text:
    Horace B. Burr v. Henry L. Nivison et al.
    [Submitted March 18th, 1908.
    Decided April 7th, 1908.]
    1. In a suit for the cancellation of a contract to sell certain land, evidence held insufficient to warrant a finding that the contract was altered after it was signed.

      2. Where a broker acting for plaintiff in the sale of certain land procured a contract on Sunday, by which plaintiff agreed to sell the land to R. but the contract was not delivered to the purchaser until the following Monday, it was not objectionable as a violation of the Sunday law.

      Messrs. Parker & Van Gelder, for the complainant.

      Mr. Thomas P. Pay, for the defendants.
   Howell, V. C.

(orally).

This suit is brought for the purpose of setting aside a contract made on its face between the complainant, Horace B. Burr, and a man named Rosenstein. It appears to have been made on Sunday, the 21st day of July, 1997. The actual participants in the making of it are the complainant, Mr. Burr, and the defendant, Mrs. Nivison, Mr. Burr claiming that Mrs. Nivison was acting on her own behalf; Mrs. Nivison and the other defendant, Rosenstein, maintaining that Mrs. Nivison was acting as Rosonstein’s agent.

Mrs. Nivison first approached anyone for the purchase of the farm in question in the month of May, 1907. Negotiations were then opened, but they were not successful. They were opened again in June, and, I think, up to the time of the ending of the June negotiations there is no question but what Mrs. Nivison was acting for herself and noil as agent for anybody else. The question of agency is a question I am going to reserve, because it is connected with another question in the case and it may become decisive of the whole matter.

Negotiations were opened again between Mrs. Nivison, either on her own behalf or as agent for somebody else, in the early part of the month of July, 1907, and there eventuated into a conference with the younger Burr on the farm on Saturday, July 20th, 1907. The conversation there related to the sale of the farm to Mrs. Nivison. The younger Burr was posted as to the price which his father was willing to take. He stated the terms upon which his father would sell the property. There was to be so much paid in all, so much paid down, and so much paid in October, and so much left on mortgage. The younger Burr and Mrs. Nivison were both well enough pleased with the terms. I do not think that the younger Burr had any authority to bind his father; in fact, it was for lack of that authority that he sent Mrs. Nivison to see his father, who lived in Fairfield, Connecticut. Mrs. Nivison went to Fairfield, Connecticut, on the following day, on Sunday, and it does not appear that up to that time she saw the complainant, the elder Burr, that she ever disclosed to anybody the fact that she was purchasing for anybody but herself. And there we run into the question of agency again. Mr. Burr met Mrs. Nivison and the agreement in question was executed. It was written by Mrs. Nivison and it was signed by Mr. Burr. It appears on the face to be made between Mr. Burr and Mr. Bosenstein. It is claimed on behalf of Mr. Burr that he did not know that Mr. Bosenstein’s name was being inserted, and thought that he was dealing with Mrs. Nivison onty. He thought likewise that the paper which he signed was written on one side of the sheet only. It is quite evident .that Mr. Burr is entirely mistaken on both of those questions. There is no doubt in my mind but what the name of Mr. Bosenstein was written in the agreement at the time it was written. There is no evidence of anjr erasures or any change in the names whatever, and it is quite as evident that the paper was written on two sides of the sheet at the time he signed it. As to the date when that was put on, it seems to me, under the evidence, to make little or no difference. As to when it was witnessed by Mrs. Nivison, or as to when she put the witness clause on, it seems to me to make no difference.

So we start out with an agreement by which Mr. Burr agreed to convey to Mr. Bosenstein the tract of land in question upon certain terms, which were set out in the agreement. At the time the agreement was signed there was a_ payment made on account of the purchase of $200 by the check of Mr. Bosenstein, which was subsequently redelivered by him to Mrs. Nivison. As to whether the $300 provided for in the contract was tendered on the following Tuesday or not, there is a dispute. That it was tendered later in the week I think is quite clear, and during that week it is also quite clear that Mr. Burr repudiated his contract and attempted to rescind it, and he now files a bill to rescind and set aside this whole contract on two grounds — first, on the ground of fraud, and second, because the contract was executed on Sunday and is therefore violative of the Connecticut Sunday law. I will deal only with the question of fraud to-day.

I do not think that the fraud which is relied upon in the bill has been made out. The fraud consists, according 'to the terms of the bill, in a representation made by Mrs. Nivison to Mr. Burr, the elder, that the terms which she had offered on Saturday, July 20th, to his son, Eben EL Burr, were fully acceded to by him, and were entirely satisfactory to him, and that it was on the faith of that representation that he entered into the contract, and that he had subsequently discovered that he had been defrauded in that particular, namely, that the contract was not satisfactory to his son. Well, now, so far as I can understand this testimony, the contract which the old gentleman made on Sunday is exactly the contract which was talked about and practically agreed upon between the younger Burr and Mrs. Nivison on Saturday.

I have scanned this testimony, as it came out, very closely, for the purpose of seeing whether there was any difference whatever between the terms that were offered to her by Mr. Eben Burr and the terms which she eventually got from the complainant, Mr. Horace Burr, and I fail to see that there is any difference. The dissatisfaction which either the young man had over the matter, or which the old man felt when he found that he had bound himself, was a dissatisfaction that arose after the contract was made, entirely and completely, and, as I said before, I see no variation between the contract that was. tendered by the young man on Saturday and the contract that was executed by the old man on Sunday. So, on the ground of fraud, which is charged in the bill, I think the complainant must fail.

But he says that the contract was made on Sunday, and that according to the Connecticut law it is void. The defendant says it was made, the paper was written on Sunday, but it was not delivered until Monday, and that raises a question of fact, so that there is both a question of law and a question of fact yet remaining, the question of fact being whether Mis. Nivison was the agent of Mr. Burr or whether she was the agent of Mr. Eosenstein, and the question of law being the effect of the Connecticut Sunday law.

For the purpose of deciding this case I shall assume that the Sunday law of Connecticut is as is claimed on the part of the-complainant, and that the agreement in question if executed and delivered on Sunday in the State of Connecticut is governed by the Connecticut law and is absolutely unenforcible. If the agreement had been on its face an agreement between Mr. Burr and Mrs. Nivison, such would be the effect of the application of the Connecticut law to it. Likewise, if Mrs. Nivison had been the agent for Mr. Eosenstein the same result would have followed, because there then would have been an actual execution of the agreement and a delivery of it to Mrs. Nivison on Sunday, but if Mrs. Nivison was the agent of Mr. Burr, a different situation arises. Then the agreement would be binding because it was not delivered to Mr. Eosenstein until the following Monday, and this I conceive to be the fact.

There is evidence of some weight to the effect that Mr. Burr-had agreed to pay Mrs. Nivison -a commission for making the sale of the farm for him; that Mr. Eosenstein in person and with his wife visited the farm and had some talk with the younger Burr about it on his own account on July 20th, the day before Mrs. Nivison went to Fairfield; that a deposit was made by Mr. Eosenstein’s check, which came into the hands of the vendor on Sunday and remained in his possession until the following Thursday; that the tender of the second payment of $300 was made by Mr. Eosenstein, first by h'is own check and after-wards with his own money. There was no evidence tending to-show that Mrs. Nivison was the agent of Eosenstein. On the contrary, it appeared that Mrs. Nivison dealt with him by the-ordinary methods of real estate agents, by exhibiting to him several other farms that were for sale in the neighborhood, the inference being that she- had been authorized by the Owners to make sale for them.

I therefore conclude that the agreement was not delivered to the real vendee until Monday, July 22d, and that it is a valid, instrument.

The bill should be dismissed, with costs.


source: Caselaw Access Project

author: Howell, V. C.

license: Public Domain

text:
    Arthur Falaenau v. Reliance Steel Foundry Company.
    [Decided April 25th, 1908.]
    1. A seller wrote to a buyer, offering to sell machinery for a specified price, terms half cash, balance within a specified time, machinery to remain the seller’s property “until fully paid for.” , The buyer accepted the offer and ordered machinery, which was furnished. — Seld, a conditional sale, and that the title remained in the seller until the price was fully paid.
    2. Under P. L. 1898 p. 610, providing that conditional sales are void as against judgment creditors and subsequent purchasers and mortgagees in good faith, unless the conditions of the sale shall be expressed in a writing which has been recorded, a receiver of an insolvent cannot, as such, in the absence of judgment creditors of the insolvent, attack a conditional sale to the insolvent, though the conditions were not expressed in writing and recorded.
    3. A seller sold a machine on condition that the title should remain in him until the price was paid. The machine was delivered, and was set up on a foundation, and was put in actual operation as a part of the plant of the buyer, who, without paying the price, mortgaged his real estate. — Seld, that the mortgagee could not claim the machine, though the conditions ,of the sale were not expressed in writing and recorded, since he could only hold property which belonged to the buyer and became affixed permanently to the realty,
    4. A domestic corporation having an office in a sister state sent letters from its office there to a foreign corporation there relating to the purchase of machinery from the foreign corporation. The last letter written by the domestic corporation in reference to the matter was written in New Jersey to the foreign corporation at its office in the sister state. The correspondence resulted in a contract whereby the foreign corporation sold machinery to the domestic corporation. — Seld, that the contract was not made in New Jersey, so as to preclude the foreign corporation from recovering it on the ground that it was doing business in the state without complying with the laws as to foreign corporations.
    5. The court of chancery has jurisdiction over the subject-matter of a controversy involving the right of a seller to resume possession of goods conditionally sold and delivered to a buyer becoming insolvent without having paid for the goods, as against the objection that there was an adequate remedy at law.

      On petition and answers.

      Mr. Sherrerd Depue, for the petitioner.

      Mr. Michael Dunn, for Cooke et al., mortgagees.

      Mr. James F. Northrup, for the receiver.
   Howell, V. C.

The litigation now before the court arises out of the insolvency of the Reliance Steel Foundry Company, which company in 190T made a contract for the purchase of a piece of machinery called a sand grinding machine, from Phillips & McLaren Company, of Pittsburgh, Pennsylvania. • The machine was delivered to the Reliance foundry, and at the time of its insolvency was set up on a foundation and had been in actual operation as a part of the plant of the company. The Phillips & McLaren Company, the vendors of the machine, have filed a petition claiming that the machine was sold conditionally, and that inasmuch as the condition was never performed, the machine still belongs to them, and they pray that they may have leave to resume possession of it as of their own property.

