placed it at upwards of $600. Horn, the lessee, called by complainant, stated the original cost of the building, with sewer and water connections, to have been $611. A witness for defendant went into a detailed statement of its present value, and fixed it at $635, that being the amount it would cost to replace it.

      Mr. Gilbert Collins, for the complainant.

      Mr. Henry Puster, for the defendants.
   Pitney, V. C.

First, with regard to the jurisdiction of the court.

The clause in question is, in effect, a contract on the part of the lessee to convey the building to the complainant, lessor, at his option, at a fair price. This is a necessary implication from the scope and purpose of the contract. If the building was, in fact, so annexed to the land as to be incapable of removal as a trade fixture, then the legal title was in the lessor and no actual conveyance is necessary. If' on the other hand, the lessee has the right to remove it, a formal release of that right is proper. The clause was evidently framed upon the idea that it was not removable, and the provision for compensation was manifestly introduced for the benefit of the lessee by way of protecting him against the loss of the amount invested in the building. It follows that the suit is, in effect, one for specific performance.

The circumstance that the interest here in question may be properly classed as a chattel interest is no objection to the jurisdiction of the court. The power and propriety of the court, in proper cases, to deal with specific performance of contracts for the sale of chattels is established by a series of authorities in New Jersey, the leader being Cutting v. Dana, 10 C. E. Gr. 265, followed by Rothholz v. Schwartz, 1 Dick. Ch. Rep. 477, and by the later case of Gannon v. Toole, 32 Atl. Rep. 702. In the last case, the interest dealt with was much like that now before the court.

But, in essence, the subject-matter here is real estate. It involves the right to the possession of the land itself, as well as of the building which has been erected upon it.

Then I am unable to see how the complainant can have his remedy at law. By his notice given to Kelly, he bound himself to purchase the building at a fair price, and barred himself from declaring the term ended except upon terms of paying for the building. In order to maintain an action at law, it is necessary for him to make a tender of a fair price in advance of his action. And there are two difficulties in the way of that — first, that he has no mode of ascertaining in advance what a jury will consider to be a fair price, and second, he might not be quite safe in tendering it to either of the two — Kelly, the assignee of the lease, or to the Bavarian Brewing Company, as mortgagee.

The real position of the complainant is that of a person holding a contract to purchase a right of possession of land upon paying a fair price for a building situate upon it. In that respect the case is the converse of Berry v. Van Winkle, 1 Gr. Ch. 269, where the aid of the court was asked by the lessee, who had a contract from the lessor to pay him, at the end of the term, the value of improvements to be put upon the premises.

Viewed in the light of a suit for specific performance, the power and duty of the court, where, as here, it is necessary, in order to do justice, to ascertain the fair value of the subject of the sale, must be considered as settled in this court. The subject was considered by Chancellor Green in Van Boren v. Robinson, 1 C. E. Gr. 256 (at p. 260), where that learned judge collected the authorities and stated the result thus : “ But where the contract is that the land shall be reconveyed, not at a price to be agreed upon by the parties, but at a fair price, or at a fair valuation, the court would direct the valuation to be made by a master, and will enforce the execution of the contract.”

It is manifest that, unless the court will undertake to ascertain the fair value of the building, the complainant will be in great danger of losing the benefit of the terms of his contract, and that consideration has influenced the courts in the'direction of assuming that duty whenever practicable. This abundantly appears from, an examination of the later English authorities. Pom. Spec. Perf. § 151; Fry Spec. Perf. (3d Am.ed.) § 346; Hopcraft v. Hickman, 2 Sim. & S. 130; Gaskarth v. Lord Lowther, 12 Ves. 107; Jackson v. Jackson, 1 Sm. & G. 184; 22 L. J. Ch. (N. S.) 873; Milnes v. Gery, 14 Ves. 400.

The latter was an action for specific performance of a contract to sell an estate at a price to be fixed by two indifferent persons, one to be named by one party and the other by the other party, and if the persons so named should happen to disagree, then these two to choose a third person, whose determination should be'final. Two persons were chosen, but were unable to agree, and were unable to agree upon a third person. Complainant filed a bill for specific performance, asking the court to appoint a proper person to make the valuation, or that the valuation should be ascertained in such other manner as the court should direct. Sir William Grant, master of the rolls, held that the court had no power to fix the price in any other manner except in that mode fixed by the parties, but at page 407 he adds: “ The case of an agreement to sell at a fair valuation is essentially different. In that case no particular means of ascertaining the value were pointed out. There is nothing, therefore, precluding the court from adopting any means adapted to that purpose.”

With regard to the value of the building here in question, I think a fair valuation will be arrived at .by taking the actual cost of the building and water and sewer connection, which was $611, and make a moderate allowance for five years’ wear and tear. This I fix at $61 and fix the valuation at $550.

As the complainant made his offer too small and the defendant his demand too large, I think it right that each party should pay his own costs.

The decree will be that, upon tender of that sum, the defendant must release all right, title and interest in the premises, without prejudice to the right of the complainant to recover for use and occupation.


text:
    Birbeck Investment, Savings and Loan Company of America v. Clara B. Gardner et al.
    1. A sheriff continued a foreclosure sale because of an alleged insufficient bid, and, at the adjourned sale, bid in behalf pf a third person a much larger amount, and the property was sold to the bidder at the first sale at a greatly increased price. — Held, that though the increase of the price would increase the fee of the sheriff, it was his duty to adjourn the sale — Gen. Stat. p. Sill providing for confirmation of foreclosure sales only where the court is satisfied that the property has been sold at the best price —and the sheriff is entitled to fees for the adjournment as based on the increased price.
    2. Where a sheriff sells land in foreclosure, he is not entitled to §3.50, given by Gen. Stat. p. 1456, for serving a writ against lands and making inventory and return.

      Mr. Charles B. Hughes, for the motion.

      Mr. Joseph N. Tuttle, contra.

   Pitney, V. C.

This is a motion to retax the sheriff’s fees on a foreclosure sale. The principal contest was over the amount of commissions. The execution was for over $9,000.

