author: Bentley, Y. C. (orally). Bentley, Y. C.

text:
    William G. Kelso, complainant, v. Anna L. Kelso, defendant.
    [Decided July 8th, 1924.]
    1. The lack of independent advice will not nullify a deed made by a man to the woman whom he wished to marry if he, at the time he executed the deed, appreciated his position and the consequences of the act which he was doing, unless it is shown that illness, exttreme old age, dependence on the grantee, undue influence, of some such cause exists.
    2. Evidence examined and held that the bill to reform or cancel such deed should be dismissed.

      On bill, &e.

      Mr. Harry Lane, for the complainant.

      Messrs. Seuferi & Elmore, for the defendant.
   Bentley, Y. C. (orally).

This ease having been tried at such great length, I am going to at least indicate what I consider to be the proofs, and I may or may not finally dispose of the questions as I talk myself into a state of mind.

The bill is filed by a husband against a wife, originally, to impress a constructive trust upon certain property transferred by the complainant to the defendant, and to have her turn the property back to him, with a prayer for restraint and a receiver.

Subsequently, it was amended so as to charge fraud and undue influence; and still later, upon the final hearing, to set up the further ground of lack of independent advice.

The complainant, now sixty-seven years of age, was a widower at the time of meeting the defendant in the summer of 1921, his first wife having died in the spring of 1920. He has been employed a great many years, practically all his life, as a shoe salesman, and by his industry and frugality and that of his family had acquired a competence of, roughly, $35,000, made up, as I recall it now, of a house in which he lived in Hackensack, and three mortgages, totaling $25,000.

At the time of meeting the defendant his family consisted of four sons, all of whom were self-supporting and living away from him, and one daughter who was about twenty or twenty-one years of age, who had remained with him and was taking care of his home.

This man was violently attracted by the defendant, and undoubtedly set out to woo her, and eventually won her hand. I say this because there has been some attempt to make it appear that this defendant was a fortune-hunter, which I do not believe. I think that the pressure of the courtship was exerted only upon his side, and that she was very largely impressed by the ardor of his suit, his show of affluence and generosity, and the entirely practical consideration of a. help-meet in the support of herself and her three sons. In the early winter after meeting her he appears to have proposed to her, and then learned from her own lips that she was still married, whereupon, I think it is clear, he suggested that she go to Nevada and there secure a divorce which he agreed to finance, and which he did finance, including presents to a very large sum of money, totaling almost $6,000. He went to the city of Reno with her and the youngest of three minor sons. There he saw to the preliminary arrangements, remained with her a few days, and returned east to his residence in Hackensack. That was followed by three other trips to- Nevada, the second one being of no moment. On the third one I have in mind he started about the 26th of November, 1922, and while en route had delivered to him a telegram from the defendant in which she recommended that he should not come immediately, but explain a telegram that she had received purporting to come from his sons. Concerning the contents of this telegram of hers, there is great diversity between them. However, he had started, and, in his then frame of mind, he didn’t turn back, but continued on out there, to learn that one or more of his sons had sent a western union night letter to the defendant couched in hostile terms and threats, with the design of breaking up the proposed marriage of these -parties. As the result of the consternation caused by this telegram, it was then determined that he should return east and convey to her all of his property, for the purpose of discouraging any attempt upon the part of his children to commence a litigation. He says that it was upon the understanding, enforceable, I suppose, if true1, as to the personalty, that she would reconvey to him in the future when his difficulties with his sons should have blown over and upon request. She denies this, and I believe truthfully, for the reason that I consider this another move in his consuming passion to make certain of her hand, and for other reasons upon which I shall presently touch.

After a very brief stay in Reno he re-embarked and came back to his horn®, where he consulted Mr. Howard Mackay, a solicitor of this court living in the complainant’s town of Hackensack, and as a result of that interview he executed the necessary conveyances to transfer all the property that I have mentioned over to the defendant, to whom he was not then married.

He then, about Christmas time, still in 1922, returned again to the defendant, who, in the meantime, had had her two elder boys go out and stay with her, both of whom were ill. Her decree of divorce being granted on the 2d of January of this present year, the parties were married the following evening in San Francisco, California. They then appear to have commenced their long journey home and, according to the defendant, the trouble that has. since eventuated started on the train.

Of course, I am not concerned with much of the great mass of testimony that has been introduced about the present and recent relations of the parties. Under the bill as it was originally framed is presented the issue of whether or not this was a voluntary conveyance, or was . a conveyance to her in trust, the trust being her willingness to reconvev upon his request; and, subsequently, as the amendment showed, whether or not there was any frqud or undue influence, and whether or not he lacked having had the benefit of independent advice.

So far as fraud is concerned—I mean fraud at the inception of the contract—or undue influence, I see no evidence in this case, either direct or circumstantial, out of which-1 can find in favor of the complainant. It is true that the man appears to have been madly infatuated with the defendant, and it is also true that he did a very foolish thing, but I don’t see how out of that I can spell undue influence. And there is no pretense of fraud, let alone the clear proof that is required to establish it. Reluctantly—and I say “reluctantly” because I realize the effect upon the complainant of finding against him—it seems to me that I must find as a fact that there was no such promise made by the defendant as he says there was in the fall of 1922, and that is very largely for reasons that counsel for the defendant has elaborated upon more than I shall do, such as his unquestioned assertion to her when he proposed marriage that she would have everything that he had in the world. I think that that is not denied. And, secondly, the very luminous fact that in May, 1922, after he had deposited the defendant at Reno, and without anjr talk with her about it—without any pressure from her—he made the will, as he said on the stand, but that he thought it had been destroyed. And he wrote her to that effect. She says, and I think it fits in with- all the testimony and with all the facts in the case, that his letters to her to that effect was the first intimation that she had that he was going to make a will.

Now, here was a man who was a free agent, sui juris, who, without any request, made what he thought was a secure provision for this woman if anything happened to him. It is very significant that this man, whose memory is remarkable, and who kept notes and memoranda of all these things, testified upon the stand that the will was not made in May, but in the month of November of 1922, or six months later.

Now, I can see only one explanation of his post-dating— on the witness-stand I mean—the making of the will for a period of six months, when he had m'ade it only a year and a half before. That was an important thing in the man’s life—the making of a will and disposing of all his property— especially where the will is entirely unnatural, cutting off everybody who was dear to him, and especially cutting off this daughter who was unmarried and at that time living with him in all apparent happiness.

Furthermore, it seems to me that the defendant’s statement of what took place, corroborated to a large extent by the complainant himself, when his sons undertook to stir up trouble, is perfectly natural. This man admitted on cross-examination that he was putting his best foot forward to win the woman of his choice; he admitted that he wanted to win the love of this woman when he found that there was a likelihood of his sons interfering with his cherished design. I think it was a most natural thing that he should have talked it over with her in Reno', and I confidently believe that they did talk it over on that late November visit, and it was agreed between them that he should strike while the iron was hot and go back and convey these properties to her. As I say, the individual facts, the letter written—drafted upon the train to his daughter—everything, indicated to me that this man did at that time intend to make an irrevocable gift of everything that he had. I am not inclined to agree, for a number of reasons, with the defendant’s theory that this was the execution of an executory contract in contemplation of marriage. I don’t think that their minds ever met on that, and I don’t believe it can be said that that was one of the considerations upon which this woman agreed to marry him.

That leaves the question that complainant’s counsel has just raised, and to which there has been no reply, that the statute of frauds applies only to real estate, and that an express trust in personal property may be established by parol. But in view of my findings of fact, I suppose that there is no application of that law at all. That leaves only the question of applying the doctrine of independent advice.

That doctrine, which has, I think, probably been developed in this state beyond the development in any other jurisdiction whatsoever, is, of course, designed to secure a man against improvidence in acts similar to this. The chief-justice, in his opinion in Slack v. Rees, 66 N. J. Eq. 447, lays the doctrine down in the broadest possible terms. He says there, and points out the error into which this court fell in its opinion in the ease, that it goes away beyond any question of fraud and undue influence; that its scope is to protect the donor from the effect of a voluntary gift of any considerable portion of his estate, as explained in the ease of Hall v. Otterson, 52 N. J. Eq. 528, and is to protect him against the effect of a conveyance to somebody standing in a confidential relation—a confidential relation of any sort— without the realization of the effect of his bounty upon himself.