The first question to be decided is whether the sale of the machine by the petitioner to the Reliance company was an absolute or a conditional sale. The contract arises out of correspondence only. The first letter is written by the petitioners to the vice-president of the Reliance company, the petitioners then being in Pittsburgh, but having an office in Philadelphia, and the vice-president having an office in Philadelphia. By this letter the petitioners make a tender of a contract to furnish a machine of the genera] character of the one in controversy for either $900 or'$985, depending upon the details of the machine. The terms of credit were set out as follows: “Terms one-half cash against B/L balance thirty days, machinery to remain our property until fully paid for.” The vice-president of the Reliance company replied to this letter under date of August 10th. That reply was written from Philadelphia, and was addressed to the petitioners at Philadelphia, at their branch office. By this letter the Reliance company accepted the tender of the petitioners in the following words: “Kindly enter onr order for one seven-foot diameter stationary bottom self-discharging sand pan, same to be in full accordance with your proposal dated June 5th, 1907, to the writer, at a price of $985. F. O. B. cars Pittsburgh, Pa.,” &c.

On August 13th, the Reliance company from its Philadelphia office again wrote to the petitioners, addressing the same to their Philadelphia office, changing the diameter and the weight of the rolls and the price of the machine, and this was followed on September 3d by a formal order printed by a typewriter on a blank specially prepared for ordering machinery. This order was dated at Delawanna, New Jersey, and was addressed to the petitioners at Philadelphia, and contains these words: “This order confirms our letter order of August 10th, 1907. Do not duplicate.” This order contains also this very significant statement : “Kindly furnish us with the following material, same to be in full accordance with your proposal of June 6th, 1907.”

I take it that all this correspondence must be read together in order to ascertain what was the contract under which the ma-, chine in question was delivered, and I conclude, after a careful examination, that the contract was this: That Phillips & Mc-Laren, the petitioners, would furbish the machine in question for a certain price; that it should be delivered to the Reliance compantq on the cars at Pittsburgh, Pennsylvania, and that the title should remain in the vendor until the machine was fully paid for.

It appears by the testimony that in due course of time the machine in question was delivered at the works of the insolvent corporation at Delawanna, but that this corporation never made any payment of any amount on account of the purchase price.

I therefore conclude that as between the petitioner and the corporation the transaction in question was a conditional sale, and that it can be enforced by the petitioner by proper proceedings and the machinery be recovered by it, unless the rights of other persons shall have- intervened.

Answers are filed to the petition by the receiver, and by Cooke and others, trustees, who hold a mortgage on the premises. By their answer the mortgagees claim that there was no conditional sale as between the petitioner and the corporation; that the machine was affixed permanently to the freehold and became, therefore, in law a fixture and subject to the lien of their mortgage. They claim further that inasmuch as the petitioner is a foreign corporation, and has not obtained a license to transact business in this state, it has no authority to take the pending proceeding for the recovery of the machine, even though they are the owners of it.

The law in relation to conditional sales is found in sections 71, 72, 73 and 21 of the “Act respecting conveyances” (P. L. 1898 p. 670). It does not vary, excfept possibly in mere verbiage from the acts of 1889 (p. 1/21), and' 1895 (p. 802), which were repealed by chapter 233 of the laws of 1898. By the provisions of the law now in force conditional sales are absolutely void as to judgment creditors and subsequent purchasers and mortgagees in good faith in every case in which the sale , shall be accompanied by an actual delivery and followed by an actual and continued change of possession, unless the conditions of the sale shall be expressed in a writing, which must be recorded as by the statute is prescribed. This statute in.its former shape (P. L. 1889 p. 1/£1, and P. L. 1895 p. 802) came before Yice-Chancellor Pitney for construction in the case of General Electric Co. v. Transit Equipment Co., 57 N. J. Eq. (12 Dick.) 460 (1898). It was there held by him that under the strict reading of the statute the only persons who were meant to be protected were the classes of persons described in the act, namely, “Judgment creditors not having notice thereof and subsequent purchasers and mortgagees in good faith not having notice thereof.”

Neither the receiver who submits his rights to the judgment of the court, nor the real estate mortgagees who make actual claim to the machine in question, can be said to occupy the place of either judgment creditors or subsequent purchasers or mortgagees in good faith and without notice. It is true that the receiver takes title on behalf of creditors, and that he is entitled to pursue any of the remedies which creditors would be entitled to pursue on their own account if no receiver had been appointed. He gets his rights through the rights of creditors. The petition alleges that there are no judgment creditors, and there is no evidence that there are any. Hence, it is quite apparent thát the receiver is not in a position to attack the conditional sale as representing judgment creditors. He certainly cannot attack it as representing general creditors. I must therefore say that the receiver as such can maintain ho claim as against the force of the conditional sale of the machine in question. Neither can the mortgagee hold any lien upon the subject-matter of the conditional sale. The mortgagee can only hold property which belonged to the mortgagor and became affixed permanently to the realty. If, therefore, the conditional sale retained the title in the so-called vendor the title never reached the vendee, and hence the vendee was never in a position to confer a lien upon the property in favor of the mortgagee. And this disposes of the claim of lien in favor of the mortgagee.

The mortgagee next claims that the petitioner, being a foreign corporation, and without a license to transact business in New Jersey, may not.take any proceeding for the recovery of the property in question. Without' attempting to decide that this proceeding is an “action” within the meaning of the ninety-eighth section of the Corporation act of 1896, but conceding for'the purpose of the argument that it is such, still I do not think that the contract in question is a contract made by the insolvent corporation in this state. The three first letters were written by the insolvent corporation to the petitioner in Philadelphia, each having its office there. The last one, that of September 3d, was written from Delawanna, in Passaic county, to the petitioner at Philadelphia, and the natural inference would be that it was sent by mail from Delawanna to Philadelphia or Pittsburgh, and received by the petitioners at one of those places. Under the authorities, such a contract is not a contract made in New Jersey. Faxon Company v. Lovett Company, 60 N. J. Law (31 Vr.) 128; Delaware and Hudson Canal v. Mahlenbrock, 63 N. J. Law (34 Vr.) 281. Wolf v. Lancaster, 70 N. J. Law (41 Vr.) 201, cited by counsel for the mortgagee, does not apply. It is there assumed, and probably appears by the record, that the contract in question was a contract made in New Jersey.

I have given counsel my views of the whole case for the reason that the whole case was submitted without reservation.

The answer of the mortgagees raises the question of the jurisdiction of the court to deal with the question at all, upon the ground that there is an adequate remedy at law. I have no doubt about the jurisdiction of this court over the subject-matter of the controversy, and should not hesitate to advise a decree as against that objection. A possibly more serious question, viz., whether this court has properly acquired jurisdiction over the persons of the mortgagees, is not raised by the answer, nor was it discussed on the argument. I will give counsel an opportunity, if they so desire, to argue this question before any order shall be made.


author: Walker, V. C.

text:
    Philadelphia Trust, Safe Deposit and Insurance Company, trustee, et al. v. The Mayor and Council of the Borough of Merchantville.
    [Decided March 30th, 1908.]
    1. Land includes the water upon it, and when the fee to land is acquired by condemnation everything which in the legal sense is comprehended in the term land, including water, vests in the expropriator.

    2. When land,-which has water upon it, is condemned, the law gives as compensation to the owner the value of the land, including the value of the water; that is, if the value of the land is commercially enhanced by the presence of the water either in the immediate present or in reasonable anticipation in the near future, the benefit of it is given to the owner.
    Where an action at law is pending, relief by bill in equity concerning the same subject-matter should only be auxiliary to the action at law, and questions of a legal character which have been or may be decided in that action should not be reviewed.

      4. AYhere a motion for a preliminary injunction is denied, and it appears that the court is without jurisdiction to grant the relief prayed, or that the bill itself is absolutely and palpably lacking- in equity, the bill may be dismissed, although no demurrer has been filed thereto, nor any notice given of a motion to dismiss under rule 213 of this court.
    On supplemental bill and order to show cause and affidavits.

      Mr. Herbert A. Drake, for the complainants.

      Mr. William Early and Mr. Howard Garrow, for the defendant.
   Walker, V. C.

Upon filing the original bill an order to show cause was made why an injunction should not issue restraining the defendant from proceeding with its application for the appointment of commissioners for the condemnation of lands upon which it was proposed to build and construct a sewage disposal plant and from discharging refuse from any sewage disposal works into, or so as to injure, the water of Cherry run, a stream flowing through the lands of the complainants proposed to be condemned. The matter being heard upon the bill, order to show cause and affidavits, before Vice-Chancellor Bergen, he filed conclusions in which he observed, among other things: “It has, however, been urged, that beyond the question of the appointment of the commissioners, what the borough proposes to do in the condemnation and after it has secured the lands, is to so use these lands as to create a nuisance injurious to the adjoining landowners, and to pollute the stream of water which the complainants say they use, and have used for a great many years, for domestic purposes. The answer to that, it seems to me, is this: We must presume that the commissioners in condemning these lands, and providing for compensation, will take all the matters into consideration likely to injuriously affect the remaining land. If they do not, then the complainants, or the landowners, would have their remedy at law.” The order to show cause was discharged and the complainants then certioraried the condemnation proceedings into the supreme court, where, upon hearing, the certiorari was dismissed. This judgment has been removed into the court of errors and appeals by writ of error.

The complainants have now, by leave of the court, filed a bill ' of complaint supplemental to and amendatory of the original bill, in which they set forth that the land sought to be condemned is favorably situated for development as a residential tract, and that it may be beautified by the making of an artificial lake by damming Cherry run, into which they say that sewage and effluent will be emptied from the proposed disposal works. An order to show cause was made upon the filing of the supplemental bill, and the matter now comes on to be heard upon that bill, the order to show cause, and affidavits.

Upon the argument of the matter now in hand, counsel for complainants urged that the taking sought under the condemnation proceedings was a taking of water ajid not of land, and that the defendant is powerless to condemn water. This contention, in my judgment, is not sound.

