text:
    Thomas R. Jennings, appellant, v. Charles E. Reed, administrator of the estate of Gilbert C. Ritter, deceased, respondent.
    [Decided April 14th, 1909.]
    A bequest to S. R. of “rights and benefits” in a certain share of an estate as long as she remained single, was, in effect, a gift of the income thereof, and, being without limit as to time, was equivalent to a gift of the principal. S. R. died without having married, and thus the limitation over to the heirs of the testator’s brother in the event of her marriage was defeated, and, she having died possessed of the share, it passed to the legatee named in her will.
    On appeal from a decree of distribution made by the Union county orphans court.

      Mr. Carl J. Ahlsledl and Mr. Alfred F. Skinner, for the appellant.

      Mr. Frederick C. Ilyer, for the respondent.
   Walker, Vice-Ordinary.

Gilbert C. Ritter, deceased, late of the county of Union, left a last will and testament in which, after directing his executors on a division of his father’s estate to receive and take charge of his portion thereof, he provided that his funeral expenses and doctor’s bills and certain other debts to be paid, and made certain small bequests, and then provided as follows:

“Fourthly: I do give tq my brother William all the remainder of my share and portion of my father’s estate, the full use and controle of which he shall have during his natural life, meaning thereby that during his natural life he may use and controle the same as if it were his own, either in building, purchasing- a house and lot for his own residence, despoiting the same share or portion remaining a Savings bank, Government Bond &c &c or on godd sound securities, -with this provision nevertheless that the same remaining share or portion of my Father’s estate is not to be squandered or made away and if his wife Susan should survive him, she shall have rights and benefits as long as she remains single, if she should get married then the said property shall go to the heirs of my brother William forever.”

The testator’s brother, William, died after him, intestate, leaving his widow, viz., Snsan Ritter, who afterwards died leaving a last will and testament, and therein gave all her estate to Thomas R. Jennings, the appellant.

On an application for an order of distribution of the estate of Gilbert C. Ritter, deceased, being made to the orphans court of the county of Union, it became incumbent upon that tribunal to construe the fourth clause of the testator’s will above quoted in order to determine to whom distribution should be made, whether to the next of kin of Gilbert C. Ritter, or to the beneficiary under the will of Susan Ritter, the widow of his brother, and that in turn involved the question whether the bequest to the brother’s widow was of the corpus of the share given to him for his life with remainder to her as long as she remained single, or whether the estate in her in any event was no greater than a life estate, in which case upon her death it would go to the next of kin of her deceased husband, to whom it was given upon the termination of the particular estate.

The orphans court made a decree distributing the corpus of the share in question to the next of kin of William Ritter as of the death of Susan Ritter, and excluded the beneficiary under her will, deciding the question involved upon the authority of Trenton Trust Co. v. Armstrong, 70 N. J. Eq. (4 Robb.) 572, in which Vice-Chancellor Bergen observed at p. 575:

“The next question presented is: Has the testator made any disposition of the corpus of his estate? The gift over, as expressed by the testator, is to take effect when all of the three unmarried daughters are married, and it is insisted that the gift of the corpus is liable to take effect or to be defeated by the occurrence or non-occurrence of an uncertain event, viz., the marriage, not of one, but of all of these unmarried daughters, and therefore falls within the definition of a conditional legacy, and as one of the daughters died unmarried, the condition upon which distribution depends can never happen, and that therefore the testator died intestate as to the corpus. In my judgment this insistment has not the sanction of the true rules of construction to be applied to a case of this character, and I am of opinion that the testator intended to create, and under well-established rules for the construction of wills did create, an estate for life, which was subject to an earlier termination upon the marriage of all his then unmarried daughters, and that the remainder over takes effect on the determination of the preceding estate, whether by death or marriage, and that although the bequest over is, in terms, made payable upon the marriage of the life tenant, it is to be extended by implication so as to take effect on the determination of that estate whether by death or marriage.”

It is to be observed in this connection that the learned vice-chancellor put his decision upon what he conceived to be the intention of the testator, thus giving effect to a cardinal rule for the construction of wills, for he observed in the next paragraph: “What the testator undoubtedly intended was a provision for his unmarried daughters during their maidenhood, even if that condition continued until their death, and in the event of the destruction of that previous estate, either by marriage or death, then the corpus of the fund was to be divided among his living children, which might include these three daughters if the determination of their life estate had been caused by marriage, and also among the issue, per stirpes, of any of his children who might have died before the determination of the previous estate.” The appellant relies upon the rule that a bequest of the income of personalty, without limit as to time, is equivalent to a gift of the principal, and he says that the language of the testator in the fourth clause of his will, in which he provides that if his brother William’s wife Susan should survive her husband “she shall have rights and benefits,” is an unqualified gift of the income, and is, consequently, a gift of the principal. There is also a rule that where an absolute gift is made in the first instance, followed by a limitation over, the absolute gift is not defeated unless the gift over takes effect. These two rules are stated in Gulick v. Gulick, 27 N. J. Eq. (12 C. E. Gr.) 498.

The appellant contends that as Susan Ritter died without having married she died seized of the corpus of the share of the estate given to her husband for life and then over to her, and that, therefore, it passes to the legatee under her will.

The learned judge in the court below held that the gift to Susan of “rights and benefits” meant not only the income but also the corpus of the estate. In this view I concur. He then held that the question was controlled by Trenton Trust Co. v. Armstrong, and he extended by implication the limitation over upon Susan’s remarriage to a like limitation upon the happening of her death. From this conclusion I dissent.

In Traphagen v. Levy, 45 N. J. Eq. (18 Stew.) 448, there was a gift of one-third of the income derived from1 the testator’s real estate to his widow for an indeterminate period of time if she should not remarry, and Chancellor Runyon observed at p. 453:

“No other disposition is made of it, or of the undivided third of the principal of the estate which it represents. Her interest, then, is an equitable fee in one-third of the testator’s estate, subject to be defeated by her marriage. As she died without having been married, that equitable fee descended to her heirs-at-law.”

A gift of income during widowhood is a gift for life or during widowhood, but a gift of income to the legatee so long as she should continue single and unmarried has been held to be an absolute interest, if the legatee did not marry. Theob. Wills (7th ed.) 480.

Now, I am of opinion that there was an absolute gift of the share to Susan Ritter, subject to be defeated only in the event of her remarriage, which did not take place, and, consequently, as she died possessed of the property, it passed to the appellant, Thomas R. Jennings, under her will.

The cases of Gulick v. Gulick and Traphagen v. Levy are not referred to in Trenton Trust Co. v. Armstrong, and in resting my conclusions upon the former, I do not consider that I am refusing to give effect to the latter, for, as I have already said, I do not think the latter governs the case under consideration. Trenton Trust Co. v. Armstrong was decided upon the intention evinced by the testator to make provision for his unmarried daughters, and does not in any way attempt to override the rules laid down in Gulick v. Gulick and Traphagen v. Levy.

Gulick v. Gulick (both in our court of chancery and court of errors and appeals) was cited with approval by the supreme court of the United States in Wellford v. Snyder, 137 U. S. 521, in which case (Wellford v. Snyder) it was held that a gift to daughters with limitation over in case of marriage, was an absolute gift to the daughters, and was unaffected by the limitation as to a daughter who died unmarried.

There was an award of costs and counsel fees to both sides by the orphans court out of the estate. Such award will be made in this court and the amounts fixed upon application.

There will be a decree of reversal and the record will be remitted to the court below for further proceedings in conformity to the views'above expressed.


source: Caselaw Access Project

author: GuMMERE, CHIEF-JUSTICE.

license: Public Domain

text:
    Arthur L. Andrews, complainant-appellant, v. The Guayaquil and Quito Railway Company et al., respondents-defendants.
    [Argued July 8th, 1908.
    Decided March 2d, 1909.]
    An association conveyed by trust deed certain securities empowering the trustees to sell or pledge them to raise money to enable the association to perform a railway construction contract. Thereafter another company undertook to complete the railway, and assumed all other obligations of the association, which conveyed to it all its property, including the securities, subject to the trust deed.—Held, that a pledge of the securities by the grantee company, to secure the payment of money loaned to it, but which was not intended to be, and was not used in the construction work, was a violation of the trust, and unenforceable against the trustees.

      On appeal from a decree of the court of chancery advised by Vice-Chancellor Stevens, whose opinion is reported in 78 N. J. Eg. (8 Buch.) 150.

      Messrs. McCarter & English, with Charles A. Collin (of the New -York bar), on the brief, for the appellant (the complainant below).

      Mr. Charles L. Corbin and Mr. DeWitt Van Buslcirk, for the respondents.
   The opinion of the court was delivered by

GuMMERE, CHIEF-JUSTICE.

This case is a sequel to that of the Ecuadorian Association v. Ecuador Company, reported in 70 N. J. Eq. (4 Robb.) 277, and on appeal in 71 N. J. Eq. (1 Buch.) 757. In that case it was determined that certain money, amounting to $65,750, advanced by one Robert C. Pruyn to the Ecuador Company, was a loan by him to that corporation, and not the payment of a subscription to its capital stock. The rights of Pruyn under this loan have been assigned by him to the complainant, Andrews, and the latter has filed this bill to compel the defendants, or some of them, to turn over to him preferred stock of the Guayaquil and Quito Railway Company of the par value of $650,000, which he asserts was pledged by the Ecuador Company to Pruyn as security for the loan, but was never actually transferred to him.

