text:
    The First National Bank of Jersey City v. Richard S. Tobin et al.
    [Decided June 20th, 1919.]
    Where a will causes a debt to be a charge upon the lands of a testator, there is an equitable estate in lands created thereby, and the debt not being barred by the statute of limitations at the testator’s death, it may be enforced within twenty years from his death against the lands as though- it were a legal estate given by will.
    On pleadings and proofs.

      Mr. Francis V. Many and Mr. Marshall W. Van Winkle, for the complainant.

      Messrs. Fisk & Fisk and Mr. J. Fisher Anderson, for McPherson & Company, defendant.

      Mr. Robert 8. Hudspeth, for the Union Trust Company of Eew Jersey, defendant.
    ilir. Theodore Rurode, for George A. Shannon, defendant.
   Lewis, V. C.

This is a suit instituted by the First Eational Bank of Jersey City to procure payment to it of a fund of $4,547.43 in the possession of Marshall Yan Winkle, as trustee, and which resulted from the sale of certain real estate owned by George F. Schober in his lifetime.

The facts admitted by the pleadings and by stipulations made in open court at the hearing are, that George F. Schober died at Jersey City, September 30th, 1911, leaving a last will and testament, and a widow, Pauline J. Schober. The will was admitted to probate on October 14tli, 1911. At the time of his death he was seized of two parcels of real estate, and was indebted to the partnership of McPherson & Company, which indebtedness was established b3 judgment obtained on February 8th, 1913, against Pauline J. Schober, as- executrix of the decéased, for $12,394.93, damages and costs. Verified proof of claim was served upon the executrix prior to the expiration of any time limited for presenting claims, to which claim no objection was made. The personal estate was insufficient to pay the debts, as shown by the final account of Marshall Van Winkle, substituted administrator with the will annexed, showing a net personal estate to be distributed of $1,590.56. This personal estate has been distributed by Mr. Van Winkle, and McPherson & Company received as its distributive share the sum of $1,156.81. The personal estate of Schober is completely exhausted. The complainant and the Union Trust Company of blew Jersey hold numérous judgments against Pauline J. Schober individually, she being indebted to them personally for the amounts of the judgments of those banks. Executions were issued on some or all of the judgments of the complainant, and the Union Trust Company of blew Jersey, under which levies were-made upon the real estate owned by Schober in his lifetime, the levies being made upon the individual interest of Pauline J. Schober, the executrix of the will, acquired by her as devisee under his will. Such executions were issued on nine of complainant’s judgments in 1913, prior to the execution of the trust agreement, and on two of its judgments, in 1918.

It was admitted in open court, by stipulation on the record, “that the judgment'of McPherson & Company, recovered against Pauline J. Schober, executrix of the last will and testament of George F. Schober, deceased, was founded on an indebtedness of the said George F. Schober in his lifetime to the said McPherson & Company, which indebtedness was in part for goods sold and delivered, and in part evidenced by five checks to the order of McPherson & Company, signed by the said George' F. Schober in his lifetime, and upon which debt for goods sold and delivered, upon which checks evidencing the balance of said indebtedness, judgment was entered against the said Pauline J. Schober, executrix, in the amount set out in the hill of complaint.

The present conflict is between the complainant and Union Trust Company of New Jersey, a defendant, who hold judgments against Pauline J. Schober individual!)’, on the one side, and McPherson & Company, Tobin & Shannon, and Newton & Company, creditors of Schober at the time of his decease, on the other side, as to whom the funds shall he paid. The First National Bank of Jersey City, and the defendant, Union Trust Company of New Jersey, stand together as judgment creditors of Pauline J. Schober individually, she being personally indebted to them (not the testator). On the other hand, the other defendants were all creditors of the deceased. The question as to the priórity as between the claims of McPherson & Company, Newton & Company, and Tobin & Shannon, need not he discussed, because these three defendants have agreed to a pro rate distribution of the fund based on the amount of their judgments, in the event that the court decides that the judgments of McPherson & Company, Newton & Company, and Tobin & Shannon should be paid prior to the judgments of complainant and Union Trust Company of New Jersey.

The will of the testator says: “I order and direct that all my just debts and funeral expenses be paid and satisfied as soon as can be conveniently done after my decease.”

He then devises and bequeaths everything to his wife, both real and personal, her heirs and assigns forever, and appoints her as sole executrix of the will.

After verified proofs of claim had been served upon the executrix by the defendants who were creditors of the testator, prior to the expiration of the time limited for presenting claims, and to which no objection was made, judgments- were obtained against her as executrix by the creditors of the testator. McPherson & Company, of course, admit that by its judgment against her* as executrix it acquired no lien upon the real estate of which the testator died seized. 3 Comp. Stat. p. 2955, § 1.

What became of the personal estate of George F. Schober is not known. Because of the actions of the executrix she was removed, and ihe substituted administrator was aide to collect only the amount of $1,590.56, which was distributed among the creditors who filed claims.

The widow, Pauline J. Schober, aliened the lands which came to her through her husband’s will, but the purchasers refused to consummate the sale and pay the purchase price until the liens created by the judgments referred to were in some way adjusted and disposed of. To accomplish this, on the 23d clay of October, .1913, an agreement was entered into between Pauline J. Schober, individually and as executrix under the will of the testator, Richard B. Tobin and George A. Shannon, partners trading as Tobin & Shannon, John A. McClosky, trading as Newton & Company, Edward J. Eox and Simon Frankenstein, surviving partners of the firm of McPherson & Company, and the First National Bank of Jersey City, a corporation, and the Union Trust Company of New Jerset’, a corporation, the significant portions of which agreement read as follows:

“Whereas, the said lands and premises hereinbefore described have been sold by the said Pauline J. Schober at public auction, and the title thereto is about to be conveyed by her individually and as executrix to the purchasers thereof, and the purchasers will not accept the conveyance of the said lands and premises unless the- same are released from the lien of the said judgments hereinbefore set forth;
“And, whereas, it is considered by the parties hereto that the said prices to be obtained for the sale of the premises aforesaid are adequate, and that it is to the advantage of the parties hereto that said conveyances should be made and that the net purchase-prices received therefrom should be held subject to the same priority and liens so far as judgments heroin recited are concerned, and the claims or" debts upon which said judgments are recovered, as are the lands hereinbefore described at the date of said conveyance, and to that end and for that purpose the holders of the said judgments have consented to release said lands aforesaid from the lien thereof ;
“That the net proceeds of sale when so received by him (Marshall Van Winkle) shall be subject to the same liabilities and priorities as are the lands hereinbefore described at the date hereof, so far as the judgments hereinbefore recited, and the claims or debts on which said judgments were recovered, are concerned. * * *
“That any of the parties hereto may take such proceedings at law or in equity in respect to the net proceeds of sale in the lands of the said trustee as they might now take in respect to the lands hereinbefore described.”

The sale was then consummated and releases given to the purchasers, and the net proceeds of sale deposited with Mr. Yan Winkle as trustee, Pauline J. Schober giving deeds which cut off her dower right in the real estate.

The complainant’s contention is, that by obtaining judgment against Pauline J. Schober individually on the debt owing by her individually and issuing execution thereon, levy being actually made, that under the law of this state it is entitled to be first paid, even as against actual creditors of the testator, the complainant itself being merely a creditor of the devisee, relying on Mott v. German. Hospital, 55 N. J. Eq. 726; First National Bank of

The opposing group of creditors, however, contend that they are entitled to be paid first out of the trust fund in the hands of the trustee by virtue (first) of the filing of-their claims with the executrix within the time limited for preservation of claims, and which were not objected to; and (second) of the judgments which they respectively obtained against the executrix based on those claims.

They further contend that the effect of the entry of such judgments was merely to establish the claims referred to, but not otherwise affecting the claims as presented to the executrix.

Counsel for the respective parties elaborately and ably presented and discussed a number of questions of the most interesting character as having a bearing upon the controversy between the two classes of claimants to the fund involved; but, laying to one side most of them as being unnecessary to the decision of the main question presented byi the record, I think it is sufficient to say that the decisions in this state are clear to the effect that where a will causes a debt to be a charge on the lands of a testator, there is an equitable estate in lands created thereby; and the debt not being barred by limitations at the testator’s death, it may be enforced within twenty years from his death against the lands- as though it were a legal estate given by the will. McKinley v. Coe, 66 N. J. Eq. 77.

And that, as said by Hr. Justice Depue, speaking for the 'court of errors and appeals in Morse v. Hackensack Savings Bank, 47 N. J. Eq. 279 (at p. 286) : “The charge in the testator’s will of his debts upon his estate created a trust which creditors could enforce ex debito justicia: by compelling the executor to execute the trust”

To the like effect are: Shreve v. Shreve, 17 N. J. Eq. 494; Suydam v. Voorhees, 58 N. J. Eq. 164; Roll v. Roll, 68 N. J. Eq. 229; Hetzel v. Hetzel, 71 N. J. Eq. 773.

I shall, therefore, advise a decree that the fund.of $4,547.43 in the hands of Marshall Van Winkle, trustee, he paid to the creditors, McPherson & Company, Tobin & Shannon, and Newton & Company, in accordance with the agreement entered into by them in case they prevailed, and that the bill of the complainant be dismissed.

I will settle the terms of the decree on the application of counsel.


source: Caselaw Access Project

author: Lewis, V. C.

license: Public Domain

text:
    The New Jersey Title Guarantee and Trust Company, a corporation, v. Louisa Archibald et al.
    [Decided January 21st, 1919.]
    1. Joint tenancy may be created in personal property.
    2. Where money was deposited in a bank of deposit, with a signed statement that all moneys deposited in that account belonged to the signers as joint tenants, and would be the property of the survivor, either party and the survivor to draw, the account is in joint tenancy, and the survivor is entitled to the money deposited.
    On motion to strike out.

      Messrs. Collins & Corbin, for the complainant.

      Mr. Ralph E. Cooper, for the defendants.
   Lewis, V. C.