Land, as I understand it, includes water, -and this understanding seems to be supported by abundant authority. The word “land,” when used in a deed, includes not only the naked earth, but everything within it, and the buildings, trees, fixtures, fences, stones, minerals, water and herbage upon it. 18 Am. & Eng. Encycl. L. (2d ed.) 141. The word “land” is comprehensive in its import, and includes many things besides the earth we tread on, as water, grass, buildings, fences, trees and the like, for all these may be convejed by the general designation of land. Words and Phrases, vol. 5 lit. Land p. 8976.

The contention of counsel, broadly stated, is, that the Condemnation act of 1900 (P. L. 1900 p. 79) does not authorize the condemnation of water, and that, therefore, by virtue of proceedings to condemn land, water cannot be taken. The act referred to is one of procedure and practice only. The authority for taking land or other property under the right of eminent domain is derived from other statutes. The authority of the defendant to establish a sewage disposal plant and to acquire lands for the purpose is'to be found in section 87 of the Borough act of 1897 (P. L. 1897 p. 285), and the supplement thereto of 1903 (P. L. 1908 p. 893), just as the right to acquire water or water rights for the purpose of supplying any city with water is to be found in section 1 of the act of April 1st, 1895 (P. L. 1895 p. 769; Gen. Stat. p. 1388 § 57).

Thus it appears that land may be condemned, or water may be condemned, or, for that matter any other species of property may be condemned; but, when land is condemned without qualification, the fee itself, carrying with it all appurtenances, goes to the party acquiring title under the proceedings for that purpose.

When the use of land is transferred by the action of the legislative will, the right to use, for the specified purpose, everything which, in the legal sense, is comprehended in the term land, is transferred. Taylor v. New York and Long Branch Railroad Co., 38 N. J. Law (9 Vr.) 28, 30. The complainants acquired the property sought to be condemned (including the water) as land, and as land it can be taken away.

While it was held in Albright v. Sussex Co. L. & P. Com., 71 N. J. Law (42 Vr.) 303, that the right to fish in an inland lake could not be acquired under a grant to the power of eminent domain contained in an act which was declared to be unconstitutional, yet it was said that if the legislature had provided for the condemnation of the lake itself the right to fish would have passed as an incident of the public title. From this it appears that a lake may be condemned for public use. Now, how would it be condemned? Certainly as land, if the fee were to be acquired, for, by taking the land under the water, the water upon the land would pass.

In Woodcliff v. New Jersey, &c., Railroad Co., 72 N. J. Law (43 Vr.) 137, land lying between high and low-water marks, acquired by a grant of riparian lands, was held to be subject to condemnation under the state’s power of eminent domain. The property taken was described as land, and it was partly upland and partly land under the tidewaters of the Hudson river. The supreme court said (at p. 139) that it seems impossible, upon principle, to say that such lands (under water) may not be condemned by corporations having the state’s right of eminent domain. In Rand. Em. Dom. § 77, it is said that the subjection of land, using the word in its common meaning, to the right of eminent domain is so evident that the citation of supporting cases is unnecessary. But among the wider uses of the word in law is that it describes earth and water in every natural condition, and all things artificially annexed to them. Hence, where there is an authorization, express or implied, to condemn land, the expropriator may take under water a coal bed, land with buildings upon it, and in fine all improvements, interests and appurtenances included within the term real estate.

The fear of the complainants is that the commissioners in the condemnation proceedings will not award damages which shall include the value of the water which is upon the land, but this apprehension is groundless. In Currie v. Waverly, &c., Railroad Co., 52 N. J. Law (23 Vr.) 381, it was held that the law gives as compensation to the owner of lands taken for a public use its fair price for any use for which it has a commercial value of its own in the immediate present or in reasonable anticipation in the near future. Therefore, whatever value the complainants’ lands have by reason of the presence of Cherry run upon them, that value will be given to them in the way of compensation for their lands to be taken under the condemnation proceedings.

Besides, this matter is one not properly recognizable in this court, but is subject to the jurisdiction of a court of law. Whether or not water upon lands may be acquired in the condemnation of land is, in my judgment, a purely legal question. The subject here discussed was made the sixth reason for the setting aside of the order appointing commissioners in the cause in the sm preme court between the same parties. That reason prays that the order appointing the commissioners in condemnation be set aside because it is proposed to cast the sewage refuse, called effluent, into a drink-water stream in destruction of the rights of the prosecutors. This is equivalent to the assertion that the defendant has no right to acquire the -water mentioned for the purposes for which condemnation of the land is sought under the power of eminent domain. Appreciating this, counsel for the complainants on the oral argument' contended that the supreme court did not decide the question thus raised. In this he is mistaken. In the opinion of the supreme court, the order appointing the commissioners is upheld upon four distinct grounds, neither one of which involves the sixth reason for reversal, but, in conclusion, Mr. Justice Trenehard, delivering the opinion, says that all the other objections argued were considered, but no merit was found in them. Clearly then the sixth exception was considered, if argued, and if not argued should be held to have been abandoned.

Where an action at law is pending (and the certiorari proceeding is pending in the court of errors and appeals) relief by bill in equity concerning the same subject-matter should only be auxiliary to the action at law, and questions of a legal character which have been or may be decided in that action should not be reviewed. Attorney-General v. Central Railroad Co., 68 N. J. Eq. (2 Robb.) 198.

These conclusions lead to the discharge of the order to show cause, and the question remains, shall the bill be dismissed ?

On the argument, counsel for the defendant moved that the supplemental bill be dismissed, and counsel for the complainants did. not object on the ground of want of proper notice, but urged only the merits of the complainants’ case as a reason for retaining the bill. I think that independent of rule 213, under which a bill may be dismissed for want of equity,, on notice, without _ the filing of a demurrer, a bill may be dismissed when it plainly and palpably appears that the complainant has no case whatever. Chancellor Desaussure said in Holman v. Holman, 3 Desaus. Eq. (S. C.) 210, that motions to dismiss are sometimes granted when it appears on the face of the proceedings that the complainant has no just ground of complaint, or that the court cannot give the relief prayed, but it is very rare that the court will, in this shorthand way, dismiss the parties without giving them an opportunity of substantiating their case, and that the want of right must be very clear to induce the court to act in a manner which, in substance, is a refusal to hear the party.

Yice- Chancellor Learning'in his opinion in McCarter, Attorney-General, v. Dungan, Colonel, &c., recently filed, but not yet reported, entertained a motion to dismiss the bill on the hearing of an application for a preliminary injunction. He denied the injunction, and while he refused the motion to dismiss, he put it on the ground that the bill was sufficient, and seems to have been made no doubt about his power to dismiss in a proper ease.

The case at bar, in my judgment, is a proper case for dismissal. It is true that this supplemental.bill was filed by leave of the court, but that- was upon an ex parte application and it appeared to me at the time that I ought' to give the complainants a rule to show cause and an opportunity to be heard on the question of injunction. I am now convinced that the injunction should not go and that the bill absolutely lacks equity, and that, therefore, it should be dismissed. It has been decided in this state that a motion to dismiss a bill for injunction should not be reserved for future determination on final hearing, but should be determined as to all questions of law on the admitted facts, and questions as to jurisdiction of the court, and want of equity, before a preliminary injunction is granted, and in a proper case the bill should be dismissed. Grey v. Greenville and Hudson Railway Co., 59 N. J. Eq. (14 Dick.) 372.

The order to show cause will be discharged, the preliminary stay vacated, and the supplemental bill will be dismissed, with costs.


text:
    Joanna Shreve et al. v. Thomas E. Harvey, administrator, &c., et al.
    [Decided May 5th, 1908.]
    1. Four sisters and four brothers being seized in fee of a tract of land, the sisters conveyed their undivided interests, amounting in all to one-half of the fee, to their four brothers, three of whom, being of age, executed four several bonds to their sisters respectively, and gave them collectively a mortgage upon the same premises, to secure a portion of the purchase-money; the brother, who was a minor at the time the mortgage was given and who did not join therein, came of age within two years after the giving of the mortgage, and lived for more than thirty years thereafter and died, devising his one-fourth interest to his three brothers who made the mortgage; and the mortgage is now being foreclosed.' — Held, that the outstanding undivided one-fourth interest in the premises did not come under the lien of the mortgage when the entirety of the fee vested in the three brothers, the mortgagors, by reason of the devise to them of the one-fourth by their brother upon his death, and that the complainants’ mortgage is still a lien only upon the three undivided one-fourth parts and interest in the mortgaged premises; and this because there is no covenant of seizin or for title in the mortgage, and no intention is apparent that the outstanding one-fourtli interest should ultimately fall within the mortgage; hence no estoppel has been worked.
    2. On December 14th, 1858, the three brothers, the mortgagors, made a deed to R. P. for a portion of the mortgaged premises. The deed from the sisters to the brothers, dated December 9th, 1858, was recorded May 3d. 1860. The mortgage from the brothers to the sisters, dated January 1st, 1859, was recorded May 3d, 1860. The deed to R. P. was recorded October 9th, 1860. There were other conveyances of portions of the mortgaged premises as follows: To S. A., May 1st, 1S60; to G. B., July 23d, 1861; to M. K., March 31st, 1874. The deed to S. A. was recorded September 10th, 1860; the deeds to G. B. and M. K. were both made and recorded after the making and recording of the mortgage. These tracts, by sundry mesne conveyances and devolutions of title, have become vested in others than the original grantees, but the original grantees and their successors in title, including the present owners, have been for more than twenty years last past in the full exclusive and actual possession of their several distinct parcels of mortgaged premises without admitting the title of the mortgagees and with no claim for principal or interest having been made against them and without any entry by any holder of the mortgage; they have improved their tracts by the erection of houses and other buildings thereon, have paid the taxes upon their lots and exercised in every particular all the usual acts of ownership over the same. — Held, therefore, that the mortgage is no longer any lien at all upon any of these several tracts.
    3. Two of the brothers, being then seized of the entire fee of the premises, by virtue of their individual holdings and under the will of their deceased brother, and by a conveyance by their surviving brother, in the years 1891, 1895 and 1903 made three other several mortgages upon the premises to several mortgagees. Pending this suit one of the brothers died intestate and his interest in the mortgaged premises descended to his heirs-at-law, who are his surviving brother, and his nephews and nieces, children of his deceased brothers and sisters. They, the surviving brother and those nephews and nieces, are the owners of the interest in the mortgage of one of the sisters in certain proportions, as well as being owners of the fee of the mortgaged premises. — Held, as against the mortgages of 1891 and 1895 (the question not being raised as to the mortgage of 1903) there is no merger of their interests in the original mortgage of 1859 into their title to the fee in the lands, because the subsequent mortgages are presumed to have been taken with reference to the state of the record, which, in the case of the one of 1S91 would have disclosed the existence of the complainants’ mortgage and no interest therein at that time in the now owners of the fee, ancl there being no unity of title as mortgagees and owners there could have been no merger at that time; and, since acquiring title to such interest in the mortgage they have done nothing themselves to cause a merger; and as to the mortgage of 1895 there is no merger, because, when it was given while the two brothers, who were owners of the fee, were already beneficiaries of one of the original mortgagees, yet they did nothing themselves whereby they can be held to have harbored any intention to surrender their interests in the original mortgage, which they derived as legatees, in favor of the mortgage of 1895.
    4. Buie 224 of this court, promulgated in pursuance of section 91 of the Chancery act (P. L. 1902 pp. 510, 540), provides for the only allowance by way of fee for counsel for the complainant that can be made in a foreclosure suit, litigated or ex parte. Whatever the complainants’ counsel is entitled to beyond the amount provided for in rule 224, he will have to collect from his clients.
    On final hearing on bill to foreclose, answers and agreed state of facts.