The stock, which is the subject of this litigation, was originally the property of the Ecuadorian Association, a Scotch construction company, formed for the purpose, among other things, of building the Guayaquil and Quito railway. In January, 1902, the association, having met with difficulty in procuring funds for the carrying on of their work of building the railway, executed a trust deed to the defendants, Gardyne, DeFriese and Lockwood as trustees, the primary purpose of which was to provide a method of raising the moneys required for the prosecution of the company’s work. The stock in question was a part of the. securities conveyed to these trustees, and by the terms of the deed they were authorized

“from time to time and at any time or times, to dispose of or otherwise deal with the mortgaged premises (viz., the securities transferred by the deed) or any part or parts thereof * * * in any way or ways which may be required by the Association and approved by the trustees for the purpose of raising money, in .order to enable the Association to perform its obligations under the construction contract * * * and for such purpose to approve of any pledges, mortgages, sales or public or private issues of the mortgaged premises or any of them upon and subject to any terms and conditions whatever.”

A year after tlie making of the trust deed, and on the 17th day of February, 1903, the association, still being in financial difficulties, entered into an agreement with the Ecuador Company by the terms of which the latter corporation took upon itself the burden of completing the railway, and assumed all other obligations of the association, and the association conveyed and assigned to the company all of its property, including the securities held by the trustees. These securities, however, were assigned expressly “subject to the provisions of said trust deed.” Soon after the execution of this agreement Pruyn began the making of the loans to the company which, together, constitute the $65,750. By the 30th of March all of this money, except about $1,350, appears to have been loaned, and on that day the directors of the Ecuador Company passed a resolution instructing the trustees, Messrs. Gardyne, DeFriese and Lockwood, to deliver to Pruyn as collateral security for the loans preferred stock of the Guayaquil and Quito Railway Company equal to ten times the amount of cash advanced by him. A copy of this resolution was sent to the trustees, and on April 29th they notified the president of the company that they had on that day instructed their bankers, who were the depositories of the stock, to hold $650,000 worth of it to the order of Pruyn. Later, however, the trustees concluded that the assignment of the stock to Pruyn would be a violation of the provision of the trust deed, and for this reason refused to carry out the instruction of the board of directors. The complainant now claims that the resolution of the directors of the Ecuador Company, and the subsequent instruction of the trustees to their bankers, operated as an equitable assignment of the $650,000 of preferred stock of the railway company, and seeks to compel the actual transfer and delivery thereof to him by the defendants, of stock certificates to that amount.

On the hearing of the case before the vice-chancellor it was considered by him that the relief sought by the complainant should be refused—first, because the agreement to pledge the stock to Pruyn had no valid consideration to support it, and second, because the agreement was nugatory for the reason that it was in violation of the terms of the trust deed. A decree was thereupon entered dismissing the bill of complaint. From this decree the complainant appeals.

We think the decree must be affirmed, and we rest our conclusion upon the second ground specified by the learned vice-chancellor. The power of disposition of the stock by the trustees was limited by the terms of the trust deed to a single purpose, namely, that of raising money in order to enable the Ecuadorian Association to perform its obligations under the construction contract, and it was for that purpose alone that the trustees were authorized to “approve of any pledges, mortgages or sales” thereof. The transfer of the interest of the Ecuadorian Association in this stock to the Ecuador Company was upon the express condition that the trust under which it was held should remain in full force. The importance of this provision for the protection of the association is apparent; for without it the assets which it turned over to the Ecuador Company might be used by the latter for purposes other than the construction of the railway, and the association, in case the Ecuador Company should default on its obligation to perform the contract which it assumed, might be left to bear the burden of that default with a bankrupt treasury. Although the beneficial ownership of the stock had become vested in the Ecuador Company under its agreement with the association, it was subject to the trust which still existed for the benefit of the latter, and the terms thereof could not be departed from bjr the trustees without the assent of the association. The purpose of'the resolution of the board of directors of the Ecuador Company of March 30th, 1903, did not contemplate the raising of money to perform obligations arising under the construction contract of the Ecuadorian Association, but the securing to Pruyn of the repayment of money's theretofore loaned by him to the Ecuador Company, the greater portion of which, it may be said in passing, would seem, from the evidence, not to have been used, and not even to have been intended to be used, either directly or indirectly, in the work of constructing the Guayaquil and Quito railway. There is no pretence that Pruyn was induced to make the advances to the Ecuador Company under a promise. by it to secure their repayment by a pledge to him of this stock, and the transfer of it by the trustees for such a purpose would, therefore, have been a clear violation of their trust, and one which would have worked serious injury to the Ecuadorian Association whose right to a strict performance of its provisions was preserved by the express terms of their agreement with the Ecuador Company.

The decree under review will be affirmed.

For affirmance—The Chancellor, Chief-Justice, Garrison, Swayze, Trenchard, Parker, Bergen, Yoorhees, Minturn, Bogert, Yredenburgh, Yroom, Gray, Dill—14.

For reversal—None.


author: Gummere, Ci-iiee-Justice.

text:
    Frank Bassett, appellant, v. United States Cast Iron Pipe and Foundry Company, respondent.
    [Argued March 18th, 1909.
    Decided June 14th, 1909.]
    The preferred stockholders of a corporation were entitled, under its certificate of incorporation, to non-eumulative dividends, not exceeding seven per cent, per annum, payable out of surplus net profits. The holders of common stock were entitled to dividends out of the surplus net profits remaining after the payment of dividends on the preferred stock. A reserve fund had been accumulated by the corporation, in part, by scaling down dividends on the preferred stock.—Held, that the payment of a subsequent dividend to preferred stockholders, out of so much of the reserve fund as had been so accumulated was not in derogation of the dividend rights of the common stockholders.

      On. appeal from a decree of tbe court of chancery advised by Yice-Chancellor Howell, whose opinion is reported in 73 N. J. Eq. (4 Buck.) 668.

      Messrs. Pilney, Hardin & Skinner, for the appellant.

      Messrs. Lindabury, Depue & Faulks, for the respondent.
   The opinion of the court was delivered by

Gummere, Ci-iiee-Justice.

The contest in this case is over the right of the board of directors of the defendant company to declare a dividend on its preferred stock out of a fund known as “Reserve for additional working capital.”

By the defendant’s certificate of incorporation its preferred stock is entitled to non-cumulative dividends not exceeding seven per cent, per annum, payable out of any and all surplus net profits; and the common stock is entitled to dividends out of the surplus net profits remaining after payment of the dividends on the preferred stock.

The fund known as “Reserve for additional working capital” amounts to $2,459,896, and was accumulated from the surplus net profits for the years 1900, 1902, 1903, 1904 and 1906. Of this amount $1,593,750 was obtained by scaling down the divi- . dends on the preferred stock below seven per cent, in four of these years.

The complainant is a holder of common stock of the defendant company. His contention in the court below, and here, was, and is, that the dividends on preferred stock for any fiscal year must be paid out of the profits made during that year; that the profits of any given year which are not distributed in dividends declared in that year belong to the common stockholders, and when distributed must be paid to them to the exclusion of the holders of preferred stock. The defendants claim is that it may pay dividends on its preferred stock out of any and all surplus net profits, without regard to the period during which they were earned. The learned vice-chancellor who heard the cause adopts in Ms opinion the contention of the defendant upon this point.

It seems to us that neither the contention of the complainant nor that of the defendant is altogether sound. On the one hand the corporation has no right to accumulate a reserve fund from earnings which would otherwise be paid out as dividends to the holders of common stock, and afterward use it to pay dividends to the preferred stockholders, when the net profits of the year for which the dividend is declared are not sufficient for that purpose. On the other hand, when the reserve fund is accumulated, in whole or in part, by the cutting down of dividends which would otherwise have been paid to preferred stockholders, that fund, so far as it represents moneys so retained, is available for the payment of subsequent dividends upon the preferred stock. To yield to the contention of the complainant would be to permit the directors of the corporation to defraud the preferred for the benefit of the common stockholders; while to sanction the claim of the defendant would be to put it in the power of the directors to defraud the common for the benefit of the preferred stockholders. The dividend which the defendant proposes to pay to its preferred stockholders, and the payment of which the complainant seeks to enjoin, amounts to $218,750. The fund out of which it is proposed to pay it contains over a million dollars, which would have been heretofore paid in divi- • dends to the preferred stockholders had not the directors of the company considered it wise to accumulate the fund as a reserve. So far as that fund is made up from moneys which would otherwise have been paid to the preferred stockholders, we concur in the conclusion of the vice-chancellor that it is available for the purpose of paying the dividend, which is the subject-matter of this controversy.

Except to the extent indicated, we are in entire accord with the views contained in the opinion of the learned vice-chancellor, and conclude that the decree under review must be affirmed.

For affirmance—The Chief-Justice, Garrison, Swayze, Reed, Trenchard, Parker, Bergen, Yoorhees, Minturn, Bogert, Yredenburgh, Yroom, Gray, Dill—14.