When the premises' were first exposed for sale the solicitor of the complainant bid $2,000, and no one bidding any more, the deputy sheriff conducting the sale stated, in a low tone to the bidder, that the premises were worth a good deal more, and that lie must bid more or that he would adjourn the sale for a better bid. The solicitor protested, declining to bid more; the sheriff, who was near by, was called in, heard what the solicitor had to say, and adjourned the sale. On the adjourned day the solicitor made the same bid, and the deputy increased the bid, and when asked the name of the bidder gave the name of Stephen Crilly, of New York. The solicitor charged him with fictitious bidding in order to increase his fees; the deputy persisted, bid the property up against the solicitor to $5,000, whereupon the solicitor bid $100 more — $5,100—and it was struck off to the complainant.

The sheriff has charged commissions on $5,100. The solicitor claims that the property should have been struck off to him on the first day, and that the bidding by the deputy for Mr. Crilly was a mere device to increase the amount of the sheriff’s fees.

The affidavits on the part of the sheriff show the property to be worth much more than $5,000, and that he was authorized by Mr. Crilly to bid that sum for it. There is no proof that the sheriff hunted up Mr. Crilly and induced him to bid, or that he was a mere irresponsible figurehead for the sheriff. He swears that he was acquainted with the property and authorized the bid.

The fact that the solicitor was willing to bid $5,100 rather than let the premises go, and the fact that the sheriff, if he did so, was able to get a responsible party to make the bid of $5,000, indicate that the property was of sufficient value to make it bring that much in cash at sheriff’s sale, for, under the circumstances, the sheriff would have been personally responsible for Crilly’s bid if the property had been struck off to him.

And that brings us face to face with the statute of March 12th, 1880 (Gen. Stat. p. Sill), which provides for confirmation of sales by sheriffs under foreclosure proceedings, and that the sale

“shall not he confirmed unless the court is satisfied, by evidence, that the property has beeu sold at the highest and best price that the same would then bring in cash, and such evidence may be in the form of affidavits.”

It has been held that this act was intended to apply not only to cases where there was likely to be a decree for deficiency, but to all sales. Mutual Benefit Life Insurance Co. v. Gould, 7 Stew. Eq. 417; Delaware, Lackawanna and Western Railroad Co. v. Scranton, 7 Stew. Eq. 429; Trust Company v. Jenkins, 13 Stew. Eq. 451; Bethlehem Iron Co. v. Philadelphia and Seashore Railway Co., 4 Dick. Ch. Rep. 356.

I think it may be safely said that'the policy of the law is that every encouragement be given to sheriffs and other officers to obtain the lai’gest price they can for property sold by them. In the conduct of the sale, with that object in view, sheriffs are not altogether subject to the control and direction of the plaintiff, or complainant, in the writ. The control which that party has over the writ does not extend so far as to enable him to compel the sheriff to sacrifice property at a sale. Other persons may be, and usually are, interested — infants, lunatics and others — who, by reason of absence or other circumstances, are unable to look after their interests. If, then, the sheriff or other officer having the responsibility of conducting a sale under a judicial writ or order, sees that a sacrifice is about to be made, which may be avoided by an adjournment, it seems to me that, in the absence of other controlling circumstances, it is not only his right but his duty to adjourn the sale. How else can he make the usual affidavit that the property brought the highest and best price that it would bring in cash ?

This right and duty of the sheriff are not affected by the circumstance that an increase of the price will increase his fees. It may be that one object in making sheriff’s fees in such cases measurably dependent upon the amount realized from the sale was to incite the officer’s diligence and care in the direction of procuring the best prices attainable.

If, then, the evidence in this case warranted the conclusion that the sheriff induced Mr. Crilly to bid, I am far from sure that it would affect the result.

I think the charge for adjournment and commissions must stand.

The only other objection is to the item of $3.50 for levy and return. In this case there was no levy or inventory to be made, and none was made.

The writ was a special fieri facias to sell certain lands therein described, and certain shares of stock therein specified, held by the complainant as collateral, and in its possession-. The certificate of stock was handed to the sheriff or put within his reach by the solicitor, for the purpose of sale and delivery. In fact,there was, and is, in - such cases, no necessity for the issuance of a writ of fieri facias. All sales by order of the court of chancery of specific property already within the reach of the court, .may be made by a master, as in partition cases, by a mere order or decree of sale.

The word “levy,” in our legal nomenclature, imports an actual seizure by manual caption of goods and chattels, accompanied by an inventory of the same and in the case of land, a description thereof and no more. It is true that the word in its broader sense may include the whole process of making the money mentioned in the writ by seizure of the goods, making a description of lands, advertising them for sale, selling them, and collecting the money. But in practice it has been distinguished from an advertisement and sale, and has been confined to the actual seizure of the property either by taking manual possession or by statutory proceeding, or, in case of land, making a description thereof where the property is incapable of manual caption. This abundantly appears by a perusal of the various judicial deliverances upon the subject of proceedings under execution, as found in the reported cases which are collected in 1 Stew. Dig. 531, 532, 534; Sup. 300, 301. And see Nelson v. Van Gazelle Manufacturing Co., 18 Stew. Eq. 594; Delaney v. Martin, 22 Vr. 148.

And in the Fee act (Gen. Stat. pp. 1447, 1448), the sheriff is allowed a fee for “serving” a writ of execution, another for “advertising,” and still another for “selling” under it. By the service here mentioned is meant the levy or seizure and making the inventory of the goods and lands seized, as distinguished from the sale of the same. This distinction has run through all the acts, from the act of June 13th, 1799. Rev. of 1816 p. 488 ; Rev. of 1846 p. 464 ; Rev. of 1877 p. 405.

But the counsel for the sheriff relies upon the act of April 18th, 1891 [Gen. Stat. p. 1456), by which the sheriff is allowed $3.50 “ for serving every writ against goods or lands and making an inventory and return.”

The “serving” here provided for is the same “serving” provided for in the original act before quoted; and the fee is made $3.50 instead of $1, presumably on account of the smallness of that sum for making a seizure and an inventory. It certainly does not cover the advertisement and sale, for he is allowed for each of those' separately and has charged for them in this case.