      Mr. Ecleard P. Budd, for the complainants.

      Mr. Charles Ewan Merritt, for the defendants Annie R. An-trim, administratrix, &e., and Charles Ewan Merritt, executor, &c.

      Mr.,IÁ.nton Saiierihwait, for the defendants Elizabeth Page, Lawrence L. Gratz, Anna G. Keller, Anna D. Keller, Maggie M. Keller, Anna E. Keller, Mary Keller, Marion Keller, Lillie Y. Keller and Lillie Y. Keller, guardian.

      Mr. Samuel A.. Allcinson, for the defendants James Tallman, Sarah A. Hancock and Mary E. Tallman, an infant by Elmer L. Tallman, guardian.
   Walker, V. C.

This is a litigated and complicated foreclosure, involving these questions: First, whether an outstanding interest in the mortgaged premises passed by way of estoppel when the mortgagors afterwards acquired title; second, whether distinct parcels of the mortgaged premises conveyed to third persons, who have been in the exclusive possession of their several tracts for over-twenty years, and who improved the same, without recognizing the mortgage, and without any claim on behalf of the mortgagees being made upon them, are still subject to the lien of the mortgage; third, whether certain interests in the mortgage acquired by owners of the fee by bequest from certain of the mortgagees have merged; that is, whether their interests in the mortgage have merged in the fee for the benefit of subsequent mortgages, and fourth, the amount that may be allowed counsel for the complainants to be taxed in the costs in such a case as this.

On December 9th, 1858, Sarah H. Shreve, Mary E. Harve3, Charlotte H. Biddle, and Elizabeth Harvey, tire younger, Peter E. Harvey, Amos E. Harvey, Thomas B. Harvey and William T. Harvey were seized in fee, as'tenants in common, of'a certain farm in the township of Mansfield, Burlington county, of which Peter Harvey, their father, had lately died seized. Peter Harvey died intestate, and the persons named were his children and heirs-at-law, each one being seized of an undivided one-eighth part of the farm, subject to tire estate in dower of their mother, Elizabeth IParve3r, the elder.

On the same day, December 9th, 1858, Sarah H. Shreve and Charles M. Shreve, her husband, Mary E. Harvey,' Charlotte H. Biddle and Israel Biddle, her husband, and Elizabeth Harvey, the younger, conveyed all their undivided half part of the farm to Peter E. Harvey, Amos E. Harve3^, Thomas B. Harvey and William T. PIarve3, by deed dated the same day, December 9th, 1858, and which was recorded March 21st, 1859, in the office of the clerk of Burlington county. After the deed was executed and delivered, the ownership of the farm was vested in Peter E. Harvey, Amos E. Harve3', Thomas B. Harvey and William T. Harvey, as tenants in common, each one of them being then seized of an undivided one-quarter interest therein. At this time Peter E. Harve}, Amos E. Harvey and Thomas B. Harvey were all of age, and William T. Harve3>- was a minor. On January 1st, 1859, Peter E. Harvey, Amos E. Harvey and Thomas B. Harve3, the three adult brothers, in order to secure the payment of a portion of the purchase price of the farm, executed to their sisters, Sarah PI. Shreve, Mary E. Harvey, Charlotte H. Biddle and Elizabeth Harvey, the younger, four several bonds, respectively, and also a mortgage on the lands conveyed to secure those bonds. The mortgage just referred to-contains no covenants of seizin or for title, nor does it even recite the source of title of the mortgagors. It, however, described the farm in its entirety, and not an undivided interest therein.

The fact that William T. Harvey was under age at the time of the making of the mortgage by his adult brothers to his sisters did not absolutely incapacitate him from joining in the conveyance. He could have joined his brothers in the mortgage and ratified his act after he attained his majority. He must have been nearly of age at the time the mortgage was made, for on July 23d, 1861, he joined his mother, the widow, and his brothers, Peter E. Harvey, Amos E. Harvey and Thomas B. Harvey, in a conveyance of a portion of the mortgaged premises to George Black. He remained seized of the fee in an equal undivided one-fourth part of the premises until his death, until August 1st, 1889, and by his last will and testament devised the same to his brothers last named, whereupon -the mother having died on August 10th, 1880, and her estate in dower in the premises thereby having terminated, the three brothers became seized of the entire fee in the premises in these proportions: Peter E. Harvey, four-ninths; Amos E. Harvey, four-ninths, and Thomas B. Harvey, one-ninth, being the one-third of the one-third devised to him by his brother, William T. Harvey, he, Thomas B. Harvey, having on March 25th, 1868, conveyed his one-fourth interest to his brothers, Peter E., Amos E. and William T. Harvey.

It will be remembered that the complainants’ mortgage conveyed only the three undivided fourth parts of the premises described therein, and the first question is, did the outstanding undivided one-fourth interest in those premises come under the lien of the mortgage when the entirety of the fee vested in the mortgagors under the devise to them of that one-fourth by their brother, William T. Harvey, upon his death in 1889 ? That it did not, and that the complainants’ mortgage is still a lien only upon the three undivided fourth parts, and interest in the mortgaged premises is, to me, clear.

The case, upon this head, comes within the reasoning of Chancellor Runyon in Smith v. De Russy, 29 N. J. Eq. (2 Stew.) 407. The learned chancellor says (at p. 408) : “There is no covenant of seizin or warranty in the mortgage to her. And, although the entire premises are described in the mortgage as being mortgaged thereby, yet the description of the property in that instrument is followed by the statement that the property mortgaged is the same which was conveyed by the complainant to the mortgagor by deed of even date with the mortgage, and that the mortgage was given to secure the payment of part of the purchase-money of that conveyance.” In the ease under consideration, the entire premises are described in the mortgage as being mortgaged thereby, and, while there is no recital that the premises conveyed are the same premises which were granted by the mortgagees to the three mortgagors, together with their brother who did not join, nevertheless, the fact is, that such was the case, and that the conveyance had been made only three weeks before the mortgage was given, and, therefore, the mortgagees knew perfectly well that they .were receiving a conveyance by way of mortgage security from three of their brothers, whereby title passed only to the three undivided fourth parts of the mortgaged land. If, by reason of a family arrangement, regarding the settlement of the estate of their father, it had been understood that William T. Harvey’s interest in the lands was to be mortgaged to his sisters, then, as I have intimated, he doubtless would have joined in the mortgage, being within two years of his majority, and would not have repudiated his act afterwards, but would have ratified and confirmed it, or, he would, upon attaining his majority, have executed to his sisters a mortgage upon his interest in the premises. That he did neither of these-things, but, on the contrary, retained the fee in his one-fourth interest until his death, over thirty years after the mortgage was given, then devised it to these three brothers by will, is, to my mind, conclusive evidence that it was never intended that his, William T. Harvey’s, outstanding interest in the estate, should ever fall within the mortgage given, by the three brothers to the four sisters on January 1st, 1859, or become in any way subject to its lien.

In Hannon v. Christopher, 34 N. J. Eq. (7 Stew.) 459, an after-acqnired interest was held to pass by estoppel as the result of a conveyance by deed of' bargain and sale without covenants, because it was found to be the intention of the parties to convey it, and it was held that whenever it clearly appears that such was the intention of the parties it is the duty of the court to adjudge an estoppel. This case is an authority for the view I take with reference to the mortgage under discussion, because, in tire case at bar, it not onty does appear to have been the intention of the parties that the after-acquired interest in the lands should pass, but, on the contrary, to my mind, it clearly appears that such was not the intention, and, therefore, no estoppel can be worked.

There was excepted from the mortgage a small tract expressed to be conveyed to William C. Taylor, mentioned as a lot adjoining Thomas Page’s lot. A conveyance of this lot to Taylor was made by the three brothers, the grantees of the mortgagees, on December 14th, 1858, and on the same date the same grantors 'made a deed to Richard Page for another portion of the mortgaged premises. The deed from the sisters to the brothers was recorded May 13th, 1860. The deed from the same grantors, the brothers, to William C. Taylor, was recorded April 6th, 1859. The deed to Page October 9th, 1860. The mortgage from the brothers to the sisters was recorded May 6th, 1860.

Besides the conveyances to Richard Page and William C. Taylor, there were conveyances made for other portions of the mortgaged premises, as follows: By Elizabeth Harvey, widow, Peter E. Harvey, Amos E. Harvey and Thomas B. Harvey, to Samuel Asay, May 1st, 1860; by the same parties, William T. Harvey joining them, to George Black, July 23d, 1861; by Peter E. Harvey, William T. Harvey and Amos E. Harvey to Mary Kirk-bride, March 31st, 1874.

It will be noticed, in passing, that the conveyance to Taylor was of an undivided three-fourths part of the premises; the same to Page; the same to Asay; while that to Black was of four-fourths, or the whole, and that to Kirkbride was for three-thirds, or the whole. No question is raised in respect of the quantum of the estate vested in any of these grantees.