For reversal—None.


author: G-ummere, Chief-Justice.

text:
    Vulcan Detinning Company, appellant, v. American Can Company, respondent.
    [Argued March 9th, 1909.
    Decided June 14th, 1909.]
    Where defendant making use of complainant’s secret process did not know that it was infringing upon complainant’s rights until it acquired notice thereof by complainant’s filing of a bill to restrain further use of the process, but continued the user thereof after such notice, complainant was entitled to an accounting of profits made by defendant through the use of the process from the date of filing the bill up to the time of taking the account, but not for profits made before the filing of the bill; defendant’s user before that time not amounting to wrong-doing.
    On appeal from an order of the court of chancery advised by, Vice-Chancellor Howell, whose opinion is reported in ¡60 Atl. Rep. 1103.

      Mr. Richard V. Lindabury, for the appellant.

      Mr. Robert H. McCarter (Mr. Henry Woilman and Mr. Albert E. Seidman, of the New York bar, upon the brief), for the respondent.
   The opinion of the court was delivered by

G-ummere, Chief-Justice.

The bill in this case prayed for an injunction restraining the defendants from using a secret process of the complainant for detinning tin scrap, and also for an accounting of the profits made by the defendants through the use of that process. The case went to a hearing on bill, answer, replication and proofs, and resulted in a decree of dismissal. On review by this court the decree was reversed, and it was held that the relief prayed for in the complainant’s bill should be decreed by the court of chancery, with the single exception of the prayer for an accounting, which matter not having been argued before this court was sent back to be disposed of in the court below. .Upon the return of the ease to the court of chancery, application was made for the taking of an account of the profit made by the defendants through their use of the complainant's secret process; and, after argument before Vice-Chancellor Ilowell (to whom the matter was referred), it was ordered that the defendants account to the complainant for all profits made by them directly or indirectly in, through, or in connection with, detinning tin scrap, or tin cans, at the factories of the American Can Company, and elsewhere, and a reference Avas directed to a special master of the court to take the account of such profits from the time that detinning was commenced at either of said factories, until the time of the taking of the account. From this order the American Can Company appeals.

The first point raised by counsel on the argument before us is thus stated in his brief: “The right of a complainant to an accounting in equity for the profits made by a defendant in the use of property depends upon the title of the complainant to the property so used, and it appears in the present case that the complainant had no title to the process used by the American Can Company." A reference to our earlier opinion in this case (72 N. J. Eq. (2 Buch.) 387) shows that it has already been'determined that, as betAveen the parties to this litigation, the complainant is the rightful possessor of the secret process for detinning scrap, and is entitled to protection against the defendant in its user. If the soundness of the abstract principle contained in this contention of the appellant be conceded, the complainant is Avithin it.

It is further insisted on behalf of the appellant that a complainant is not entitled to an accounting against a defendant for profits made b3r the latter in the use of a secret process belonging to the complainant, unless such use was made with fraudulent intent ; and it is said that no such intent appears in the case. If by this proposition the appellant intends to assert that where the user is begun in good faith, without any knowledge on the part of the defendant that he is infringing on the rights of the complainant, the defendant is entitled to continue it without incurring liability to the complainant until the termination of a litigation instituted by the complainant to establish his right to be protected against the defendant’s unlawful user, we cannot assent to it. In our opinion, the rule which comes nearest to doing complete justice between the parties to such a litigation as this, is that laid down by Lord Westbury in the case of Edelsten v. Edelsten, 1 De G. J. & S. 199, viz., that so long as the defendant continues the user without notice that in doing so he is infringing upon the rights of the complainant, he is under no obligation to account to the latter for the profits made through such user; but that if he continues the user after receiving notice of the rights of the complainant, the complainant is entitled to an accounting from him of all profits made by him after receiving such notice. And the reason of the rule would seem to be that so long as the defendant remains in ignorance of the fact that he is using the property of the complainant, he is innocent of wrong-doing; but just as soon as he receives notice of the complainant’s rights, he becomes a wrong-doer if he persists in such user. And he is none the less a wrong-doer because, after receiving notice, he refuses to recognize the rights oE the complainant, and puts the latter to a litigation to establish them'.

In the present case the proofs do not make it clear that the American Can Company, when they first engaged in the detinning of scrap by the use of the complainant’s secret process, had knowledge of the fact that they were infringing on the complainant’s rights by doing so; for although, as we stated in our former opinion, it was manifest from the proofs that the president of the can company had such knowledge, that knowledge should not be imputed to the corporation for the purpose of establishing fraud on its part. But after the complainant filed its bill in this cause, and spread its whole case before the can company upon that pleading, the latter had full notice of the complainant’s rights, and, in continuing the user of the secret process after that notice, it became a willful wrong-doer.

We conclude, therefore, that the complainant is entitled to an accounting from the can company of all profits made by it through the use of the secret process, from the date of the filing of the bill in this cause up to the time of the taking of the account.

On the other points raised by this appeal we concur in the opinion filed by Vice-Chancellor Howell in the court below.

As the order appealed from requires the can company to account for all profits made by it from the inception of its use of the secret process, there will be a technical reversal for the purpose of modifjdng the order to the extent which we have indicated.

For affirmance—None.

For reversal—The Chief-Justice, Garrison, Swayze, Reed, Parker, Bergen, Voorhees, Minturn, Bogbrt, Vredenburgh, Vroom, Gray', Dill—13.


author: Swayze, J.

text:
    Sloss-Sheffield Steel and Iron Company, complainant-respondent, v. The Ætna Life Insurance Company, defendant-appellant.
    [Argued March 16th, 1909.
    Decided June 14th, 1909.]
    The Alabama agents of a Connecticut insurance company proposed, in writing, to the complainant to write employers’ liability policies at an annual premium of $8,725 on a payroll of $1,400,000, and this offer was accepted. It was understood that the premium named in the policies to be issued should be at a higher rate fixed by the company, being the same rate at which the company had insured the complainant during the previous year. Policies were issued in accordance with this agreement, and the premiums paid at the discount rate named in the written proposal of the Alabama agents.—Held, that under the facts of the case the complainant was not entitled either to a reformation or rescission of the contract.

      On appeal from a decree of the court of chancery advised by Vice-Chancellor Howell, whose opinion is reported in 74 N. J. .Eg. (4 Buck.) 638.

      Mr. Frederick J. Faulks, for the respondent.

      Mr. Malcolm, 0. Buchanan {Mr. James Buchanan, on the brief), for the appellant.
   The opinion of the court was delivered by

Swayze, J.

The bill in this case was filed to reform certain policies of insurance, called employers’ liability policies, and to enjoin a suit at law which had been brought by the insurance company to recover additional premiums arising out of an excess of the actual payroll over the amount of the paj'roll on which the premium originally paid had been based. The vice-chancellor advised a decree in favor of the complainant upon its paying the amount which it conceded to be due. The question involved is purely a question of fact, and the view we take of the case is such that it is unnecessary for us to consider whether the powers conferred upon the Alabama agents of the insurance company, a Connecticut corporation, were in fact extensive enough to authorize the contract' which the complainant insists was made, or if not, whether the defendant company had held the Alabama agents out as so authorized in such a way that it cannot now deny the authority. We think the case may be determined upon the simpler question as to the actual contract that was made. Mr. McQueen, the vice president of the complainant, who testified in its behalf, and with whom tjae contract for the insurance was made, testified that that contract, after some negotiations by parol, was embodied in a letter of June 20th, 1905. This letter was rightly regarded by the vice-chancellor as constituting the offer on the part of the Alabama agents. The language is, therefore, of the utmost importance. It is as follows, so far as material :

“We are in receipt of your favor of June 15, also your supplementary letter of June 19, in reference to your company’s liability insurance for one year, and in reply thereto we beg to quote you a net price of $8,725 on a payroll of $1,400,000, divided as follows: (Here follow details of payroll.) If your company will enter into an agreement to carry this insurance with the iEtna Life Insurance Company for three years, we will allow you a discount of 2-1/2 from the price of one year, or $8,506.88, practically the same figures at which the business was written last year, subject to cancellation at your election after the first year by paying the difference between the price for one year and the price for three years.”