Now, I say to Mr. Lane, that if he can persuade me that this doctrine should be invoked, it ought to- be applied to this case. I mean by that, as I have indicated, that the natural equitjr, so to speak, of the case, is in favor of the complainant, if there is anjr way of working it out. Here is a man, no matter what he had done, who stands before this court in the extremely hard condition of having had wiped away from him with a stroke of the pen all the savings of a lifetime, and just at a moment when he is most likely to- be dependent upon it for his very existence. His earning days must be nearly over, and he stands stripped of almost everything that he has except some slight interest that he may have in the $15,000 mortgage on the Wegman Parkway house, although I don’t suppose he has any left in that.

She, on the other hand, even if she did not have this property, would, of course, have her inchoate right of dower in the real estate, and could appeal to this court and compel her husband to support her, so- long as she tried to perform her part of her obligation, forever. It is a sad case. The law of this state attempts to throw around a man protection against such actions as this. This man seems to have been consumed with the desire to destroy himself. He has broken through every bárrier which the law his thrown around him for his own protection, and unless Mr. Lane can convince me that, on some such theory as he has thrown out, about this man not understanding the consequences of his act, I feel that I shall have to dismiss the bill, because here is a man who knows enough of the world, who has brought up a large family, supported them, educated at least one of his children in college, who himself has picked up considerable education even though he had to- leave school at a very tender age and go to work. He has been able to amass a competence in addition to all those things against his old age. Apparently, he has been a successful business man in his line of work. He says here on the stand that he did know what it meant to sign these instruments, and then he went on and illustrated that he knew what it meant when he said that if she kept the property it left him "without a shirt.”

Now, as I have indicated, I am ready to give you an opportunity, Mr. Lane, to submit a brief, or further argument, or anything you want, because I feel that this is a very hard case. I don’t want it to be one of those hard cases that make bad laws however.

MEMORANDUM OR OPINION.

Bentley, Y. C.

At the request of counsel I have heard additional argument on the single question of lack of independent advice. Of course, there can be no question that the complainant did execute the various conveyances involved without independent advice. The solicitor by whom the instruments were prepared, and before whom they were executed, very frankly admitted that he had not cautioned the former as to the effect and consequence of his act upon himself. However, I still feel, as I did at the conclusion of the final hearing, that there was no occasion for anybody to warn him of what he was doing, for the reason that he well appreciated his position, what he was doing, and the possible results that might flow therefrom. The leading case in this state, and, as I have indicated, authorities from other jurisdictions are of little or no value, is that of Slack v. Rees, 66 N. J. Eq. 447, In that case (at p. H9) the kernel of’the doctrine under consideration is expressed in these words:

“Its purpose is not so much to- afford protection to the donor against the consequences of undue influence exercised over him by the donee as it is to afford him protection against the consequences of voluntary action on his part, induced by the existence of the relationship between them, the effect of which, upon his own interests, he may only partially understand or appreciate.”

Of course, it is unnecessary to cite authorities to show that one may, under proper circumstances, without discussing the matter with anybody, voluntarily alienate all of his property to any person, entirely without consideration. He may do it by will, or he may do it by deed. If, as was said in Hall v. Otterson, 52 N. J. Eq. 528, and quoted in Slack v. Rees, no deception or undue influence appears, and all was fair, open voluntary and understood, the transaction is unimpeachable. So, as I understand the doctrine, it is only in those cases where, because of illness, extreme old age, dependence upon the grantee, undue influence or some such cause exists, that the doctrine is applicable. Surely, it cannot be said that there is any such mental ascendancy of a bride-elect over her flaneé as would make it necessary for him to seek independent advice before bestowing upon her his bounty. Violent 'as the exaltation of an honest courtship may be, it surely cannot be said to amount to1 an aberration of mind. If this were so, no marriage settlement would be safe, and, of course, it is elementary that these compacts are regarded by the law with great favor.

At the close of the case the complainant was recalled to the stand, and upon further cross-examination the following answers were made to the following questions:

“Q. You knew at the time you made the transfer that you were transferring all of your property to her?
“A. At that time? To her; yes, sir.
“Q. And had you ever taken up the situation as to what would happen if she didn’t give it back to you?
“A. I did; I knew I would be left without a shirt.
“Q. And knowing that, you made the transfer?
“A. Yes.
“Q. And you took the risk?
“A. I did. I had faith enough in her bo1 believe that she was perfectly honest; yes, sir. Otherwise I would have had different papers drawn up.”

The highly expressive language in answer to the second question, coming from a man of the experience and mental and physical vigor of the complainant, defeats all possibility of my belief that he stood in need of any counsel or advice as to what he was doing when he stripped himself of his property to present it to the defendant. His counsel has argued with great ingenuity that while he may have realized the difficulty to which he would be put, he did not appreciate the fact that he would have no cause of action against his wife to recover back what he was giving her. This, of course, is not sound, because he does not say any such thing, but said that he realized that if she refused to share or return his property he would be penniless, or, in the vernacular, that “I knew I would be left without a shirt.”

I regret that the earnest and extremely able effort of complainant’s counsel to change my mind has been without avail. There must be some stability to the title of property, and I feel that if I should permit the complainant to nullify his well-understood grant it would be pushing the application of the doctrine of independent advice to a perilous length.

I will advise a decree dismissing the bill.


source: Caselaw Access Project

author: Bentley, Y. C.

license: Public Domain

text:
    Andrew M. Haring et al., complainants, v. Martin Margroff, 2d, et al., defendants.
    [Decided December 5th, 1923.]
    1. Where a testator provided in his will that certain real estate be sold “at any time my executors * * * have a good opportunity to do so at a fair price,” this discretion so given them defeats a conversion, and the title thereto vests in the testator’s heirs, subject to be divested upon the exercise of the power of sale given the executors.'
    2. A devise of real estate, subject to a power of sale in executors, the proceeds of said real estate after sale to be given txv the testator’s widow, and at her death or remarriage all “property as it is left at her death or remarriage” to his son, thére having been no sale of said real estate, can be supported as an executory devise, even though as a contingent remainder it fails for lack of a particular estate to support it.
    On bill for partition.

      Mr. Charles C. Scott, for the complainants.

      Messrs. Ward & McGinnis, Mr. Cornelius Doremus and Messrs: Morrison, Lloyd & Morrison, for the defendants.

      This is a bill for the partition of certain lands in the county of Bergen.
    Martin Margroff died December 7th, 1898, seized of the lands referred to above forming a tract of about five acres. He left surviving as his next of ldn and heirs-at-law his widow, Ellen; the defendant Martin Margroff, Jr.; children of his deceased daughter, Andrew M. and Walter Haring, and children of his deceased son Horace, Martin Margroff, 3d, John W. Margroff and Katherine Amelia Hunt, now Katherine Amelia Chapman. He also left a will, probated in the Bergen county surrogate’s office January 4th, 1899, wherein he appointed his son, the defendant Martin Margroff, Jr., and Matthew D. White, executors, both of whom have qualified. The pertinent provisions of the will gave the testator’s widow his personal property and an estate for life or during her widowhood in the mansion house, and then provide:
    “If my mill property, known as the Hopper’s Mills, and the about five acres land, opposite and across the road, situate at Waldwiek, in Orvil Township, is not sold during my life time, I want it to be sold at private sale at any time my executors hereinafter named have a good opportunity t® do so at a fair price, and the net proceeds to be given to my beloved wife, Ellen Margroff, for her use and benefit.
    “After the decease of my beloved wife Ellen Margroff, or in ease she remarries, I give devise and bequeath to my son, Martin Margroff, all the real and personal estate and property as it is left at her death or remarriage, to have and t® held the same to him, the said Martin Margroff, for his use and behoof forever.”
    ^Following this there was a bequest of $50 to' each of his grandchildren, who are the complainants, each concluding with the same words that conclude the latter paragraph of the will just quoted, namely, “to' his or her use and behoof forever.”
    The mill property has never been sold by the executors in the manner described in the will, and the testator’s widow died in 1902, of course, without having received the proceeds of such sale. The defendant Martin is now the sole surviving executor. The testator’s widow died intestate, leaving as her heirs-at-law and next of kin the same parties mentioned as standing in the same relation to the testator, and who, with the exception of the defendant Martin, are complainants. The defendant Martin has taken possession of said premises and claims title thereto, and has conveyed by several deeds parts thereof.
   Bentley, Y. C.

The important question is to determine the estate that the widow took under the devise of what is called his “mill property.” When he said, speaking thereof, “I want it to be sold,” &c., I feel that he was giving directions to his executors and that the same would have been obligatory upon them, and a conversion would have been effected at the time of his death were it not for the discretionary character of the power evidenced by the language “at any time my executors hereinafter named have a good opportunity to do so at a fair price.” It seems to me that this discretion defeats a conversion :

“If the act converting * * * is left to the option, discretion or choice of the trustees or other parties, then no equitable conversion will take place, because no duty to make the change rests upon them.” 3 Pom. Eq. Jur. {4th ed.) § 1160.