The Asay tract was by sundry mesne conveyances and devolutions of title finally vested in the defendants Anna G. Keller, Anna D. Keller, Maggie M. Keller, Amy E. Keller, Mary Keller, Marion Keller and Lillie V. Keller, which tract is mortgaged to the defendant Lawrence L. Gratz, to secure the sum of $700. The Page tract was, in like manner, finally vested in the defendant Elizabeth F. Page. The Black tract was, in like manner) finally vested in the defendants James Tallman, Sarah A. Hancock and Mary E. Tallman. The Kirkbride tract was, in like manner, finally vested in the defendant Charlotte B. Biddle, subject to a mortgage for $2,000 given to John Bishop, trustee, by Joseph W. Biddle, the then owner, in 1891, who, John Bishop, the trustee, has departed this life without anyone having been appointed to succeed him in the trust, and Charlotte B. Biddle, the owner of the tract, claims an interest in the mortgage because she is entitled to the income of the same during her life, and the defendants Eliza Black Deacon, Anna W. Newbold, Marion E. Ellis, Bessie R. Biddle (Luce) and Sue Black Biddle, claim to have an interest in it after the death of Charlotte B. Biddle, who is their mother. The only question in this suit regarding these lots is, are they subject to the lien of the complainants’ mortgage ?

The deed to Page was made December 14th, 1858, two weeks before the complainants’ mortgage, which was made January 1st, 1859, and recorded May 3d, 1860, while the deed to Page was not recorded until October 9th, 1860. The complainants claim that their mortgage is a lien against the property sold to Page because his deed was not recorded as required by law before the recording of the mortgage. The complainants also claim that their mortgage is a lien against the property sold to Asay because his deed was not recorded as required by law before the / recording of the mortgage. Asay’s deed bears date May 1st, 1860, three days before the recording of the mortgage, but the deed was not recorded until September 10th, 1860. The complainants also claim that their mortgage is a lien against the property sold to Black and Kirkbride because those two deeds were both given after the making and recording of the mort- ' gage. If the mortgage be a lien upon these tracts it would only be valid against the three undivided fourths interest in them, because, at the time the conveyances just mentioned were made, William T. Harvey’s share had not vested in his three brothers who made the mortgage.

However, the claims of the complainants concerning these tracts of land are not valid because it is admitted that none of the present owners in fee of the portions of the mortgaged premises described in these deeds, nor their grantors, had actual knowledge of the mortgage when the purchase of the lots was made and the improvements, which are many and valuable, were placed upon the grounds; that the mortgagees had every opportunity to witness the improvements while being made, as they lived in the neighborhood; that the present owners and their grantors have been in possession since the time of the conveyances above mentioned, continuously and without any actual knowledge of the mortgage, until either a short time before or at the beginning of- these foreclosure proceedings; that none of them have ever paid any interest upon or in any way recognized the existence of the complainants’ mortgage; that neither the mortgagees nor anyone representing them ever made demand upon the owners in fee of these lots, or their grantors, for anjr payment on the mortgage by way of principal or interest; that the mortgagees never gave notice to any of the owners of the tracts, or their grantors, when the houses and buildings were being erected, or to any occupant of the premises, that they claimed any lien by mortgage encumbrance or otherwise upon any of these tracts; that the owners of the tracts in fee, and their grantors, have had the exclusive and notorious possession of the lands, and have collected for their own use and enjoyment all the rents, issues and profits thereof; have paid the taxes upon the lots and have exercised in every particular all the usual acts of ownerships over the same; that no entry has been made upon any of these several tracts by any holder of the mortgage.

Thus it will be seen that the present owners of these tracts, and their predecessors in title, have been for more than twenty years in the full, exclusive and actual possession of these distinct parcels of the mortgaged premises without admitting the title of the mortgagees, with no claim for principal or interest having been made upon them, and without entry by any holder of the mortgage, and, therefore, the mortgage is no lien at all upon any of these several tracts, even if the mortgage debt has been kept alive by payment of interest by the owners of other portions of the mortgaged premises. Ely v. Wilson, 61 N. J. Eq. (16 Dick.) 94; Willis v. Fields, 62 N. J. Eq. (17 Dick.) 271.

On February 2d, 1891, Thomas B. Harvey conveyed his undivided one-ninth interest in the mortgaged premises to his brothers, Peter E. Harvey and Amos E. Harvey, and they thereupon became seized of the entire fee in these proportions, namely, Peter E. Harvey an undivided live-ninths part and Amos E. Harvey an undivided four-ninths part.

On February 7th, 1891, Peter E. Harvey and Amos E. Harvey executed a mortgage on the premises in question to the Mount Holly Insurance Company to secure the sum of $1,500. On April 29th, 1895, the Mount Holly Insurance Company assigned this bond and mortgage to Thomas Antrim, who died intestate, and whose administratrix, Annie E. Antrim, is now in possession of the bond and mortgage and entitled to realize upon it. This mortgage describes the same lands as are in the complainants’ mortgage, the courses and distances being the same, excepting thereout, however, the lots sold to George Black, William C. Taylor and Mary Kirkbride, three in number.

On March 26th, 1895, Peter E. Harvey and Amos E. Harvey executed a mortgage on the premises in question, together with other lands, to Shreve Antrim, to secure the sum of $4,000. Shreve Antrim died leaving a last will and testament, of which Charles Ewan Merritt, Esquire, is the executor, and who is now in possession of the bond and mortgage and entitled to realize upon it. This mortgage described the same lands as are in the complainants’ mortgage, with the addition of a tract which the Harveys purchased July 10th, 1869, which joins the former tract, and is merged in the description. Out of this mortgage are expressly excepted the lots sold to George Black, E. H\ Page, William C. Taylor and Mary Kirkbride, four in number.

On January 29th, 1903, Peter E. Harvey and Amos E. Harvey executed a mortgage on the premises in question, together with other lands, to Thomas B. Harvey, to secure the sum of $1,000. Thomas B. Harvey departed this life leaving a last will and testament of which Mary S. Harvey and Thomas E. Harvey are the executors,' and who are now in possession of the mortgage and entitled to realize upon it., The description in this mortgage is the same as in the one given to Shreve Antrim. There is expressly excepted therefrom the lots conveyed to George Black, R. H. Page, William C. Taylor, Samuel Asay and Mary Kirk-bride, five in number.

Each of these three mortgages of February 7th, 1891, March '26th, 1885, and January 29th, 1903, conveyed the entire fee in the farm, subject to the lien of the complainants’ mortgage on the undivided three-fourths of the premises.

All of the sisters, the holders of the bonds and the original mortgagees, are dead, and all of the brothers, the owners of the fee and three of whom were the original obligors and mortgagors, are dead, except Amos E. Harvey, who was one of the owners of the fee and one of the originaTobligors and mortgagors.

It becomes important now to ascertain who, are the present holders and owners of the bonds, and who are, therefore, commensurately interested in the original mortgage, for the purpose of deciding who are entitled to the proceeds of the sale to be made of the mortgaged premises, and also for the purpose of deciding another question, namely, that of merger, which has been raised as to certain interests in the mortgaged premises.

The bond given to Sarah IÍ. Shreve is now owned by the complainant Joanna Shreve, and there is due thereon the principal sum of $500 with interest at six per cent., from March 9th, 1897. The bond given to Charlotte H. Biddle is now owned by the complainant Elizabeth B. Conrow, and there is due thereon the principal sum of $875 with interest at six per cent., from April 1st, 1890. The bond given to Elizabeth Harvey is now owned by the complainant John II. Hutchinson, her administrator cum testamento annexo, and there is due thereon the principal sum of $2,693 with interest at six per cent, from January 1st, 1900. The bond given to Mary E. Harvey is now owned by the following persons and in the following proportions: Complainants Joanna Shreve, Mary H. Biddle and Elizabeth B. Conrow, one-tenth part each; the defendants Amos E. Harvey and Thomas E. Harvey, administrator of Peter E. Harvey, deceased, one-fifth part each; and the defendants Caleb E. Shreve, Thomas E. Harvey and John S. C. Harvey, one-tenth part each, and there is due thereon the principal sum of $3,143 with interest at six per cent, from January 1st, 1900.

It would be to no purpose to trace the various steps by which the persons just named became entitled under the will of Mary E. Harvey, deceased, to her bond in the proportions just set out.

Amos E. Harvey»is the only original mortgagor still living. The premises in question, it will be remembered, were owned by him and his brother, Peter E. Harvey, at the time of the latter’s death pending this suit. He, Peter E: Harvey, died intestate, and his interest in the mortgaged premises descended to his lieirs-at-law, who are his brother, Amos E. Harvey, and his nephews and nieces, Joanna Shreve, Caleb E. Shreve, Mary H. Biddle, Elizabeth B. Conrow, Thomas E. Harvey and John S. C. Harvey.

The surviving brother and nephews and nieces of Mary E. Harvey just named, are, as above stated, the owners of interests in the bond of Mary E. Harvey in the proportions mentioned, as well as being owners of the fee of the mortgaged premises.

In this situation of affairs the defendants Annie R. Antrim, administratrix of Thomas Antrim, deceased, who is the holder and owner of the bond and mortgage made by Peter E. and Amos E. Harvey to the Mount Holly Insurance Compaq, February 7th, 1891, and Mr, Merritt, the executor of Shreve Antrim, who is the holder and owner of the bond and mortgage made by Peter E. H^vey and Amos E. Harvey to Shreve Antrim, March 26th, 1895, contend that such interest in the mortgage formerly owned by Mary E. Harvey as is owned by her beneficiaries above mentioned are merged into their legal title to the property by reason of their ownership of portions of the fee in the lands. No such contention is set up in behalf of the mortgage of 1903, given by Peter E. and Amos E. Harvey to Thomas B. Harvey.

When the Mount Holly Insurance Company took its mortgage from Peter E. Harvey and Amos E. Harvey (February 7th, 1891), it is presumed to have taken it wjth reference to the record title whiph disclosed the existence of complainants’ mortgage. Bingham v. Kirkland, 34 N. J. Eq. (7 Stew.) 229. If Mary E. Harvey, who was alive when this last-mentioned mortgage was given, had so disposed of her property that none of it would go" to her brother, Amos E. Harvey, and to the nephews and nieces of her brother, Peter E. Harvey, then the mortgage of the Mount Holly Insurance Company would remain what it was when made, namely, a second mortgage on the three-fourths interest in the farm, being, of course, a first mortgage on the other one-fourth. That this brother and these nephews and nieces are the recipients of Mary E. Harvey’s bounty, ought not, in my judgment, to operate for the benefit of the Mount Holly Insurance Company. Her bequest to them of certain interests in this bond, and an accompanying interest in the mortgage, is a gift to them of so much of her property, and cannot enure to the benefit of the Mount Holly Insurance Company unless these beneficiaries voluntarily forego their benefits. This they have done.

