author: Magie, Ordinary.

text:
    Mary Gunn et al. v. Eliza Early.
    [Argued May 15th, 1906.
    Decided June 18th, 1906.]
    An adjudication of an orphans court, made after an examination before it of the testamentary witnesses to a paper-writing 'offered for probate as a will, and of other witnesses present at its alleged execution, finding that, upon all the evidence it appeared that the paper-writing was not signed or published in the manner required by law, and 'that the evidence to that effect was so convincing as to overcome any presumption arising from a full attestation clause, signed by the testamentary witnesses, will not be reversed unless it is clearly erroneous.
    On appeal from a decree of the Essex county orphans court.

      Mr. FredericJc M. P. Pearse, for the appellants.

      Mr. Samuel J. McDonald and Mr. Leon Abbeit, for the respondent.
   Magie, Ordinary.

The appeal in this cause seeks a reversal of an order refusing to admit to probate a paper-writing, offered to be proved as the last will and testament of Annie Reilly. From the transcript, and a statement annexed thereto, sent up 'from the orphans court, it appears that the contest arose upon a petition for the admission of the paper-writing to probate, and a caveat filed by the heirs-at-law and next of kin'of the deceased. The evidence was taken in open court. The learned judge filed an opinion expressing the conclusions of fact at which he had arrived.

It thereby appears that he found in the evidence convincing proof that the paper had not been executed in the manner required by law to make it a valid testamentary disposition, and that it was defective in two respects—first, because it was not signed in the presence of two witnesses as required; and second, that it was not published by the testatrix as her last will in the presence of two witnesses.

I have examined with more than usual care the evidence contained in the transcript. I have never encountered proofs that were so confused, confusing and contradictory. It is not alone • that the witnesses contradict each other, but their own evidence is impossible to reconcile.

There were five witnesses present in the little room in which the transaction that attempted the execution of this will was carried on. One was the scrivener who drew the will. Two others were witnesses who signed, it. .The fourth was a person who is named-in the will as a beneficiary, but, I assume, for a small amount. Another person was present who was not called as a witness, and, no explanation is given for not calling her on the part of either side-. The court below had the great advantage of seeing and hearing the witnesses, and was able, therefore, intelligently, to determine whether any credit, and what credit, should be given to their statements. It is evident that the court concluded that no credit was to be given to some witnesses, and that the testimony of one of the testamentary witnesses established, as a fact, a failure to execute the paper in the two respects above stated, in the manner required by law, and was so convincing as to overcome any presumption which might arise from the fact that there was a complete and perfect attestation clause appended to the paper, under which the two witnesses signed. That the presumption which may arise from an attestation clause may be overcome, and that by the evidence of the two witnesses who signed it, has been decided. Berdans' Gase, 65 N. J. Eq. (20 Dick.) 681.

My examination of the evidence does not make it clear that the court below erred in the conclusion it reached upon the evidence. I ought not to reverse the action thereon unless it is clearly wrong. As I do not find it so, the order appealed from must be affirmed.


source: Caselaw Access Project

license: Public Domain

text:
    In the matter of the estate of Mary Berry, deceased.
    [Argued May 15th, 1906.
    Decided June 18th, 1906.]
    A testatrix, by a clause in her will, appointed her son executor, and added that in case he should neglect or decline to qualify and act as executor, her daughter, Jennie, should be executrix thereof. Testatrix died November 25th, 1905, domiciled in Morris county. Her son lived in North Dakota. On December 6th, 1905, a beneficiary under the will applied to the surrogate for probate thereof. On the same day the daughter, Jennie, filed a caveat against the issuance of letters to the son. On. December 12th, 1905, the son applied to the surrogate for probate of the will and for letters testamentary. This application was signed by a proctor and verified by the affidavit of the proctor. The contest as to the issuance of letters testamentary, inaugurated by the caveat of the daughter, was brought to a hearing before the orphans court on- February 23d, 190G, when the son appeared, submitted to examination, and insisted that letters testamentary should be issued to him.—Held, (1) that the orphans court had correctly concluded that the son had not neglected or declined to qualify as executor; - (2) that his application for probate and letters testamentary, signed and verified by his proctor and adopted by him, disclosed his purpose to act as executor; (3) the orphans court permitted caveatrix to present evidence claimed to show that the son should not be given letters testamentary, because he had been guilty of fraud in transactions with his mother, the testatrix. Quiere. As to the correct practice upon such a charge, and as to whether such a charge, sustained by proof, would justify refusing letters testamentary to the person selected by the deceased.—Held further, that the evidence produced was insufficient to support the charge.
    On appeal from a decree of the Morris county orphans court.

      Mr. Willard W. Cutler, for the appellant.

      Mr. Henry C. Pitney, Jr., for the respondent.
   Magie, Ordinary.

This appeal questions the correctness of an order of the Morris county orphans court, directing the issuance to Abram B. Berrjr, of letters testamentary upon the estate of his mother, Mary Berry, deceased. ' _

The transcript sent up with the bill discloses that on December 6th, 1905, Ella Angleman, alleging that she was a beneficiary under the will and codicil of Mary Berry, who died November 25th, 1905, presented to the surrogate an application for the probate of said will and codicil, and that on December 12th, 1905, Abram B. Berry, alleging that he is the executor appointed by said will and codicil, presented to the surrogate an application for the probate thereof and the issuing of letters testamentary to him. This application was signed by his proctor and verified by the- affidavit of the proctor.