In the case of Romaine v. Hendrickson, 24 N. J. Eq. (at p. 237), the chancellor, speaking cf a somewhat similar provision in the will, said as follows:

“The power of sale is not one that is to be exercised on the happening of a certain event, or at a given time, but is wholly discretionary, not only as to the time of sale, but as to whether the sale shall ever be made. It may never be exercised. It is a power and not a trust. The land was not devised to the executors, and in the meantime, until the sale, the title is in the heirs, and they have power to transfer their interest in it, at all events, so far as to entitle the alienee to all their rights, whatever disposition should be afterwards made of it. Den v. Snowhill, 3 Zab. 447; Den v. Creveling, 1 Dutch. 449; Herbert v. Executor of Tuthill, Sax. 141;

Gest v. Flock, 1 Gr. Ch. 108; Fluke v. Fluke’s Fxecutor, 1 C. E. Gr. 478."

To like effect is Parker v. Glover, 42 N. J. Fq. 559.

Had the direction to sell been unequivocal, of course, it is clear that the conversion would have been instant, and I am inclined to believe that she would have taken the proceeds absolutely by reason of the unlimited power of disposal thereof. Annin v. Vandoren, 14 N. J. Fq. 135; McClellan v. Larchar, 45 N. J. Fq. 17; Weaver v. Patterson, 92 N. J. Fq. 170.

But, in view of the discretion vested in the executors and on the authorities mentioned above, I feel that no conversion occurred, and the title vested in the testator's heirs (Hopping v. Gray, 82 N. J. Eq. 502, and authorities collected at p. 504), subject to be divested upon the exercise of the power of sale by the executors, and that the widow took nothing, but that there was created a conditional estate dependent upon the sale if the same should ever take place. An estate upon condition depends upon the happening or not happening of some certain event whereby an estate may be either originally created, or enjoyed, or finally defeated. Co. Litt. 201A; Bl. Com. 152; Blackwell v. Blackwell, 15 N. J. Law 386; Brooks v. Kip, 54 N. J. Eq. 452. However, the contingency or event that was to bring this estate into being, to wit, the sale by the executors, never having occurred and being limited in extent to the life or widowhood of the widow, and she having been long since dead, of course she took no estate.

On the subject of conversion, a number of cases are cited by the complainant which are not germane. In Huber v. Donoghue, 49 N. J. Eq. 125, and Herbert v. Tuthill, 1 N. J. Eq. 141, the direction to sell was clear and unequivocal. For example, to- direct that land shall be sold for the most it will bring or to the highest bidder, or as soon as conveniently may be, is very different from such a provision as is found in the will under consideration, “at - any time my executors herein named have a good opportunity to do so at a fair price.”

While the devise or bequest over to the defendant Martin of “all the real and personal estate and property as it is left at her death” cannot be given effect as a contingent remainder for lade of a particular estate to support it, it is good as an executory devise. Fearns Bern. *895. Of course, had the widow ever come into possession of the proceeds of the sale of the property, this devise would have been defeated by reason of the unlimited power of disposal bestowed upon her. But that event never having transpired, the devise over was good, and, in consequence, at the death of the testator’s widow, the defendant Martin took an indefeasible estate in fee-simple in the land sought to be partitioned.

It is also said by the complainants that the defendant Margroff, as such executor, has been guilty of a breach of trust in failing to make sale. Unfortunately, however, there is not one word in the stipulation on which this matter was tried to substantiate that contention. In fact it is said:

“The defendant executor asserts that he has never been requested to sell said lands, nor had he a good opportunity to do so at a fair price. The complainant has no knowledge as to the truth or falsity of this statement.”

It is clear that the designation “the complainant” in the last sentence is a typographical error and should have been in the plural. This, reduced to its lowest terms, leaves the m'atter in a situation where a fraud is charged in the bill, denied by the defendant, and no proof of any kind to support the bill, not to mention overcoming the effect of the defendants’ denial.

For the reasons I have given, I have concluded that the testator’s widow, through whom the complainants claim title, never had title to the real estate in question or the proceeds thereof; that there is no evidence of fraud or bad faith against the defendant Margroff, and that, consequently, the bill should be dismissed. This makes it unnecessary to consider the other defenses, such as laches and exoneration that have been raised.


author: Bentley, V. C.

text:
    Henry Lederer, petitioner, v. Justy Lederer, defendant.
    [Decided January 8th, 1924.]
    1. The filing of an amended petition is but a continuation of the original petition, not the beginning of a new suit.
    2. The separation of a wife from her husband while proceedings at his instance are pending against her does not constitute a willful desertion in contemplation of law.
    3. A husband’s desertion is not obstinate where the wife, who claims to have been deserted, testifies that she was through with her husband and had had enough of him, and she had not responded to his letters asking her to take him back, so that they might start all over again.
    On petition for divorce.

      Messrs. Weinberger & Weinberger, for the petitioner.

      Mr. John M. Bell, for the defendant.
   Bentley, V. C.

This is a jietition for divorce filed by the husband, to which the defendant answered and filed a counter-claim.

At the conclusion of the proofs I indicated to counsel that I did not see how I could grant the praj^er of the petitioner, because of the requirement of our statute that a desertion shall have existed for two years prior to the commencement of the suit.

The parties cohabited until some time in the month of July, 1920. The petitioner says the 5th and the defendant says about the middle or the 20th of the month. She was engaged in running a candy store in East Rutherford, and complained that she was receiving no assistance from him: whereupon she engaged one Philip Schaub, who did most of the work around the place, and, he says, became too familiar with her. The defendant, who left his wife on other occasions and then came back, appears to have taken this as an excuse and disappeared from the home, never having returned thereto. This actual separation and desertion, if such it was, as I have said, occurred some time during the month of July, 1920. Therefore, under the case of Koch v. Koch, 79 N. J. Eq. 24, the cause of action did not arise until some time during the month of July, 1922, notwithstanding which the original petition shows that it was filed on August 23d, 1921, or almost eleven months before the statutory period had elapsed. Subsequently and after the expiration of that period an amended petition was filed, under date of July 18th, 1922. When I say after the completion of the statutory period I mean assuming that the date of the desertion alleged by the petitioner is correct. His counsel urged that the time should be calculated from the date of the desertion to the date of of the filing of the so-called amended petition.

With this I cannot agree. It is said in Dan. Oh. Pr. & PI. (6th Am. ed. after describing the amending of a bill of complaint:

“But although it is the practice to call a bill thus altered an amended bill, the amendment is in fact esteemed but a continuation of the original bill, and as forming a part of it; but both the original and amended bill constitute but one record; so much so that where an original bill is fully answered and amendments are afterwards made, to which the defendant does not answer, the whole record may be taken, pro confesso, generally, and an order to take the bill pro oonfesso as to the amendments only will be irregular.”

To the same effect will be found the opinion in Equitable Life Assurance Society v. Laird, 24 N. J. Eq. 319, affirmed in 26 N. J. Eq. 531. Of course, it requires no argument that the effect of amending a petition is precisely the same as amending a bill.

Even were this not so, the argument made by counsel woul,d be of no avail to his client, because if the amendment were the commencing of a new suit, as it is not, he would then be faced by the rule laid down in Marsh v. Marsh, 14 N. J. Eq. 315; Chipchase v. Chipchase, 48 N. J. Eq. 549; Drayton v. Drayton, 54 N. J. Eq. 298, and a number of other cases to the same effect, that the separation by a wife from her husband, while proceedings at his instance are pending against her, does not constitute a willful desertion in contemplation of law. In this case the original petition charged the defendant with adultery, and certainly her husband could not complain of her living apart from him from that time on; so that the running of the statute was stopped from August 23d, 1921, and no more time had elapsed for the purpose of this case at the time the amended petition was placed on file.

Nor do I see how any relief can consistently be given to the defendant on her counter-claim. She has testified to a state of facts, slenderly, but perhaps sufficiently, corroborated, which would entitle her to a decree were it not that her husband’s desertion, assuming her story to be true, lacked the necessary quality of obstinacy. She testified that she was through with him, or had grown tired of him, or had had enough of him, or some such statement, and admitted that he had written her letters asking her to take him back, so that they might “start all over again.” This being so, the separation of these parties was quite as agreeable to her as it was to him, aird she certainly cannot now be heard to complain against it and ask the assistance of this court.