The motion to strike out the bill of complaint should prevail. The facts which are agreed upon are as follows; The bill of compláint was filed by the executor of Helena Metz for instructions as to its duty with respect to two hank deposits, one with the complainant, and one with the First National Bank of West-wood, New Jersey, standing in the joint names of Helena Metz and her daughter, the defendant Louisa Archibald.

The account with the New Jersey Title Guarantee and Trust Company, which dated from March 31st, 1916, contains the following provision:

“This account, and all money to be credited to it, belongs to ns as joint tenants, and will be the absolute property of the survivor of us, either and the survivor to draw.”

The oilier account with the First National Bank of Westwood, New Jersey, was opened March 4th, 1918, in the name of Helena Metz and Louisa Archibald, they having signed a writing and delivered the writing to the said bank, in which, among other things, was the following provision:

“This account, and all money to be credited to it, belongs to us as joint tenants, and will be the absolute property of the survivor of us, either and the survivor to draw.”

Neither of the parties drew any funds while both were alive. These facts set forth in the hill lead me to the conclusion that. the accounts are in joint tenancy, and as such the survivor is entitled to the money deposited.

The requisites of an estate in joint tenancy are present — the unities of interest, title, time and possession; and the estate, of course, was created by the act of the parties.

Tt is well settled that a joint tenancy may be created in personal property with the same Incidents of joint control and survivorship as in real property.

The words used by the New Jersey Title Guarantee and Trust Company and the First National Bank of Westwood in these contracts of account are most appropriate for the creation of an interest of joint tenancy; and they meet the rule that joint tenancy in personal estates must be sustained by the same requirements and fulfill the same conditions as joint tenancy in realty. Staples v. Maurice, 2 Eng. Reprint 395.

A ease which controls is East Rutherford Savings and Building Association v. Margaret Stewart McKenzie (New Jersey Court of Errors and Appeals), 87 N. J. Eq. 375.

An examination of this case leads one unhesitatingly to view the transactions between the Now Jersey Title Guarantee anc| Trust Company, the First National Bank of Westwood, New Jersey, Helena Metz and Louisa Archibald, as having created a joint tenancy in the moneys deposited in these accounts.

In the case of Morristown Trust Co. v. Capstick, 106 Atl. Rep. 391 (just reported), Vice-Chancellor Stevens indicates a concurrence in the views taken in the case under consideration.

An order may be accordingly entered.


text:
    The New Jersey Title Guarantee and Trust Company, executor of the estate of Charles Arthur Smith, deceased, v. Margaret Smith et al.
    [Decided July 17th, 1919.]
    1. Where a testator stated in his will that it was his intention and wish that his widow should always be well provided for, the payments of income to her commence from the testator’s death.
    2. Where a testator provided that a trust fund of $105,000 should bo first set apart from his estate, such fund should be established without regard as to whether it comes from his real or personal estate, and where the testator's legacies far exceed his personal estate at the time of making his will, and also at the time of his death, this implies an intention on his part to charge the pecuniary legacies on his real- estate.
    3. When a trust fund is established by will, equity will never want for a trustee, and where a person is appointed by the will as “guardian” with the duties of a trustee, it is clear that the testator intended that he should perform the duties of a trustee, and the executor of the will may safely pay him the income of the trust fund.
    4. The executor, being' so authorized by the will, may pay principal as well as income for the support and maintenance of the widow, when in the judgment of both the executor and guardian it is necessary to do so.
    5. AYhere the will provides that transfer taxes be paid by the executor, and also that a trust fund of $105,000 be created, this fund should not be diminished by the payment of transfer or inheritance taxes.
    O. A gift of $15,000 upon trust to erect and maintain a building in Forked River to be used -for the benefit of the inhabitants thereof is a charitable gift. '
    7. AATiere the residue of the estate is bequeathed and devised to an executor in trust, if necessary to carry out the provisions of the will, this works a conversion of the real estate into personalty, especially where there is a power of sale in the executor.
    On bill, pleadings and proofs.

      Mr. Gilbert Collins, for the complainant.

      Mr. Theodore Rurode, of counsel with Mr. George W. Enrodé, guardian, defendant.

      Messrs. Vredenbnrgh, Wall £ Carey., for the defendant Margaret Smith.
   Lewis, V. C.

The hill seeks the construction of the will of Charles Arthur Smith upon the ‘following questions: (1) Whether the income payable to Margaret Smith, the widow, is to be paid from the date of the-testator’s death, or only after'one .year from his death. (2) Whether the real estate is charged with the payment of pecuniary legacies. (3) As 'to the status of George W. Bu-rode, who is designated as guardian of Margaret Smith, the widow. (4) Whether the executor can safely pay to George W. Furodc the income on the trust fund for the benefit of the widow. (5) As to the executor’s duty in regard to the payment of principal for support and maintenance of the widow. (6) Out of what fund the inheritance tax on the trust fund is payable. (7) As to the bequest in the thirteenth paragraph of the' will for the benefit of the inhabitants of.Forked Fiver. (8) As to the .bequest in the nineteenth paragraph of the will for the benefit of the Toms Fiver Hospital.

(1) The intention of the testator, who provided substantially for his widow, is clear. He said: “It is my intention and my wish that she shall always be well provided for and maintained.” It would be absurd to hold that such provision and maintenance should he withheld for a period of a year following the testator’s death; for, in that time, through lack of funds, or proper attention and care, the widow might herself have passed away. I have no hesitancy, therefore, in construing this provision of the will in accordance with what I thus take to be the testator’s clear intention; and the income on the trust fund of $165,000 for the benefit of the widow should be paid from the date of the death of the testator.

(2) I also feel that there can be no real question as to the testator’s intention that if the personal estate is insufficient to produce the trust fund of $165,000, created for the 'benefit of the widow, that then the additional amount necessary should be raised from the real estate. By the first article of the will, the testator directs the executor to set aside “such part of my estate to the amount of $165,000.” By the twelfth article he says:

"In the event that my estate shall not be sufficient to pay the legacies herein bequeathed, I then direct that my executor shall first set apart the sum o£ $105,000 mentioned in the first clause of my will, and the remaining legacies shall be reduced pro rata.”

In the first article the testator also shows that he wanted his widow to be supported as he had been supporting .her, even if it were necessary to use the principal of the trust fund. He says: “She shall always he well provided for and maintained,” and that she should always be supported “as she is now being maintained and supported by me;” and further, “as I am now supporting her and maintaining her.”

It seems entirely clear, therefore, that the testator’s intention was to raise the fund of $165,000, mentioned for the benefit of his widow, regardless of whether it came from his personal estate or from his real estate, in the event of the personal estate being insufficient for that purpose.

I, therefore, so construe the will in this respect.

The legacies far exceeded the value of the personal estate, not only at the time of the testator’s death, but at the date of the execution of his will, and the residuary clause disposes of the real and personal property in a blended mass. This implies an intention oil the part of the testator to charge the pecuniary legacies on the real estate, if the personal estate is insufficient to pay them. It follows that the real estate should be charged with the payment of the pecuniary legacies.

(3) The testator was deeply solicitous of the welfare of his wife. Mr. George TT. Rurocle was a close friend in whom he reposed great confidence. It was his specific desire that Mr. Rurocle should be entrusted with the care of Mrs. Smith, the testator’s wife, after his death. It seems to me to he immaterial by what name he designated the person whom he desired to take care of his widow, when he himself was no longer able to do so. It is easy to understand how a man in his position, whose wife has been ill, and for a time in a sanitarium, should he thus specially desirous of selecting some personal friend in whose ability and personal integrity he had full confidence to exercise •this delicate and important tiuist. There can be no doubt, of the effective creation of the trust fund for the benefit of the widow; and there is no doubt, in my mind, but that the testator intended Mr. George IT. Rurocle to be the trustee. In the light of the well-known rule that “equity will never want for a trustee,” where a trust is clearly established, I would have no hesitancy in holding, in the event of the testator’s having failed to effectively designate a trustee, that a trustee .should now be appointed to carry out the terms of the trust which unquestionably lias been created by the testator in this case; and it would be a simple matter to appoint as the trustee Mr. George W. Rurode, the person designated by the testator as “guardian ;” but I feel that this is unnecessary, because, in my judgment, the testator clearly intended that Mr. Rurode should be such trustee; and that his designation of him as “guardian” was due to the layman's natural misuse of technical terms and misapplication of the niceties of legal phraseology.

(4) It follows, again, that the executor, therefore, can safely pay to George W. Rurode the income from the trust' fund for the benefit of the widow; and

(5) That it is the executor’s duty to • make payment of the principal as well as the income, for the support and maintenance of the widow if, or when, in the concurrent judgment of the executor and trustee, it may he necessary; the testator's will in this respect, providing that such action he taken, “if at any time it may be necessary in the judgment of both my executor and guardian of my said wife to use any part of the principal of said sum of $165,'000.” ‘

(6) The testator, Iry the twenty-third article of the will, directs his executor to pay all transfer or inheritance taxes imposed on the principal sum of $165,000. In the twelfth article the testator provides that if there is not enough to pay the legacies, he desires the $165,000 fund to be first set aside for the benefit of his widow and the remaining legacies reduced pro rala.

The testator’s intention to create a trust fund of $165,000 net is plain, from these and other provisions of the will already considered.

I am, therefore, of the opinion that this fund should be undiniinished by the payment of transfer or inheritance taxes, and that such taxes should be paid out of -the general estate.

(7) This involves a bequest of $15,000, upon trust, to erect and maintain a building in Forked River, to he used for the benefit of the inhabitants thereof; and falls within the general definition of a charity as “a gift to be applied consistent with existing laws for the benefit of an indefinite number of persons, either by bringing their minds or hearts under the influence of education or religion; by relieving their bodies from disease, suffering or constraint; by assisting them to establish themselves in life; or by erecting and maintaining public buildings or works, or otherwise lessening the burdens of government. It is immaterial whether the purpose is called charitable in the gift itself or if it he so described as to> show that it is charitable in its nature.” Mackenzie v. Trustees, 67 N. J. Eq. 652 (at p. 655).