It further appears that, by some proceedings not disclosed by the transcript, the matter was brought to hearing in the orphans 'court, and that on January 22d, 1906, the court ordered the will and codicil to be admitted to probate, but by the same order, set down for further hearing, a contest which had been raised respecting the issuing of letters testamentary thereon. That contest was raised upon a caveat which had been filed December 6th, 1906, against the issuing of letters testamentary to Abram B. Berry.

By the sixth clause of the will the testatrix thus provided:

“I nominate and appoint my said son, Abram B. Berry, to be the executor of this my last will and testament, but in case my said son, Abram, shall neglect or decline to qualify and act as executor hereof, it is my will that my said daughter, Jennie Berry, shall be the executrix thereof.”

The caveat was filed ^y Jennie B. Lutes, the Jennie Berry named in that clause.

• On February 5th, 1906, which appears to have been the day to which the hearing of that contest was adjourned, Mrs. Lutes presented to the surrogate an application reciting that Abram B. Berry, the executor named in the will, had neglected to qualify and act as such, and praying that letters testamentary on such will and codicil should be granted to her. On a subsequent day the matter thus raised went to hearing, and upon proofs taken in open court the order appealed from was made, on February 24th, 1906.

It is first contended that the issuance of letters testamentary to Abram B. Berry was erroneous, because it was shown that he had neglected to qualify and act as executor, and that therefore Mrs. Lutes, under the provisions of the sixth clause of the will, was entitled to letters testamentary, and he was not.

As testatrix died November 25th, 1905, and as Mrs. Lutes on December 6th, following, filed a caveat against the issuance of letters testamentary to Abram B. Berry, and as it appeared that she and the other parties interested knew that he lived in North Dakota, at a great distance from the domicile of testatrix, his attendance before the court on February 23d, 1906, and submitting to examination, and insisting on the issuance of letters to him, was properly held by the orphans court to show that he had not neglected to qualify as executor.

It is further contended that his neglect was shown because he never made personal application for letters testamentary and that the application signed by his proctor was of no avail.

In my judgment this contention cannot be yielded to. The application was in writing, signed by an officer of the court, who represented his client in so doing. It was verified by affidavit, as required by the first rule of the orphans court. Abram B. Berry, when he reached Morris county, adopted and approved it. It sought to obtain letters testamentary on the estate of decedent, and I think it is impossible to maintain that Abram B. Berry neglected to qualify when, under the contest inaugurated by the caveat, he appeared at a day fixed by the court. The order cannot be reversed on this ground.

The transcript shows that the orphans court allowed caveatrix to examine Abram B. Berry and to introduce other evidence, upon which she then contended, and now contends, that he was shown to be an unfit person to- be qualified as executor. She claims that it was shown that he had acted fraudulently in some transactions with the testatrix, his mother. If such grounds were proper to be presented to an orphans court, on the question of granting letters testamentary, I think the course of practice was irregular and ought not to have • been allowed. Caveatrix ought to have been compelled to file specific charges of fraud, so that the applicant would have been apprised of what he was accused of. No such charge was made in the caveat or in the application of caveatrix.

I do not think it necessary to express any opinion in respect to the jurisdiction of the orphans court to examine into the character and conduct of a person appointed to be executor of his will, by a competent testator, and thereupon to exclude the appointee by denying him letters testamentary. In 'some states power of this sort has been conferred on probate courts. We have no such legislation. The question thus suggested was not fully argued.

But if it be assumed that the contest over the issuing of letters testamentary to Abram B. Berry was properly before the court on this ground, I think there was no sufficient proof of fraudulent conduct which would justify a rejection of his application for letters testamentary on his mother’s appointment.

It appeared,, and he admitted, that he' procured from his mother the discharge of a mortgage on land of his in North Dakota without payment. He applied to her for that discharge by a letter which was produced. He therein gave reasons such as a mother might well be influenced by, and induced to discharge the mortgage without discharging the debt. He represented to her that he .could make an advantageous sale of the land and use the proceeds for building upon his property a building which he needed in his business. If his statement in that letter, to the effect that he could give her security on other lands, may be inferred to be a promise to do so, his failure to perform that promise would not show fraud, unless such a purpose was in his mind when he asked her to cancel the mortgage. The mortgage exhibited for the same amount, made, not to testatrix, but to her husband, is not connected with the canceled mortgage except by the agreement in the amount secured by each, which may easily be a mere coincidence. That mortgage was upon land to which Abram B. Berry had not yet acquired title from the United States, but it is plain that he had acquired some interest therein, and nothing indicates that it was not an interest that might be mortgaged, or that it was not sufficient security.

But lastly, his evidence, called out by appellant, and which was wholly uncontradicted, shows that he had paid to his mother, the testatrix, all that he owed her. The contention on this ground cannot prevail.

It is strenuously urged that the orphans court improperly excluded evidence upon the contention last dealt with,, and it is claimed that, for this, the order should be reversed, and the cause remitted to the orphans court to take further evidence.