When the other mortgage, the one to Shreve Antrim,"was made, Mary E. Harvey was dead, and her sister, Elizabeth Harvey, who was the beneficiary of her estate for life, was still living, and upon her death, by the will of Mary E. Harvey, her, Mary E. Harvey’s, interest in her bond went to her brothers and sisters and children of deceased brothers and sisters, share and share alike. Her brother, Peter E. Iiarvey, was living at her death and inherited a beneficial interest in her bond, which has since passed to his surviving' brother and nephews and nieces. A search of the records at the time this last-mentioned mortgage was given would have disclosed the existence of the complainants’ mortgage, and an appropriate search and investigation would also have disclosed the death of Mary E. Harvey and the interests of her brothers, nephews and nieces in her share of the first bond and mortgage.

While the doctrine of merger can be urged against the beneficiaries of Mary E. Harvey with reference to the Shreve Antrim mortgage with much more effect than as against the mortgage of the Mount Holly Insurance Company, by reason of the facts just stated, still, I am also against" the view that there has been any merger with reference to the Shreve Antrim mortgage.

If the Harveys had paid off their indebtedness to their sisters, they would not be permitted to keep these bonds and their corresponding interests in the mortgage alive as against the subsequent mortgagees, but, in such case, the subsequent mortgages would be moved up in the line of preference. This happens daily with reference to mortgages in consequence of payment of prior encumbrances. No equities are, in such eases, ordinarily involved, and none are involved in this transaction. Merger is essentially a matter of intention and where the intention to merge does not exist the doctrine is not operative. Andrus v. Vreeland, 29 N. J. Eq. (2 Stew.) 394. Neither the Mount Holly Insurance Company nor Shreve Antrim have been in anywise prejudiced by the bequests made by Mary E. Harvey, deceased. No equities are to be subserved by holding that those bequests, so far as they represent interests in the bond and mortgage, owned by her in her lifetime, are to be extinguished in favor of the Mount Holly Insurance Company and Shreve Antrim, the subsequent mortgagees. One of the conditions under which merger will operate upon estates is that the two estates, the greater and the lesser (in such a case as' this, the fee) vested in the same person at the same time. 20 Am. & Eng. Encycl. L. (2d ed.) 589; Wills v. Cooper, 25 N. J. Law (1 Dutch.) 137, 164. There was not at the time the mortgage was given to the Mount Holly Insurance Company any interest in the beneficiaries of Mary T. Harvey in the lands, in succession to her as mortgagee, her estate at that time being in her sister, Elizabeth Harvey, the life tenant, and, therefore, there could have been no merger with reference to that mortgage at that time; much less could there have been any merger worked by act and operation of law since that time. While the present owners of the bond of Mary E. Harvey and her commensurate interest in the mortgage were such at the time the second mortgage, namely, that to Shreve Antrim, was given, nevertheless, their ownership was as beneficiaries of the estate, and had they done nothing themselves to in anywise prejudice the position of Shreve Antrim, the mortgagee, nor can they be held to have harbored any intention, which was not shown, to surrender the benefit they derived as legatees. Therefore, equalty, there is no merger with reference to this second mortgage.

There is now due to Annie R. Antrim, administratrix, upon the mortgage given to the Mount Holly Insurance Company in 1891, the principal sum of $1,500, with interest at six per cent., from March 22d, 1900. There is now due to Charles Ewan Merritt, Esq., executor, upon the mortgage given to Shreve An-trim in 1895, the reduced principal sum of $2,100, with interest at six per cent., from May 12th, 1900, plus interest on the original principal sum of $4,000, from March 26th to May 12th, 1900, the principal having been reduced to $2,100 on the last-mentioned date. There is now due to Mary S. Harvey and Thomas E. Harvey, executors, upon the mortgage given to Thomas B. Harvey in 1903, the principal sum of $1,000, with interest at six per cent, from its date, January 29th, 1903.

Directions will now be given as to the form of the decree, as follows: The whole of the mortgaged premises, or so much thereof as may be necessary, will be sold to raise and satisfy, in the first place, the bonds given to the sisters out of the three-fourths part of the proceeds of sale, to be distributed as fol-tows: To Joanna Shreve (on the bond given to Sarah H. Shreve) the sum of $500, with interest at six per cent., from March 9th, 1907; to Elizabeth B. Conrow (on the bond given to Charlotte H. Biddle) the sum of $875, with interest at six per cent., from April 1st, 1900 ; to John H. Hutchinson, administrator cum tesiamenip annexo (on the bond owned by Elizabeth Harvey), the sum of $2,693, with interest at six per cent., from January 1st, 1900; to Joanna Shreve, Mary H. Biddle and Elizabeth B. Con-row, Caleb E. Shreve, Thomas E. Harvey and John S. C. Harvey, one-tenth each, and Amos E. Harvey and Thomas E. Harvey, administrator of Peter E. Harvey, deceased, one-fifth each (on the bond given to Elizabeth Harvey) of the sum of $3,143, with interest at six per cent., from January 1st, 1900. If sufficient money is not raised to pay these bonds in full, tire distribution will be made pro raid. In the second place, the mortgage of the Mount Holly Insurance Company out of the one-fourth portion of the proceeds of sale; in the third place, the mortgage of Shreve Antrim out of the one-fourth portion of the proceeds of sale; in the fourth place, the mortgage of Thomas B. Harvey out of the one-fourth part of the proceeds of sale. If any deficiency should exist in the payment of the second, third or fourth mortgages, and any surplus should remain after the payment and satisfaction of the first mortgage, the surplus should be applied to the second, third and fourth mortgages, respectively, pro ionio.

The complainants’ taxed costs and a counsel fee, to be ascertained according to rule 224 of this court, will be paid out of the three-fourths portion of the proceeds of sale, representing the first and original mortgage, before any payment is made upon the bonds secured by that mortgage. The taxed costs of answering defendants, mortgagees, will be added to the amounts provided for them in the decree and paid out of the proceeds of the sale of the one-fourth part of the premises, or out of the surplus of the proceeds of the three-fourths part, if any there be, and any deficiency remains in the payment of the defendants’ mortgages.

The complainants’ counsel has asked- for a special allowance by way of counsel fee. I regret that I cannot comply with his request. By the ninety-first section of the Chancery act (P. L. 1902 pp. 510, 540), it is provided that the counsel fee in foreclosure suits to be included in the complainants’ taxed costs shall be such percentage, not exceeding five per cent, of the amount decreed, as the chancellor may by general rule, from time to time, prescribe. Rule 224 was promulged in pursuance of this statutory direction, and, as it makes no distinction between litigated and ex parte foreclosures; it comprehends both classes. This I' regret, for, in the present instance, I would recommend an allowance for complainants’ counsel. He has rendered important services, not only to the complainants but to the defendants, in clearing up the title to the lands in question and procuring a decree for their sale and the satisfaction of the various liens above mentioned, and for this reason no costs will be allowed any of the defendants who have successfully answered the complainants, that is, those defendants who own the lots which have been exonerated from the lien of the mortgage. Counsel for the complainants must look to his clients for his extra allowance in this cause. That he is entitled to an allowance is clear (Strong & Sons v. Mundy, 52 N. J. Eq. (7 Dick.) 833), and if I were at liberty to award it-I would hear the parties on the question of the. amount, of such counsel fee„ and in advising the decree in this cause would report to the chancellor what is a reasonable sum to be allowed. McMullin v. Doughty, 68 N. J. Eq. (2 Robb.) 776, 780. The execution may be issued to a master owing to the involved and complicated distribution to be made of the proceeds of sale.


text:
    James B. Safford v. John C. Barber.
    [Decided May 16th, 1908.]
    1. When the existence of an adequate remedy at law is made the ground of demurrer to a bill in chancery the objection must be specified as a cause of demurrer under rule 209 of the court, and it cannot be availed of under a general demurrer for want of equity.
    2. Where the case made by the bill, that is. where all the facts, taken together, make a case in which it is doubtful if the complainant be entitled to relief, the bill may be assailed for want of equity under a general demurrer, but where the want of equity springs out of some cause which can be distinctly stated in the demurrer in an intelligible proposition, whether it be collateral to the bill, strictly speaking, or whether involved in the main case, then the cause of demurrer must be specified.
    3. Where the corporate stock to which a contract of sale relates is not procurable in the market and its pecuniary value is not readily ascertainable, specific performance will, as a rule, be decreed.
    4. Upon a sale of goods or lands and payment by the vendee of the consideration,' the vendor holds the legal title to the property in trust for the vendee, and will be required to specifically perform the contract by making a proper conveyance.
    5. It will not be presumed that the shares of stock in what is known as a close corporation can either be procured in the market or that they have any market value; and whenever their procurement and their value comes in question, proof of these facts will be required.
    6. Where the complainant has performed all of the conditions of the contract on his part to be performed, so far as permitted to do by the defendant, the defendant will be required to specifically perform his part of the contract. o

      7. Where the vendee of real or personal property makes such performance of the contract on his part as satisfies the law, and the other party refuses to perform, a bill for specific performance will lie; and more especially so in a case where not only has the complainant performed, but the defendant himself has made part performance
    On bill and demurrer.

      Mr. Gilbert Collins, for the complainant.

      Mr. Charles D. Thompson, for the defendant and demurrant.
   Walker, V. C.