In short, this was an agreement that the net price for a payroll of $1,400,000 should be $8,725, subject to the two and one-half per cent, discount if the insurance was carried for three years. The policies, however, showed a higher rate, amounting in all to $10,502.10. These policies were duly delivered to the complainant and retained by it for a year without objection and until it desired to cancel them. The amount paid by it for premium was $8,506.88, and no claim is made on the part of the insurance company for an amount in excess of this so far as concerns the payroll of $1,400,000. The controversy is merely as to the rate at which the premium for the payroll in excess of $1,400,000 shall be calculated. The complainant’s theory is— and that seems to have been adopted by the vice-chancellor—that the contract embodied in the letter of June 20th, 1905, was a contract to issue a policy at the rate of $8,725, less the two and one-half per cent, discount, for a payroll of $1,400,000, and at the same rate for any excess. The letter, however, says nothing about the rate to be charged for the excess payroll, and as far as the ease shows, the only contract that the complainant had with the agents as to the rate to be charged for the excess was the contract embodied in its policies. We find nothing in the case which indicates that any definite contract was made with reference to the premium on the excess except that contained in the policies. The case clearly shows there was no fraud involved, for it is conceded that the agreement of the prior year was that the higher rate should be inserted in the policies, being the rate which actually was inserted, and that the complainant prior to the issue of the policies now in question was shown a telegram and letter from the insurance company to its agents authorizing a renewal at the same rate as the previous year; nor is it denied by the complainant that it knew that the amount of premiums inserted in the policies was greater than the amount which it was actually to pay to the agents. It is conceded that the actual agreement of the preceding year was that the policies should be issued at the rates fixed by the company; but the Alabama agents agreed to accept a smaller sum in satisfaction of the premium. This they might well do, as the difference was made up out of the commissions to which the Alabama agents were entitled from the company. In other words, the contract was a contract for insurance at regular rates with a special agreement of the agents to accept a smaller sum in payment; but there is no evidence in the case to indicate that that agreement to accept a smaller sum in payment of a larger sum was the agreement of the defendant company. Quite to the contrary; the amount paid the company was the exact amount which it was entitled to receive at the policy rates. There is some evidence that the agents informed the company of their action and begged for some concession that would add to their compensation, but this the company refused to grant. It never assented to receive less than the full rates, and never held the agents out as authorized to make a contract different from that contained in the policies. The facts that the policies were not sent to the agents executed in blank, but had to be actually executed by the defendant at the office in Connecticut before they were sent to the Alabama agents for delivery, that when so executed they showed the higher rate of premium and were so accepted by the complainant, convinces us that the complainant was relying for its discount not upon an agreement of the company to issue the policies at a lower rate, for no such agreement was made, but upon the favor of the Alabama agents. Under such circumstances, the natural inference to be drawn by the complainant must have been either that the agents were deceiving their principal in the belief that the policies' were negotiated at the full rate as they were written, or were making the discount at their own cost. If we adopt the first alternative, the complainant was party to a scheme to deceive the company; if we adopt the second, which corresponds with the actual facts, the arrangement for a discount was not with the defendant. In either event, the complainant has no right to relief. It has no right to a reformation, since the policies as issued were in exact accordance with the proposal contained in the letter of June 20th, 1905, and the course of practice pursued in 1904, and the payment required of the complainant for the policies of 1905 and actually made by it was exactly in accordance with the proposal in the letter of June 20th and the practice of the year before. The complainant has no right to rescind for' fraud since the policies and the amount paid exactly correspond with the contract. The letter of June 20th, 1905, says nothing about the rate to be charged for the excess payroll, and the testimony is equally silent as to any contract to settle the excess premium at the discount rate. The complainant apparently took it for granted that a discount would be allowed by the agents upon the excess premium. Such a discount was. allowed on the excess premium of the previous year, but that was not until October 20th, 1905, nearly four months after the present policies were issued, and even then the statement rendered to the defendant company showed the excess premiums calculated at the full policy rates. It was the agents who then allowed the discount, and allowed it at their own cost. The complainant could not, therefore, have been misled by anything done by the agents in settling the excess premiums on the first year’s policies. The case is even stronger against the complainant; for in adjusting the excess premiums, in October, 1905, it turned out that, under one policy, the actual payroll had been less than the estimated payroll, so that the defendant owed the complainant a return premium. This return premium was calculated at the full policy rate, and a receipt therefor at that rate given to the defendant. It is true that in the actual adjustment with the agents, this return premium was figured at the discount rate; but the fact that a receipt was given to the defendant company at the full rate is quite conclusive against the complainant upon the question of fraud.

It is suggested that the complainant is entitled to rescind because the contract as written in the policies is not the contract which it intended to make. After what we have said it is ■almost superfluous to add that the contract it received is the exact contract it bargained for, that it has been carried out to tbe letter by tbe defendant company and by their Alabama agents, and that the complaint now made.by the complainant relates to a matter which was not embodied either in the parol contract or in the contract by letter. What has happened is that the complainant has been disappointed in its expectation that it could settle at a price less than it had agreed by the acceptance of the policies to pay. It may have been justified in entertaining this expectation, but to entitle it to relief it was necessary that it should be at least a term of the parol contract.

For these reasons we think the decree should be reversed and the record remitted to the court of chancery to the end that the bill may be dismissed, with costs.

For affirmance—None.

For reversal—Ti-ie Ci-iiee-Justice, Garrison, Swayze, Reed, Trenci-iard, Parker, Bergen, Voorhees, Minturn, Bo-GERT, VREDENBURGH, GRAY, DlLL—13.


text:
    Amelia R. Sparks et al., appellants, v. Charles S. Ross et al., respondents.
    [Argued March 17th, 1909.
    Decided June 14th, 1909.]
    Ross was married to Cavanaugh in 1873. Upon a feigned issue out of chancery, as to the validity of this marriage, there was evidence that Ross had been married in 1862 to Moose, who was still living, and testified that she had never been divorced. There was evidence that she and Ross had separated shortly after their marriage, had lived in the same county within a few miles of each other thereafter, and that neither had asserted any rights under the marriage of 1862; that in 1870 Moose had contracted another marriage of which a child was born, in 1871; that Ross had lived continuously until his death, with Cavanaugh and had children; that Moose had lived continuously from her marriage in 1870 with Prehl; that the children of Boss by his second wife had been recognized as legitimate by the executor of his father’s will.—Held, that the question of the validity of the second marriage was for the jury and that it was improper to direct a verdict against its validity.
    On appeal from an order of the court of chancery advised by Vice-Chancellor Learning, whose opinion is reported in 71¡. N. J. Eq. (k Buch.) 621.

      Mr. John J. Crandall (Mr. Timothy J. Middleton, on the brief), for the respondents.

      Mr. Thomas E. French, for the appellants.
   The opinion of the court was delivered by

Swayze, J.

After the decision of this court, reported in 73 N. J. Eq. (3 Buch.) 735, the case was retried and a verdict again directed for the appellants, which was again set aside by the vice-chancellor; this appeal is taken from his order. The reason upon which the vice-chancellor and this court relied in setting aside the former verdict seems to have been misunderstood. The situation is this: Edmund B. Ross was married to Mary Cavanaugh in 1873. If that marriage is valid, the respondents are his lawful issue and are entitled to the property in question under the will of their grandfather, Samuel Ross. It is not questioned that Edmund Ross and Mary Cavanaugh went through the form of a marriage ceremony and lived together as husband and wife in Camden for fifteen years and until his death. The claim of the appellant is that the marriage was invalid because he had previously been married to Maria Moose in 1862. Some question was raised as to the proof of a ceremonial marriage to Maria Moose, but in the view we take of the case that question becomes comparatively unimportant, for we think the evidence is sufficient to establish a valid marriage between Edmund Ross and Maria Moose at that time, provided they were both then free and capable of contracting marriage. It is proved by Maria Moose, who now calls herself Maria Prehl, that she was at that time unmarried and capable of marrying Ross. As to Ross himself, the only evidence is that of his sister, who testified that she does not know of his having been married prior to his marriage to Moose. If the only question in the case were the validity of the first marriage, this testimony would be sufficient to establish capacity on Ross’ part at that time; but the case presents the situation of two marriages, each of which is presumptively valid; neither presumption is so conclusive that the court is justified in taking the case from the jury. The question is one of fact to be decided under all the circumstances of the case, and while no doubt it would be the duty of the court to instruct the jury that the first marriage was presumed to be valid at the time, it would be for the jury to decide whether that presumption was overcome by the fact that Ross deserted Maria Moose soon after, leaving her and a child entirely without support, and that no claim was made upon him by His alleged wife, although they lived in the same county only nine miles apart, either for the support of herself or her child.

Even if the first marriage was a valid one, it does not follow as a necessary conclusion that the second marriage was invalid, for the first marriage may have been dissolved by divorce. The testimony of Maria Moose that she did not know and had never heard of any proceedings taken against her by Ross for a divorce, and her further testimony that she had never been divorced, is not conclusive, since it must be weighed against the presumption in favor of the validity of the second marriage, which is a presumption in favor of the innocence of Ross of the crime of bigamy; of the innocence of his second wife of the crime of fornication; and of the legitimacy of his children. We need not in the present case decide what would be the effect of the testimony of Maria Moose that she had never been divorced, weighed against the presumption of innocence and of legitimacy, if there were nothing else proved. There are other circumstances of great significance. Maria Moose admits not only that she made no claim upon Ross after he deserted her in 1863, hut that in 1870 she herself married one Prehl, by whom she had a child born in 1871, and with whom she lived as his wife undisturbed by Boss. In 1873, therefore, when Boss married Mary Cavanaugh, he had good ground for divorce against Maria Moose for adultery, and had had ample time to procure a decree. No search of the records of our court of chancery is proved to have been made such as was made in Schmisseur v. Beatrie (Ill.), 35 N. E. Rep. 524, but we are not prepared to say that the absence of any record of such a suit in our court of chancery would, of itself, be so conclusive as to justify the court in withdrawing this case from the jury.

Another important fact is the recognition of the legitimacy of the appellants by the executor of their grandfather’s will, the husband of one of the appellants.

The proof of the continuance of the marriage relation between Edmund and Maria rests upon her testimony, and in view of the facts stated, and of the necessary inference from Maria’s own testimony that she herself was guilty of bigamy if the marriage of Boss had not been dissolved, we think her credibility also was a question for the jury.