An examination of the whole case convinces me that the evidence, excluded at first, was all admitted afterward, and so the caveatrix sustained no injury from its first exclusion.

The order appealed from must be affirmed, and the costs in this court must be imposed upon the appellant.


text:
    In the matter of the estate of Charles Meyers, deceased.
    [Decided June 18th, 1906.]
    1. The orphans court has no power under the Orphans Court act (P. L. 1898 p. 789 § 197), authorizing the court in causes respecting the probate of a will to order the costs of the litigation to be paid out of the estate of the deceased, to allow proctor’s fees payable out of the estate of the decedent in proceedings to open the probate of his will, on the ground that some of the next of kin had not been cited on the application for probate, and that the withdrawal of -a contest had been induced by fraud.
    2. Where an executor has been discharged, and a distribution of the estate has been made, the orphans court has no jurisdiction to make an order which imposed a counsel fee as part of the costs and expenses of litigation upon the decedent’s estate.
    On appeal from a decree of the orphans court of Cape May county.

      Mr. William T. Boyle, for the appellant.

      Mr. Matthew Jefferson and Mr. John W. Wescott, for the respondent.
   Magie, Ordinary.

The state of the case presented by this appeal is the same which was before me, on the appeal decided by me in Myers’ Case, 67 N. J. Bq. (1 Robb.) 560, with an addition setting out the order from which this appeal has been taken. The facts were so fully stated in the opinion above referred to that I deem it unnecessary to repeat them. The decree made thereon reversed a decree of the orphans court, which had opened the probate of the will of Charles Myers, and reinstated a caveat thereto, which had been withdrawn a long time before. This reversal was made November 22d, 1904.

The order now appealed from was made by the orphans court on March 30th, 1906. It recited that the court making it was satisfied that the petitioners before it had reasonable cause for contesting the validity of the will of Charles Myers, and it thereupon ordered a proctor’s fee of $2,500 to be paid by the trustees under said will, out of the funds of Charles Myers’ estate.

In my judgment, the orphans court possessed no jurisdiction to make this order, which imposed a counsel fee as part of the costs and expenses of litigation, upon the estate of the deceased. Its power is derived alone from the provisions of section 197 of the Orphans Court act of 1898. P. L. 1898 p. 789. It is thereby limited to litigation arising on a contest respecting the validity of a will offered for and admitted to probate. In this case, the will had been' admitted to probate six years before the litigation begun by the parties, whose proctors were the subject of this allowance, had commenced. The contest over the admission of the will to probate had been raised by a caveat, but it ceased by the withdrawal of the caveat. It was therefore admitted to probate without contest. These proctors were not then concerned. Afterwards they procured an order to show cause why the probate should not be opened. They prosecuted the same and obtained the order which was reversed in this court. Their prosecution of the order to show cause did not involve at all the validity of the will. The contention was Lhat some of the next of kin or heirs-at-law had not been cited upon the application for probate of the will, and that the withdrawal of the caveat had been induced by fraud. On these grounds they sought a right to contest the, validity of the will, but disclosed no grounds for such a contest. Nothing appears upon which the court could say that there was a reasonable ground for contesting the validity of the will.

There is another ground on which this order must be reversed. The case shows, beyond doubt, that the estate of Charles Myers has been fully settled. The executor has been discharged, and distribution of the estate has been made. What remains in the hands of him who was executor, is in his hands as trustee under the will. In my judgment, no power exists in the orphans court to impose such fees upon the trust estate under such circumstances.

The order appealed from will be reversed, with costs.


author: Bergen, Vice-Ordinary.

text:
    George M. Waldron v. Peter Layton et al.
    [Decided May 18th, 1906.]
    1. The Orphans Court act (P. L. 1898 p. 793 § 201), authorizing a person aggrieved by an order of a surrogate in proving an inventory or granting letters of administration, &c., to appeal to the orphans court by filing a petition of appeal with the surrogate within thirty days after such order, and (P. L. 1898 p. 793 § 202) providing that proceedings of the surrogate respecting the probate of a will shall be subject to appeal to the orphans court as if the will had not been proved, and fixing the time for such appeal, being a part of subdivision 17, entitled “Appeal from Surrogate,” must be read together, and when so read, an appeal from a surrogate’s order admitting a will to probate must be taken by a petition filed with the surrogate, and not in the orphans court.
    2. A will was admitted to probate August 27th.' A petition of appeal was not filed until August 6th in the following year. No other step was taken in the prosecution of the appeal until September, the 'following-year.—Held, that the unexplained delay in prosecuting the appeal constituted laches sufficient to defeat a right of appeal.
    On appeal from a decree of the Somerset county orphans court dismissing an appeal from the order of the surrogate admitting to. probate the. last will and testament of Jonathan H. Moore, deceased.

      Mr. Horace Codington, for the appellant.

      Mr. Theodore C. English, for the respondents.
   Bergen, Vice-Ordinary.