I do not think that the act just cited enlarges the scope of the old act, but simply increases the amount of the charge, so that the charge is, in my judgment, allowed for a seizure and inventory. None such were made in this case, and therefore the charge of $3.50 must be stricken out; but as the complainant failed in his principal contention, it will be without costs.


text:
    In the matter of the alleged lunacy of John Frelinghuysen Kennedy.
    1. A finding of lunacy will be set aside where it appears that the commissioners remained in the jury-room with the jurors while they were deliberating as to their finding, in the absence of the alleged lunatic or his counsel, especially where, under such circumstances, they gave directions to the jury and informed them of the issue.
    2. The consent of an alleged lunatic’s counsel that the commissioners might be present with the jury while deliberating on their finding is not a consent to their giving directions in the nature of a charge in his absence.
    Motion to set aside a return to an inquisition finding J. F. Kennedy a lunatic. Heard on petition and affidavits.

      Mr. Bartlett C. Frost and Mr. Henry S. Harris, for tlie motion.

      Mr. William H. Morrow, contra.

   Pitney, V. C.

The commission issued out of this court on the 25th of August, directed to three gentlemen, of whom one is a master of this court, directing them, in the usual form, to inquire as to the lunacy of John Erelinghuysen Kennedy, of the county of Warren.

The commissioners issued their precept to the sheriff, returnable at the house of the alleged lunatic, a farmer living a few miles from Phillipsburg, and that officer returned twenty-four men as jurors, who all appeared. Counsel appeared for the petitioners and also for Mr. Kennedy. The commissioners sat in a room in the house and Mr. Kennedy was present with his counsel. Witnesses were sworn and the cause summed up by counsel on each side, and then, according to the affidavit of the chairman of the commission, the counsel and all parties except the commissioners, the jury and Mr. Kennedy were directed (o leave the room, and did so. Then the jury were told by the commissioners that they might ask Mr. Kennedy any questions they chose. The chairman of the commission asked’him if he had anything to say, and he said Nothing, except that he wanted to take care of his own property.” He then left the room. Then the chairman of the commission charged the jury, stating that they were to find whether or not Mr. Kennedy was of unsound mind and by reason thereof unable to take care of himself and his property. Then — the commissioners still being in the room — the jurors had a conference, and asked the commissioners if they might take a vote by ballot. The commissioners answered in the affirmative. Then it tvas agreed among the jurors that the question should be whether or not Mr. Kennedy was capable of taking care of his property. The chairman of the commission explained to the jury that a vote on that question would be proper provided it was understood that they were voting upon the question whether he was of unsound-mind or not and by reason of such unsoundness incapable of properly taking care of his property. Blank ballots were then prepared and each juror voted yes or no, as he thought Mr. Kennedy was or was not capable of taking care of himself and his property. The result was that fifteen voted no and nine voted yes. The fifteen voting no then signed the inquisition, which had already been prepared in blank.

I find the foregoing facts from a reading of the several affidavits of the chairman and one juror. The affidavit of the juror states that he understood the question upon which the jurors voted was whether Mr. Kennedy was or was not capable of taking care of his property. And that this was the view of the individual jurors is inferable from the fact that those who voted that he was so incapable voted no and those who thought he was capable voted yes; for, if the question was whether he was of sound or unsound mind, the vote of no would seem to be in favor of his sanity rather than of his insanity.

The principal ground relied upon for setting aside the return was the conduct of the commissioners in charging the jury in the absence of the alleged lunatic and his counsel and remaining in the jury-room with the jurors while they were deliberating as to their finding. The chairman of the commission, in his affidavit, swears that he understood that they so remained with the jurors by the consent of the counsel for Mr. Kennedy. This is denied by that gentleman, and as no other person'seems to have understood him to say anything of the kind, I must infer that the chairman of the commission is mistaken. Be that as it may, the consent by the counsel of the alleged lunatic that the commissioners might be present while the jury was deliberating cannot be construed as a consent to their giving directions in the nature of a charge to the jury in his absence.

It was held in Lindsley’s Case, 1 Dick. Ch. Rep. 357, that the commissioners and jury might lawfully examine the alleged lunatic privately and apart from his counsel, and therefore the commissioners here were warranted in staying in the room with the jury while that examination was made; and it is probable that they inferred that if they had the right to be present at a private examination of the alleged lunatic, they also had the right to be present in the absence of counsel and the alleged lunatic, while the jury were deliberating and determining what should be their finding. But in this I feel constrained to say that I think they fell into an error which is fatal to this return. The very idea of a jury — whether a grand jury, or inquest, or a petit jury — is that their conference and deliberation in determining what shall be their finding or verdict, shall be held either alone, with no person present, or, if in the presence of the court, theu also in the presence of counsel, so that the counsel may hear all that is said and make objections and take exceptions if they shall see fit. It is, I believe, well settled that while the public prosecutor has the right to be present while the evidence is being laid before the grand jury, he has no right to be present while the jurors are conferring together and considering the effect of the evidence. Their deliberations are, of right, strictly private.

In the present case it appears not only that the commissioners remained in the room after the counsel and the alleged lunatic had left the room, but also that they proceeded to charge the jury, and inform them of the issue, and that they answered questions and made suggestions as to the mode of ascertaining their sentiments on that subject in the use of the ballot. I can find no authority for such practice, and I think it would be dangerous to give it the approval of the court. One reason why the deliberations of a jury are had in private is that each one may express his views without restraint, and that there may be a free and full interchange of views and arguments.

In the matter of Arnhout, 1 Paige 498, the sheriff, who had charge of the jury, remained in the room with them while they were deliberating, and the return was set aside on that ground. And I know of no distinction in this respect between a grand jury, a petit jury, and an inquisition of lunacy.

I think it would be making a dangerous precedent to permit this return to stand, though I am well satisfied that the commissioners were entirely innocent of any attempt to influence the jury.

From the statement of counsel for the petitioners, and from the fact that only fifteen out of twenty-four jurymen joined in the retara, it is plain that it is not so clear a case of lunacy as to be outside the range of debate.