We have thus dealt with the question as a question of fact to be decided in view of the conflicting presumptions and all the circumstances surrounding the case. The authorities are clear that as between a first and second marriage the presumption is in favor of the second marriage and this for the very obvious reason that the first marriage does not necessarily invalidate the second.

Of the numerous authorities it will be sufficient to cite those which more nearly resemble the present case: Dysart Peerage Case, 6 App. Cas. 489, especially the language of Lord Blackburn (at pp. 510-511); United States v. Green, 98 Fed. Rep. 63; Hunter v. Hunter (Cal.), 43 Pac. Rep. 756; Pittinger v. Pitting er (Colorado), 64 Pac. Rep. 195; Erwin v. English, 61 Conn. 502; 23 Atl. Rep. 753; Potter v. Clapp, 203 Ill. 592; 68 N. E. Rep. 81; Leach v. Hall, 95 Iowa 611; 64 N. W. Rep. 790, with which may be compared a case where the facts were somewhat different. Casley v. Mitchell, 96 N. W. Rep. 725; Smith v. Fuller (Iowa), 108 N. W. Rep. 765; Wenning v. Teeple (Indiana), 144 Ind. 189; 41 N. E. Rep. 600; Scott’s Adm’r v. Scott (Ky.), 77 S. W. Rep. 1122; Bowman v. Little, 101 Md. 273; 61 Atl. Rep. 223. A dissenting opinion in this case is reported in 61 Atl. Rep. 657, and a supplemental one by the chief-justice in 61 Atl. Rep. 1084. Ala. & V. R. Co. v. Beardsley, 79 Miss. 417; 30 So. 660; Rash’s Estate, 21 Mont. 170; 53 Pac. Rep. 312; Palmer v. Palmer, 162 N. Y. 130; 56 N. E. Rep. 501.

Counsel for the complainant contended that since the feigned issue in form put upon the respondents the burden of proving the affirmative proposition that Edmund B. Ross was capable of contracting a legal and binding marriage in 1873 and was lawfully married to Mary Cavanaugh, the evidence was not sufficient to sustain this burden. No doubt the form of the issue made it incumbent upon the respondents to prove that the marriage to Mary Cavanaugh was a valid marriage; there was a presumption in its favor; whether this presumption and the evidence in its support was sufficient upon the whole to justify a finding in favor of the validity of that marriage was a question for the jury.

We think, therefore, that the vice-chancellor was quite right in ordering a new trial, and the order is affirmed, with costs.

For affirmance—The Chiee-Justice, Garrison, Swayze, Reed, Trenchard, Parker, Bergen, Yoorhees, Minturn, Bogert, Yredenburgh, Yroom, Gray, Dill—14.

For reversal—None.


text:
    Amparo Mining Company, complainant-respondent, v. Fidelity Trust Company, executor of Edward M. Paxson, defendant-appellant.
    [Argued March 3d, 1909.
    Decided June 14th, 1909.]
    The court of chancery has jurisdiction of a suit to establish a trust in shares of stock in a New Jersey corporation, although the trustee resides out of the state, and cannot be served with process, but can only be brought in by the statutory proceedings against absent defendants.
    On appeal from an order of the court of chancery advised by Vice-Chancellor Stevenson, whose opinion is reported in 71¡. N. J. Eq. (J/. Buck.) 197.

      Mr. Samuel H. Bicharás (French & Richards, on the brief), for the respondent.

      Mr. Richard V. Lindabury, for the appellant.
   The opinion of the court was delivered by

Swayze, J.

The bill charges that the complainant is a New Jersey corporation; that Paxson was its president and chairman of the executive committee; that as a result of transactions with Williams and Graham, which need not here be set forth, Paxson advanced $40,000 to settle their claims against the complainant, and acquired from them five hundred and forty-nine thousand five hundred and four shares of the capital stock of the complainant; that this stock is the property of the complainant, subject only to the repayment of the advance of $40,000, with interest, which has been tendered. The important prayers of the bill are that it may be decreed that the stock was held by Paxson- in Ms lifetime and is now held by the defendant as his executor, as trustee of the complainant, subject to the repayment of the money advanced, and that Paxson had not, and his estate has not, any interest in the stock except as security for the repayment of the advance. There is a further prayer that the defendant as executor be decreed to assign, transfer and deliver the stock to the complainant. The defendant pleads to the jurisdiction, averring that it is not a resident or a citizen of New Jersey or existing as a body corporate under and by virtue of our laws; that it has no office, agent or agency or place of business within the state and never has had, and is not now engaged in business within the state, and never has been; that it is a body corporate under the laws of Pennsylvania; that the ordinary proceedings against absent defendants have been taken against it, but that no process or other legal notice has been otherwise served. It submits that the court of chancery has no jurisdiction and that no decree can be entered in the suit which is enforceable against the defendant under the constitution and laws of the United States of America or of the State of New Jersey. The learned vice-chancellor advised an order overruling this plea.

It is conceded that in order to sustain jurisdiction over the defendant it must appear that the proceeding is a proceeding quasi in rem and that our statutes authorize the court of chancery to entertain jurisdiction of such proceedings as distinguished from proceedings in personam, over which alone a court of equity has jurisdiction in the absence of statute.

The question whether the proceeding can be sustained as a proceeding quasi in rem depends, of course, upon whether there is a res in this state upon which the depree can operate. That involves the question whether the stock of a New Jersey corporation belonging to a resident of another state can be said to have a situs in New Jersey, when it does not appear that the certificates of stock are within the state. Since the question is one which involves the rights of a non-resident under the fourteenth amendment to the federal constitution as construed in Pennoyer v. Neff, the decisions of the federal courts are of great, if not controlling, weight. The precise question has been decided in Jellenik v. Huron Copper Mining Co., 177 U. S. 1. At page 11 Mr. Justice Harlan distinctly stated that the question to be determined was whether the stock in question was personal property within the western district of Michigan. The Michigan statutes contain provisions very similar to ours, declaring that the stock should be deemed personal property and should be transferred only on the books of the company; that the company might conduct its business, in whole or in part, in any place in the United States or any foreign country; might have a business office out of the state and hold any meeting of the stockholders or directors-at such office; that the shares might be taken in execution and attached by process of the Michigan courts. In answer to the argument that the certificates were held outside the state, he said: “The certificates are only evidence of the ownership of the shares and the interest represented by the shares is held by the company for the benefit of the true owner. As the habitation or domicile of the company is and must be in the state that created it, the property represented by its certificates of stock may be deemed to be held by the company within the state whose creature it is, whenever it is sought by suit to determine who is its real owner.” In that case two of the defendants, who were held to be indispensable parties, were residents of Massachusetts, and one, also an indispensable party, resided in Michigan, but not in the western district. The company itself was made defendant, and filed the plea to the jurisdiction. The point actually decided was that the court had jurisdiction where the question involved was the title to the stock of a corporation domiciled within the district. That is exactly the present case. If the allegations of the bill are true— and they must be taken as true for the purpose of determining the validity of the plea—the precise question involved is whether Paxson’s executor holds the stock of a New Jersey corporation in trust for the complainant. It is not as contended by appellant a bill for specific performance of a contract. A similar question was presented in Andrews v. The Guayaquil and Quito Railway Co., 69 N. J. Eq. (3 Robb.) 211, affirmed on the opinion of Vice-Chancellor Stevens, 71 N. J. Eq. (1 Buch.) 768, where we sustained the jurisdiction under the facts of that case.

It is argued by counsel for the appellant that the reasoning of the cTellenih Case does not command assent and that we are not bound to follow it. We think, however, that, aside from the respect due the tribunal which pronounced that opinion and the peculiar force which ought to be given to its determination in a matter, of that character, the result itself was in accordance with sound principle. The fact is that the property right of a stockholder in a corporation is an intangible thing, which may well be called a chose in action, and has no actual situs anywhere in the sense that real estate or tangible chattels have. The principle which should guide in such a case is said by Professor Dicey, in his book on “Conflict of Laws,” to be that choses in action should be held to be situate at the place where they can be effeetivety dealt with, from which it follows that debts, choses in action and claims of any kind must be held situate where the debtor or other person against whom a claim exists resides; or in other words, debts or choses in action are generally to be looked upon as situate in the country where they are properly recoverable or can be enforced. And he says :

“Foreign stock cannot be fully transferred by the representative of the deceased without doing some act in a foreign country. The certificate or other documents, if any, held by the owner of such stock may be in England but they are mere evidence of a debt due from a foreign government, or in other words from a debtor not resident in England, and this debt, i. e., the stock, must apparently be situate out of England.” Dic. Confl. L. (1st Am. ed.) 318-320.

Accordingly it is held that shares of stock for purposes other than taxation and some similar purposes, are personal property whose location is in the state where the corporation is created. Cook Corp. § 485. These reasons are applicable to the present case. A complete and effectual transfer of the stock can only be had upon the books of the corporation in New Jersey, and if the stock is ever to be converted into cash, otherwise than by mere sale, it must be by a distribution of the assets of the corporation to be had in New Jersey. In view of the control of New Jersey courts over our corporations, and especially of the necessity of that control being made effectual in case of a winding up, it is, we think, quite as important that the title to the shares should be determined by our courts as that the title to real estate in New Jersey should be so determined. The cases which hold that stock has a situs in the state of the domicile of the owner for prirposes of taxation are rested upon a different ground, which is recognized by the cases as peculiar to the question of taxation, and rests upon the legal fiction mobilia personam sequuntur— a fiction which is not to be unnecessarily extended.