According to the transcript of the record of the proceedings sent up with this appeal, it appears that on the 27th day of August, 1903, the last will and testament of Jonathan H. Moore was duly admitted to probate by the order of the surrogate of the county of Somerset, and on the same day the executors named in the will qualified and assumed the dutiés cast upon them as such officers; that on the 26th day of February, 1904, the proctor of the appellant, who is one of the heirs-at-law of the testator, filed with the clerk of the orphans court a notice of appeal to that court from the order of the surrogate admitting the will to probate; that on the 16th day of August, 1904, the appellant filed his petition of appeal with the clerk of the orphans court, praying that the order of probate be set aside; that .the letters testamentary issued thereon be revoked, and that citations be issued to the parties in interest. On the 19th day of January, 1906, the orphans court dismissed the appeal and affirmed the surrogate’s order because the petitioner had not properly prosecuted the appeal, and from this decree this appeal was taken.

The petition of appeal in this court alleges as grounds for reversal—first, that within the statutory period the'appellant had caused to be filed a notice of appeal from the surrogate’s order; second, that on the 16th day of August, 1904, a petition, of appeal was filed in the orphans court, and proceedings taken thereon which resulted in bringing into court the parties in interest; third, that the orphans court denied a motion for an order that the petition of appeal be considered filed within fifteen days after the notice of appeal; fourth, that the surrogate should have issued citations in the first instance, because such doubts existed on the face of the will as to require him-to adopt that proceeding before probate; fifth, that the appeal was dismissed without a hearing on the merits; whereby the petitioner was prevented from having the will proved in solemn form. The real and only substantial objection, and one which includes all of the reasons stated, is that the orphans court dismissed the appeal for want of prompt prosecution when no such condition existed. That there was unusual delay in prosecuting the appeal if one had been properly taken is fairly to be inferred from the record, and in it no excuse or justification therefor appears. In my judgment, how.ever, there was no proper appeal. The statute permitting an appeal is to be found under subdivision 17- of the Orphans Court act. P. L. 1S&S p. '7S3, tit. "Appeal from Surrogate ” Section 201 under this subdivision enacts that any person aggrieved by any order or proceeding of a surrogate in proving an inventory or granting letters of administration or guardianship may, by filing a petition of appeal with the surrogate witliin twenty days after such order or proceeding, appeal therefrom to the orphans court. Section 202 of the same subdivision enacts that

“proceedings of surrogates respecting the probate of will shall be subject to appeal to the orphans court by any person interested, or other person legally representing him, and to proceedings thereon, as if the will had not been proved; provided, that such appeal be made within three months after such proceedings, before the surrogate, or within six months after such proceedings, in cases where the person appealing resides out of this state at the death of the testator.”

As these two sections are a part of the subdivision of the law which regulates appeals from the surrogate, they should be read together in determining the method of taking the appeal. The first section referred to requires the filing of a petition of appeal with the surrogate, and limits the time within which such petition may be filed in the eases enumerated in that section. The succeeding section provides for an appeal in proceedings relating to the probate of wills, and extends the time of appealing to three or six months, according to the residence of the appellant, without stating how the appeal shall be prosecuted. As this section prescribes no method for taking the appeal, my opinion is that the proceeding, set out in section 201 was intended to apply to both sections, and that an appeal from the surrogate’s order of probate must be taken by a petition filed with the surrogate, and not in the orphans court. It clearly appears from this record that neither the notice or the petition of appeal was filed with the surrogate as a notice or petition filed in the surrogate’s court, but both papers were filed in the orphans court. Prom this it follows that the appellant has not observed the law allowing such an appeal to be taken, and therefore the orphans court was justified in disregarding it.

It also appears from this record that the petition of appeal was not filed in the orphans court until the 6th day of August, 1904, a period of nearly a year having elapsed from the date of the order of probate, and that no other step was taken in the prosecution of this appeal, if one existed, until the month of September, 1905, and it seems to me that the orphans court committed no error in determining that an unexplained delay of two years on the part of the petitioner in prosecuting his appeal constituted such laches on his part as to justify its dismissal.

On the point that the surrogate should have determined that upon the face of the paper offered for probate such doubt existed as to require that officer to issue citations in the first instance, it is sufficient to say that a reading of the will indicates no such condition as to warrant this court in saying that the surrogate ought not to have acted in the premises, but should have referred the matter to the orphans court. .

I am fully satisfied that the appellant has shown no legal ground to complain of the decree appealed from, and that it should be affirmed, with costs.


text:
    Martha Wyckoff et al. v. William O’Neil et al.
    [Decided June 13th, 1906.]
    1. An executor is responsible for the amount of interest and penalties imposed under Gen. Stat. § SSlfi ¶ SS6, regulating the payment of collateral inheritance tax, resulting from his neglecting to pay such tax' within the limit of time required to prevent such additional charges on the state.
    2. Evidence examined, and held not to justify the allowance for counsel fees claimed by the executor.
    3. As an executor is not entitled to commissions until they have been settled and allowed, if he takes them before that time he occupies the position of a borrower of the amount so taken, and is chargeable with interest thereon to the time of his accounting.
    4. Evidence examined and held insufficient to sustain an allowance for traveling expenses incurred in connection with the business of the estate.

      5. An executor should not be charged with interest on moneys in his hands previous to the accounting, where it appears that he received such moneys not in bulk, but in varying sums as from time to time the amounts due on the different securities were paid, and where he settled his account promptly, he being under no obligation to make temporary investments of it.
    On appeal from the decree of the orphans court of Warren county.