I will advise that both the petition and counter-claim be dismissed.


text:
    Allen F. Gray, petitioner, v. Edna J. Gray, defendant.
    [Decided January 22d, 1924.]
    In a suit for divorce for adultery the name of the partieeps crimmis should be stated if known, and if not known a description of such party should be given, and an allegation that the adultery was committed with A. B., or if not with A. B., with a person whose name is unknown to petitioner, is not sufficient.
    On petition, &c.

      Mr. James A. Butler, for the motion.

      Messrs. Morten £ Melosh, for the petitioner.

      Mr. Robert Carey, for the defendant.
   Bentley, V. C.

This is a motion to strike from a petition for divorce on the ground of adultery the name of a person alleged, upon information and belief, to have committed the offense with the defendant.

I have concluded that the designation of the partieeps criminis in the amended petition is bad, and that either the name should be stricken therefrom or an amended petition filed. The allegation is that the defendant, during a certain time, “committed adultery with a person who is named Frank Maxwell, according to the petitioner’s information,” and then, after designating the places of adultery, continues: “But if said person with whom the said defendant committed adultery is not named Frank Maxwell, then said adultery was committed with a person whose name is unknown to petitioner,” describing him. The two hundred and fifty-ninth rule of this court, which has existed unchanged for over fifty years, requires that in suits for adultery the petitioner “shall state the name of the person with whom the adultery was committed, if known, and, if not known, shall set forth the description of the person,” &c. For the petitioner to say that he is informed, or someone has told him, or that he has heard, or “according to petitioner’s information,” is certainly not a naming of the co-respondent within the meaning of this rule. It is true, as pointed out in Marsh v. Marsh, 16 N. J. Eq. 391, that it is sufficient in pleadings required to be verified to state the matters therein, either positively or upon information, as the case may be, for the reason, of course, that in the latter case the party filing the pleadings is unable to verify or swear to every detail of the same, either in such pleading or at the hearing, and this hiatus can be and is followed up by the oath of some witness having knowledge of the fapts thus alleged. But where the pleading is not verified, there is no understanding or belief that the facts are all entirely within the knowledge of the party and, therefore, as in a declaration or complaint at law all facts must be unequivocally and directly pleaded.

It is said in 2 Bish. § 1825: “The allegation should state positively, not from information and belief, or otherwise in uncertain terms, that at a time and place specified, the defendant committed-the carnal act with a person named, unless something of this particularity is unknown, when the want of knowledge may be averred as a substitute therefor.” It cannot be said that the statement is positive, that the person is named, or that there is any want of knowledge that could not be readily discovered if the petitioner would take the requisite steps so to do. There is no reason why the petitioner should not determine definitely whether or not the person named in the petition is the one against whom he intends to produce his evidence. This will result in his knowing, himself, whether the person he now names is the one he intends to convict or not.

Much has been said of the fact that if the Frank Maxwell who now injects himself into this case is the proper party, no injustice is done, and, on the other hand, if he is innocent he has nothing to fear. Practically, I am not able to agree with this reasoning. Innocent men have been convicted. There is.no way that I can know at this time that this is not a collusive suit, and the policy adopted by the Divorce act of 1907, I think, clearly indicates that he should be given an opportunity by this method, either to know definitely what he has to meet or, if he is not the individual intended, that his name shall be cleared. There is no reason that the practice of this court should not be flexible enough to deal with a situation such as this when it contravenes the requirements laid down by the rules of the court.

Either the petitioner may amend his petition so as to definitely charge this man or some other as the person with whom the defendant committed adultery or, in the usual way, charge the adultery with some man unknown, but, of course, describe him with all the particularity possible, or else I will advise an order striking the name from the petition. Such amendment shall be made on or before February 1st next.


text:
    Milton J. Gordon, complainant, v. Joseph L. Schellhorn, defendant.
    [Submitted January 25th, 1924.
    Decided January 29th, 1924.]
    1. If either party to a contract conceals some fact which is material and which is within his own knowledge, and which it is his duty to disclose, he is guilty of actual fraud.

      2. Where a vendor promised a vendee, in consideration of his purchasing certain machinery and paying therefor, a lease of the premises on which the machinery was erected, and knew at the time that his ability to comply with his promise depended upon his being able to satisfy the demands of the owner of the premises, and, as a reasonable man, knew that the vendee would not purchase the machinery at so high a price, or at all, without the lease, and failed to disclose the condition upon which he could make such compliance, he was guilty of fraudulent conduct such as may be relieved against in this court.
    S. Where a vendor advertised certain machinery for sale with a lease, and also in a circular letter stated that the goods were to be sold “with lease of light factory and living apartment” and in dealing with a proposed vendee showed him a draft (unexecuted1) of a lease for three years with an option to purchase, whereupon the vendee communicated with the owner of the premises, who refused to execute a lease to vendee, saying he would let the premises, to the vendor only, but stated that he had no objections to the vendee as a subtenant ; whereupon, at the time oí passing title the vendee refused to proceed until given some assurance as to the lease, and the vendor gave the vendee a letter agreeing to sublet to him the premises in question, but stating therein that “the lease has not yet been signed” it is clear that the vendor represented that he would assign a valuable lease to the purchaser of his chattels, and he cannot be heard to deny that he intended to put the vendee in the very state of mind that induced him to enter into the contract to purchase the chattels.
    On bill,' &c.

      Messrs. O’Brien é Tartalshy, by Mr. Samuel Tartalshy (Mr. Maximilian T. Rosenberg, of counsel), for the complainant.

      Messrs. Perlcins & Drewen, by Mr. Randolph Perlcins, for the defendant.
   Bentley, V. C.

This is a bill to rescind a contract for the sale of machinery and cancellation of a chattel mortgage and series of notes given in payment therefor.

The complainant is engaged in the embroidery business. The defendant and his brother, Fred Schellhorn, are engaged in the real estate and insurance business, and they are, for the purposes of this suit, one and the same individual. By that I mean that while the legal title to the machinery involved in. this case was in the defendant, his brother, Fred, as his attorney in fact, carried on all of the negotiations, the defendant, I think, doing nothing more than to execute the bill of sale, to be mentioned hereafter, and also affix his name to an important letter of March 19th, 1923, so that I shall, for the sake of convenience, refer to both of these brothers as “the defendant,” it being elementary that, in equity, the defendant is bound by the acts of his agent even to the extent of charging the former with fraud perpetrated by the latter. Nicholson v. Janeway, 16 N. J. Eq. 285.

Prior to the dealings of the parties that led to this suit, the defendant caused an advertisement to be published, which came to the attention of the complainant, holding out for sale, with a lease, the chattels which the latter subsequently bought. The complainant also came into possession of a circular letter, typed upon the stationery of Sehellhorn Brothers, an artificial person composed of the defendant and his brother. That letter reads as follows:

“Weehawken, N. J., November 23d, 1922.
Dear Sirs:
I offer for sale a complete embroidery plant, consisting of the following:
Three 15-yard automatic embroidery machines, Sauer system;
One punching machine;
Six sewing and mending- machines;
Two bobbin machines;
With motors, tables, shafting, belting, &c., in perfect condition, will be sold at a sacrifice, on easy terms, together or separately, with lease of light factory and living apartment.
For further particulars apply Fred. It. Sehellhorn, No. 107 Shippen street, Weehawken Heights, N. J. Phone 249 Union.
Yours very truly,
Feed. K. Scheilhobn.”

(The italics are mine.) The parties subsequently met and discussed the purchase of the property just enumerated and, as a result of their conferences, the defendant was beaten down from the sum of $18,000, which he originally asked, to the sum of $10,500, which price was agreed upon. Thereupon, they met at the office of a lawyer mutually agreed upon and with whom each of the parties had previously had relations as a client. There, on the 10th day of March, 1923, an agreement was made wherein it was alleged that the defendant was the owner of the chattels to be sold, and agreed that the complainant should buy the same from the defendant for the sum of $10,500, $200 whereof was paid upon the signing of the contract, $1,900 to be paid on the delivery of the bill of sale, and the balance of $8,400 to be taken care of by a series of notes, each in the sum of $400, the first one becoming due May 15th, 1923, and the others falling due one each month thereafter, with certain inconsequential notations. It was also set out that the contract was to be consummated on or before March 17th, 1923, with possession in the vendee immediately, and a provision that if the contract should not be carried out the purchaser was to redeliver the property and secure back his deposit of $200 without further claim by either party against the other. On the following Friday, March 16th, the time fixed for the passing of title, a delay was caused by reason of a claim made by a family named Neir, who were in possession of the living apartment referred to in the circular letter copied above. This matter was satisfactorily adjusted between the Neirs and the defendant, and the matter of passing title went over to the following day, March 17th. At that time the complainant, who has been a member of the bar of some other jurisdiction, refused to accept a bill of sale signed only by the defendant’s brother as attorney in fact, and insisted upon the signature of the defendant in whom the title stood as well. That evening, namely, Saturday, the defendant or his brother tendered the bill of sale with the defendant’s signature thereon, but the complainant, for some reason or no reason, refused to do business at that time and the matter again went over until Monday morning, March 19th. On the last-mentioned date the defendant again attended at the office of the aforesaid lawyer, but the complainant was late and there appears to have been considerable effort to reach him by telephone and some anxiety about his absence, until he eventually also came to the office where the contract was to be consummated. Up to this point, and with the exception of one exceedingly important matter to be subsequently explained, there appears to be no serious difference as to what had transpired. After meeting on the morning of the 19th, delivery was made of the bill of sale by the defendant and delivery by the complainant of the series of notes mentioned, secured by a chattel mortgage, but before the separation of the parties—and it is impossible for me to say whether it was before or after these deliveries were negotiated—the complainant raised the question of his securing a lease upon the freehold where the chattels purchased by him were situated. The negotiations and representations made by the defendant as to this lease are the important feature which I have just mentioned.