The bill in this case alleges that the Standard Car Truck Company, a corporation existing under and by virtue of the laws of the State of New Jersey, was organized with a total amount of capital stock of the par value of $150,000, the shares being $100 each; that the defendant, who was one of the organizers of the company and its principal stockholder, received one thousand four hundred and ninety out of the total issue of one thousand five hundred shares, and, upon the incorporation of the company, became, and has continued to be, one of its directors and its president; that the defendant, Mr. Barber, persuaded the complainant, Mr. Salford, because of the latter’s extensive acquaintance with railroad organizations, throughout the country, to enter into the employment of the Standard Car Truck Company for a period of three years, the complainant to be paid his necessary expenses and the sum of $7 for each truck he should succeed in getting various railroad companies to put upon its cars, and, in addition, the defendant was to give to the complainant $25,000 worth, par value, that is, two. hundred and fifty shares, of the full-paid capital stock of the company, and to have the complainant elected a director therein, to all of which the defendant agreed, and the company thereinafter, upon the request of the defendant, “ratified the employment of the complainant and provided for his compensation as above stated,"and he was elected one of the company’s directors; that for upwards of two years the complainant continued successfully in the active discharge of his duties under the terms of his employment with the company, and while so in the employ of the company and while he was performing his services, and without his consent or without legal justification, the company discharged him from its employment, notwithstanding his protests and his insistment that he should be allowed to continue his duties during the remainder of the term of his employment under the contract; that while the complainant was employed by the company, and at different times, the defendant delivered to him in all thirty-five shares of the company’s capital stock and no more; that the business of the company is now (1901, when the bill was filed) valuable and the stock sells for almost par; that the defendant has failed and neglected to carry out his part of the agreement with the complainant, namely, to deliver him the balance of the stock of the company, although often requested so to do; that the defendant still has and possesses sufficient of the capital stock of the company, full paid, to carry out his contract with the complainant; that the defendant brought about and influenced the discharge of the complainant from the company which he, the defendant, controls; that the defendant claims and pretends that because the complainant did not perform the services for the company for the entire period of hiring (three years), that he, the defendant, is exonerated and relieved from delivering any further stock to the complainant.

The defendant was served personally with subpoena in this state on Januaiy 2d, 1901, and the cause slept until October 21st, 1907, when the complainant took an order on him to plead, answer or demur within thirty days after service upon his solicitor of a copy of the order. On November 4th, 1907, the defendant applied for and obtained an order for security for costs, the complainant being a non-resident of New Jersey, and, security being given, the defendant, on December 2d, 1907, filed a general demurrer to the bill.

Counsel for the defendant asserts that the demurrer to the bill raises the question of want of equity, and that the want of equity is, that the complainant has an adequate remedy at law. This was the only proposition discussed upon the hearing.

Eule 209 of this court requires that every demurrer, whether general or special, shall distinctly specify the ground or several grounds of demurrer. It has been held, however, that notwithstanding the rule just mentioned, that a simple statement of want of equity, in the usual language of a general demurrer, will constitute a sufficient specification of the ground of the demurrer in cases where the court finds, on looking at the complainant’s bill, that his right to relief is doubtful or uncertain, but where the defect is obscure or latent to such an extent that the court, on inspecting the complainant’s bill, cannot readily discern it, there the demurrant will be required to make a more explicit statement of the ground on which his demurrer is founded. Essex Paper Co. v. Greacen, 45 N. J. Eq. (18 Stew.) 504; Parker v. Stevens, 61 N. J. Eq. (16 Dick.) 163; Goldengay v. Smith, 62 N. J. Eq. (17 Dick.) 354; Demarest v. Terhune, 62 N. J. Eq. (17 Dick.) 663; Larter v. Canfield, 59 N. J. Eq. (14 Dick.) 461, 464.

However, under the same rule (209, formerly 225), the grounds of demurrer must be specified even where the defect in the bill is plain, if that defect be collateral to the main issue. Van Houghten v. Van Winkle, 46 N. J. Eq. (1 Dick.) 380. In this case (Van Houghten v. Van Winkle) the defendant under a general demurrer relied upon laches as a cause appearing upon the face of the bill which showed a lack of equity. Chancellor McGill remarked (at p. 886) : “I will not say that the laches exhibited by this bill is not readily discernible, but I am most decidedly of the opinion that within the letter and spirit of the rule, it was the duty of the demurrant to indicate that it was because of laches that he demurred. Not only should specification be made where the defect in the bill is obscure, but also even where it is plain, if it is collateral to the main case made by the bill, as it is in this instance.” As no objection was made to the form of the demurrer it was sustained.

It is at least doubtful, to my mind, whether the question of adequate remedy at law- is not collateral to the main case, the same as laches was held to be in Van Houghten v. Van Winkle, ubi supra; but, be this as it may, it seems that legal remedy when relied upon for cause of demurrer in a chancery suit must be specified as a cause of demurrer. Bishop v. Waldron, 56 N. J. Eq. (11 Dick.) 484; S. C., on appeal, 58 N. J. Eq. (13 Dick.) 583. In this case (Bishop v. Waldron), it is stated by Chancellor McGill (at p. 487) that the statute under which the complainant’s bill was filed did not require any allegation to the effect that it was not in the complainant’s power to put to rest the claim of the defendant with reference to the complainant’s lands by one of the ordinary processes of the law, nevertheless, it was squarely decided (at p. 486) that the ground relied upon by the demur-rant that the bill did not allege that the complainant cannot attack the claim oE.the defendants by suits at law, that is, that the complainant has no adequate legal reined)', was objectionable under the rule which requires that the particular grounds upon which it rests shall be specified as construed in Essex Paper Co. v. Greacen and Van Houghten v. Van Winkle, ubi supra. Chancellor McGill, in this connection, remarked: “The grounds taken at the argument could have been distinctly stated in the demurrer in intelligible propositions.” If this is the test, then the rule would seem to be this: Where the case made by the bill, that is, where all the facts taken together, make a case in which it is doubtful if the complainant be entitled to relief, the bill may be assailed for want of equity under a general demurrer, but where the want of equity springs out of some concrete proposition, whether collateral to this bill, strictly speaking, or whether involved in the main case, then the cause of demurrer must be specified.

While I hold that the demurrer in this case is bad for want of specification oE the cause upon which the alleged lack of equity is rested, nevertheless, as the question of the sufficiency of the-bill was fully argued upon the demurrer, I -will decide that question also.

Counsel for the defendant urges specific performance of a contract for the purchase or sale of stock will not be decreed where the stock is purchasable on the market or has a money value which may be readily computed, and cites 26 Am. & Eng. Encycl. L. (2d ed.) 122.

This is undoubtedly a correct exposition of the law; but the stock of a commercial or industrial corporation, which is usually a close corporation, so called, that is, one owned and controlled by a coterie of individuals, is usually not for sale, and has no-market value. The bill is this case alleges that the defendant organized and controls the corporation whose stock the complainant seeks. It is a close corporation.

I think the complainant’s case falls more nearly within that other rule stated in 26 Am. & Eng. Encycl. L. (2d ed.) 122, namely, that where the corporate stock to which the contract relates is not procurable in the market, and its pecuniary value is not readily ascertainable, specific performance will, as a rule, be decreed, especially where the court acquires jurisdiction of the action on the ground that there is an action to enforce a trust.

In Adderley v. Dixon; 1 Sim. & S. 608, 610, Vice-Chancellor Sir John Leach said: “A court of equity will not generally decree performance of a contract for the sale of stock or goods, not because of their personal nature, but because damages at law, calculated upon the market price of the stock or goods, are as complete a remedy to the purchaser as the delivery of the stock or goods contracted for, inasmuch as, with the damages, he may purchase the same quantity of the like stock or goods.”

In Duncuft v. Albrecht, 12 Sim. 190, Vice-Chancellor Shad-well made a distinction between public stocks of a known market value, and stocks of a particular company with none in the market, remarking (at p. 199) : “Now, I agree that it has been long since decided that you cannot have a bill for the specific performance of an agreement to transfer a certain quantity of stock. But, in my opinion, there is not any sort of analogy between a quantity of three per cents, or any other stock of that description (which is always to be had by any person who chooses to apply for it in the market), and a certain number of railway shares of a particular description, which railway shares are limited in number, and which, as has been observed, are not always to be had in the market. And, as no decision has been produced to the contrary, my opinion is that they are a subject with respect to which an agreement may be made which this court will enforce.” This distinction was recognized and approved by Lord-Chancellor Chelmsford in Cheale v. Kenward, 3 De G. & J. 27. He remarked (at p. 29) : “Now, there is no doubt that a bill will lie for a specific performance of a contract to transfer railway shares.”

In Rothholz v. Schwartz, 46 N. J. Eq. (1 Dick.) 477, it was held that the court of chancery would entertain jurisdiction of a suit by a vendor against the vendee for the specific performance of a contract for the sale of chattels where the payment was to be made by specific securities and the remedy at law is inadequate. In that case Vice-Chancellor Pitney remarked (at p. 481) : “The eases cited by Chancellor Runyon in Cutting v. Dana and Professor Pomeroy and Judge Waterman, are mostly, if not all, cases of vendee against vendor, and the language used in the text of the treatises is mainly applicable to such cases. But the principle upon which they go includes the cases of vendor against vendee.” In Rothholz v. Schwartz the vendor put the vendee in possession and relied upon his promise to execute the securities. With regard to the vendor in'that case regaining possession, by replevin, of tire goods which he delivered, which the vice-chancellor thought was more than doubtful, he remarked that it seemed to him that a reclamation of possession by means of replevin would be treated at law as a rescission of the contract and must be preceded by a repajunent or tender of return of the part payment and an abandonment of all benefit from the contract. In the case at bar there could be no rescission of the contract by the complainant, for the consideration given by him for the stock in question, together with that which has been delivered, was his work and labor performed for the company for'a period of upwards of two years. Therefore, in this case, there could be no rescission by the complainant for the fraud of the defendant in 'withholding from him the delivery of the balance of shares to which the complainant is entitled under the contract. The observation of Vice-Chancellor Pitney in Rothholz v. Schwartz, that it did not lie in the 'defendant’s mouth to complain that the complainant had brought him into this court to administer his right under its protection and direction, is peculiarly applicable to the facts of the case at bar.

In Curtice Brothers’ Co. v. Catts, 72 N. J. Eq. (2 Buch.) 831, Vice-Chancellor Learning-held that no inherent difference between real estate and personal property controls the exercise of the jurisdiction of chancery to decree specific performance of a contract, and that where no adequate remedy at law exists specific performance of a contract touching the sale of personal property will be decreed with the same freedom as in the case of a contract for the sale of land.

A vendor may bring a suit for specific performance against the vendee to recover purchase-money. Moore v. Baker, 62 N. J. Eq. (17 Dick.) 208.