      Mr. William I£. Morrow, for the appellants.

      Mr. Sylvester Q. Smith, for the respondents.
   Bergen, Vice-Ordinary.

The respondent as executor of the last will and testament of Mary E. Harris, late of Belvidere, Warren county, filed with the surrogate his final account to be audited and presented to the orphans court for examination and allowance. To this account certain exceptions were filed by the appellants, but only those which I shall state are now here for consideration. One of them disputes the right to a credit for $1,027.75, paid to the state treasurer in satisfaction of the total sum assessed against all the legacies subject to a collateral inheritance tax. The orphans court surcharged the accountant with $152.31, that sum representing the amount of interest and penalties imposed, because he did not pay the taxes within the time necessary to avoid the penalty. The appellants appeal from so much of the decree as allows the accountant credit for the residue of the amount paid, and the respondent appeals from the decree surcharging, the $152.31. I am satisfied that the orphans court committed no error in making the accountant responsible for the penalty resulting from his neglect to pay the taxes within the limit required to prevent such additional charges on the estate. He had ample funds of the estate, in bank, subject to his check, and the estate should not suffer because of his negligence. With regard to the exception which questions the allowance of the amount paid for collateral inheritance taxes, exclusive of the penalties imposed, it is manifest that the accountant has not observed the law which requires him, if the legacy or gift is of money, to “deduct the tax therefrom” (Rev. Stat. ¶. 88J/-1 § £68) and to pay it to the state treasurer, in doing which he is acting practically as the agent of the state, and strictly speaking the proceeding has no place in his final account. It is a matter in which no other legatee has any interest, it concerns only the executor, the legatee and the state.

In this case, if this was the only error, I should be content to let the matter stand as it is, trusting that, as it was claimed on the argument it would, the orphans court would correct the error in its decree of distribution, but as this account will have to be restated for other reasons, and in order to have the account stand as it should, I shall-hold that the accountant be charged with the whole amount paid on> this account, viz., $1,027.75, instead of $152.31, as decreed by the 'orphans court. The accountant will not suffer because he can retain from each legatee the true amount of the tax assessed against each legacy, which will not include the $152.31, for which he' is personally liable. This method has the advantage of showing the true balance for which the accountant should be charged, and avoid á retrial of the question on the settlement of the decree for distribution.

The next exception relates to a credit in the account of $300 for counsel fees paid Joseph H. Wilson, and in this connection I will also consider a further exception to the allowance of $100, additional counsel fee, to the same counsel on the final accounting. I find it-impossible to justify the allowance of the $300, and consider the $100 allowed when tire account was passed as ample compensation for any services' counsel could have rendered this executor in the discharging of the duties of his office. The inventory shows 'that this estate was bank stock or mortgages, and all of' such a class that they were realized on without suit, and apparently without any special difficulty. Nor does the evidence show any particular services rendered by counsel, or the necessity for them. The business of' collecting this estate and reducing it to' money was such that any man of ordinary business ability could readily conduct it without the aid of counsel. From the nature of the estate, the business' knowledge and judgment of the accountant—Ire having served two terms as surrogate of the comity of Warren—and supported bj’- the fact that the accountant had, for some years prior to her death, been the adviser and attorney in fact of the testatrix, with full knowledge of all her business affairs, and of the place and character of her investments, it is impossible to find any justification for this allowance. Reasonable counsel fees are never refused when the settlement of the estate requires the aid of counsel, but there must be a necessity and the fee allowed based upon some real and not fancied service, and the power to make an allowance ought never to be so exercised as to make counsel a legatee. The accountant will be surcharged with the $300 allowed by the orphans court as a counsel fee, but will be allowed the $100 awarded by the orphans court on the final accounting.

The next question raised relates to a charge of interest decreed by the orphans court against the accountant on $700, withdrawn by the executor as his commissions. The testatrix died August 17th, 1904, and the executor filed his inventory of the estate December 13th, 1904, ,but prior to this date, and on November 21st, 1904, he drew from his account, as executor, $700 on account of his commissions, and placed the same to his individual credit in bank. The final account of the executor was filed November 8th, 1905, in which the commissions were fixed at $717.62, so that with the exception of $17.62, this accountant had had in his possession, subject to his own use, his commissions for services nearly a year before they were fully rendered, and for all practical purposes before any of the services for which commissions were allowed, had been performed. As this executor was not entitled to commissions until thejr had been settled and allowed by the court (Lathrop v. Smalley’s Ex’rs, 23 N. J. Eq. (8 C. E. Gr.) 192, 194), he occupies the position of a borrower of the amount taken, and should be charged with interest as decreed by the orphans court.

Another exception, and one which the orphans court refused to sustain, relates to five items amounting to $25.50. The accountant prays allowance for car fare to Philadelphia and return, and expenses to assign five mortgages—they are set out in the record and need not be recited here—the cost in each case with a single exception was $4.90, the exception being $5.90.