It will be recalled that the defendant, both in his advertisement in some magazine and also a circular letter herein-above copied, had advertised that there should go with the chattels a lease of the premise's where they were situated. At the inception of the dealings with the parties one with another, the complainant had taken this matter up and was not only promised a lease, but was shown a draft thereof ready for execution but not executed, for a term of three years, with an option to purchase, for the benefit of the proposed lessee, and it was thereupon represented by the defendant that he would execute an assignment of that lease covering the premises mentioned. The complainant thereupon telephoned to Mr. Hollander, who purported to be the owner and in whom the legal title resided, and asked him if he could have a lease of the premises if he should purchase the fixtures, whereupon he was informed by Mr. Hollander that he could not, that the said Hollander’s business was with the defendant, and that he would not make a lease to the complainant; although, in answer to the complainant’s question, he said that he had no objection to the latter as a subtenant. Now, it appears that previously these premises had been rented by Hollander to a firm named Squire & Tobias, which had been declared a bankrupt and against which there was a claim by the landlord for arrears of rent. In the fall preceding the negotiations I have mentionecl, the Schellhorns had foreclosed a chattel mortgage upon the machinery described above, and it was at their sale that the defendant secured title thereto. At the sale under the chattel mortgage Mr. Hollander distinctly warned all bidders that he would refuse to rent the premises unless he was paid the arrears of rent owed by Squire & Tobias. It is clear to me from the testimony that the defendant heard that announcement.

After the passing of the title on March 19th, namely, on the 20th of that month, the complainant and the defendant had an interview with Mr. Hollander, and then the complainant learned that Mr. Hollander had not executed the lease because he was demanding of the defendant $2,250, representing the arrears of rent of Squire & Tobias. It is undoubtedly true that Hollander was attempting to drive a hard bargain, and subsequently he or his principal, in trust for whom he held the title of the property, agreed to accept a much lower sum, finally getting down to $800. To this the defendant refused to accede. There has been a great deal of testimony injected into the record anent the exorbitance of Mr. Hollander’s demand and the lack of legal liability on the part of the defendant. As indicated on the argument, I am unable to see the force to be given to this evidence that the defendant contends for.

At the time of the passing of title and when the complainant made objection that he was not secured as to the lease of the realty—and this, it will be remembered, was prior to his meeting Hollander and the defendant—the following letter was written and signed:

“Hoboke.x, N. J1, March 19th, 1923.
Mr. M'ilton J. Gordon,
c/o Boulevard Lace and Embroiders' Works,
4932 Boulevard, North Bergen, N. J.
Dear Sir:
In consideration of the closing of the purchase of the plant at 320 Eighteenth street, West New York, New .Jersey, we hereby agree to sublet to you the premises 320 Eighteenth street, West New York, New Jersey, for the term as set forth in the lease and subject to the conditions therein and options thereunder.
The security which has been deposited of $300 is to be applied to the last month of the rent, and you, or your assigns, are to have the benefit of such security. In other words, the purchase price for the plant includes this cash security.
It is understood, however, that the lease has not yet been signed, and the above letter is given upon the assumption that the lease will be signed in the future.
Very truly yours,
Schellhorn Brothers, . Inc.,
By F. R. Schellhorn,
Secretary and Treasurer.
Joseph R. Schellhorn.”

The history of this document discloses that the first two paragraphs were dictated to a stenographer by the complainant, and the last paragraph by a lawyer named B. C. Moore, who was acting for both parties in closing the contract. Taken by itself, the meaning and effect of this memorandum is not entirely free from difficulty. The complainant contends, of course, that the gist of his agreement with the defendant is contained in and expressed by the portion of the letter that he dictated and that the remaining paragraph was simply added by Mr. Moore out of an abundance of caution or merely for the purpose of saying something. The defendant, equally, of course, maintains that the first paragraph is to be entirely disregarded, and that the real reason for the letter was the securing to complainant the benefit of the $300 deposit, and that the third paragraph was tantamount to an agreement by the defendant that he would assign ifj and when, he should secure a lease, and that he was to be exonerated if that event should not occur. As I say, taken by itself, the meaning to be given to the letter is obscure, but when read in the light of all the circumstances surrounding the case, I think it must be said that the defendant held out to the complainant the promise of a lease, and that the complainant was largely actuated in purchasing by a reliance upon the representation that a lease would be given. It is clear that the value of the machinery would have been very little unless the owner was secured by'a demise of the premises where it was located. The testimony has been that the machinery is of a most delicate kind and requires to be set up upon special concxete foundations extending well down into the subsoil, so that it is apparent that to tear this machinery out and transport it to another location and there build the necessary foundations and install the machinery upon it would be so expensive as to reduce the value of the same, which was second-hand, to almost that of scrap metal. In this connection it is significant, that although the defendant originally asked $18,000 and eventually secured $10,500, it has been represented to the court during the progress of the cause that the defendant has secured a purchaser from whom it is hoped that the same machinery, in the same condition that it was in March, 1923, may be sold for as much as $5,000. Furthermore, it is impossible for me to shut my eyes to the wide circulation given by the defendant to the assertion that there would be included in the sale a lease of the premises. With these facts are to be considered others, to which I have referred, that make it clear that the defendant did represent that he would assign a valuable lease of the premises to the complainant, in part consideration of the latter’s money -and notes. For example, there are the advertisement published that a lease would accompany the chattels and a circular letter sent out to like effect, as well as the conversation when the transaction was first discussed and when the complainant was not only told that a lease, a draft of which was shown him, would go with the machinery; but was permitted, in the defendant’s presence, to telephone the landlord, from whom he learned nothing of the conditions, but was told that a lease would be made only with the defendant. "When Schellhorn, by his acts and words in that respect, and his silence upon the condition upon which he could secure a lease, allowed Gordon to draw the perfectly justifiable conclusion that he was securing possession of a plant that could be worked, he certainly cannot be heard to deny that he intended to put the complainant in the very state of mind that induced him to enter into the contract. There is no doubt in my mind that he was entirely honest when he so represented the facts. But his honesty is not in issue. All the authorities agree, that while moral turpitude may be, it is not essentially an element in fraud. And it is clear that he had some sort of an understanding with the landlord which had even progressed so far as to reduce the terms of the proposed lease to writing, and I think that he regarded the matter as hinging entirely upon a composition with Mr. Hollander of his claim for back rent. I have already indicated during the argument, and I now reiterate, that whether it be called constructive fraud or by any other name (and it is unnecessary to go into an extended discussion of the subject to be found in 1 Big. Fraud 10 and passim) there was no conscious determination upon the part of the defendant to secure the money and negotiable paper of the complainant upon a misstatement of facts or any false representations. I do think, however, that he did promise, as a part of this arrangement, that he would place the complainant in possession of the premises protected by an assignment of lease, and that in this he took a chance. Bearing in mind the fact of his representations to which I just alluded, it seems clear to me that when it came to the passing of title of the machinery on March 19th the complainant, finding himself upon the point of forever barring himself from any complaint in the premises, demanded some security that he would be put in possession of the realty where that machinery was located and refused to consummate the transaction unless he was secured, and that it was then worked out by one or the other, oi all of the persons present, that the letter of March 19th should be given to him, and that explains the opening phrase thereof: “In consideration of the closing of the purchase of the plant.” I do not know, nor is it necessary for me to decide, whether or not Mr. Moore was entirely ingenuous when he dictated the concluding paragraph and simply used an unfortunate conglomeration of words that failed to shed any additional light upon the subject, or, rather, obscured the matter. But he succeeded in using language over which a great deal of argument has been necessary, and, principally, by reason of his use of the word “assumption.” The Standard Dictionary defines “assumption” as “a taking for granted.” Therefore, the language in the last paragraph—“and the above letter is given upon the assumption that the lease will be signed in the future”—means that it was taken for granted or conceded that there would be a lease. It has been argued that 'the draftsman meant that the letter- was given upon the condition that the lease would be signed; but the difficulty is, as was expressed by Vice-Chancellor Backes in Messinger v. Franzblau, 118 Atl. Rep. 260: “If that had been the case it would have been a simple matter to have said so.” To summarize, the defendant, by his written and oral representations, led the complainant to believe that he was paying for a lease as well as the tangible chattels, and finding that without the former the complainant would not complete the sale he bound himself to secure and assign a lease from Hollander. The lease was part and parcel of the arrangement between them, and every effort has been made by the defendant to live up to this part of his obligation, even to'the extent of commencing suit for specific performance against Hollander to compel him to execute and deliver such a lease, except the purchase from Hollander which constitutes his breach of contract.