Whether or not Forked Fiver is incorporated as a municipality is immaterial. The bequest is to a trustee for the benefit of the inhabitants of Forked Fiver, and the beneficiary is sufficiently designated to admit of identification without doubt or difficulty.

I think, therefore, that the provisions of the will in this respect should be carried out as directed by the testator.

(8) The residue of testator’s estate, both real and personal, is bequeathed and devised to the executor, in trust. If necessary to carry out the provisions of the will, this works a conversion of the real estate into personalty, and especially is this true where there is a power of sale in the executor, which is equivalent to an imperative direction to sell, and causes equitable conversion.

Tt seems plain, therefore, that the bequest to the Toms Fiver Hospital is a gift of personalty. The fact that this hospital is unincorporated is immaterial, it being clearly capable of identification, and able to take an unconditional gift of personalty. The proof establishes that it is managed by the hoard of directors and that its objects are of a charitable nature.

I think, therefore, that the provisions of the will in this respect should also ho carried out as directed hv the testator.

I will advise a decree in accordance with these views.


text:
    Thomas J. Mullen v. Cornelius J. Cronan et al., executors of John Mullins, deceased.
    [Decided July 21st, 1919.]
    1. Mistakes wliicli might have been avoided by common and ordinary care, and which result from negligence, will not be reformed in equity.
    2. There is .no authority for the doctrine that a unilateral mistake is ground for reformation in the absence of fraud.
    3. One who seeks reformation of a written instrument has the burden of proof.
    4. Equity will not decree a reformation when the. result will be inequitable.
    On bill, &c.

      Messrs. Edwards £ idinilh, for the complainant.

      Messrs. Yredenburgh, Wall £ Carey, for the defendants.
   Lewis, V. C.

The real proposition presented by this issue is that this court should reform an assignment, absolute on its face, made by the complainant to John Mullins, his father-in-law, of his interest in two hundred aliares of Colonial Land Company stock. If the proofs, as presented, do not justify the court in doing this, the executor should not be restrained from pleading at law this assignment, and the bill tiled by him should be dismissed. A further review of the evidence in this case does not change the opinion entertained by me at the-conclusion of the oral proceedings that this course should he pursued.

The shares in the land company just mentioned formerly belonged to the complainant, but on May 16th, 1912, ho assigned them to John Mullins, his father-in-law. A copy of this assignment, which is under seal, is in evidence (Exhibit G-8). A perusal of it cannot fail to satisfy anyone that it was prepared with consideration and care. It would appear to set at rest any claim or contention of the complainant that after executing it he retained any right in the proceeds of the stock. I call attention to this significant paragraph in the instrument:

“And the undersigned hereby authorizes and empowers said John Mullins to retain and keep for his own use and benefit any and all moneys which may be collected upon checks, drafts and orders heretofore or hereafter issued by the Colonial Land Company to the order of the undersigned.”

Similar assignments and agreements were made by Mrs. Thomas J. Mullen, wife of the complainant, for her one hundred and fifty shares in the land company; and also by John Henry Mullins, a son of John Mullins, covering his holding of one hundred shares in the company. There is nothing in the evidence, as I recall it, which shows that any of these parties paid John Mullins, who, with Dennis McLaughlin, controlled this company, for this stock, and it is admitted that none of thjem have received any of the proceeds after the assignment to Mullins.

The complainant’s evidence is that he signed the assignment at the request of his wife without reading it, and that the next time he saw it it was in the possession of Cornelius J. Cronan, the executor of John Mullins, and that he made a demand upon Mr. Cronan for the money. His testimony is flatly contradicted by Mr. Cronan, who appears to be a disinterested witness, and who says that the first claim ever made by Mullen or anyone in his behalf was on January 6th, 1914, after the death of his father-in-law. Mrs. Mullen’s story of the assignment is that she got it from Mr. Cronan and asked her husband to sign it, telling him where it came from and what the paper was for. After her’ husband had signed it she says she took it back to Mr. Cronan. There does not appear from this evidence to have been a mistake, mutual or otherwise, and the testimony of Mullen, who seeks the reformation, is simply to the effect that he signed the paper because his wife told him to. This evidence is inconclusive and somewhat feeble to effect a reformation, and, moreover, the mistakes which equity will reform are common and ordinary ones and which are not the result of negligence.

The evidence offered by the defendants is more convincing. It is shown by it that John Mullins, the father-in-law of Thomas J. Mullen, was a very successful business man, possessed of considerable wealth. Among his other possessions he had a furniture business at 218 Market street, Newark, New Jersey. On January 5th, 1912, during his lifetime, he leased the premises to the complainant and his wife for twenty-one years, from January 1st, 1912, at a yearly rental of $6,000. This rental was nominal. It was asserted that it would have been, to a stranger, in the neighborhood of $25,000 a year. Testimony was offered which prove that the charges, taxes, insurance, &c., on this property amounted to about- $5,000 a year. On the same day Mr. Mullins also assigned to the complainant and complainant’s wife all the accounts, debts, &c., arising out of the business carried on by him in Newark. A hill of sale of the good-will, entire stock of trade and business wa.s also on the same clay given to Mullen. Mullen said on direct examination that he paid $20,-000 to his father-in-law for this bill of sale, but on cross-examination he admitted that he merely handed him a check for this amount and that his father-in-law endorsed it and handed it back to him and it was deposited in his bank account. In- other words, he paid nothing.

On January 29th, 1912, the Newark store was destroyed by fire. The evidence is that after the fire Mullen and his wife asked John Mullins that instead of replacing the destroyed building at Newark of like character to use the money derived from the sale of the shares in the Colonial Land Company belonging to them in the erection of a larger and more modern building. It would appear that Mullins agreed to this proposition. Mullins had intended to expend about $50,000 in replacing the building, hut it cost finally $117,634.03. On April 8th, 1913, Mullins died. The will of Mullins, bearing date December 30th, 1911, provided that the fee of the land to this Newark property should pass to his daughter, the wife of the complainant. The Newark building was not completed at the time of Mullins’ death, but was by the executors. The evidence does not satisfy me that during, the period, of the reconstruction of this building that the complainant ever made any claim for the proceeds of the sale of the Colonial Land Company’s stock. Cronan, the executor, says in his testimony that no mention was ever made to him by complainant of his claim for the cash proceeds of the stock until the last bill had been paid on the building. The evidence shows that the money derived, from the sale of conrplainant’s stock was used in the erection of the new building, and that in its construction he had full control and his wishes were carried out by the architect and those employed on the building. .

In view of these facts and circumstances, which I am constrained to view as correct, I think reformation of the instrument should be denied. It is well settled that equity will not decree a reformation when the result would be inequitable, and aside from this the testimony offered by the complainant, and the burden of proof is with him (Flaacke v. Jersey City, 28 N. J. Eq. 110; affirmed, 30 N. J. Eq. 733), does not disclose any mutual mistake, and there is no authority for the doctrine that a unilateral mistake is ground for reformation in the absence of fraud. Green v. Stone, 54 N. J. Eq. 387; Herron v. Mullen, 56 N. J. Eq. 839; Doniol v. Commercial Fire Insurance Co., 31 N. J. Eq. 30, and other cases.

It was urged by the defendants that the bill also might be dismissed on tile ground of laches and estoppel. It is not necessary for me to consider this in light of the views 1 have just expressed, but in passing it might be said that it would seem highly inequitable for this court to grant the relief prayed for so long after the death of the testator, when his lips are sealed as to the transaction between himself, his son-in-law and bis daughter, and while it is apparent that the money derived from the stock assigned was expended in the building, disbursed and applied according to complainant’s wishes and desires., and that this identical property is devised under the will of John Mullins to his daughter, the wife of complainant.

A decree may be entered dismissing the bill in accordance with these views.


author: Lewis V. C.

text:
    H. J. Jaeger Company v. John M. Hannan.
    [Decided August 1st, 1919.]
    1. In a transaction as to purchase and sale of real estate, if fiduciary relationship is shown to have existed between the. complainant and defendant, the defendant cannot profit by the transaction at the expense of the party whose interests he was bound to protect, unless full disclosure was made and assented to by the complainant.
    2. The burden of establishing the' fiduciary relationship is upon the complainant.
    On bill, pleadings and proofs in open court.

      Messrs. Weller c6 Liehlensiein-, for tlie complainant.

      Mr. J. Emil Walscheid,dor the defendant.
   Lewis V. C.

The bill was filed by the complainant, a body corporate, against the defendant, to compel him to account for and pay over to the complainant the difference between what he paid for a certain piece of land in Weehawken, New Jersey, and the amount paid to him for it by the complainant.

The defendant, John M. Hannan, was a real estate agent. Mr. H. J. Jaeger was the president of the H. J. Jaeger Lamp Company, the complainant. The lamp company desired to purchase a tract of land upon which to erect a. factory. By appropriate resolutions the president was authorized to negotiate for the purchase of the tract in question. He- claims that he arranged with Hannan to treat with the owner of the land and obtain it for him, Hannan to receive his commission on the sale, from the owner. Hannan, in turn, arranged with Louis Menscheler to negotiate with the owner, and told him to collect the brokerage for himself. Hannan then informed Jaeger that the property could not be purchased for the sum of $2,000, which was the price fixed by-Jaeger, and, finally, the purchase-price was inflated to $3,600, which is the consideration finally passing between Jaeger and Hannan. As the price advanced, however, during the negotiations, Jaeger (who had also agreed to pay Hannan the same commission which the owner was to .pay) withdrew this part of the commission, and said that Hannan, would have to receive liis' entire compensation from the owner.

During all these negotiations Hannan .represented to Jaeger that he was unable to get the property for the various figures mentioned, ranging from $.2,000 to the final figure of $3,600.