I will advise that the return be set aside.


author: Emery, V. C.

text:
    Henry Weinburgh et al. v. The Union Street Railway Advertising Company et al.
    1. Where stockholders, at a special meeting, did not object to it as irregularly called, but in a protest filed assumed its regularity, and the restraining order which they sought to procure was against a regularly-called meeting, any objection to the regularity of the call for the meeting must be deemed to have been waived.
    2. The by-laws of a corporation provided that at special meetings of stockholders the Corporation act of 1896 should apply as to the casting of all votes. The only provision of the Corporation act relating to the casting of votes, is the thirty-sixth section, authorizing votes by shares at elections of the directors. — Held, that the voting at a special meeting must be by shares, and a px-ovision in the by-laws relating to amendments thei'eof requiring the affirmative vote of a majority of the stockholders at a special meeting, means the majority in interest.
    3. Under such by-laws as to special meetings and a by-law providing that at annual meetings the right to vote should be determined as provided by statute, the rule of voting by shares should be the rule as to casting of votes for all puxposes.
    On application for preliminary injunction. Heard on bill and affidavits, and answers and affidavits.

      Mr. William B. Barrielclo and Mr. Horwitz (of the New York bar), for the complainants.

      Mr. Charles D. Thompson, and Mr. Marshall (of the New York bar), for the defendants.
   Emery, V. C.

The bill in this case is filed by three of the six stockholders of the Union Street Railway Advertising Company, against the company and the other three stockholders, who are also three of the four directors of the company, the fourth director being Henry Weinburgh, one of the complainants. The main object of the bill is to enjoin the defendant directors and the company from acting under certain amendments to the by-laws of the company, which were adopted solely by the vote of the three defendant stockholders. One of the by-laws so adopted confers, or purports to confer, upon the directors of the company increased power of removal of officers of the company, and the other confers upon the president alone powers which are now exercised by him under the supervision or control of the directors. I think there can be no question but that the bylaws in question do regulate the internal affairs and management of the company in such important particulars that, unless they have been legally adopted, the complainants, as stockholders, are entitled to the aid of this court in preventing action under cover of their authority.

The jurisdiction of the court for this purpose was not questioned at the argument, the contention of the defendants being that the amendments to the by-laws were lawfully adopted. The disputed amendments to the by-laws were adopted on May 24th, at a meeting of the stockholders, at which the three individual defendants were present and voting for them, being holders of shares as follows: Michael Weinburgh, six hundred and sixty-six shares; Robert M. Burnett, six hundred and sixty-five shares; Asa W. Dickinson, one share, being one thousand three hundred and thirty-two shares out of a total of two thousand shares. This is the statement of the vote as given in the answers, although it would seem, by other statements in the pleadings, that Michael Weinburgh is the owner on record of seven hundred and thirty-two shares. The complainants are each owners of record of two hundred shares (six hundred in all), and there are no other stockholders than the complainants and individual defendants.

The meeting of the stockholders to consider the proposed amendments to the by-laws was a special meeting, originally called for May 15th, 1897, and at this meeting the complainants were all present in person, and were attended, also, by their counsel. At this meeting no objection was made by either of the complainants or by their counsel that the special meeting had not been properly called. They presented a protest in writing, against the consideration of the proposed amendments, on the ground that they were contrary to law and interfered with the vested rights of the complainant Henry Weinburgh, who was and is treasurer of the company.

A bill has been filed by the present complainants against the present individual defendants (the company not being a party) to restrain the removal of Henry Weinburgh from his office as treasurer, and from passing on the proposed by-laws to accomplish that purpose; and pending the hearing of an application for preliminary injunction action on the proposed by-laws was restrained except to adjourn the meeting, which was duly adjourned to May 24th. The restraining order was discharged on the hearing and the proposed amendments to the by-laws were adopted at the adjourned meeting of May 24th, 1897, by the vote above mentioned, none of the complainants being present at the adjourned meeting. The validity of these amendments to the by-laws was attacked at the hearing on three grounds:

First. Because the special meeting was illegally called.

Second. Because the quorum required by the by-laws for special meetings was not present at the meeting of May 24th, when the amendments were adopted.

Third. Because under the existing by-laws of the company, as is claimed by complainants-, an amendment to the by-laws can be made only by the affirmative vote of a majority in number of the stockholders, and cannot be made by a majority in interest.

The second ground of objection was not set up in the bill but was relied on at the hearing.

As to the first objection, that the special meeting was not regularly or legally called, the affidavits in reply to the bill show that the requirements of the by-laws in this particular were followed, and in view of the failure of the complainants, at the special meeting of May 15th, to object to the meeting as irregularly called, and in view also of their protest, which assumed a regularly-called meeting, and of the restraining order which they procured as against a regularly-called meeting, the objection cannot be considered as affording a ground for preliminary injunction in the present case, even if the irregularity of the meeting was conceded. Under these circumstances,' objection to the regularity of the call for the meeting should, for the purposes of the present application, be considered as a matter of form which has been waived by the complainants, and the only objections urged by the bill which I shall consider are the other objections which go to the merits of the case.

The claim of the complainants is that, under the by-laws in ' force at the time of the special meeting of May 24th, a majority in number of the stockholders of record was necessary to constitute a quorum at the special meeting, and also that by the by-laws an amendment thereto can only be adopted by the affirmative of a majority in number of these stockholders. If either of these claims be well founded, the by-laws in question have not been legally adopted and action under them should be enjoined. The company was incorporated under the general law of 1894, and the provisions relating to amendments and quorums in its by-laws as originally adopted, provided (article 13):

“These by-laws may be altered or amended at any regular meeting of the stockholders, upon the affirmative vote of three-fourths in interest of the stockholders, and at any special meeting of the stockholders, upon the same vote” &c. <.

By these original by-laws also it was provided (article 1, section 2) that

“ seventy-five per cent, in interest of the stockholders present, either in person or by proxy, shall constitute a quorum for the transaction of business at all meetings of stockholders.”

Article 8 of these original b)r-laws also provides that at all meetings of this company each share of stock shall be entitled to one vote either by proxy or in person.”