Objection is made by the defendant that this suit is founded upon an attempt to vary the terms of a written instrument by parol. It is true that the parol agreement was made contemporaneously with the main contract and ordinarily would become merged therein (Parker v. Jameson, 32 N. J. Eq. 223; Scharff Construction Co. v. Bower, 81 N. J. Eq. 198); but it is equally true that fraud, among other things, creates an exception to the parol evidence rule. Pom. Eq. Jur. (4th ed.) § 858. In the leading case of Naumberg v. Young, 44 N. J. Law 331, the exception with which I am now dealing was distinctly set out at pages 33-l- and 335. The court says:

“Neither in the declaration nor on the evidence do the plaintiffs rely on fraud—false and fraudulent representations by the defendants, whereby they were induced to enter into the lease—as a. ground for recovering damages. The grava-, men of the suit is a warranty or undertaking by the defendants that the engine and boiler were in good repair and capable of supplying the power necessary to carry on the plaintiffs’ business.

* * !■:=

“Except where fraud or illegality has been set up, parol evidence of an agreement not expressed in the writing is competent only where the writing contains only a part of the contract, or the evidence is admitted to apply the written contract to its subject-matter, or to establish a parol contemporaneous agreement between the parties, with respect to the manner in which the rent reserved should be paid, which both parties have acted upon and carried into execution, and, therefore, have given the agreement the force and effect of an accord executed.”

Of course, the exception to the rule mentioned in this quotation that is of interest now is the first one, namely, fraud.

But the defendant says there was no element of fraud under which to invoke the exception. It is true, as I have already said, that I do not think there was any conscious attempt to actually deceive the complainant by an untruthful statement of fact; but there was that sort of fraud that grows out of ' the suppression of a fact known to the party to be charged when the one with whom he deals, justifiedly relying upon the representations of the former being true and complete, parts with something of value or puts himself in a worse position than he would have -occupied had the complete information been communicated. Professor Pomeroy, in his work on Equity Jurisprudence, says that actual fraud may be reduced to two forms, namely, false representation and fraudulent concealment (section 875), and it is frequently a matter of delicacy to apply the principles in cases founded upon the latter sort. In line with what I have said about the lack of any moral turpitude existing in this case, I cannot do better than to quote the same author, in section 873, when he says that although the omission on the part of the defendant. should be willful “it is not essential in the equitable notion, although it is in the legal, that there should be a knowledge of and an intention to obtain the undue advantage which results.” He also points out (section 877) that a representation concerning something in the future may be fraudulent where it is affirmed as a fact quite as well as if made of a fact existing at present. In the case of Roberts v. James, 83 N. J. Law 492, it was represented, on the sale of land, that there would be a hotel near by, a railroad station, cement walks and a park with swings, none of which ever made their appearance. On an action by the vendor for the purchase price the vendee defended upon the ground of fraud in these representations—all concerning things to be done in the then future. The court of errors and appeals in that case says: “It is, however, settled that the representation of an intention as existing may, if false, void the contract induced thereby.”

It is true that this is placed upon the ground that no such intention was in the vendor’s mind at the time he so informed the purchaser. But just so here: My difficulty with the defendant’s case is that there was present in his mind an intention to assign a lease only if he were able to secure one from the owner of the realty, but said, unequivocally, that a lease was to go with the machinery, and concealed-from the complainant his state of mind, namely, the contingency or condition under which the lease would be made by Hollander. Pomeroy says, in section 901, that:

“If either party to a transaction conceals some fact which is material, which is within, his own knowledge, and which it is his duty to disclose, he is guilty of actual fraud.”

This quotation appears in Keen v. James, 39 N. J. Eq. 527 (at p. 540), where Mr. Justice Dixon adopts it for the court. The difficulty, of course, in most cases arises in determining whether or not any such duty exists. The same author, in reducing the cases to the classes in which the duty to disclose exists, says:

“The second class embraces those instances in which there is no existing special fiduciary relation between the parties, and the transaction is not in its essential nature fiduciary, but it appears that either one or each of the parties, in entering into the contract or other transaction, expressly reposes a trust and confidence in the other; .or else from the circumstances of the case, the nature of their dealings, or their position towards each other, such a trust and confidence in the particular case is necessarily implied. The nature of the transaction is not the test in this class. Each case must depend upon its own circumstances. The trust and confidence, and the consequent duty to disclose, may expressly appear by the very language of the parties, or they may be necessarily implied from-their acts and other circumstances.”

In the case of Ricketts v. Tompkins, 73 N. J. Eq. 552, a bill was filed to set aside a deed made by the complainant to the defendant. A decedent had left a paper-writing, ineffectual as a will, attempting to devise and bequeath all her estate to the defendant. Because of the ineffectiveness of this document the complainant had taken, by descent, a valuable interest in some real property. The latter testified that the defendant told her that the decedent had made him the beneficiary of her will, but that there was a slight technicality which would necessitate the complainant’s signature in order to obtain title insurance. Thereupon, complainant executed a conveyance, and it was held that she was entitled to a decree canceling the same. Here, of course, there was a misrepresentation, but the actual fraud consisted in his not informing her of the fact that the inartificialitv of the paper robbed it of all legal effect and gave her an interest in the land when she relied upon his statement.

It is of no moment how true all other statements in a transaction may have been if a misrepresentation or concealment is made of any material matter, where a duty to disclose exists. Pom. Eq. Jut. § 880. In the case of Nash v. Minnesota, &c., Co., 163 Mass. 574, an action for deceit governed, of course, by legal and not equitable principles, it was decided by a majority of the court that the defendant may show that his words were not used with the intention to state anything falsely, and explain what his understanding and intention were. On that phase of the case only, Mr. Justice Holmes filed a dissenting opinion, in part as follows:

“When a man makes such a representation, he knows that others will understand his words according to their usual and proper meaning, and not by the accident of what he happens to have in his head, and it seems to me one of the first principles of social intercourse that he is bound at his peril to know what that meaning is. In this respect it seems to me that there is no difference between the law of fraud and that of torts, or of contract or estoppel * * *. Of course, if the words used are technical, or have a peculiar meaning in the place where they were used, this can be shown, if by the context or the subject-matter or the circumstances the customary meaning of the words is modified, this can be shown by proof of the circumstances,-the subject-matter, and the contract; but when none of these things appear, a defendant bannot be heard to say that for some reason he had in his mind and intended to express by the words something different from what the words appear to mean and were understood by the plaintiffs to mean, and are interpreted by the court to mean, whether the action be in tort or contract.”

An illuminating discussion of the attitude of a court of equity appears in the case of Reynel v. Sprye, 1 Le G. M. & Co. 660. Lord Cranwoi'th says:

“Once make out that there has been anything like deception, and no contract resting in any degree on that foundation can stand. It is impossible to so analyze the operations of the human mind as to be able to say how far any particular representation may have led to the formation of any particular resolution, or the adoption of any particular line of conduct. No one can do this with certainty eren as to himself, still less as to another. Where certain statements have been made, all in their nature capable, more or less, of leading the party to whom they are addressed to adopt a particular line of conduct, it is impossible to say of any one such representation so made, that even if it had not been made, the same resolution would have been taken, or the same conduct followed. Where, therefore, in a negotiation between two parties, one of them induces the other to contract on the faith of the representations made to him, any one of which has been untrue, the whole contract is considered in this court as having been obtained fraudulently. Who can say that the untrue statement may not have been precisely that which turned the scale in the mind of the party to whom it was addressed ? The case is not at all varied by the circumstances that the un- ' true representation, or any of the untrue representations, may in the first intanee have been the result of innocent error. If, after the error has been discovered, the party who has innocently made the incorrect representation, suffers the other party to continue in error, and to act on the belief that no mistake has been made, this, from the time of the discovery, becomes, in the contemplation of this court, a fraudulent misrepresentation, even though it was not so originally.. These are all principles of such obvious justice as to require neither argument nor authority to illustrate and enforce them, and they need but to be stated, in order to command immediate assent. The only question can be in each particular case, how far the facts bring it within the principle.”