The Manor Beal Estate and Trust Company was the owner of the land. It agreed to sell the land, as a result of these negotiations, for $2,250. The agreement was first taken in the name of Charles E. Gorrell, a mere dummy. ■ -

The agreement was drawn by George Frankenstein, a. member of the bar of this state, acting for Hannan. He testified that later on he learned that Gorrell was married and that there would be difficulty in obtaining his wife’s signature to a deed, and so the contract with the Manor Beal Estate and Trust Company for the sale of this land was assigned to Charles A. Bubens, to whom the deed for the property was given by the real estate company. The consideration passing to the real estate company was $2,250. There was considerable delay in closing the transaction, due, doubtless, to the manoeuvring thus employed; but, finally, on June 10th, 1915, title passed to Bubens from the real estate company, and then Bubens executed the deed to the H. J. Jaeger Compaq, the consideration for which was $3,600.

Frankenstein was paid $150 for his services by Hannan.

■ Complainant, claiming to be the real party in interest, and for whom H. J. Jaeger, its president, simply acted as its agent in this transaction, now seeks an accounting from Hannan to the extent that Hannan received unjust profits in this transaction.

It is clear that if a fiduciary relationship is shown to have existed between complainant and defendant, the defendant cannot take any profit in this transaction, at the expense of the party-whose interests lie was bound to protect, unless full disclosure was made and assented to by the complainant. Loudenslager v. Woodbury Heights Land Co., 58 N. J. Eq. 556.

It seems equal]}' clear that the burden of establishing the fiduciary relationship is upon the complainant.

I think there is ample evidence in this case, direct and positive, with strong corroborating facts and atmosphere to establish the fact that Hannan, through his relations with Jaeger, was acting as the agent for the complainant, and that while so acting in negotiating the purchase of the land in question, manoeuvred and manipulated a sale from the owner to a dummy and then resold to his principal at a. profit. The exact amount of this profit is not disclosed by the proofs, but, when, ascertained by a proper accounting, the defendant should be decreed to pay that amount to the complainant.

If it is necessary to bring in Herman J. Jaeger as a party complainant in order to make the record technically correct for the granting of the relief stated, ah order will be made on application to make such an amendment.

The only doubt, in my mind, is whether complainant has not an adequate remedy by law, either for damages or an action in <7«asi-contract against Hannan to recover the amount of Han-nan’s profit. Dickinson v. Updike, 49 Atl. Rep. 712.

But I am satisfied, after consideration, that the relief here sought is of a clear equitable nature, and that a decree in accordance herewith should be made.

I will so advise.


author: Backes, V. C.

text:
    Attorney-General, ex rel. William Bliss et al., v. Linden Cemetery Association et al.
    [Submitted July 3d, 1917.
    Decided September 17th, 1917.]
    Where a case is referred to a master to ascertain what will be a reasonable sum to be paid to a grantor for services and profit in the purchase and sale of property, a finding by the master of a certain sum for the services of the grantor, no finding being made for the profit on the purchase and sale of the property in view of the services of the grantor and their value to the grantee, exception to such finding will be sustained.

      On exceptions to master’s report.

      21essrs. Tail d¿ 2IcLean, for the exceptants.

      J]lessrs. Osborn & Cornish, for the respondents,'
   Backes, V. C.

Eor a comprehensive understanding of the question presented the exceptions filed to the,master’s report, the opinion of Mr. Justice Garrison in the court of errors and appeals (85 N. J. Eq. 501), reversing this court (83 N. J. Eq. 494), must be consulted.

Fpon the coming down .of the remittitur the matter was referí ed to a master “to ascertain what will' be a reasonable sum to be paid to the grantor in said deed and Ms assigns for services aird profits on the purchase and sale of said property in view of the services of the grantor and their value to the grantee,’’ and the master has reported the sum at $-1,000, with interest, to which, exceptions are filed. The master measured and determined the amount upon the basis of compensation for the services of the grantor, whereas, according to the view of the court of errors and appeals, he should have ascertained and reported a reasonable sum for the profit of the grantor “in view of the services of the grantor and their value to the gTantee.” While the remittitur is not precisely in the language of the opinion of the court of errors and appeals, its phraseology is such as to permit an inquiry and findings conformable to the directions laid down in the opinion. The supposed variance in nowise interferes with the application of the criterion adopted by the appellate court in establishing the sum to be paid the grantor.

Covenant “two,” providing for the profit of the grantor, was declared extra-statutory solely because the amount to be paid was unliquidated. In its moral aspect it has the approval of the upper court, and percentage as a basis of calculation is not looked upon with disfavor.

A profit of ten per cent, of the gross proceeds of the sales of burial plots was agreed upon by the contracting parties and is to be presumed reasonable, and had thej estimated the probable total income from sales and thereon accordingly fixed the amount of the profit, the vice in the covenant which caused its destruction would have been obviated. A substitute for this indispensable element of the covenant will be furnished by adopting the course the parties themselves could lawfully have pur-, sued. The amount of the percentage is not unreasonable under the circumstances, and the aggregate will be small or large, depending entirely upon the successful prosecution of the cemetery enterprise. The testimony before the master disclosed that a fair and reasonable average price for lots is fifty cents per square foot; that the gross proceeds of the sale of all of the lots at this rate will exceed a million and a half dollars, and that the net income will be over a million, dollars. Staggering as these figures are, and large as the profit must be, if they are realized, they serve to emphasize the value of the grantor’s services to the grantee — a controlling factor in the measure of profit which the master has wholly ignored.

The exceptions will be sustained and the matter referred to the master for further investigation and report, in accordance with these conclusions.

Note. — Modified, 89 N. J. Eq. 192.


text:
    Attorney-General, ex rel. William Bliss et al., v. Linden Cemetery Association et al.
    [Submitted April 8th, 1919.
    Decided April 21st, 1919.]
    Tlie fair value of lands of a cemetery company is properly ascertained by subtracting from their gross value the expenses of future development of the lands for cemetery purposes, and treating the association as a going concern, making no deduction to cover possible losses if the cemetery should not continue to be operated as a cemetery.

      On exceptions to master’s report.

      Messrs.-Vail & McLean, for the claimant.

      Mr. Abram II. Cornish, for the receiver.
   Backes, V. C.

This matter is before the court on cross-exceptions to the master’s report. The master was directed “to ascertain and report tire fair value of the land of the said Linden Cemetery Association as of the date of the receivership; and ten per cent, of said ascertained value without interest, in accordance with the views expressed in the decree of the said court of errors and appeals therein.” That decree, which followed the opinion of the court of errors and appeals, reported in 85 N. J. Eq. 501, directed the court of chancery “to ascertain what will be a reasonable sum to bo paid the grantor, or his assigns, for services and profit on the purchase and sale of said property, and their value to the grantee, less any credits to which the grantee is entitled. And that when such sum is ascertained it shall be treated as unpaid purchase price of the land until extinguished by payment in gross or by percentage from the price; of lots, as provided in said coven'ant, which covenant is declared to be extra-statutory solely because the amount to be paid to the grantor was unliqiiidated.” The plan and rule for measuring the claimant’s (grantor’s) compensation, adopted by this court and approved by the court of errors and appeals, with qualifications, reported in 89 N. J. Eq. 192, while not incorporated in the reference, guided and controlled the master. The master estimated the value of the land at $519,140.18. He did not report this to be the fair value, but as both parties have treated his calculations and findings as a compliance with the spirit of the order of reference, it is accepted as his appraisement. Tn arriving at' these figures the master estimated the land not suitable for burial purposes-at $1,000 per acre (which is-not criticised by either party), and the land suitable for burial purposes, based upon past experience, at fifty cents per square foot, the gross amount, after adding thereto the value of land sold, being $863,610.98. Front this sum ho deducted $344,470.20, which lie estimated would he the cost of the future development of the land for cemetery purposes, leaving the balance of $519,140.78'as his appraisement, upon which he estimated the ten per cent, at $51,-914.07. The claimant complains and contends that the ten per cent, should have been calculated upon the gross instead of net value. In other words, ten per cent, on $863,610.98 and not on $519,140.78. I do not see how this position can be maintained in the face of- the opinion of the court of errors and appeals reported in 89 N. J. Eq. 192. When the case was then before me on exceptions to the master’s report, I held, in effect, the measure of profit to the claimant to be ten per cent, on a liquidated sum to be ascertained by an appraisement of the land based upon the probable total income from sales. The court of errors and appeals in affirming said: “This seems to be a practical way of disposing of the matter, and we assent to it with two qualifications — the first, that no interest be payable on the unpaid balance, for reasons already stated, and secondly, that the appraisal bo made as of the date of the receivership, at which time the original scheme broke down.” It seems to me the master has correctly interpreted the liews of the court of errors and appeals. The dply possible chance the claimant has of realizing on his equities depends entirely upon the prospective use of the land for cemetery purposes, and in appraising its worth as of the time when the receiver was appointed, based upon this prospect, the master very properly took into consideration the estimated cost of developing the enterprise, in the event that it should be revived. The particular grievance is that in the estimate is included the cost of the sale of lots, and the incidental expenses of carrying on the business of the association, and in this respect it is pointed out that under the original scheme the ten per cent, profit was independent of these costs and expenditures. The argument on this point altogether ignores the second qualification of the court of errors and appeals opinion above quoted “that ihe appraisal be made as of the date of the receivership.” The whole theory upon which the appraisal was made rests upon the utilization of the lands for burial purposes, and necessarily the expenses incident to a successful prosecution of the cemetery enterprise were determining factors in fixing the value as of the-time when the scheme broke down. The exceptions will be overruled.