In Goodwin Gas Stove, &c., Co.'s Appeal, 117 Pa. St. 514, the supreme court of Pennsylvania affirmed a judgment of the Philadelphia common pleas sustaining a master’s report. The master’s language is stated as follows (at p. 628) : “The stock is not listed in the stock exchange of this city (Philadelphia) or elsewhere. It cannot be brought in the market. It has no market price. So far as the master is informed there have been no open sales, all transfers having presumably been inter parties. It would seem to be difficult, if not impossible, to measure in money the value of such stock. Based upon its earning power, an estimate could be made of its value, and that sum of money fixed as the damages. The remedy, then, would not be complete. The damages must first be made out of some one whose ability to pay is not in evidence, and moreover, when the money damages are paid, stock in the same company cannot be pr'ocured. Other stock may possibly be purchased, while its earning powers may now be equal to those of the stock in question, non constat, that they will continue to be equal, or that the circumstances and conditions of the two corporations are not so widely different that the real estate of the stocks as investment securities, albeit to-day paying the same dividends, may not be very far apart.”

In Ashe v. Johnson’s Administrator, 2 N. C. 149, 155, the court remarked: “Again it is said equity will not enforce the specific performance of an agreement to transfer or to accept stock. The reply is, that may be so with reference to government stock in England, which, like corn or flour, may 'be bought for the money in market at any time, but the doctrine has no application to railroad stock.” This was in the year 1855, when railroad stocks generally were not as valuable as now, and consequently were not generally regarded as good investment securities, and, while the question was not definitely decided in that case, the observation of the court, in my judgment, correctly states what is now the law.

In his conclusions in Murray v. Skirm (Court of Chancery, 1905), which is unreported, Vice-Chancellor Bergen, speaking of certain shares of stock of a manufacturing corporation, said: “It was the stock of an industrial company, and its market value was an uncertain quantity.” This case was recently decided on appeal by the court of errors and appeals, and the decree of the vice-chancellor affirmed. Speaking for the majority of the court of errors and appeals in that ease, Mr. Justice Garrison in his opinion said: “If, in the absence of fraud, it be admitted that that question of the value of the stock is at all relevant to the present controversy, it must also be admitted that, strictly speaking, the market value of the stock was not proved, * * * the vice-chancellor properly declined to take par value as the equivalent of market value, and'he also rightly recognized that the price paid for stock to get a controlling interest was not a reliable criterion of the market value of the outstanding minority shares.”

In Raynolds v. Diamond Mills Paper Co., 69 N. J. Eq. (3 Robb.) 299, Vice-Chancellor Stevenson, speaking of the value of shares of corporation stock, said (at p. 309) : “But, .in fact, in this case the complainant’s stock is that of a private manufacturing corporation, a close corporation, whose stock does not appear to have any market value. * * * I think the distinction drawn by counsel for complainant between private manufacturing corporations like this paper mill company and banks and trust companies, and even railroad companies, the shares of which are readily salable at all times on the market, and the market price of which is directly affected by the prosperity of the corporation, ought not. to be overlooked,” &c.

In Baldwin v. Commonwealth, 11 Bush 417, a sale of turnpike stock", belonging to the State of Kentucky, was by legislative act ordered to be sold by the commissioners of the sinking fund, and it was there held that a bid made for such stock which was accepted, should be specifically enforced and the commissioners were ordered to execute th'e contract of sale and transfer the stock. It so happened that after the sale was made the legislature repealed the act under which it was ordered, hence the commissioners- refused to make the transfer. It maj be said that specific performance was enforced in that case because the complainant had no remedy at law, and that may be true, yet, it seems to me, the ease is authority for the position that a sale will be specifically enforced where there are any special or peculiar circumstances which indicate that the complainant 'in equity is entitled to the thing he seeks rather than damages resulting upon the deprivation of it.

If the stock in question in this suit has no- market value for which adequate damages could be given at law, then this court undoubtedly has jurisdiction to specifically enforce the contract between these parties.

Now, I would have no difficulty in holding that complainant in this case is entitled to a decree for specific performance upon the admitted facts, were it not for the allegation in the bill that the stock of the company is now (1901) valuable and sells for almost par. It may be urged that this is an allegation that the stock is practically worth par and that it is salable. On the other hand, it may be urged that this is not an allegation that the stock is worth par, but that it is worth something less than par, and it is not salable on any market, and that, consequently, 'this is a case for specific performance rather than one for remitting the complainant to his action at law for damages.' These questions I will not attempt to decide. They make it at least doubtful whether or not the complainant has an adequate remedy at law, and this compels me to regard another question urged by counsel for the complainant, and that is that the bill in this case presents a case of- fraud and of trust mala fide.

The contract, it will be remembered, was that the complainant should enter into- employment of the Standard Car Truck Company for a period of three years, which he says he did, and that he served faithfully for over two years, and until discharged by the company without cause and at the instigation of the defendant. For that consideration, namely, his services rendered, he was to have two hundred and fifty shares of the company’s stock, of which the defendant delivered to him only thirty-five shares. He alleges that he is entitled to have the balance of two hundrecl and fifteen shares delivered to him by the company or to have its equivalent in money, amounting, at par, to $21,500. This, in effect, is what is pleaded, although the language used is different. As a matter of fact, the bill says the complainant is entitled to the balance of two thousand four hundred and sixty-five shares, or its equivalent in money, amounting to $216,500. This, of course, is a palpable error.

I incline to the opinion that this is a case of fraud 'and of' trust mala [ida. The complainant performed the contract on his part, that is, he paid for the stock by his services, and therefore-became its owner by the law of this state. Delivery is not necessary to complete the sale of personal property. Frazier v. Fredericks, 24 N. J. Law (4 Zab.) 162, 169. In this transaction, I take it, title passed to the complainant.

It seems that the court of chancery in this state have jurisdiction in cases of fraud equally with courts of law even where there is a remedy at law. Eggers v. Anderson, 63 N. J. Eq. (18 Dick.) 264.

There is a constructive trust in this case. Mr. Perry says that constructive trusts are: “Third, trusts that arise from some-equitable principle independent of the existence of any fraud; as where an estate has been purchased, and the consideration money paid, but the deed is not taken, equitj'' will raise a trust by construction for the purchaser.” 1 Perry Trusts 168. The supreme court of Tennessee, in Matthews v. Crowder, 111 Tenn. 738, 743 (citing Perry 168), said: “Equity in such a case will regard the vendor as the trustee of the legal title of the land for the benefit of the vendee.” In my opinion, the defendant in this case holds the legal title to the shares of stock in question for the benefit of the complainant, and, therefore, specific performance is a remedy available to the complainant, irrespective of the question of the adequate of damages at law, and, too, irrespective of the question of fraud.

There is also apother reason for decreeing a specific performance. It is that the complainant has performed all the conditions on his part to be performed, so far as he was permitted to do so by the defendant, and he is, for that reason,- entitled to have performance from the defendant. Fry Spec. Perf. (2d ed.) 904 § e.t seq.

In my judgment, where the vendee of real or personal property makes such performance of his part of the contract as satisfies the law, and the other party refuses to perform, a bill for specific performance will lie; and this is even more true in such a case as this, where not only has the complainant performed, but the defendant himself has made part performance.

In arriving at these conclusions, I have not overlooked Joslin v. Stokes, 38 N. J. Eq. (11 Stew.) 31, cited by counsel for the demurrant. Chancellor Runyon, in denying specific performance in that case, remarked that the complainant’s remedy was at law, “except, perhaps, as to the issuing of the stock.” In that case (Joslin v. Stokes) the complainant’s contract was with the defendants, and by its terms he was to acquire stock from a corporation, and the corporation was not bound. Other facts in that case differ from those in this case, and, therefore, in my judgment, Joslin v. Stokes is without controlling effect in the case at bar.

For the foregoing reasons the demurrer will be overruled, with costs.

CASES ■ADJUDGED IN THE PREROGATIVE COURT OF THE STATE OF NEW JERSEY. FEBRUARY TERM, 1908.'


author: Pitney, Ordinary.

text:
    Mahlon Pitney, Ordinary.
    Edwin Kobert Walker, Yice-Ordinary.
    In the matter of the claim of the State of New Jersey to an inheritance tax upon three thousand and sixty-five shares of the capital stock of the Morris and Essex Railroad Company bequeathed by the will of Laura Astor Delano, deceased.
    [Submitted February 19th, 1908.
    Decided March 28th, 1908.]
    The case of Neilson et al., Executors, dc., v. Russell, Surrogate, et al., 76 N. J. Law (47 'Vr.') 27, approved and applied.

      Mr. Robert H. McCarter, attorney-general, for the state.

      Mr. John W. Griggs, for the executors of Laura Astor Delano, deceased, and the Morris and Essex Eailroad Company.
   Pitney, Ordinary.

The parties in interest have appeared in' court as if under citation issued pursuant to section 16 of the act for the taxation of collateral inheritances. Gen. Stat. p. 3342 pl. 278.

The question is whether certain shares of stock in the Morris and Essex Bailroad Company (a corporation of this state), owned by and registered in the name of Laura Astor Delano, deceased, who died in Switzerland in the year 1902, and was then and for years prior thereto had been a resident of the principality of Monaco, are subject to the collateral inheritance tax.

The disposition of th'ese shares by the will is such that the shares are taxable under the act cited if they are “property within this state” within the meaning of section 1 of the act.

Since this case was submitted the same question has been passed upon by our supreme court in Neilson et al., Executors, v. Russell, Surrogate, and Morgan, Comptroller, 76 N. J. Law (47 Vr.) 27, in which an elaborate and well-reasoned opinion has just been delivered by Mr. Justice Garrison, with the result of holding that shares of stock of a New Jersey corporation represented by certificates hpld by a non-resident at the time of his death at his domicile outside of this state, which passed by his will to persons not exempt by our law, are liable to the succession tax imposed by the act of 1894.

I concur in that view, and therefore hold that the shares- of stock in question are subject to the tax.

CASES ADJUDGED IN THE COURT OF ERRORS AND APPEALS OF THE STATE OF NEW'JERSEY ON APPEAL FROM THE COURT OF CHANCERY, AND THE PREROGATIVE COURT. MARCH TERM, 1908.