In the instant case, it seems to me inevitable that when the defendant promised the complainant, in consideration of his purchasing the machinery and paying therefor, a lease of the premises, and knew at the time that his ability to comply with his promise depended upon his being able to satisfy the demands of Hollander, and as a reasonable man knew that the complainant would not purchase the machinery at so high a price, or at all, without the lease, and failed to disclose the condition upon which he could make such compliance, he was, under the authorities that I have referred to, guilty of fraudulent conduct such as this court will relieve against. Because, in the nature of things, he was getting a larger price than Gordon was willing to pay for the machines in the event that the lease could not be secured—a most inequitable contract to hold Gordon to, when, in fact, the .lease was not to be had He was the one who had knowledge of the facts suppressed, whereas the defendant relied upon his statement that the lease would be forthcoming. This confidence immediately created a corresponding duty in the defendant to disclose all of the facts and circumstances connected therewith of which he had knowledge. If this court is to maintain its boast of being one of conscience and fair-dealing, I do not see how any other conclusion can be reached.

The next contention raised against the bill is that the promise to secure and assign a lease was an agreement to grant an interest in lands and is void under the statute of frauds. This' might be so (Gay v. Mooney, 67 N. J. Law 27, and Cooper v. Aiello, 93 N. J. Law 336) were it not for the fact that the exception to take the case out of the statute referred to in those cases, is made to appear by the written memorandum of March 19th, under the construction I have already given it.

The next point raised by the defendant is, that there was no consideration for the agreement, as expressed in the letter of March 19th. Counsel saj^s:

“No consideration moved from Gordon to Schellhorn by virtue of which the letter of March 19th becomes a binding agreement. It is true that Gordon in dictating the letter stated ‘In consideration of closing the purchase, &c.’ But he was under contractual obligation to close the purchase of the machinery. There was clearly no consideration, but merely the recital of one, for the purchase was closed by virtue of the agreement of March 10th.

The case of Norton v. Abbott, 113 N. Y. Supp. 669, is almost exactly like the one here.”

The fallacy of this argument, of course, is that counsel assumes that the contract between the parties was complete upon the passing of title to the tangible property and leaves out of consideration the further term of the consideration that drew the complainant into the deal, namely, the assignment of lease. It is true that if such an assignment had not previously been contracted for, the letter of March 19th, so far as it referred thereto, would have been nudum pactum. But, being convinced, as I am, that at all times, due to the representation of the defendant, the complainant had such a lease in mind, the citations of Conover v. Stillwell, 34 N. J. Law 54; Snyder v. Merchants’ Insurance Co., 59 N. J. Law 69; Watts v. Frenche, 19 N. J. Eq. 407, and 13 Corp. Jur. 353, are not apposite. Of course, it is elementary, as therein pointed out, that a consideration lor one contract will not support a distinct and independent contract; but there can be no doubt that the complainant was justified in refusing to fulfill his part of the contract until the defendant completely fulfilled his. The consideration passing from the complainant was the complete execution of his part of the contract, while a portion of the defendant’s remained executory, to wit, the assignment of lease.

The complainant went into possession March 10th, relied upon the defendant to secure a lease and assign same to him, and appears to have waited until August 16th before filing his bill to rescind the contract. He did, however, charge the defendant in a letter of April 2d with not having procured the lease and asking how soon he could have the same, and, finally, on July 20th, approximately four months after going into possession, wrote another letter, in which he says:

“Now I have given you plenty of time to get for me the lease. Now I want my money back and am ready to give you back the plant. I decided to annual (sic) the deal X am tired of you and your methods I want to hear from you how you want to arrange this transfer of the plant back to you.”

■ This cannot be said to be laches. No harm could have come therefrom to the defendant during that period. It does not seem to me that four months was an unreasonable length of time for him to wait so that defendant could secure a lease from Mr. Hollander. This period of delay in itself was not unreasonable, in view of the fact that it did not operate to injure the defendant in any way.

It also objected on the part of the defendant that there was no mutuality. It seems to me too clear for argument that completer mutuality from the standpoint of the defendant could not be conceived. The complainant had done everything incumbent upon him to execute the contract. He had paid the price. Complete performance on the part of the complainant is not the only method of curing lack of mutuality at the inception of the contract; but there is none more certain.

If a contract, although not originally binding for want of mutuality, is nevertheless executed by the party not originally bound, so that the party asserting the mutuality of the contract has actually received the benefit contracted for, the latter will be estopped from refusing performance on his part on the ground that the contract was not originally binding on the other, who has performed. 6 R. C. L. 690; Green v. Richards, 23 N. J. Eq. 32; Reynolds v. O'Neil, 26 N. J. Eq. 223; Brown v. Pinniger, 81 N. J. Eq. 229.

If I purchase a hat, to be delivered, and pay for it, and, subsequently, I sue to recover back the purchase price because it never has been delivered, it would be a novel defense that the hatter could keep my money because I might have refused to accept the hat if it ever had been delivered.

I will advise a decree of rescission, together with a cancellation of the bill of sale, chattel mortgage, and promissory notes, and that an accounting be taken between the parties.


author: Bentley, Y. G.

text:
    Ike Gershonowitz and Philip Gershonowitz, complainants, v. Nathan Neider and Max Feldman, defendants.
    [Submitted February 6th, 1924.
    Decided February 8th, 1924.]
    1. Where a vendee had no knowledge of the vendor’s inability to convey land at the time an agreement to convey was made he may at his election repudiate the agreement upon ascertaining the lack of or defect' in the title. But should he not then repudiate the agreement he is bound to perform if the title can be made by the time of the decree.
    2. Evidence examined, and held that the agreement of sale was not in fact repudiated, and the defects in title being now cured, the agreement must be performed.

      On bill, &e.

      Mr. Isaac Gross, for the complainants.

      Mr. Harry B. JDembe (Mr. Thomas J. Brogan, of counsel), for the defendants.
   Bentley, Y. G.

This is a bill by a vendor for the specific performance of a contract to convey land.

On November 23d, 1922, the parties entered into a contract for the sale of property in the city of Newark for the sum of $44,000, to be effected on February 1st, 1923. Time was not of the essence of the contract. On January 26th the defendants made objection to the title in a letter which set out a large number of encumbrances and defects. Every encumbrance and defect in the title has been cleared up and was cured, not later than May 11th, 1923, whereof defendants were notified, and whereupon, on the 14th, the complainants served written notice upon the defendants that they would be ready to convey, on May 24th, at four p. m., at the place agreed upon in the contract, and said: “Te hereby make said time of the essence of said contract, and demand that you then, attend to perform the same on your part.”

There was no such attendance, and thereupon, after some further correspondence, this bill was filed on July 6th.

The defense undertaken to be made out is, that the contract Avas repudiated in February, at or about the time for passing title, and that, consequently, the dealings of the parties Avere at an end. I find, as facts, that all defects in or questions concerning the title have been cured or eliminated. In fact, there seemed to be a tacit agreement on the hearing to that effect, leaving only the question I have just stated.

Every witness produced is vitally interested in the result of this case. On both sides the solicitors of record have testified, not merely as to formal matters, but as to the merits of the question to be decided, and, on the part of the complainant, the solicitor who actually tried the case has given evidence on the disputed facts on the merits. This, as he knows, if the matter had to be decided upon the oral proofs, would place the court in an exceedingly unpleasant position, and is a practice condemned in this state. Garrett v. Garrett, 86 N. J. Eq. 293. It is only fair to say, however, that complainants’ counsel was probably surprised at the line of" defense adopted at the final hearing, although he did not object to the same, and that he had every reason to believe, as he indicated in his opening, that he would simply have to meet legal questions as to the state of the title at this time. The other witnesses were, respectively, the agent who was interested in the contract being performed, who testified to a very damaging admission by the defendant Neider, and that defendant who took the stand for the single purpose of denying the same. Fortunately, I feel that the documentary evidence is a safe guide, and sufficient for determining the single issue presented.