The receiver excepts on the grounds that the appraisal is excessive, in that forty-four and ninety-seven hundredths, acres of land suitable for burial purposes should have been appraised at $2,500 per acre instead of at the rate of fifty cents per square foot, the current price of burial lots and plots; and that in determining the value of the property at the date of the receivership, the master “used a speculative value contingent upon the happening of three certain elements — (1) cost of suitable preparation of the ground; (2) the cost of sale, and (3) the continued operation of the cemetery; but failed to deduct from the sum total of such speculative value, the third element necessary to make it up, namely, the continued operation of the cemetery.” In view of what has been said by this court, and the court of errors and appeals on the subject, it seems to me that the master applied the correct rule and rightly appraised the lands suitable for cemetery purposes as though they were those of a going concern, after making due allowance, as he did, for the expenses that a going concern would be put to to successfully carry out the project. The plan endorsed by the court of errors and appeals for admeasuring the claimant’s profit, of .course, implies purely speculative values, as the theory upon which the valuation is based contemplates the sale of the land for burial purposes under the management of a cemetery association, properly conducted, which does not now exist. Unless this coinés to pass the claimant will realize nothing or little, for, as has been pointed out in a prior decision, the payment of his claim, or any part of it, is contingent upon the sales prices of the land. Whether the land be sold for burial or other purposes, and whatever price it may bring, only ten per cent, is to be set aside and appropriated to the satisfaction of the claim. The exceptions will be overruled.

In Attorney-General, ex rel. William Bliss et al., v. Rosedale Cemetery Association similar exceptions were filed to tile master's report. They will be overruled.


text:
    Attorney-General, ex rel. William Bliss et al., v. Linden Cemetery Association et al. and Rosedale Cemetery Association et al.
    [Argued May 26th, 1919.
    Decided May 26th, 1919.].
    1. A vendor’s lien for unpaid purchase-money does not attach to lands sold to a cemetery association and devoted' to burial purposes.
    2. A vendor’s lien for unpaid purchase-money on lands of a cemetery association not used for burial purposes is waived by the agreement of t-ho vendor to accept payment out of the proceeds of tilio sale of burial plots.
    3. The costs of administration of a receivership are entitled to priority of payment regardless of the liens and claims of the litigants in a cause.
    On motion, &c.

      Mr. Abram II. Cornish, for the complainant?.

      Messrs. Vail & McLean, for the defendant?.
   Backes, V. C.

These cemeteries — Linden and Rosedale — have been administered by the receiver as a single trust. The receiver moves that his intermediate report he approved and that allowance be made to him for his operating expenses and services and for counsel fees to his counsel. There is no opposition, and his report is approved and the allowances asked for are granted. The receiver, has not enough money to pay them and he will be permitted to borrow on bis certificates to supply the deficiency. •

The receiver has a balance on hand of, approximate!}’, $2,500, and the controversy is over the use of this money ioward defraying the administration expenses. One thousand, five hundred dollars of this represents ten per cent, of the appraisal of land?, of the two cemeteries condemned by the Pennsylvania Railroad Company and paid into, court, and recently paid to the receiver. Eor the purpose of this decision it may be said that the remaining $1,000 represents ten per cent, of the proceeds of burial plots sold by the receiver. The representatives of Smith, the vendor of the lands to the cemeteries, claim that the receiver holds this ■balance in trust for them, that it is not available for the pa3rment. of the costs of administration, and they pray that it be awarded to them. They contend that ten. per cent, of sales made by the receiver, or b3 the corporations if restored to control, is- impressed with a trust in the nature of a vendor’s lien, and that it was so declared by the court of errors and appeals in its opinion reported in 85 N. J. Eq. 501. The appeals there under consideration were from decrees of this court-striking out the second covenant in the deeds from Smith to the associations. By this covenant the associations promised

“To pay semi-annually in cash to said William F. Smith, his heirs, administrators, executors and assigns, one-tenth part of the gross proceeds of the sale, lease or loan of each burial plot or of any use thereof or interest therein made by said Linden Cemetery Association, party of the second part, from the land hereinafter conveyed to said association by this indenture.”

The covenant was part consideration for the conveyances and was held to he void by this court because it violated the Cemetery act. The court of errors and appeals concurred but formulated an equitable substitute which it defined in its remittitur requiring this court “to ascertain what will he a reasonable sum to be paid to the grantor, or his assigns, for services and profit on the purchase and sale of said propei^, and their value to the grantee, less any credits to which the grantee is entitled. And that when such sum is ascertained it shall be treated as unpaid purchase price of the land until extinguished by payment in gross or by percentage from the price of lots, as provided in the said covenant, which covenant is declared to be extra-statutory solely because tlie amount to lie paid to grantor was unliquidated.”

In compliance, it has Leon determined that $51,914.07 is a reasonable sum to be paid by Linden and $28,419.20 by Bose-dale. 90 N. J. Eq. 385.

Claimants’ counsel argues along the line that if .these sums are “to> be treated as unpaid purchase price of the land,” as the appellate court decreed,, vendors’ liens -are implied, and that, as the holders of such liens upon the land; the claimants have priority upon the proceeds of sales over the charges for administering the trust. I think he entertains too-'broad a view of his clients* rights. _ It seems to me that the vendor could have had' no lien had this covenant been valid, arid it is obvious that the court of errors and appeals in recasting it conferred no greater privileges than the vendor would have had had the covenant been statutorily lawful. Considering the rights of the vendor upon the hypothesis of a valid covenant, what were they? It is not questioned that in the ordinary cáse of sales of land where the purchase-money is unpaid the vendor has á lien. “It is well established in this court that where land is conveyed and'the purchase-money for it is not paid, and no distinct security for the payment of that money is taken in its stead, a constructive trust arises, and the vendee 'is considered as the trustee of the land for the vendor until the purchase-money is paid. The vendor thus obtains an equitable lien upon the land for the purchase-money, which is good against the vendee and his heirs and all persons taking- from them as volunteers, and also against purchasers from them for value with notice that the purchase-money is unpaid, and is unenforceable only against purchasers for value in good faith without such notice.” Action v. Waddington, 46 N. J. Eq. 16. But here the vendor by conveying the lands to cemetery associations dedicated them to public xise for the burial of the dead, and at least as to so much of the lands as is devoted to that purpose a lien could not attach. The trust in the vendees to the use of a public, charity is repugnant to a use to the vendor. The very essence of a vendor’s lien is that it follows the lands and is to be made out of the lands, and if the remedy is not available it is because the right does not exist. In Spear v. Locust Wood Cemetery, 72 N. J. Eq. 821, the vendor took a purchase-money mortgage and upon default sought to foreclose it. His contractual and legal position was much stronger than that of the claimants, but Yice-Ohancellor Learning held that the mortgage debt could not be recovered by a pale of tlie lands devoted to burial purposes, because they were exempt from execution by section 8 of the statute concerning cemeteries. Comp. Stat. p. 375. This disposes only of the claim to so much of the funds in the receiver’s hands as was derived from the sales of burial plots.

The $1,500 received from the Pennsylvania Railroad Company, in the condemnation proceedings of lands not appropriated to cemetery uses, stands on another footing. In the case last cited it was held that lands not alloted to cemeteiy purposes were not immune to levy and sale for the payments of the mortgage debt. Consequently, such lands are the subject of vendors’ liens. But Smith, the vendor, waived his right to a lien by agreeing to accept the purchase-money in the manner and from the source provided by the covenant above quoted. Payment was to be made out of the proceeds of the sales of burial plots only, and by restricting himself to this single medium of payment, he thereby indicated his intention to waive his right to the security of a vendor’s lien upon lands not devoted to that purpose. The principles of waiver, and the adjudicated cases in this state upon the subject, are discussed at length in the opinion of Vice-Chancellor Howell in Knickerbocker Trust Co. v. Carteret Steel Co., 79 N. J. Eq. 501.

The status of the vendor was that of a common creditor of the cemetery association with the right to a semi-annual accounting; and it may be that upon habitual, default, equity would relieve by a specific performance of the covenant, compelling the association to set aside ten per cent, of the proceeds of the sale of each burial plot. The court of errors and appeals, in fashioning the covenant so as to carry out, as nearly as possible, the intentions of the parties, left the vendor’s contractual status undisturbed, and to this effect is its mandate that the consideration when liquidated “be treated as unpaid purchase price for the land until extinguished by paymént in gross or by percentage from the price of lots as provided m the said covenant.”

But it is not essential to a decision to determine with exactness the privileges, if any, of the claimants as against the cemotray association. The immediate question is whether they have priority over the costs and expenses of a managing receiver administering a public charity, and this I feel is not open to serious discussion or consideration.

Tlic rule is thoroughly settled that when a court of equity-takes possession of property for tlie purpose of protecting and preserving it for the benefit of the parties interested, the costs of administration aro entitled to priority o£ payment, regardless of the nature of the liens and claims thereon of the litigants. This is so fundamental to the administration of justice and so generally recognized that citation of, authority is unnecessary. The rule is especially applicable in this case. But for the management of these enterprises by the receiver the covenant -of the claimants would be valueless. And it is not to be overlooked that the preferential right set up by them did not arise from any fixed lien upon the property at the time it came to tire bands of the receiver, which will he displaced. Whatever rights they have were horn of this litigation. Then, too, beside conserving the rights of creditors, including the claimants, the operation of these cemeteries was indispensable to .the maintenance of a sacred trust assumed by the corporations, and was also necessary for the protection of the public; for the public lias, an interest in them. Cemetery corporations are, in a sense, grosi-public service corporations. They have been so recognized. Of them Wymans, in his 'work on Biiblic Service Corporations, section 09, says:

“The absolute necessity of public cemeteries is obvious. This necessity may be met either by cemeteries owned directly by the government or by chartered corporations. Such corporations are rarely empowered to take private profit from the conduct of the cemetery, but are obliged to devote their receipts to the purposes of the cemetery. Such being the casé, the law concerning them is mostly that relating to public charities, which is outside the scope of this treatise. It may be noted, however, that it is common to exempt such cemeteries from taxation, and these exemptions are liberally construed in favor of the cemetery-

.In Evergreen Cemetery v. Henry Beecher, 53 Conn. 551, Judge Pardee said: “The safety of the living requires the burial of the dead in proper time and place. * * * Tn order to secure for burial places during a period extending indefinitely into the future that degree of care universally demanded, the legislature permits the associations to exist with power to discharge in behalf and' for the benefit of the public the duty of providing, maintaining and protecting them. The use of land by them for this purpose does not cease to be a public use, because they require varying sums for rights to bury in different localities; not even if the cost of the rights is a practical exclusion of some. * * * It remains a public use. as long as all persons have the sa'me measure of right for the same measure of money.” To the same general effect is Davis v. Coventry, 55 Kan. 557; Wolford v. Crystal Lake, 54 Minn. 440; Close v. Glenwood, 107 U. S. 467. Xow, then, even if the claimant’s so-called lien had been a fixed charge upon the property (if that were possible in come-to y promotions) when the receiver took hold, I would have been justified in subordinating it to the receiver’s expenses in analogy with the rule in cases of insolvency of public service corporations proper, where the receiver operates primarily to discharge the corporation’s duty to the public and for the doing of which the corporate property and the lienholders’ rights may be appropriated. Wallace v. Loomis, 97 U. S. 146. The principles underlying the rule are adverted to in Lockport Felt Co. v. United Box Board and Paper Co., 74 N. J. Eq. 690. The case, however, does not require that I go to this length. It is sufficient, as already pointed out, that the claimants are parties litigants, and that the possession and operation of the property by the receiver is, amongst other things, for the benefit of the •claimants.