The appellants insist that these charges are not proper, and it is difficult to understand from the evidence why the accountant was required to go to Philadelphia. In one case it appears that the purchaser of the mortgage was a resident of Belvidere, where the accountant lived, and as to every case the accountant testified that he had a business in Philadelphia which required him to go to that city every week during the time he has charged this estate with car fares. This admission of respondent is sufficient to justify a refusal of these charges. The ear fares were incurred for his own purposes, and the fair presumption from the nature of the business claimed to have been done for the estate is, that it was not necessary to put the estate to this expense, and if any business for the estate was done in Philadelphia, it was done there for the convenience of the respondent. He had ample opportunity as a witness to explain the matter in detail, but did not, beyond the statement that he went to Philadelphia to assign the mortgages because he had agreed to, but this agreement was carried out because he was going to Philadelphia weekly on his private business, and he would have gone even if the estate had no mortgages on property in that city. These items should not be allowed; they were expenditures made by the respondent in the carrying on of his private affairs and ought not to be east upon the estate.

The appellants also object to so much of the decree of the orphans court as overrules the exception to the charging part of the account because the accountant is not charged with interest on moneys in his hands previous to the accounting. After a careful consideration of this question, I have come to the conclusion that the decree of the orphans court in this matter is correct, and that the accountant should not be charged with this interest. He did not receive the money in bulk, it was paid to him in varying sums as, from time to time, the amounts due on the different securities were paid. He settled his account quite promptly, and was justified in holding the money to be disbursed as soon as the orphans court had passed upon it, nor did he have in hand any large sum until a few months prior to the date he might expect to be called upon to pay it out. He could not make any permanent investment, and I cannot say that under-the circumstances he was guilty of any negligence in the management of the fund sufficient to justify the court in charging him with interest on the fund in hand prior to the settlement of his account. Another ground of complaint is that the orphans court allowed counsel fees on the exceptions in that court and charged the estate with the costs of that dispute. In my judgment, the counsel fees of $200 to counsel for the accountant, and of $100 to counsel of the exceptants, was a proper allowance, but that the costs of so much of the proceedings in. the orphans court as are chargeable to the trial of the exceptions ought to have been adjudged against the accountant, because it was the errors in his account that provoked the exceptions, the substantial and material part of which have been sustained.

The decree of the orphans court will bo reversed, and the account ordered restated in accordance with the views here expressed. The costs of this appeal to be paid by the respondent.


author: G-UMMERE, ClIIEE-JuSTICE.

text:
    Seven Mile Beach Company, appellant, v. Charles S. Dolley et al., respondents.
    [Argued June 29th, 1906.
    Decided March 4th, 1907.]
    Defendants agreed with complainants to conduct a summer school at a certain place for a period of three years, and to erect and pay for, within three years, such buildings as might be required, and complainants agreed that, on performance by defendants, complainants would execute a deed for certain land located at the place where the 'school was to be conducted. The concluding clause of the contract recited that it was the intention of the agreement that defendants should conduct a bona, fide summer school, and, in return, receive the land. Defendants conducted a school, but erected no buildings, the school being carried on in buildings belonging to other parties.—Held that, on a bill by complainants to declare the agreement void by reason of failure of performance on the part of defendants, complainants were entitled to a decree.

      On appeal from a decree of the court of chancery advised by Vice-Chancellor Bergen, who filed the following opinion:
    This contract is very badly drawn, and it requires the reading of the whole contract to enable you to apprehend what the parties intended by it. As I interpret the contract, there appears to be two branches to it. Along the lines of one a conveyance was to be made to certain individuals, provided they would buy and conduct a summer school at this place called Avalon. Connected with that, however, wras apparently a vague theory that it was to be stationary, and an association was to be organized, and to that association another tract of land was to be conveyed, provided they erected buildings and continued to use it for the purposes of a summer school. “The said ground to only be used for the purposes of the summer school of said association.”
    I do not interpret this contract as meaning that it is an absolute requirement that the individual defendants shall erect any building. Now, the stipulation is, they are to erect and pay for, within three years from the date of this agreement, such buildings, &e., as the association- may require for its purposes; and the further stipulation in this contract is that there shall be an association incorporated, but it limits the effect of this stipulation by the words, “but no definite amount of building is specified.”' Practically that destroys the agreement to- build, because if there is no definite amount of building specified, the parties of the second part may build a building that would cost only a nominal amount, and they would say and insist then that they had complied with this clause of this contract.
    However, at the close of this agreement, we find the words, summing it all up, that it is the intention of this agreement that the said parties of the second part shall conduct a summer school, bona fide, in accordance with the prospectus, a map of which is hereto attached, marked Exhibit B, for a period of three years, and should in return receive from the Seven Mile Beach Company the land hereinbefore mentioned, in the manner herein described.
    My conclusion, therefore, is that so far as the individual defendants here are concerned, they are entitled to have the land conveyed to them. On the other hand, the association is not entitled to specific performance, because they have practically abandoned the enterprise. If the association had maintained its incorporation up to this date, and by that act had indicated that they had any intention of carrying out the contract which was to take this land and put on it buildings, lecture halls, &c., and' continue the work of a summer school, the situation would be different. But as I look at it now, there is no one to convey the property to. The corporation is absolutely defunct. It has been declared to have no existence in law. There is no one to whom the property can be conveyed. And coupled with the fact, as it appears here, that they have substantially abandoned any intention of carrying out the stipulation to conduct this summér school, or to use this land only for the purposes of a summer school, I do not consider that.they are in a position to ask specific performance. I cannot accept the argument that because they have done all this they can now come in and say, “Well, we are sorry we neglected to take advantage of our opportunities; we will organize another corporation, and thereby get into position so that we can go on and have this property conveyed to us.” That cannot be dome.
    I will advise a decree of specific performance as to the one block of lots, but as to the other, there shall be no specific performance. I will not allow costs to either party.
    Of course, you will understand that where there is a contract like this decreed to be specifically performed, the parties stand in this relation—that the vendor holds the title in trust for the vendee, and he is only entitled or only bad a vendor’s lien for the purchase price. Substantially the land belongs to the party to whom it should have been conveyed. I am very strongly of the opinion that you took the property just as it was in 1896, upon the theory that the court has determined that the Seven Mile Beach Company held the title in trust for you, and all that they were entitled to was the vendor’s lien for the purchase price, whatever that may have been. Now, of course, they have not any lien, because the purchase price has been satisfied. If it was mone}r, then they would have a lien for their money, and you would have had to pay the taxes if the property had been conveyed. I think the defendants are hound to pay the taxes on the property from the time 'they were entitled to a conveyance, on the theory that it is held in trust for them, as a trustee, keeps down interest and taxes and like charges. A trustee does it for his own sake. If he collects any rents he is entitled to, he can apply the rent to the payment of such indebtedness, and he is entitled to his mone};, with interest on it. •