Following the objections made to the title in the letter referred to above, the defendants’ solicitors, on February 14th, notified the complainants’ solicitors that they hesitated to guarantee the title, and suggested that if a title company policy of insurance could be procured they would recommend that the defendants complete the contract, and then say: “In other words, if tiershonowitz Brothers .are willing to pay the fee of the title company to guarantee both of these searches to us, we will then close it.”

Thereupon the complainants took up the matter of title insurance with some company and appear to have been able to secure the same. At the same time, and necessarily running over a considerable period, steps were taken to clear the record of all judgments, in ui least one case requiring proceedings under the statute, with the advertisement to the parties in interest and the other steps, consuming considerable time. The next letter that passed between the parties was one of May 8th to the defendants’ solicitors, from which it might be drawn that the defendants had changed their mind about a policy of insurance and preferred the guarantee of their attorneys. It also notified the defendants of the correcting of all defects and irregularities, and called upon them to fix any time they pleased for the closing of the contract. To this letter there was no reply, and the defendants’ solicitors have no recollection of receiving the same; but it is impossible for me to escape the belief that the letter was, in fact, sent to them. Thereupon, on May 14th, the demand mentioned above was made upon the defendants that they perform their contract on the 24th. To that the defendants replied, under date of May 17th, denying the implications contained in the complainants’ letter, and saying: “At the time our search was completed we informed you that because of the irregularities and existing judgments we could not advise them to take title.”

Of course, there was no written information to that effect, and, for the reasons I shall subsequently state, I feel compelled to find that there was no such repudiation at all. It is also significant that the letter closes with this paragraph:

“The writer expects to be in Jersey City some time next week, and I will call upon you personally in regard to the matter.”

Several letters passed between the respective solicitors, culminating in the usual threat of a suit and invitation to-commence the same.

This course of correspondence and the'conduct of the complainants, through their solicitors, makes its clear to me that there was no effort or intent until May, when the title had been cleared, to- terminate the contract. It is incredible that in an important contract, involving the not inconsiderable sum of $44,000—no matter how friendly counsel may have been to one another—an experienced lawjTer would have left the election to discontinue liability, upon mere word of mouth. Defendants’ counsel did not neglect to put in writing their letter of January 26th, in which they tabulated those matters that they desired corrected, nor did they neglect to make a written memorandum of the dissatisfaction of their clients in May, when they definitely made up their minds not to accept title. Furthermore, it is unbelievable that complainants’ counsel would have gone to the trouble and expense of securing affidavits, copies of remittiturs, and proceedings to cancel records if they had known that the defendants had put an end to their relations with the complainants, to say nothing of procuring, or undertaking to procure, an expensive policy of title insurance. I think that this is a case where either the defendants tired of their bargain or became impatient at the delay, and, being business men, desired to employ their fortunes and energies in another direction. It is also significant that in their answer, filed July 26th, 1923, the defendants represent themselves as having been ready, willing and able to carry out their contract, but say not one word about their attempted defense, namely, that they had terminated the contract.

There is no question of fraud or bad faith, and I think the cases comes under the rule as stated by Pom. § 8880:

“If, however, the vendee had no knowledge of the vendor’s inability to convey at the time of the agreement, he may, at his election, repudiate the agreement upon ascertaining the lack of, or defect in, the title. But, should he not then repudiate the agreement, he is bound to perform if the title can be made by the time of the decree.'’

The pertinent part of this rule was acted upon by the court of errors and appeals in Van Riper v. Wickersham, 77 N. J. Eq. 232. In that case Yice-Charcellor Learning allowed a period of time for the complainant to perfect his title after the hearing and before the signing of the decree.

I will advise a decree of specific performance and dismiss the defendants’ counter-claim to be reimbursed for their deposit under the contract and their search fee.


text:
    Assets and Liabilities Association, a corporation, complainant, v. Antonio Esposito et al., defendants.
    [Decided March 5th, 1924.]
    1. Where a husband, almost immediately after a judgment at law was entered against him, conveyed most of his property to his wife, alleging that this was done in fulfillment of an antenuptial contract with her, which contract was fully proved, such conveyance was merely a preference of one of his creditors, and perfectly lawful if the transaction is untainted with fraud.
    2. Where the evidence showed that a wife who was entitled to a conveyance of property from her husband, agreed with him that he mig'ht hold the property in his own name so that thereby he might secure credit, such evidence is irrelevant where the bill in the case did not charge such matters. They can only be introduced as evidence under an amended bill setting them up, and allowing the defendants opportunity to answer them where the defendant does not acquiesce in such introduction, but promptly objects and shows surprise.
    On bill, &e.

      Mr. Schuyler M. Cady, for the complainant.

      Messrs. Azzoli .& Krasny (Mr. Merrill Lane, of counsel), for the defendants.
   Bentley, Y. C.

This is a bill in aid of an unsatisfied judgment at law to set aside conveyances.

The single theory of the bill is that almost immediately after a judgment has been rendered in the United States district court for this dictrict in favor of the complainant against the defendant husband, the latter conveyed most of his property to his wife, and that the same was accomplished without consideration and in fraud of the complainant, the husband’s creditor. The answer denies that the conveyances were made without consideration, and sets up a prenuptial contract to pay che wife the sum of $50,000 as soon as the man should be able, to induce her to marry him,. The proofs disclose that such a contract had been made between the defendants prior to the marriage, and of that there can be no doubt.

It is perfectly lawful for a debtor to prefer one of his creditors where the transaction is untainted with fraud. Engelhard v. Schroeder, 92 N. J. Eq. 663.

What I have just said disposes of the complainant’s charge of fraud as expressed in the bill. There was, however, testimony by the defendants themselves most startling and indicating strongly that another species of fraud had been practiced by the parties, but not included in the bill. The husband and wife each testified that although he had been in a financial position to comply with the antenuptial contract for a long time before these conveyances, he had persuaded her to permit him to keep the legal title in himself so that he might thereby secure credit, and it was probably by this subterfuge that the complainant’s assignor extended the credit for which they sued in the United States court. The trouble is, however, that the defendants’ counsel promptly and vigilantly objected to all such evidence during the hearing, and based his objection upon the ground of variance with the pleadings, so that it cannot be said that there was any acquiescence in meeting the case of which the bill did not apprise the adverse parties. In other words, the bill attacked the conveyances as voluntary and in fraud of creditors, 'and was not sustained by the proofs, while the evidence disclosed an apparent fraud by the wife, permitting the husband to hold himself out as the owner of the property conveyed for the purpose of securing credit—a case far different from that to be found within the four comers of the bill.

It would seem too elementary to require argument that a variance of the character shown is fatal to the complainant’s success were it not for the fact that complainant’s counsel now insist that it should be permitted to amend its bill after final hearing and enter decree in accordance with the amendment. Vice-Chancellor Van Fleet, in Lehigh Valley Railroad Co. v. McFarlan, 30 N. J. Eq. 180 (at p. 182), in referring to the complainant’s bill in that case, said: “They must recover, if at all, upon the case made by their bill. They cannot make one case by their bill and another by their proofs and still have a decree.”

This case was reversed, but not on this ground. So> that to accede to the motion of the complainant at this time would be to permit the entering of a decree that was not within the scope of the bill that the defendants were notified they had to meet, and would result in forfeiting their rights in their property, under a theory upon which they have never had an opportunity to be heard. Any such proceeding, of course, would be subversive of one of the great undertying principles of our jurisprudence. The complainant feels, as might have been expected, that there is no escape from what it considers a fatal admission against their own interest made by the defendants. That may be so, but I cannot so find until they shall have had a complete opportunity to present their explanation, or whatever defense they may think they have, to the new cause of action. As I have already said to counsel, there has been enough disclosed in the defendants’ brief to warrant me in feeling that it is not beyond the realm of possibility that even this apparently clear case may be defeated.

Complainant has urged with great force the opinion in Besson v. Eveland, 26 N. J. Eq. 468. That authority may be of great weight if the defendants ever have their day in court on the amended bill. But it is without significance in disposing of the case at this stage of its progress, because Besson v. Eveland dealt with the rights of the parties where there was no question of surprise or variance such as the defendants protest in the case at bar.

The defendants urged that the bill should be dismissed, for the reasons I have outlined; but I see no reason that that should be done. If they can explain the testimony that was irrelevant.on the. hearing already had they should, of course, be given an opportunity to do so. But if the situation is as it was made to appear by the testimony of the husband and wife, there is no reason the complainant should be put to the expense and trouble of another original bill, when an amendment, with an opportunity to answer and a further hearing, will afford them an opportunity to secure their defense quite as fully and completely.

I will advise an order permitting the amendment to the complainant’s bill, in accordance with the notice filed herein on the 4-th day of March, 1924,-but not allowing the decree mentioned therein to be entered.