The receiver will he permitted to use the fund to defray his allowances.


text:
    Florence Pipe Foundry and Machine Company and Walter Wood v. The Burlington City Loan and Trust Company, Leonard Peckett, Edward L. Herndon and W. Howard Ramsay, creditors’ committee, and Sloss-Sheffield Steel and Iron Company, a corporation.
    [Submitted January 29th, 1919.
    Decided March 7th, 1919.]
    1. In a suit to prevent the surrender for cancellation of a bond and mortgage given by one of the complainants to one of the defendants, evidence held to show that the mortgagor had formed a company and caused that company to execute and deliver, or tender for delivery, its bonds 'and mortgages as agreed upon with the creditor, and thereby he satisfied his personal bond and mortgage, and was entitled to the surrender thereof.
    2. Where the private counsel of a creditor company was also its selection as a member of the creditors’ committee, his actions in this dual capacity must be regarded primarily as those of a committeeman.
    On final hearing on bill, counter-claim and proofs.

      Mr. Marshall II.' Limerty and Mr. J. II. Brinton (of the Philadelphia bar), for the complainants.

      Mr. Ernest Waits, for the defendant Burlington City Loan and Trust Company.

      Messrsi Collins & Corbin (Mr. Gilbert Collins and Mr. Edward A. Markley o£ counsel), for the defendant creditors’ committee.

      Messrs. Pitney, Hardin & Skinner (Mr. Corbin Howell and Mr. Louis II. Freedman (of the New York bar) of counsel), for the defendant Sloss-Sheffield Steel and Iron Company.
   Backes, V. C.

The object of this bill is to secure the surrender for cancellation of a bond and mortgage given by Walter Wood to the- Burlington City Loan and Trust Company, on tlie plant formerly of the Florence Iron Works, at Florence, New Jersey, oti the ground that they have been satisfied, and to compel the defendant Sloss-Sheffield Steel and Iron Company to accept bonds of the Florence .Pipe Foundry and Machine Company secured by a mortgage on said plant, in satisfaction of its debt against the Florence Iron Works. The Sloss-Sheffield company has answered, and by its counter-claim' prays that the mortgage be 'decreed to be a lien in its.favor and that it be foreclosed; or in the alternative that the complainant Walter Wood and the three defendants, Leonard Peckett, Edward L. Herndon and W. Howard Ramsay, a creditors’ committee of the Florence Iron Works, he field personally liable for the payment of its claim.

The circumstances that lead up to this litigation are these: On October 22d, 1911, the United States district'court for the district of New Jersey appointed a receiver for the Florence Iron Works, which was then indebted to various creditors in an amount exceeding $500,000, in addition to upwards of $500,000 due to what may be called the Wood estate. The Wood estate had up to that time controlled the Florence Iron Works and the Camden Iron Works, at Camden, New Jersey. After the receiver advertised tlie plant of the Florence Iron Works for sale a creditors’ committee was formed composed of Messrs. Peckett, Herndon and Ramsay, and on March 22d, 1910, the creditors entered into a protective agreement whereby they assigned their claims to the creditors’ committee to represent them in all matters relating to their claims “in order to legally and efficiently carry out and execute this agreement,” and did

“also constitute and appoint the said committee tlieir, and each of their true and lawful attorneys irrevocable to execute in their behalf any contracts or other instruments in writing, and to do such acts and-things as to said committee may seem proper, to enable the committee to carry out the duties created in. this agreement in all.its parts and details; hereby giving and. granting to the said committee full power and authority to do and perform all and every act and thing which it may deem requisite and necessary to be done in and about the premises as fully to- all intents and purposes as the creditors might or could do personally, hereby ratifying and confirming all that the committee shall lawfully dc or cause to be done by virtue hereof.”

The preamble oil the -protective agreement indicates that its piimary purpose was to protect the creditors by the purchase of the plant at the sale, but the powers granted were more extensive, and inter alia, authorized the committee to represent the creditors in the event that it should not be the purchaser. The Sloss-Sheffield company was one of the signatories. The committee 'was a bidder at the sale, hut the property was struck off to Walter Wood. On the day after the sale, June 29th, 1916, Mr. Wood, by circular letter addressed .to the creditors, proposed that—

“If you will assign your claim to the Burlington City Loan and Trust Company, giving tlicm authority to use the claim so deposited (together with all dividends that may be declared on the same) for the payment for the property bought by myself, then I will agree upon the settlement with the. receiver to cause to he executed a mortgage on the property purchased by me.' consisting of the plant of the Florence Iron Works, dwelling-houses, lots of land and farm for such sum as may be necessary to secure all claims so deposited and on the basis of one hundred cents on the dollar, with six per cent, interest.
“I will further agree in said mortgage that the net rents, from the dwelling-houses, amounting to about $15,000 a year, shall be set aside as a sinking fund, to pay the principal of the mortgage — drawings to he made every six months to pay the bonds that shall be issued under said mortgage, for said claims — the smaller claims to have the preference in the drawings for payment.”

He also included the proposition to the creditors of the Camden Tron Works (many of whom were creditors of the Florence Iron Works') that—

“You to assign your claim to the Burlington City Boan and Trust Company, to be held until the sale of the property (and financial arrangements can be effected) with authority to said trust company to use said claims, as is provided with reference to the Florence Iron Works, then I will agree, upon becoming purchaser of the property, to endorse serial notes for your claim, payable, one. two, three, four and five years, respectively, with interest at five per cent., with the privilege, at any time, of anticipating payment of the unmaturod notes.”

He stipulated that the propositions were to be considered together. Later, in negotiations with the committee, Mr. Wood supplemented his proposition, stating by letter to Mr. Ramsay, of the committee, under date of August 2d, 1916, that it was his intention not to include in the mortgage to be issued any of the Walter Wood (Wood estate) claims, which amounted, roughly, to about $625,000, and that the mortgage would carry interest at six per cent., .payable semi-annually and contain the usual default clauses. In confirmation of this the committee wrote to Mr. Wood on the same day that they understood that the amount of his claim was to be represented in junior securities of the new corporation to be organized by him and

“if for any reason you conclude not to organize a corporation, but to own the property individually, the mortgage which is to be given to the depositing creditors is to be accompanied by your individual bond. The mortgage is to include all of the real estate, plant, machinery, and all personal property in use at the works, such as tools, flasks, etc., and all of the rents, of the dwellings are to constitute the sinking fund.”

On August 4th the creditors’ committee submitted the modifications to the creditors and recommended that as modified they accept Mr. Wood’s proposition. They also recommended that the proposition concerning the Camden Iron Works be accepted, stating “that the two propositions as-to Florence and Camden must be accepted jointly as one by the creditors of both.”

The creditors of the Florence Iron Works, including the SlossSheffield company, accepted and assigned their claims, respectively, to the trust company, and authorized and empowered

“the said Burlington City Loan and Trust Company to use the claims so deposited (together with all dividends to'be declared on the samel for the payment for the property of the Florence Iron Works, purchased by Walter Wood at the sale made by Harold Wells, receiver, on Wednesday, .Tune 2Sth, 1910, upon the said Walter Wood causing to be executed a mortgage on the property purchased by him. consisting of the plant of the Florence Iron Works, the dwelling-houses, lots of land and farms, for such sum as may be necessary to secure all claims against the Florence Iron Works, so deposited with said trust company, said mortgage to bear six per cent, interest, and containing a provision that a sinking fund derived from the rents from said dwelling's amounting to about $15,000 a year, shall be set aside to pay the bonds given for said claims.”