      Mr. Clarence L. Cole (with Mr. Lewis Starr on the brief), for the appellants.

      Mr. Norman Grey, for the respondents.
   The opinion of the court was delivered by

G-UMMERE, ClIIEE-JuSTICE.

The appeal in this ease is from a decree, made upon a cross-bill filed by the defendants, which requires the complainant to specifically perform an agreement, in writing and under seal, for the conveyance of a tract of land at Avalon, on Seven Mile Beach, Cape May county, New Jersey. The purpose of the original bill filed by the complainant was to have this agreement declared to vest in the defendants no right or interest in the lands described therein, and to be absolutely null and void, by reason of failure of performance on their part. The decree appealed from, in addition to the affirmative relief granted on the defendants’ cross-bill, denied the relief sought by the complainant in its original bill. The complainant appeals both from the portion of the decree which refuses' it relief and also from that part thereof which grants relief upon the defendants’ cross-bill.

The agreement which is the basis of this litigation was made on the 6th day of May, 1903. By its terms the defendants, who were connected with various educational institutions in the city of Philadelphia, agreed, among other things, to incorporate a society under the name of the American Association for the Advancement' of Education; to conduct a summer school of the association at Avalon, New Jersey, and nowhere else, for a period of three years from and after the date of the agreement; to conduct the school at least four weeks of every summer during the three years, and to erect and pay for, within the three years, “such buildings, lecture halls,” &e., as the association might require for its purposes, no definite amount of building being specified. The complainant agreed that if the “foregoing covenants” of the defendants should be well and faithfully performed, it would, at the expiration of the three years, execute and deliver a good and sufficient deed Lo them for twenty specified lots, located in the borough of Avalon. The concluding clause of the agreement is in the following words:

“It being the intention of this agreement that the said parties of the second part [i. e., the defendants] shall conduct a summer school Iona fide, in accordance with the prospectus, a copy of which is hereunto attached, for a period of three years, and should in return receive from the Seven Mile Beach) Company the land hereinbefore mentioned in the manner herein described.”

It appears from the proofs that in the summer of 1903 the defendants, having obtained from the borough of Avalon permission to use the public schoolhouse of the borough, and from the complainant permission to use an old sawmill located upon the lands in dispute, opened a school in these buildings, and conducted it there during the summer season; and that during the following summer they also conducted their school in those buildings. The proofs show that no rent was required from them for the use thereof. During the summer of 1905 the defendants conducted their’ school in a cottage, which they rented for the purpose, and also in the old sawmill. It is conceded that neither during the duration of the contract, nor at any subsequent time, did they erect any building in Avalon in compliance with the terms of their contract; and further, that after the summer of 1905 the carrying'on of the school was permanently abandoned.

The construction put upon the agreement by the learned vice-chancellor was that tire sole obligation which it imposed upon the defendants as a condition to their right to a conveyance of the land in dispute was to conduct a summer school at Avalon, bona fide, during the period specified in it. His conclusion 'that this was the true construction of the instrument was rested upon the words of its last clause, which he considered to be a summary of its binding provisions. It seems to us, notwithstanding the declaration of intention contained in the'clause referred to, that the construction put upon the agreement by the learned vice-chancellor is too narrow. It is apparent, from a reading of it as a whole, that the purpose sought to be accomplished by the complainant was the establishment of a permanent summer school at Avalon, which would form one of the attractions of the place as a seaside resort. The natural effect of the conduct of the school for three years would be to carry the scheme beyond the experimental stage. The erection during that period, by the defendants, at their own expense, of such buildings as should be required for the purpose of the school, would constitute a permanent investment by them, and tend to insure their continuing the conduct of the school after the expiration of the three-jrear period. Their promise to make this investment was just as binding upon them, and was as much a part of the consideration for the complainant’s promise to convey, as was their agreement to locate the school at Avalon and conduct it there for three years. In reaching this conclusion we do not overlook the suggestion contained in the opinion of the learned vice-chancellor that the words, “but no definite amount of building is specified,” in the covenant of the defendants to build, practically destroys that covenant, for the reason that it would be satisfied by the erection of a building of nominal cost. The suggestion, however, seems to us to be without force. The agreement is to erect such buildings as the association should require for its purposes. Both parties to it saw that the number, size and character of the buildings which would be required by the association would depend largely upon the degree of success which should attend the contemplated scheme. They, therefore, did not attempt to anticipate the future by providing for the erection of a fixed number of buildings of specified size, which might, on the one hand, turn out to be greatly in excess of the needs of the association, and, on the other hand, entirely insufficient for its purposes, but agreed generally that whatever buildings the association should require for its purposes should be erected by tbe defendants, leaving their number, size and character for the future to determine.