By the revised Corporation act of 1875 (Rev. p. 181 § 31) it was provided that every company might determine by its bylaws

“what number of shares shall entitle the stockholders to one or more votes, what number of stockholders -shall attend either in person or by proxy, or what number of shares or amount of interest shall be represented at any meeting in order to constitute a quorum, and if the quorum shall not be so determined by the company, a majority of the stockholders in interest represented, either in person or by proxy, shall constitute a quorum.”

By an act of March 9th, 1891 (P. L. of 1891 p. 118), the section was amended and re-enacted with the insertion of a proviso “that in no case shall more than a majority'of shares or amount of interest be required to be represented at any meeting in order to constitute a quorum.” The by-laws of the company as originally adopted violated this proviso, which was then in force, by requiring seventy-five per cent, in interest of the stockholders to constitute a quorum. The by-laws were afterwards amended in March, 1897, and the original by-laws as to a quorum were changed so as to provide (article 1, section 2) that

“at all meetings of stockholders there shall be present, either in person or by-proxy, stockholders owning a majority of the capital stock of the corporation in order to constitute a quorum.”

And also (article 1, section 3) as to special meetings, “and a majority of all the stockholders of record shall alone constitute a quorum at each special meeting.” As to the manner of voting, the by-laws of 1897 provided as follows :

Art. 1, Sec. 2. “Voting by proxy shall be allowed at all meetings of the stockholders of this company.”
“ Sec. 8. At all meetings of stockholders, all questions except the question of an amendment to-the by-laws and the election of directors, and all such other questions the manner of deciding which is specially regulated by statute, shall be determined by a majority vote of the stockholders present in person or by proxy, provided a quorum, as hereinbefore provided for, be present and voting. At such meetings, any qualified voter may demand a stock vote, and in that case such stock vote shall be immediately taken, and each stockholder of record present in person or by proxy shall be entitled to one vote for each share of stock owned by him. All voting shall be viva voce, except that the stock vote shall be by ballot, each ballot stating the name of the stockholder voting and the number of shares owned by him, and in addition, if such ballot be cast by a proxy, it shall also state the name of such proxy.
“ Sec. 9. At special meetings of stockholders, the provision of the act of the legislature entitled ‘The Corporation Act of the State of New Jersey,’ passed in 1896, shall apply to the casting of all votes.”

The provision as to the amendment of the by-laws adopted in March, 1897, and in force when the amendments now in question were adopted, was as follows:

“Art. 7. These by-laws may be altered or amended at any regular meeting of the stockholders, upon the affirmative vote of a majority of the stockholders, and at a special meeting of the stockholders upon the same vote (provided notice be given) &c.

The whole dispute between the parties on this branch of the case relates to the construction of the words “ majority of the stockholders,” as used in this by-law relating to amendments, and whether this means, as claimed by complainant, the majority in number of the stockholders or the majority in interest. It is insisted by complainant that the words “majority of stockholders,” in their plain, clear, ordinary meaning, refer only to a majority of stockholders as persons, and that the question has been settled by the adjudication in reference to these words as used in a statute regulatiug voting, by the case of Taylor v. Griswold, 2 Gr. 232 (Supreme Court, 1834). The charter considered in Taylor v. Griswold was that of a company organized to build bridges across the Passaic and Hackensack rivers and to exercise franchises considered by the court to be of a public character, requiring the discharge of a personal duty imposed on the members of the corporation, which could not, under the act, be discharged by proxy. There were no provisions in the act either for voting by proxy or for the casting of more votes than one by any stockholder. The court held that, at common law and independent of statute, the members of a corporation were each entitled to one vote, and no more, and that the provisions of the charter not only failed to allow one vote for each share, but its various provisions, which were cited (at pp. 338, 339), indicated clearly that the election of directors “ by a majority of the stockholders” meant a majority in number of the stockholders, and not the majority in interest or the holders of a majority of the stock. Taken in connection with the general object of the charter and its other provisions, the court held that in this statute election by a majority of stockholders could not mean election by the holders of a majority of the stock.

But this construction of words, as used in this charter, cannot be considered as conclusive upon the question of the construction of the same words used by these stockholders in this by-law. The ruling of the court in that case is not, I think, to be considered an adjudication that the words “majority of stockholders ” cannot, under any circumstances, be construed to mean a majority in interest of the stockholders, and the real question here is whether, in the present by-law, the words now in question, read in connection with the statutes relating to corporations and with the other portions of the by-laws, meant a majority in number or a majority in interest of the stockholders. And in the construction of the whole by-laws I think weight should also be given to the common, if not universal, practice of allowing voting by shares, in private business corporations, which has obtained in this state since the statute of March 11th, 1841 (P. L. of 1841 p. 116), and also obtains generally throughout the United States. This common knowledge and practice is the basis, I think, from which the ordinary stockholder of a private business corporation adopting by-laws, referring to a majority of stockholders, would to some extent be inclined to consider the meaning of the words as used in a by-law presented for adoption, and it cannot justly be laid out of view in considering the construction of a particular by-law, viewed in the scope of the entire by-laws adopted. Late cases in the courts of other states seem to hold that the natural and ordinary meaning of the words “majority of stockholders,” without other qualifications, even in a statute, indicates a majority in interest and not in number. Frederick v. Pennsylvania Canal Co., 109 Pa. St. 50 (1885). But whatever might be held to be the proper construction of the words standing alone, my view is that if upon the construction of the whole by-laws it appears that the words were intended to be used as meaning a majority in interest of the stockholders and not a majority in number, this construction of the words should be enforced. And upon the whole by-laws my opinion is that the words were used as meaning a majority in interest of the stockholders, and that this construction of the words not only in this provision as to amendment of by-laws but also iu the provision as to quorum, is the only construction which will allow all of the provisions of the by-laws to become effective. Article 1, section 9, provides that at all special meetings of stockholders the provisions of the Corporation act of 1896 shall apply to the casting of all votes. The only provision of the Corporation act relating to the casting of votes is the thirty-sixth section, authorizing the votes by shares at the election for the directors “unless otherwise provided in the charter certificate or by-laws of the corporation.” I think that the sole object of this by-law (article 1, section 9) was to refer to that portion of this section 36 which regulated the casting of votes by shares, and that this reference was made for the purpose of applying this same rule, expressly declared in the statute, to the casting of votes at special meetings. As to the annual meetings the by-laws had already provided (article 1, section 4) that the right of any stockholder to vote shall be governed and determined as prescribed in an act concerning corporations of the state of New Jersey.