The assignment of the Sloss-Sheffield company was sent by mail on November 14th, 1916, to. Mr. Ramsay by the president of the company with the advice that he had been authorized to accept Mr. Wood’s terms. On the following day Mr. Ramsay forwarded the assignment to Mr. Wood. It was the last one in. On November 15th, 1916, Mr. Wood settled with the receiver and obtained his deed. In the settlement the trust company gave the receiver a receipt for $185,112.71, being seventy-five per cent, of the estimated dividends on the claims assigned to the trust company. On February 15th, 1918, Walter, Wood conveyed- the plant to the Florence Pipe Foundry and Machine Company, which he had caused to be incorporated for the purpose of carrying out his scheme, and on February 20th the Florence Pipe Foundry and Machine Company executed and delivered to the Commonwealth Title Insurance and Trust Company of Philadelphia, as trustee, $517,000 of its bonds (the aggregate of the claims assigned to the Burlington City -Loan and Trust Company with interest thereon to March 15th, 1917) and its mortgage or deed of trust dated on that day covering the plant to secure the payment of the bonds. The bonds, together with interest from March 15th, 1917,-were delivered to the committee in settlement, and were by the committee distributed among the creditors'in proportion to their claims. All of them accepted the bonds and cash in satisfaction of their claims except the Sloss-Sheffield company. Within a week before the final settlement Mr. Ramsay, of the committee, who was also the private counsel of the 'Sloss-Sheffield company, wás notified by the company through its general counsel not to accept the settlement, and for this reason — and it. is the ground upon which the counter-claim is based: When the. receiver settled with Walter Wood and delivered to him the deed for the plant and received from the Burlington City Loan and Trust Company its receipt for the estimated dividends on the claims assigned to it, Mr. Wood had not perfected his program; he had not incorporated the company which was intended to take over the property and issue the bonds and execute the mortgage; and until this was clone, as a makeshift, to secure the trust company in the meantime, he gave his personal bond for $500,000, payable on demand, and his mortgage on the plant tó secure the bond; and on the delivery of the bond and mortgage the trust officer gave Mr. Wood a memorandum, which reads as follows:

“In connection with the settlement between Walter Wood, purchaser of the plant of the Florence Iron Works, and Harold B. Wells, receiver, certain claims of creditors of the Florence Iron Works have been assigned to the Burlington City Loan and Trust Company, trustee, with instructions to pay to Walter Wood the dividends that may he allowed on said claims from the receiver, provided that the said Walter Wood secures such claimants by bonds to bo given by the party to whom he shall transfer the title of the Florence Iron Works, which bonds are to be secured by mortgage on the plant of the company purchased by him. and so to he transferred, and as the parties are not prepared at this time to execute and deliver the formal bonds and the trust mortgage securing the same, it is agreed that there shall be executed by the said Walter Wood and delivered to the said trust company as temporary security to he held by them until such time as it is necessary for the due execution of said bonds and trust mortgage, a bond and mortgage on such plant in the sum of $500,000, which bond and mortgage is to be canceled and -surrendered to Walter Wood at the time the bonds and the trust mortgage are executed and delivered.
“It is further understood between the parties that said formal bonds and trust mortgage are to be ready for execution and delivery within ninety (001 days from the date hereof. November 15th, 1010.”

In anticipation of this course the directors of the trust company had passed a resolution that its second vice-president

“be and he is hereby authorized to receipt to Harold B. Wells, receiver of the Florence Iron Works, for claims assigned to this trust company, upon the delivery of deed by the said Harold B. Wells, receiver, to Walter Wood, for the plant and property of the Florence Iron Works, and upon the said Walter Wood delivering to said trust officer a bond and mortgage on the plant so conveyed in the sum represented by the receipt to be given by said trust officer:
“It being understood and agreed that said bond and mortgage is to be held as. temporary security for said amount, for the protection of this trust company, until the bonds and mortgage securing the claims have been prepared and executed and delivered to this trust company for the several parties who have assigned their said claims.”

The delay that ensued in perfecting the plans was in a large measure due to the efforts being put forth by Mr. Wood to liquidate the affairs of the Camden Iron Works and was apparently acquiesced in by all the parties concerned until November of 1917, when the creditors’ committee notified the Burlington City Loan and Trust Company to make, demand for the payment of the mortgage, which it did. This was done, obviously, and, as was conceded by the committee, to hasten Mr. Wood into a conclusion of the arrangement, and this it accomplished. The Sloss company now claims this mortgage.

“Counsel for Sloss company does not contend [I quote from the brief] that had Walter Wood, instead of giving his individual bond and mortgage, caused a corporation to have been formed and had then offered the bonds of such corporation in payment of the claims of creditors, that he would not have fulfilled his contract obligation with Sloss company. Counsel for Sloss company, however, does contend that having adopted a course in fulfillment and performance of his obligation and executed and delivered his individual bond and mortgage, that his contract was then fully completed and performed and he could not thereafter, without the consent of the Sloss company, substitute in place of his bond and mortgage other securities or the bond and mortgage of a corporation thereafter formed.”

This contention would bo compelling were it supported by the facts, but, as the evidence refutes, utterly, the premises, I am unable to perceive the least merit in the argument. That the bond and mortgage were given to the Burlington City Loan and Trust Company, not in fulfillment and performance of the proposition, but solely as a personal indemnification, to secure it against loss or damage in the event that the corporate bonds and the mortgage on the plant were not forthcoming in satisfaction of the creditors’ claims, as contemplated by Walter Wood’s proposal of June 29th, 1916, later modified, is shown conclusively by the documents hereinbefore quoted and by the undisputed testimony. As to this there can lie no doubt. The very terms of the bond and mortgage, for a round sum and payable on demand, are absolutely irreconcilable with the plan for denominational bonds distributable proportionately, amongst the creditors, and carrying- a credit extending over a period of years. To regard the bond and mortgage as a determination on the part of Mr. Wood to own the property individually, and that they were intended to be in lieu of corporate bonds, as suggested in Mr. Bamsav’s letter of August 2d, 1916, would be repugnant to the entire body of proof in the ease. The whole thing is so simple. The trust company used the claims for the purposes for which they had been assigned without having in hand at the time the bonds and mortgage it had agreed to secure before parting with the interest in the claims. It trusted Wood to do this, and when he later on formed the Florence Foundry Pipe and Machine Company, and caused that company to execute and deliver, or tender for delivery, its bonds and mortgages as agreed upon with the creditors, he satisfied his personal bond and mortgage to tire trust company and was entitled to their surrender. It may be that had Wood declined to carry out his bargain the bond and mortgage would have enured, by subrogation, to the creditors, but my judgment is that as they were given as a personal indemnity only, the creditors would have had to look to the trust company for damages for its misfeasance. However, it is unnecessary to decide whether the bond and mortgage would have been ultimately beneficial to the creditors if Wood had defaulted and refused to perform, for it appears clearly that he discharged his Tindertaking to them. The corporate bonds and mortgage which Wood agreed to have executed were to be for the aggregate amount of the accepting creditors’ claims with interest from the due date. The interest, included in the principal of the bonds, was calculated to March 15th, 1917 (presumably, because Wood had agreed with the trust company to have the corporate bonds and mortgage ready for delivery within ninety clays from,November 15th, 1916), and the bonds and interest from that date compounded were paid over to the creditors and tendered to the Sloss company in satisfaction of their claims. More than this, Wood was not called upon to do save, perhaps, strictly, the interest, paid in cash, should have been calculated from February 16th, 1917; but this is a trifling matter of which no point was made and none could have been because the limitation ran to. the trust company. The Sloss company was not justified in refusing to accept the bonds and cash because the tender was delayed. No time was stated for the fulfillment of the agreement and time was not of the essence of the contract. Besides it was a creditor and anxiously concerned in a favorable outcome of the affairs of the Camden Iron Works. Mr. Wood, who is a man of great wealth, had agreed to assume personal responsibility for its debts in case he should become the purchaser. He was endeavoring by a single operation to rescue from financial disaster the two companies (Florence and Camden), in both of which he and his family was vitally interested; and all during the delay, due to the combined efforts, the Sloss-Sheffield company remained quiescent. And it was not until after the creditors’ committee became impatient and the screws were put to Mr. Wood, so to speak, and as a result of which he performed, that the Sloss-Sheffield company raised its voice in protest and assumed the untenable attitude set up'in its counter-claim. The SlossSheffield company cannot, of course, be compelled to receive the bonds and interest as prayed in the bill, but they are at their call in the hands of the committee.

There was considerable discussion in the argument and in the briefs that, as the creditors’ committee did not purchase the plant, their office, under the protective agreement, terminated, and that their negotiation of the final settlement was unauthorized and not binding upon the Sloss-Sheffield company. Whatever may be the true construction of the protective agreement in this respect, it is, nevertheless, the fact that the committee acted throughout for the creditors, in all of .the dealings with Walter Wood, and with their concurrence. This applies to the Sloss-Sheffield company which, as already stated, sent its claim to Mr. Eamsay, one of the committee, for delivery to Mr. Wood. Although Mr. Eamsay was the private counsel of the company he was also> its selection as a member of the creditors’ committee, and his actions in the dual capacity must be regarded, primarily, as those of the committeeman. It'is, too, a permissible construction of the protective agreement that the committee itself had authority to accept Mr. Wood’s proposal and to assign the claims to the Burlington City Loan and Trust Company; and the mere fact that instead, the creditors, under the advice of the committee, assigned their claims direct to the trust company did not imply that the creditors dealt directly and that the agency was at an-end. On the contrary, the fair interpretation of the later conduct of the creditors in availing them. selves of the services of the committee, is that its authority remained unimpaired by this incident. But whether the committee represented the creditors, and .had or had not authority to close out the final settlement, are purely academic and wholly immaterial questions. The acceptance of Walter Wood’s proposition of June 29th, 1916, bound the Sloss-Sheffield company and the other creditors to take the bonds in payment of their debts. Nothing more was to be done by them other than to receive the bonds, and the acceptance of them, and of the interest by the committee on tlioir behalf, was merely perfunctory.

The bond and mortgage mil he ordered delivered up for cancellation and the counter-claim for foreclosure will he dismissed, with costs.

The prayer of the counter-claim for a personal decree against Walter Wood and the three members of the committee will be denied. If the court had power to assess damages against Walter Wood for breach of contract, or against the committeemen for breach of duty, which it has not, the prayer, would he denied for want of proof of a breach in either case.


text:
    Albert G. Dennis and Orrin E. Runyon v. Standard Fire Insurance Company.
    [Submitted April 11th. 1919.
    Decided April 29th, 1919.]
    1. Where a fire loss was submitted to appraisers who appointed an umpire to decide upon matters of difference only, items on which the appraisers agree should not be submitted to the umpire.
    2. When differences between the appraisers are submitted to the umpire, he is .not bound to coincide with the opinion of either appraiser, nor to confine himself within the limits 'of the appraisers’ estimates, but is required to use his own best judgment and make an independent valuation.

      3. Where an umpire or arbitrator exceeds his authority, the effect of his act is the same whether it was done -consciously -or by mistake, as in either -ca-se his award is void for misconduct. In the legal idea of misconduct, an evil intention is not u necessary ingredient.
    -1. Because the umpire did not perform his legal duty in one instance, the whole award need not be sent back to the appraisers, but may be corrected by this court.
    On bill, &c.