The right to vote at corporate elections depends upon the ownership of the stock. By the express provisions of our Corporation act the determination of a contested election is conferred upon our courts, and such a determination may necessitate an adjudication of the title to the stock. A corporation may also compel two claimants to stock to interplead. Cook Corp. § 387. Chancellor Green so held in Mount Holly, &c., Turnpike Co. v. Ferree, 17 N. J. Eq. (2 C. E. Gr.) 117, and dismissed the bill only because the complainant had assumed the responsibility of acting in advance of the order of the court and had incurred all the liability they could incur. A bill of interpleader as he there said, is proper, only where the complainants have property or funds in possession, or under control to which there are two or more claimants. That case is a direct authority in point. The complainant has all the possession of which such a chose in action as a share of stock is possible, as distinguished from the possession of the certificate which is only its paper representative ; it has at any rate the control of the substantial thing which the certificate only represents. It has such possession as is required for the purpose of a levy under execution or attachment, and it is seeking only a judicial ascertainment of the title to its own stock, which involves the determination of the beneficial ownership of the assets, real and personal, of the corporation, and the ultimate title thereto. We think for such a purpose at least the stock has a situs in this state.

It is argued, however, that the proceeding is necessarily m personam for the reason that some personal act will be necessary on the part of the executor in order to vest the title to the stock in the.complainant. The case seems to be thought analogous to a bill to remove a cloud from the title to real estate. This analogy fails, however, for the reason clearly set forth by the learned vice-chancellor that in the case of real estate some form of conveyance is required unless there is a statute giving the decree the effect of a conveyance. No such necessity exists in the case of a chose in action, to which a certificate of stock is analogous. In this case a determination that the stock belongs to the complainant becomes effective at once, and the complainant may or may not issue a new certificate therefor. All that the decree need do to effectuate the complainant’s title is to decree that the certificates in the hands of the defendant are null and void. We are not now concerned with the possible rights of a bona fide transferee of the present certificates. We are dealing only with the question of jurisdiction of the subject-matter. Our courts can protect the rights of a bona fide holder as well as the courts of his own'domicile. We thipk there is a res within this state and that no personal action of the defendant is necessary which would require a decree in personam.

The question whether our legislation has actually conferred jurisdiction is a question of statutory construction. The provision of our statute is very general, and authorizes proceedings in any case where the defendant is out of the state or cannot upon due inquiry be found therein, or conceals himself within the state. The language is more general than that of the act of congress which was under consideration in the Jellenik Case, and is similar to the provision of the Nebraska statute which was before the supreme court of the United States in Arndt v. Griggs, 134 U. S. 316, and to the provision of-the Texas statute which was under consideration in Roller v. Holly, 176 U. S. 398. The court there said that the provision had no application to suits in personam and must be restricted to actions in rem, and held that as it was impossible, in view of the generality of the statute, to say that it contemplated a procedure in one class of cases and not in another, the only reasonable construction was that it applied in all cases where, under recognized principles of law, suits might be instituted against non-resident defendants. The distinction between these two latter cases and Hart v. Sansom, 110 U. S. 151, is sufficiently pointed out by the opinions of Mr. Justice Brewer and Mr. Justice Brown. It is said by way of argument on the part of the appellant that this rule does not apply ex-eept in cases where the complainant is in possession of the res. We are not prepared to say that the scope of the statute is thus limited. The difficulty in Hart v. Sansom, supra, was that the judgment which was there relied upon against Hart's claim was not an adjudication affecting him. As Mr. Justice Brewer said: “As there was no allegation that he was in possession, the judgment for possession did not disturb him; and the decree for cancellation of the deeds referred specifically to the deeds mentioned in the petition and there was no allegation in the petition that Hart had anything to do with those deeds. There was no general language in the decree quieting the title as against all the defendants ; so there was nothing which could be construed as working any adjudication against Hart as to his claim and title to the land. Mr. Justice Gray was careful to call attention to the fact that to deprive Hart of his title, some act would, in the state of the existing Texas legislation, be necessary on his part—the delivering up of his deed to be canceled or the execution of a release—an act which could only be compelled, as the Texas law stood, by a decree in personam. But even if the statutory proceeding were limited to cases where the complainant is in possession of the res, we think, as we have already said, that the complainant has such possession.”

The order is therefore affirmed, with costs.

For affirmance—The Ci-iiee-Justice, Garrison, Swayze, Reed, Trenchard, Parker, Bergen, Yoorhees, Minturn, Bogert, Yredenburgh, Yroom, Gray, Dill—14.

For reversal—None.


author: Seed, J.

text:
    Asbury Park and Sea Girt Railroad Company et al. v. The Township of Neptune, in the County of Monmouth, et al.
    [Submitted March 23d, 1909.
    Decided June 14th, 1909.]
    1. When a trolley road has laid its tracks through the streets of a township, in pursuance of an ordinance fixing location of its tracks, equity has jurisdiction to enjoin the removal of such tracks by the township.
    2. When the grant was made upon a condition that the trolley company should pay annually to the township a certain per cent, of the gross receipts of its business, a court of equity has jurisdiction to compel the road to account for such percentage, upon a cross-bill filed by the township in a suit to enjoin it from removing the tracks of the trolley road, threatened because the compensation had not been paid.
    3. Where a trolley road agreed to pay to a township annually five per cent, of the gross receipts of the business of the road, it is not relieved from a portion of such payment because the distance it runs in the township has been shortened by the fact that other municipalities have been carved out of the township territory through which the trolley ran; nor can the sum be reduced by the fact that other sums have been exacted by these new municipalities for a right to lay an additional track through them.
    4. This trolley road having formed “a connection with another road, after which a single fare was charged for a passage over the entire system, the receipts from the business of the former road are to be regarded as such proportion of the entire receipts as the length of the former road bears to the length of the entire system of roads.
    On appeal from a decree of the court of chancery advised by Yice-Chancellor Howell, whose opinion is reported in 73 N. J. Eq. (3 Buch.) 3£3.

      Mr. Frank Durand and Mr. Charles TL. Ivins, for the complainants.

      Mr. Samuel A. Patterson, for the defendants.
   The opinion of the court was delivered by

Seed, J.

These are cross-appeals from the same decree. The main purpose of the bill is to restrain the township of Neptune from attempting to remove the tracks of the Asbury Park and Sea Girt Eailroad Company from the main street in the town of Neptune, county of Monmouth.

Both complainants are trolley companies, incorporated under the act of 1886. The road of the Asbury Park and Sea Girt Eailroad Company extends from Asbury Park to Belmar, in the county of Monmouth.

The Atlantic Coast Electric Company operates a road from Pleasure Bay to the state encampment at Sea Girt, and operates the Asbury Park and Sea Girt railroad as a part of this system.

The right of the complainants in the tracks, the removal of which is threatened, is exhibited in detail in the opinion of the vice-chancellor. It is only necessary now to restate the skeleton of facts.

The tracks questioned were built by another trolley company, namely, the Asbury Park and Belmar Street Eailway Company. That road had petitioned the township committee of Neptune township for a location of the tracks of its railway in said township. An ordinance was passed by the township committee on February lltli, 1893, granting the right of the company to locate its tracks over the main street leading from Asbury Park to Belmar. This ordinance was accepted by the company and the road built. The grant was for fifty years, but subject to conditions, one of which was that, as compensation for the grant, the railway company'should pay each January to the treasurer of the township committee of Neptune township a sum of money equal to five per cent, of the gross receipts from all the business of the said company for the year preceding payment. This road, the Asbury Park and Belmar Street Eailway Company, was sold by a receiver to certain trustees, who again sold it to the Asbury Park and Sea Girt Eailroad Company, which company leased it to the Atlantic Coast Electric Eailroad Company, which lease was afterward sold and bought in by the same Atlantic Coast Electric Railroad Company, who now operates it.

It is sufficient to say that the burden and the rights under the ordinance passed by the Neptune township committee now resides in and rests upon the complaining roads.

In March, 1907, the township committee of Neptune township served a. notice upon the complainants that they should show cause why the compensation fixed by the ordinance granting to the Asbury Park and Belmar railroad the right to lay its tracks in the main street should not be paid to the township, and to shovr cause, if default was made in the payment of said compensation, why said ordinance should not be revoked and all the tracks, plant and cars of the said railway company should not be removed forthwith from the said route lying within the township of Neptune.

The bill in this case was filed to enjoin the threatened action of the township committee, and in it the complainants set up that the payment of the five per cent, of the annual gross receipts of the company had been commuted into the payment of $400 annually, which amount had been paid by the railroad company to the township treasurer.

This commutation of payment is denied in the answer of the township of Neptune, and the township of Neptune, by way of cross-bill, seeks an accounting from the railroad company of the gross receipts of the railroad company, which the' township claims it is entitled to receive according to the terms of the ordinance.