If this construction of the object and effect of article 1, section 9, is correct, then the voting at special meetings must be by shares, and the provision in the by-laws relating to amendments, requiring the affirmative vote of a majority of the stockholders at a special meeting must mean the majority in interest. The by-laws relating to amendments allowed the amendment by the same vote at regular and special meetings, and I think it appears from the fair and reasonable interpretation of these by-laws, relating to the casting of the votes, that at both the annual meeting (which was the only regular meeting of the stockholders) and at the special meetings, the rule of voting by shares, which was adopted in the statute as to the election of directors, should be the rule as to the casting of votes for all purposes, with the provision that, except in the cases of amendment to by-laws and election of directors, the first vote should be a show of hands, or majority in number, which should be final, unless a stock vote was demanded.

As to the amendment to by-laws and election of directors, it seems to have been assumed in articles 1, section 8, of the bylaws that both of these matters were expressly regulated by statute, as governed by the same rule of voting by shares only, and therefore a preliminary vote by show of hands was not lawful. I can see no indication in any portion of these by-laws of any intention to control the powers given in the by-laws to the majority in interest, by giving to the simple majority in number the control of the amendment of the by-laws, and I therefore hold that the words were used here as meaning the majority in interest of the stockholders. It is my view, also, that in the provision that “ majority of all the stockholders of record ” shall alone constitute a quorum at a special meeting, the “majority” referred to is also a majority in interest. Otherwise, the provision is repugnant to the provision of article 1, section 2, that “ at all meetings of the company there shall bo present stockholders owning a majority of the stock in order to constitute a quorum.” And it is also in violation of the act of 1891, Corporation act, section 17, providing that “in no case shall more than, a majority of the shares or amount of interest be required at any meeting to constitute a quorum.” This pro- ■ viso as enacted repeals or qualifies to that extent the section as it previously stood, authorizing the company to determine what number of stockholders shall attend, either in person or proxy, to constitute a quorum.

I cannot adopt the construction of this act of 1891, insisted on by complainant, that after the passage of this amendment it was within the power of the company to provide that a quorum at any meeting must consist only of the majority in number of the stockholders. No more stockholders, in my view, could be required to be present in order to constitute a quorum than the owners of a majority or the stock. Adopting the above construction of these words, “ majority of stockholders,” the bylaws are consistent and effective throughout, and they also harmonize with the provisions of the statute. And taking into consideration,, also, the general and recognized understanding as to the control of private business corporations, by the majority in interest rather than the majority in number of the stockholders, and the injurious results of committing to the control of a minority of stockholders the regulation of its affairs in matters usually controlled by a majority, unless the by-laws clearly give such control, the construction I have adopted seems to me to be the reasonable construction in the absence of anything indicating that, in adopting these words, the stockholders clearly had in view the majority in number as distinct from the majority in interest of the stockholders. I hold, therefore, that these by-laws have been legally adopted, and this question being the only question presented on the hearing, the application for injunction is refused and the order discharged. The bill prayed an injunction against the removal of the complainant Henry Weinburgh as treasurer, but in view of the decision in the previous suit, which was handed down after the present bill was drawn, this application was not urged. Costs on this application will abide the final decree.


author: Reed, V. C.

text:
    C. Frank Hamill v. The Inventors’ Manufacturing Company et al.
    A grantor is not estopped by his covenant of warranty from enforcing an existing mortgage on the property which is afterwards assigned to him, it having been expressly understood when the deed was made that the property was sold subject to such mortgage, and the .consideration having been agreed on with that understanding.
    On motion to strike out so much of the answer as reserves exceptions and denies combinations and confederacy, against the provisions of rule 214; also to strike out the entire answer, and for a decree that the mortgage of complainant is a prior lien to that of Blake.
    The bill is filed by Hamill to foreclose a mortgage made to him on March 14th, 1894, by the Inventors’ Manufacturing Company, the then owners of the mortgaged premises. The bill then sets out that the premises were formerly owned by-Jesse Lake and Daniel L. Risley, and that they, while such owners, on April 16th, 1883, gave a mortgage thereon to Sommers, Robinson and Frambes, to secure the sum of $325; that afterwards, on September 13th, 1888, Messrs. Lake and Risley sold the mortgaged premises to the Inventors’ Manufacturing Company by a deed containing a covenant of general warranty; that on April 1st, 1892, Sommers, Robinson and Frambes assigned the above-mentioned mortgage to Lake, one of the former owners, who had joined with Risley in selling the mortgaged premises to the Inventors’ Manufacturing Company.
    On March 14th, 1894, the Inventors’ Manufacturing Company executed a mortgage to the complainant, which mortgage is being foreclosed by the present suit.
    On August 17th, 1895, Mr. Lake, the then holder of the first-mentioned mortgage, assigned the same to Mr. Blake.
    The bill claims that the mortgage of complainant made on March 14th, 1894, is superior in rank to the previously-executed ' mortgage for $325, executed on April 16th, 1883.
    The theory upon which this claim rests is that Lake bail given a general warranty deed to the Inventors’ Manufacturing Company; that he afterwards bought this mortgage, which was an encumbrance upon the premises when he gave his deed; that by force of his covenant he would have been estopped from enforcing the mortgage against the grantee under that-deed, and that he is now estopped from setting it up as an encumbrance against the second mortgagee, who holds in privity with the original grantee.
    The answer to the bill, while admitting the order of the creation of the encumbrances, and the execution of the deed and assignments as stated in the bill, sets up that the mortgage by Risley and Lake to Sommers, Robinson and Frambes was a purchase-money mortgage, and was on record when Hamill made his loan to the Inventors’ Manufacturing Company and took his mortgage. It further asserts that the property was conveyed by Risley and Lake to the Inventors’ Manufacturing Company, subject to the Robinson mortgage, and that although the mortgage was not mentioned in the deed, it was expressly understood, by and between the grantors and grantees, that the property was sold subject to the said mortgage, and that the purchase-money agreed upon between the parties thereto was with that understanding.