      Mr. Schuyler M. Oady, for the complainants.

      Messrs. Raymond, Mountain & Marsh, for the defendant.
   Backes, V. C.

This suit is to set aside an appraisement made under the provision of a fire insurance policy. The complainants operated a small printing plant in Newark, which was damaged by fire. They were insured for $3,000, and being unable to agree with the insurance company upon the amount of loss, the dispute was submitted to appraisers who appointed an umpire “to decide upon matters of difference only, as provided for in the within agreement.” The articles of submission provided that the appraisers

“shall together appraise and estimate the sound value of the below-described property, and the amount of loss 'and damage thereon caused by the fire' which occurred on the 5tli of November, 1917. Provided that the said appraisers shall first select a competent and disinterested umpire, who shall act with them in matters of difference only. The ¿ward of said appraisers and umpire (if the umpire be called upon to act), or any two of them, made in writing, in accordance with this agreement, shall determine the amount of said sound value, and of said loss and damage, as provided by the policy or policies of said company or companies.”

Tbe complainants - submitted to the appraisers a list of one hundred and forty-seven articles claimed to have been damaged or destroyed. The appraisers agreed upon the sound value, except as to one item, at $3,075.05. Upon the loss they agreed as to forty-two, and disagreed as to the remaining one hundred and five items; and then they called in the umpire, to whom they submitted their differences. The three worked together in an effort to reach an agreement, hut without success. The umpire and the appraiser selected by the company appraised the loss at $931.38, and signed the award. The complainants’ appraiser declined to sign it. The complainants claim to have suffered a loss of $1,709.17, and seek to set aside the award on the ground of alleged misconduct on the part of the umpire, in that he estimated the loss upon seventeen articles at figures lower than those reached by either of the appraisers, and that he disregarded the sound value of one item agreed upon by the appraisers. The bill alleges more than technical misconduct. It charges that the company’s appraiser was not impartial, that he and the umpire, debauched by bribery, conspired to defraud the complainants, and that moved by illicit considerations, the umpire violated his duty in the two instances just adverted to. The alleged corrupt practices of the insurance company, its appraiser and the umpire are ambiguously and insidiously averred and are. calculated to give the impression that the award, as a whole, is tainted with, and the product of, fraud; but upon a careful reading, it will be seen that the intemperate and extravagant language charges no more than that the umpire was fraudulently and corruptly induced to misconduct himself in respect to the two things complained of. If the pleader intended that the charges should have a broader reach he has failed. However, upon this aspect of the case, and in justice to the gentlemen whose characters have been so unjustifiably assailed, it ought to be stated that the .allegations find no support whatever in the testimony and that they were abandoned, as unfounded, by the complainants’ counsel at the conclusion of the hearing. There is not a jut of evidence of unbecoming conduct upon the part -of either the appraisers or the umpire to excite the slightest suspicion that any of them approached their task with ulterior motives, and' the impression made on the mind by the testimony is that the three gave careful consideration to the conflicting claims of the parties, and, conscientiously, reached their verdicts. It was hardly to be expected that the appraisers would agree in all matters. They were partisans, within bounds, but were, nevertheless, unbiased and unprejudiced and -disinterested within the meaning of the contract of insurance. Their attitude was that approved of by Yice-Ohancellor Pitney in American Central In surance Co. v. Landau, 62 N. J. Eq. 93, where he said that “the appraiser chosen by each party is supposed and expected, in a restricted sense, to represent the party appointing him, and within reasonable limits to see to it that no legitimate consideration favorable to the party so appointing him is overlooked by the other appraiser.” The umpire, like the appraisers, is a business man of excellent character and standing, and was peculiarly qualified by long experience in the printing trade, to pass judgment upon the value of the articles submitted. The elimination of the charges of fraud does not, however’, end the complainants’ case. The question still is, Was the umpire guilty of misconduct in appraising the loss on the seventeen items at figures beyond the limits fixed by the appraisers and in discarding the estimates of the appraisers as to the sound value of one of the articles? To this proposition counsel addressed themselves in their arguments and briefs. “In the legal idea of misconduct, an evil intention is not a necessary ingredient.” Sullivan v. Frink & Co., 3 Iowa 66. Where an umpire or arbitrator exceeds his authority, the effect of his act is the same whether it was done consciously or by mistake, as in either case his award is void. Royse's Administrator v. McCall, 5 Bush 695. The position taken by the complainants is, and they contend, that as the umpire was to act “in matters of difference only,” his function was to coincide with one or the other of the appraisers or to somehow warp' his judgment between the high and low figures that marked Iheir difference. The position is not sound. The manner in which the umpire was to malee his appraisal is not thus circumscribed or restricted by the submission agreement. Its limitation goes to his jurisdiction and not to- the method its exercise. Harmony between the appraisers excludes his participation in the appraisal. When they have “matters of difference” he automatically becomes qualified to sit in judgment. He is called an umpire, but, strictly speaking, he is not. An umpire makes his award independent of that of the arbitrators. Daniel v. Daniel, 6 Dana 93; Underhill v. Van Cortland, 2 Johns. Ch. 339; Ingraham v. Whitmore, 75 Ill. 25. Here the umpire is required to act with the appraisers in matters of difference. Ho is'a third appraiser. The three are to collaborate, each using and contributing, his own good judgment. If they disagree there is a mistrial; if the three are of one mind, or if any two of them are in accord as to sound value and Joss; the award is a finality. Manifestly, it would have been an abuse of authority Jiad the umpire arbitrarily confined himself within the limits of the appraisers’ estimates. In Kirkham v. GermanAmerican Insurance Co., 92 Kan. 941, the umpire stipulated that he would confine his appraisal “between the limits fixed by the two appraisers.” In holding that the umpire was guilty of a breach of his duty, and that the insured was not bound by the award, the court said: “It is suggested that as the agreement provided that the appraisers should submit to the umpire their ‘differences,’ it was entirely proper for him to confine his esti-' mates within the limits fixed by them. ' We think, however, that ‘differences,’ as here used, means matters about which they were unable to agree, and that when he was called upon to fix a sum, he acted as a juror and was to exercise his own untrammeled judgment.” In Orient Insurance Co. v. Harmon, 177 S. W. Rep. 192, the insured recovered on an award, and in affirming the judgment the appellate court, in disposing of the point here under discussion, said: “Concerning the proposition that the award is not binding upon appellants because the ‘umpire did not determine the differences between the two appraisers, but disregarded their findings as to the amount of the loss and damage and made up an independent valuation of his own’ which, in certain items, was largely in excess of the amount of damage found by the highest estimate made by either of the appraisers, we think it may safely be said that in so acting the umpire did not exceed the authority conferred upon him. Feither the agreement to arbitrate nor the law made it bis duty to adopt the findings of one or the other of the appraisers as to the amount of the loss and damage to items of property about which they differed, or to assess the amount thereof at some sum not to exceed the highest estimate placed upon anjr particular item by either, as seems to be the contention of the appellants. On the contrary,-we think the duty of the umpire under the terms of the arbitration agreement, or as imposed upon him by law, was to ascertain and determine, in the exercise of his own best judgment, the actual amount of the loss and damage to any item of property about which the appraisers had disagreed, independent of the findings of the appraisers, or either of them.” In Bangor Savings Bank v. Niagara Fire Insurance Co., 85 Me. 68, the insured sought to set aside an award, claiming that “the umpire was to adjust difference onty,” and that “the umpire did not confine himself to the decision of questions of. difference only.” The court approved the action of the umpire in calling in outside experts and adopting as his own judgment their estimates of damage as to the disputed items. See, also, Strome v. London Assurance Corporation, 20 App. Div. 571; (affirmed, 162 N. Y. 627; Broadway Insurance Co. v. Doying, 55 N. J. Law 569, and American Central Insurance Co. v. Landau, supra.

The sound value of item 5G of stock, consisting of five thousand four-page circulars, was agreed upon by the appraisers at $25. It was a total loss. The umpire refused to appraise the loss, because-the sound value had not been established to his satisfaction by the production of the order ticket, his position being that in the absence of the order ticket the circulars were to be considered “dead” stock and of no value. It was not within the province of the umpire to pass upon the sound value. As to this there was no matter of difference, and no submission. I-Iis duty was to appraise the loss only and his refusal was legal misconduct. Collings Carriage Co. v. German-American Insurance Co., 86 N. J. Eq. 53. This error of judgment is not, however, to be seized upon as a ground for vitiating the award as a whole. At least, not in this court upon an appeal for equitable relief. In all other respects the appraisers and umpire acted strictly within their respective capacities, and with absolute fairness towards the parties. The complainants ought to be relieved, but only to the extent of the injury. The award could be sent back to the arbitrators for correction, as was done in the last case cited, but as the loss on the circulars was total, and as their duty, consequently, would be merely perfunctory, the court can as well make the adjustment by increasing the amount. Upon tender to the complainants, and refusal upon payment into the court of the amount of the award, plus $25, with interest and costs of suit, the bill will be dismissed. Otherwise the award will be set aside, with costs.

There was another item, No. 17, consisting of nine summer rollers, upon which the appraisers fixed a sound value of $6.70 and $5.16, respective^, and loss accordingly, concerning which there was much testimony and considerable discussion. The umpire regarded the rollers- as obsolete and worthless and refused to allow anything for sound value or loss. The matter of difference related primarily to the sound Value, and one proper for the umpire to pass upon. The evidence is that the life of summer rollers is one season only, and as this had been spent during the summer preceding the fire, the umpire, it would seem, correctly decided they had no value.

It was said on the argument and asserted in the brief of complainants’ counsel that on a few minor articles of little value, the umpire refused to allow for loss, although the appraisers had estimated some trifling damage. I have carefully gone over the items of the schedule and find them all accounted for, but if there are any such instances where the appraisers have disagreed, it -was entirely proper for the umpire to disregard their estimates, if, in his honest opinion, there was no loss.