The vice-chancellor found that thei’e had been no commutation by which the percentage of gross receipts -was fixed at $400 annually, and in this conclusion we concur.

The vice-chancellor also found that, upon the facts stated in the bill and answer, the court of chancery had the power to enjoin the threatened act to remove the tracks of the complainants and also jurisdiction to direct an accounting by the railroad company of the amount of its business and gross receipts. In this we concur.

The court of chancery then, by its decree, refers the computation of the gross receipts, five per cent, of which is to be paid to the township of Neptune, to a special master, and fixed the conditions upon which the computation should be made.

To understand the basis of this direction it is essential that certain facts, appearing in the pleadings and stated in the opinion of the vice-chancellor, should be restated.

When the ordinance of February 11th, 1893, was passed, the terminal points of the proposed Asbury Park and Belmar Railroad Company were Asbury Park and Belmar. It was on the gross receipts of that road, five per cent, of which was to be paid to the township of Neptune. The length of this road was two and twenty-three hundredths miles. Now, only forty-two hundredths of a mile lies within the boundaries of the township of Neptune. In the language of the vice-chancellor: “At the time of the passage of the ordinance of 1893 the .arrangement of the municipalities in question was this: Neptune township was in existence; it embraced the two boroughs of Neptune City and Avon, both of which were also in existence, the remaining borough of Bradley Beach having not yet been formed. Later, when the complainants wished to lay double tracks through Neptune City and Avon, they agreed to pay a compensation to each of these boroughs as follows: To Neptune City, $275 annually, and to Avon, $350 annually. These payments are, therefore, for territory which was embraced in the original ordinance of 1893, and for which the railway company engaged to pay the township of Neptune. It was, therefore, claimed that the payment should be apportioned between Neptune township and the other municipalities, or that the amounts paid and payable by the street railway company to these other municipalities should be deducted from any amounts which might be payable for the whole two and twenty-three hundredths miles.”

The vice-chancellor found that the company had agreed to pay a percentage of its gross receipts from all its business, and that the company must stand by its contract; that the computation must be made on the basis of the total receipts of the company from its railway business. In this view we concur.

The method of fixing the amount of the gross receipts of the Asbury Park and Belmar Street Railway Company was as follows: “The length of the road from Asbury Park to Sea Girt is six and ninety hundredths miles. The Asbury Park and Sea Girt Street Bailway Company owns two and twenty-three hundredths miles, and the Sea Coast Traction Company four and sixty-seven hundredths miles of this distance. The railway over this whole distance is operated as a single line. There has been no separation of the receipts of the Sea Girt Traction Company from those of the Asbury Park and Sea Girt Street Bailway Company. In ascertaining the amount on which the defendant’s compensation should be calculated the total receipts of the line from Asbury Park to Belmar should be apportioned on a mileage basis between the two distances above mentioned for the various years over which the accounting shall extend, apportioning to the As-bury Park and Sea Girt Street Bailway Company two hundred and twenty-three six hundred ninetieths of the receipts for the several years. This will give the total receipts of the company on which the percentage will be calculated.”

In this view we concur.

Following this, the conclusion of the vice-chancellor embodied in the decree a clause that there should be deducted from the percentage of the gross receipts the amount which had been annually paid by the railroad company to the boroughs of Avon and Neptune City.

These deductions, we think, should not be made. The contract, as already stated, was to pay five per cent, of the gross receipts of the business of the company. The gross receipts are the amounts received without any deductions. If the payment of the sums mentioned to Avon and Neptune City was essential to the operation of the road, nevertheless the deduction of these sums, as well as any other sums necessarily incurred in the running of the road, was a deduction from the percentage of the gross receipts, which, by its contract, the railroad company had bound itself to pay.

The vice-chancellor remarks in his opinion that the right to deduct these was conceded, and no such concession is made in this court in the briefs of counsel.

The result is, that on the appeal of the railroad company the decree below is affirmed. On the appeal of the township of Neptune the decree is reversed for modification in respect to the direction that the sums annually paid to Avon and Neptune City shall be deducted from the five per cent, of the gross receipts payable to the township of Neptune.

It is to be observed that the decree enjoins not only any interference with or removal of complainants’ tracks by the township committee, but also enjoins the revocation of the ordinance of 1893. The last clause of the injunction suggests a question whether a court of equity will ever restrain legislative action bv a municipality, or if ever, when. The question is discussed and the cases collected in McQuil. Mun. Ord. § 163. This question was not discussed in the briefs of counsel, and was not distinctly raised by the defendant’s petition of appeal. This was, obviously, because, if the injunction wont at all restraining any interference with the tracks, it did not matter whether or not the injunction restrained the revocation of the ordinance of 1893. We, therefore, express no opinion upon this question.

On appeal of the railroad company:

For affirmance—The Chancellor, Chiee-Justice, Garrison, Swayze, Eeed, Trenchard, Parker, Bergen, Voorhees, Minturn, Bogert, Yredenburgh, Yroom, Gray, Dill, Cong-don—16.

For reversal—None.

On appeal of the township of Neptune:

For affirmance—None.

For reversal—The Ciianoellor, Chiee-Justice, Garrison, Swayze, Reed, Trenchard, Parker, Bergen, Yoori-iees, Min-turn, Bogert, Yredenburgh, Yroom, Gray, Dill, Congdon —16.


author: Trenci-iakd, J.

text:
    City of Atlantic City, respondent-complainant, v. Associated Realties Corporation, appellant-defendant.
    [Argued November 24th, 1908.
    Decided March 1st, 1909.]
    The predecessors in title of the defendant, by deed, conveyed to the city of Atlantic City an easement or right of way over a strip of land on the ocean front, which deed contained a clear restriction against placing any building or structure upon the ocean side of the lands conveyed, with a proviso reserving- the right to build a pier of a certain kind and length, on which the owners shall not permit the sale of any commodities “and be confined to charging only an entrance fee.” The defendant erected a pier of the kind and length permitted, and charged visitors on entering-variant fees, depending upon whether entrance to the pier only was desired or whether access to certain reserved parts of the pier, or to certain amusements thereon provided, was wanted by the visitor.—Held, that such charges, other than the fee for entrance, were made in violation of the covenant that the pier owner should “be confined to charging only an entrance fee.”
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Walker.

      Messrs. Thompson & Cole, for the appellant.

      Mr. Harry Wootlon, Messrs. Godfrey & Godfrey, and Mr. Gilbert Collins, for the respondent.
   The opinion of the court was delivered by

Trenci-iakd, J.

The bill of complaint in this case was filed by Atlantic City to secure an injunction restraining- the Associated Eealties Corporation from charging any fee for admission to any part of its pier, or to any amusement or entertainment thereon, in addition to the entrance fee.

Npon the return of the order to show cause a preliminary injunction was allowed, and this appeal is from the order so made.

The predecessors in title of the defendant, by deed, conveyed to the city of Atlantic City an easement or right of way over a strip of land on the ocean front, which deed contained a clear restriction against placing any building or structure upon the ocean side of the lands conveyed, with a proviso reserving the right to build a pier of a certain kind and length, on which the owners shall not permit the sale of any commodities “and be confined to charging only an entrance fee.”

The defendant erected a pier of the kind and length permitted, and sold to visitors thereto variant tickets differing in price from ten cents upward, according as they gave access to different parts of the pier and admit to different amusements and entertainments thereon provided. It was this practice that was enjoined by the court of chancery.

The rights of the parties depend upon the construction of the restrictive covenant in the easement deed recited.

When that covenant was heretofore before this court for construction in a somewhat similar suit (Atlantic City v. Associated Realties Corporation, 73 N. J. Eq. (S Buch.) 721) we pointed out that the covenants contained in the deed of the predecessors in title of the defendant show that the owners of the beach front lands were actuated by a common purpose to carry into effect by their joint action a general plan of mutual benefit to themselves and to the public to preserve an open view oceanward from the elevated public walk, and to that end to restrict the use of the land, and the business to be conducted, on the ocean side of the walk. We then said that the language of the covenant that the pier owners “shall not permit the sale of any commodity upon the same, and be confined to charging only an entrance fee,” seems plainly to admit of but one construction, namely, that no pecuniary exaction beyond a fee for entrance to the pier is allowable. Accordingly in that suit we held that the complainant was entitled to an injunction restraining the defendant from charging visitors to its pier any fee for the hire and use of roller skates, or for checking garments, in addition to an entrance to the pier or after entrance to the pier, as it was then doing.

In the present case the fee is charged and the ticket sold at the main entrance to the pier. But as we have stated, the defendant charges various fees, depending upon whether access to one part or another of the pier, or to one amusement or another, is desired by the visitor. An entrance to the pier only may be obtained for ten cents. Access to certain reserved parts and to certain amusements may be obtained by paying on entering certain various additional charges.

We think this likewise a violation of the covenant that the pier owner shall “be confined to charging only an entrance fee.” For illustration, it makes no difference whether the visitor is charged for his roller skating privileges when he enters the pier or when he enters the skating rink thereon. Such charge in either case is forbidden. A fee charged for participation in some amusement or other thing offered to visitors is an addition to the entrance fee, notwithstanding it is exacted when the visitor enters the pier.