      Mr. Clarence L. Cole, for the motion.

      Mr. Allen B. Endicott, contra.

   Reed, V. C.

The first objection taken to the answer must prevail, as this part of the pleading is prohibited by rule 214.

The general motion to strike out the entire answer as containing no defence to the facts set up in the bill raises a question of importance.

The ground upon which the mortgage by Lake to Blake (which will hereafter be called the Blake mortgage) is sought to be subordinated to the mortgage made to Iiamill by the Inventors’ Manufacturing Company (which mortgage will be called the Hamill mortgage), as has been already stated, is that this mortgage having come to the hands of Lake, who had warranted to his grantee, the Inventors’ Manufacturing Company, the title of the mortgaged premises, the court will, for the purpose of preventing circuity of action, refuse to Lake the right to sell the property to pay this mortgage, when it appears that the Inventors’ Manufacturing Company can turn around and recover the amount of this mortgage by an action upon Lake’s covenant of warranty. It insisted that the assignee of Lake and the mortgagee of the Inventors’ Manufacturing Company stand in the same position as the original parties. The cases cited in support of the first contention are Van Riper v. Williams et al., 1 Gr. Ch. 407; Union National Bank of Rahway v. Pinner, 10 C. E. Gr. 495; Stiger v. Bacon, 2 Stew. Eq. 442, to which may be added the cases of Woodruff v. Depue, 1 McCart. 168; White v. Stretch, 7 C. E. Gr. 76; Dayton v. Dusenbury, 10 C. E. Gr. 110.

In each of these cases a purchase-money mortgagee was foreclosing his mortgage, and he had conveyed the mortgaged premises with covenants against encumbrances, while a previous encumbrance remained upon the property. It was held that, in a suit to foreclose his mortgage, he must liquidate the previous encumbrance, or that there should be deducted from the amount due him a sum equal to the amount of the existing encumbrance.

Now, while neither of the mortgages in the present case is a purchase-money mortgage, still the principle upon which the court acted in the eases mentioned is thought by counsel to control in the present instance, for the action of the court in those cases was based upon the principle of avoiding circuity of action. The question is whether the application of this principle will reach the result insisted upon by the counsel of Hamill.

It is to be observed that it is the Blake mortgage which was the encumbrance upon the property at the time that the covenant of warranty was executed by Risley and Lake, and that neither Lake nor his assignee, Blake, is foreclosing the mortgage or bringing an action in ejectment to obtain possession of the mortgaged premises. It is to be observed further that the covenant in the deed of Lake and Risley, to their grantees of the mortgaged premises, is a covenant of warranty of title only. Of this covenant there is no breach until there is an actual or constructive eviction. No right to sue for its breach accrued or would accrue until Blake or his assignee took steps in respect to this mortgage, which would end in the eviction of the owners of the equity of redemption from the mortgaged premises. It is true that in the cases cited it does not appear that, at the time the purchase-money mortgage was foreclosed, there was in operation any proceeding to enforce the previous encumbrance. The encumbrances were either prior mortgages, municipal assessments, judgments or tax liens. But in each of these cases, among the covenants given by the foreclosing mortgagee, was a covenant against encumbrances, which covenant was broken as soon as made, and so the right of action against the mortgagee upon his covenant had accrued at the moment when he began his foreclosure suit. This circumstance is not alluded to as a ground of decision in those cases, nor will it entirely reconcile this line of cases with other cases in this court. I allude to those cases in which it has been held that, in a suit to foreclose a purchase-money mortgage, it cannot be successfully set up that the mortgagee had sold the property with covenants, and that there was an outstanding claim of title, or defect of title, or even an encumbrance.

This doctrine was laid down in the leading case of Shannon v. Marselis, Sax. 413, decided by Chancellor Vroom. In that case there was a covenant of warranty. The chancellor said: “When there is a mere allegation of an outstanding title or encumbrance, the court will not interfere, but leave the party to his remedy on the covenant. But when there is an eviction or even an ejectment brought, the court will interfere. In this case the first mortgagee is prosecuting his claim [this was the mortgage which constituted the encumbrance], all the parties are here and justice can be done.”

The doctrine laid down in this case was followed in the case of Van Waggoner v. McEwen et al., 1 Gr. Ch. 412, in respect to an alleged outstanding claim to part of the premises, where there had been rio eviction and no action was pending.

The same doctrine was also held in Long’s Administrator v. Long, 1 McCart. 462, and in Hile v. Davison, 5 C. E. Gr. 228.

In Jaques v. Esler et al., 3 Gr. Ch. 461, the deed contained covenants of warranty and seizin, and the foreclosure of a purchase-money mortgage was stayed until the determination of an ejectment suit which had been already brought by one claiming a paramount title. So the rule is entirely established that the allegation of an outstanding title is no defence in a suit to foreclose a purchase-money mortgage, unless there is an eviction or an action to evict actually pending. And this doctrine has been applied to the existence of an encumbrance, even when there was a covenant against encumbrances. In Glen v. Whipple, 1 Beas. 51, where there was a covenant against encumbrances, a claim of dower in the mortgaged premises was held to be no defence in a suit to foreclose.

In the present case, as already remarked, the mortgage which is being foreclosed is not the mortgage which, if enforced, would cause a breach of the covenant of warranty. Blake, the assignee of the last-mentioned mortgage, is quiescent. . He has neither brought an action of ejectment nor a suit to foreclose.

In this condition of affairs no action would lie against Risley and Lake by their grantees, the Inventors’ Manufacturing Company, for breach of the covenant of warranty. It would seem, therefore, that the doctrine upon which the first group of cases was decided will not support the present insistence that in this suit to foreclose the last mortgage, the first or Blake mortgage should be subordinated to the Hamill mortgage.

But it remains to consider whether the result sought does not follow from another view of the posture of affairs presented by the pleadings, in view of another rule which had its origin in the desire of courts of equity to prevent circuity of action.

The query suggested is whether, when the interest of the mortgagees in the Blake mortgage fell into the hands of Lake, a joint covenantor with Risley in the grant to the Inventors’ Manufacturing Company, the mortgagees’ interest did not pass to the Inventors’ Manufacturing Company, under the rule that if a man grants land with warranty, and afterwards acquires a title, this after-acquired title inures to the benefit of the grantee. Gough v. Bell, 1 Zab. 157; Moore v. Rake, 2 Dutch. 574; Brundred v. Walker, 1 Beas. 140; Vreeland v. Blauvelt, 8 C. E. Gr. 483; Sugar Refining Company v. Mayor of Jersey City, 11 C. E. Gr. 247.

Under the doctrine of estoppel, which precludes the grantor or his privies from asserting an after-acquired title against a grantee and his privies, it would seem that Lake was estopped from foreclosing his equity of redemption in the land which he had conveyed to the Inventors’ Manufacturing Company. It is true that a mortgagee’s interest is of an anomalous character. By itself it cannot be conveyed, and a deed made by Lake to the Inventors’ Manufacturing Company of his interest as mortgagee would have passed nothing. Devlin v. Collier, 24 Vr. 422. Nevertheless, I think that his acquired lien, accruing by his purchase of the mortgage, coalesced with the equity of redemption, and they became merged by reason of the covenant of warranty, and thus conferred a complete title upon the Inventors’ Manufacturing Company. The rule that a covenant of warranty, ipso facto, passes an after-acquired title of the grantor to the grantee, originally arose from the doctrine already mentioned, viz., the avoidance of circuity of actions. Moore v. Rake, supra. And in this instance the inchoate counter-right of the covenantee to sue the covenantor upon his warranty of title, and of the covenantor to foreclose the mortgage upon the property of the covenantee, affords a conspicuous instance for the application of the rule. If this view is comet, then the covenant of warranty being one which ran with the lands, the right to sue for any subsequent breach, -went to the second mortgagee; or, what amounts to the same thing, the after-acquired title of the Inventors’ Manufacturing Company was included in the second mortgage executed by it. The only doubt regarding the correctness of the last statement arises from the peculiar character of the mortgagees’ interest already mentioned, which obtains to its full extent in this state. It is here held not to be an estale at all, and that the mortgagee gets no title, except such as may be accorded to him for the purpose of collecting the debt for which the mortgage stands as security. For this purpose he can gain possession of the mortgaged premises, after the maturity of the debt, by an action of ejectment. But for all other purposes the legal title is in the mortgagor.

How, in England, where the legal estate passes to the mortgagee, all covenants which run with the land go to the mortgagee. The mortgagor is stripped of all right to sue upon any covenant of his grantor. Inasmuch as the position of the mortgagor and mortgagee is here entirely reversed, it would seem that the right to sue here was reserved entirely to the mortgagor. But the true doctrine is probably that both are entitled to sue, so far as such suit may be necessary to protect their respective rights. This was the rule laid down by Chief-Justice Shaw in White v. Whitney, 3 Metc. 83, and although the interest of the mortgagee in Massachusetts is more analogous to his interest under the law of England than to his interest under ours, yet the reasoning of Chief-Justi'ce Shaw in that case would seem to be entirely applicable to the respective interests of mortgagor and mortgagee here. This rule seems to have the approval of a number of adjudications in this country, collected in the notes to the Spencer Case, 1 Sm. Lead. Cas. marg. p. 160.

It would also seem that Blake, the assignee of the late mortgage, must stand in the shoes of his assignor. He took the mortgage subject to all equities between the mortgagor and his privies and the mortgagee and his grantees. Nor do I think that it matters that the mortgage became the property of one only of the two grantors to the Inventors’ Manufacturing Company. The two grantors were joint covenantors and were liable to be sued jointly for the entire damages for the breach of the joint covenant. On principle, then, if the title or interest came to either, it would pass to their grantee.

But, assuming all this to be correct, the question presented is not yet decided. A further question remains, whether the answer does not contain a statement which, if true, is a complete avoidance of the estoppel springing out of the covenant. This statement is, that when the property was conveyed by Risley and Lake to the Inventors’ Manufacturing Company, it was expressly understood that it was sold subject to the Blake mortgage, and the consideration was agreed upon with that understanding.

It was held in the ease of Pitman v. Conner, 27 Ind. 337, that a covenant of warranty was not broken by the existence of an encumbrance which the grantor agreed to pay as part of the consideration for the property. The doctrine so announced seems to violate the rule that a deed cannot be varied by parol, for it is difficult to see how, in the face of a covenant of warranty of title, the grantee can be evicted by the enforcement of a previously-existing encumbrance merely because he verbally agreed that this should not be covered by the warranty. But the provability of a similar parol agreement was recognized by the court of errors in this state in the case of Bolles v. Beach, 2 Zab. 680. In. that case a deed was given with full covenants, and there was at the time a mortgage upon the property for $1,000. The grantor, who was the obligor upon the bond for the security of which the mortgage was given, was compelled to pay the amount of the bond and mortgage. He afterwards brought suit against the grantee for the recovery of the sum which he had paid, and it was held that he was entitled to prove an agreement by the grantee, made at the time of the sale, that the grantee would discharge the $1,000 upon the premises, the grantee retaining so much of the consideration money as was necessary for that purpose. The court evaded the estoppel arising from the covenants, upon the ground that the agreement was merely collateral to the deed.

In Wilson v. King, 8 C. E. Gr. 150, it was held in this court that a parol undertaking of a grantee to pay a mortgage upon the premises conveyed would be enforced against him, although his deed contained full covenants.

How, if the grantor, by virtue of such an agreement, retains a right to recover what he has paid to discharge a previously-existing encumbrance, and if the encumbrance can be enforced against the grantee, then a court of equity would certainly refuse to recognize a right in the covenantee to sue upon the covenant of warranty when it appeared that the breach of such covenant sprang entirely from an encumbrance which the plaintiff had bound himself, by a provable and proved agreement, to pay off, and this, whether such agreement is to be regarded as collateral to the deed itself or not. The covenant, so stripped of its vigor in this respect, could not be efficient to pass to the grantee and covenantee any interest in the encumbrance, although it subsequently became the property of the covenantor.

In my judgment, if the statement in the answer is true, the Blake mortgage retains its priority.

The motion to strike out the answer is refused.