The plain meaning of the restrictive covenant is that if the covenantor or his assigns should build a recreation pier, he must confine himself to imposing a single fee which gives a visitor entrance to all parts of the pier and to all amusements thereon provided.

The decree appealed from awards an injunction restraining the defendant from charging any fee for admission to any part of its pier in addition to a “uniform entrance fee,” and from charging any fee for any entertainment or amusement upon tire pier in addition to the entrance fee. Such is not the precise form in which the decree should be drafted. We are not in this' ease concerned with gratuitous admissions nor with proper classification of visitors, and hence the word “uniform” is not an apt word for use in the decree. The form of the decree should be that an injunction issue restraining the defendant, its officers, servants, agents and employes from charging any fee or fees for admission to any part of its pier in addition to an entrance fee, and from charging any fee or fees for any entertainment or amusement upon the pier in addition to an entrance fee, and from charging variant fees depending upon whether access to one part or another of the pier, or to one amusement or another thereon provided, is desired by the visitor.

For the purpose of such modification the decree must be reversed and the record remitted to the court of chancery.

The complainant is entitled to costs in the court of chancery and in this court.

For affirmance—None.

For reversal—The Ci-iiee-Justice, Garrison, Swayze, Reed, Trenohard, Parker, Bergen, Yoorhees, Minturn, Yredenburgh, Dill—11.


author: Parker, J.

text:
    Mary E. Filley, complainant-appellant, v. Frederick A. Van Dyke et al., defendants-respondents.
    [Submitted July 6th, 1908.
    Decided April 30th, 1909.]
    1. Except for some special reason, the court of chancery will not interfere with the ordinary jurisdiction of the probate courts in the settlement of the accounts of executors and administrators.
    2. But if such special reason be apparent, it is not only the right but the duty of that court to interfere; and its action in the premises will be subject to review.
    On appeal from an order of the court of chancery sustaining a demurrer to a bill, which order was advised by Yice-Chancellor Garrison, whose opinion is reported in 7-4 N. J. Eq. (1/. Buch.) 219.

      Mr. John J. Grandall, for the appellant.
   The opinion of the court was delivered by

Parker, J.

The question raised by this appeal is whether the court of chancery erred in refusing upon the face of the complainant’s bill, to take over from the orphans court of Atlantic county the supervision of the final accounting of administrators of the estate of Sarah E. Buck, deceased. In the opinion of Vice-Chancellor Garrison, reported in 74 N. J. Eq. (4 Buch.) 219, it was assumed, and rightly, that unless some special reason appeared for such action, the court of chancery, notwithstanding its ancient and well-established jurisdiction in that regard, would not interfere with the jurisdiction over the accounts of executors and administrators which was vested by statute in the orphans court. This proposition is well established by a long line of decisions cited by the same vice-chancellor in Wyckoff v. O'Neil, 71 N. J. Eq. (1 Buch.) 681, to which may be added for completeness, King v. Berry, 3 N. J. Eq. (2 Gr. Ch.) 44; Search v. Search, 27 N. J. Eq. (12 C. E. Gr.) 137, and Field v. Field, 61 N. J. Eq. (16 Dick.) 154. The assumption of jurisdiction by chancery in cases where the orphans court has already entertained an accounting and has not completed it by a final decree thereon, rests in the sound judicial discretion of the former court, in view of such special circumstances as may be presented in the particular case; the question then being whether the circumstances show special cause for the interference of the court. Bird v. Hawkins, 58 N. J. Eq. (13 Dick.) 229, 239.

In Salter v. Williamson, 2 N. J. Eq. (1 Gr. Ch.) 480, the desire of the parties interested for an account in chancery, their right to discovery, and questions relating to alleged advancements to the administrator, were held sufficient cause; so, in King v. Berry, 3 N. J. Eq. (2 Gr. Ch.) 44, was a prayer for injunction against the executors and for a receiver of certain property and that security be required of the executors. In Clarke v. Johnston, 10 N. J. Eq. (2 Stock.) 287, nothing having been done in the orphans court, and chancery having a complete basis for accounting in the bill and answer, it proceeded in that court. In Bird v. Hawkins, 58 N. J. Eq. (13 Dick.) 229, the necessity of construing a will in order to account properly was held sufficient; and in Field v. Field, 61 N. J. Eq. (16 Dick.) 154, the same view was expressed as to a charge that certain real estate was burdened with a trust requiring a sale under supervision of the court and ad interim collection of rents. But chancery refused to interfere in Van Mater v. Sickler, 9 N. J. Eq. (1 Stock.) 483, where there were merely errors in the account which could be reviewed by exceptions; in Frey v. Demarest, 16 N. J. Eq. (1 C. E. Gr.) 236, a suit brought after final account for the collection of a share ascertained thereby; and in Rutherford v. Alyea, 54 N. J. Eq. (9 Dick.) 411, a bill by a creditor not aimed at the general settlement of the estate, but seeking the collection of the creditor’s claim, this court reversed an order overruling a demurrer to the bill and held it not a case for entertaining jurisdiction.

The facts appearing by the present bill are that Sarah E. Buck died about March 4th, 1900, intestate, leaving personal property amounting to $31,000, and her mother, Amy A. Van Dyke, and her two brothers, Frederick A. Van Dyke and William B. Van Dyke, as next of kin. That the brothers were appointed administrators in April, 1900. That Frederick was removed as administrator about 1905, and the Guarantee Trust Company substituted, but that Frederick refuses to turn over assets in his hands and that the substituted administrator has taken no steps to collect them; that Frederick is financially irresponsible and that his surety should be held liable; that no account of the estate showing Mrs. Van Dyke’s distributive share had been exhibited, though seven years had elapsed; that about the latter part of 1906 Mrs. Van Dyke filed her bill against the administrators praying for a discovery and payment of her share in the estate, and that Frederick answered, setting up certain alleged payments specified in the bill, as having been passed on by the orphans court and charged to the estate, which the present complainant claims are fictitious and fraudulent, but that on account of want of parties to the bill and because of Mrs. Van Dyke’s illness at the time and death shortly afterwards, her bill was dismissed; that she left a will in favor of complainant, Mary E. Filley, who has succeeded to her rights as executrix; that one of such payments in particular was in satisfaction of a judgment recovered against Frederick and William personally by the judge of the orphans court for legal services rendered by him to them, and that he never rendered any services to the estate. The prayer is for discovery of the estate generally and specially as to the items of discharge which are challenged, and for relief against the administrators and their surety. Among the defendants named are the administrators, their surety, the Atlantic Safe Deposit and Trust Company, the substituted administrator, Guarantee Trust Company, and the judge of the orphans court in which the final account would ordinarily be conducted, and in which the proceedings have heretofore been had, who recovered the judgment already mentioned. The only demurrers are by the Atlantic Safe Deposit and Trust Company and the Guarantee Trust Company, and are identical in form. They specify a number of causes, of which apparently only one, general want of equity, was considered. The order appealed from sustains only the demurrer of the Atlantic Safe Deposit and Trust Company, and on the sole ground that "the bill of complaint does not- show a ease of equitable cognizance.”

Treating the case on the lines of the opinion and decree below, we are unable to agree with the vice-chancellor that no special cause for interposition by the court of chancery appeared on the face of the bill. We think the long delays unexplained, the inaction of the parties, the retention of assets by Frederick, and, above all, the action of the judge in passing an important item of account in which he was personally interested, all of which were admitted by the demurrer, furnished ample reason for interference b3r the court o.f chancery and its assumption of full jurisdiction in the premises. It has already been said that this question is one for the sound judicial discretion of that court; and, ordinarily, matters of discretion are not reviewable; but in Rutherford v. Alyea, ubi supra, this court treated the question as subject to its appellate jurisdiction; so also in the somewhat analogous case of refusal to appoint a receiver, Fitzgerald v. State Mutual Building and Loan Association, 72 N. J. Eq. (2 Buch.) 829.

The other grounds of demurrer, which were not discussed in the opinion of the court below nor mentioned in the decree appealed from, have nevertheless been examined to see whether any of them will support the demurrer. As to the first ground, which was that the Atlantic Safe Deposit and Trust Company, surety, is neither a proper nor neeessarjr party, it is enough to say that the propriety of joining the surety in an action of this character was adjudged in Dorsheimer v. Rorback, 23 N. J. Eq. (8 C. E. Gr.) 46, affirmed by this court in 25 N. J. Eq. (10 C. E. Gr.) 516; and we do not understand that a defendant who is properly joined can complain that his joinder was unnecessary. The second ground, that no decree was prayed against the demurring defendant, and the third, that there is no prayer for relief as to any of the defendants, are disposed of by what has already been said; the fourth, that certain other defendants are not proper parties, is not available to this defendant. Herman v. Freeholders, 71 N. J. Eq. (1 Buch.) 541; the fifth, that chancery is deprived of jurisdiction by the existence of jurisdiction in the orphans court, was correctly disposed of in the opinion below; the sixth, and last, was the basis of the decree below.

We therefore conclude that the order sustaining the demurrer was erroneous, and it will accordingly be reversed.

For affirmance—None.

For reversal—The Chief-Justice, Swayze, Reed, Trench ard, Parker, Bergen, Atoorhees, Minturn, Bogert, Yredenburgh, Vroom, G-ray, Dill—13.