The portion of the decree appealed from by the complainant should be reversed and a decree entered in conformity to the prayer of the complainant’s bill.

For affirmance—None.

For reversal—The Chiee-Justice, Garrison, Fort, Hendrickson, Pitney, Swayze, Eebd, Trenchaed, Bogert, Vris-DENBURGH, VROOM, GREEN, GRAY, DlLL-14.


author: Gummere, Ci-iiee-Justice.

text:
    Alfred L. Miller et al., appellants, v. John A. Willett et al., respondents.
    [Submitted July 10th, 1906.
    Decided March 4th, 1907.]
    Equity will not retain a bill to enforce the liability of a number of defendants as stockholders in a corporation, on the ground that such retention would prevent a multiplicity of actions at law, where it appears that each of the complainants has a separate and independent claim against the several defendants, the adjudication of the validity of one of which would settle nothing with relation to the other.
    On appeal from a decree of the court of chancery, advised by Vice-Chancellor. Grey, whose opinion is reported in 70 N. J. Eq. 396.

      Mr. Rayion E. Horton and Mr. Eugene Emley (with Tolies & GoFbey, of Denver, Colorado, on the brief), for the appellants.

      Mr. William T. Lewis, for the respondents.
   The opinion of the court was delivered by

Gummere, Ci-iiee-Justice.

The bill of complaint in this cause was filed, by the creditors of the bank of Monte "Vista, a corporation organized under the laws of the State of Colorado, against certain of the stockholders of that corporation, who reside in this state, to enforce against them a liability imposed by the following provision of the statute of Colorado:

“Stockholders in banks, savings banks, trust, deposit and security associations, shall be held individually responsible for debts, contracts and engagements of such associations, in double the amount of the par value of the stock owned by them respectively.”

The prayer of the bill is that the several defendants may lie decreed to pay to each of the complainants certain specified sums of mone}r, the sums specified being doable the par value of the stock owned by them respectively. Demurrers having been filed by the several defendants, and argument having been heard thereon, it was ordered that the demurrers do stand. Complainants appeal from this order.

The only ground upon which, it is contended before us the bill should have been retained is that the court of chancery should have assumed jurisdiction for the purpose of preventing a multiplicity of suits at law. This ground was urged before and considered by the learned vice-chancellor, and declared by him to be without merit, for reasons stated in the opinion which he' filed in the court below. We concur in his conclusion, and in the reasons which led him to it. From the allegations of the bill it appears that each one of these complainants (several hundred in number) has a separate and independent claim against the several defendants. The adjudication of the validity of one of them will settle nothing with relation to the others. Each one' stands upon its own merits, and against each of them the defendants are entitled to malee a separate defence. There must be something more than the mere fact that two or more parties’ are jointly and severally indebted to a large number of creditors, whose claims are entirely independent of each other, to justify a court of equity in assuming jurisdiction to try and determiné rights which are purely legal in their character.

The order appealed from must be affirmed.

For affirmance—The Ci-iief-Justice, Garrison, Fort, Garretson, Hendrickson, < Swayze, Eeed, Trenci-iard, Bogert; Vredenburgi-i, Vroom, Green, Gray, Dill—14.

For reversal—Pitney—1.


author: Fort, J.

text:
    Wilhelmina Baur, respondent, v. Louis P. Cron et al., appellants.
    [Argued July 3d, 1906.
    Decided March 4th, .1907.]
    Where a person enfeebled in mind by disease or old age is so- placed as to be likely to be subjected to the influence of another, and makes a voluntary disposition of property in favor of that person, there must, to sustain it, be proof of the fact that the donor understood the nature of the act and that it was not done through the influence of the donee.
    On appeal from a decree in the' court of chancery, advised by Vice-Chancel]or Bergen, who filed the following opinion:
    The original bill filed in this cause was an interpleader, filed on behalf of a party whose property was encumbered by a'mortgage, amounting to $1,500. In that proceeding a decree of’inter-pleader was taken, the money paid into court, and this contest arises over the disposition of the fund. The mortgage in question belonged to Mrs. Elizabeth Cron, by virtue of an assignment made to her some years ago. She died, leaving a will; which was admitted to probate, and in the interpleader proceedings William Cron, one of the sons and an executor, filed an answer, claiming that the money should be paid over to the estate for distribution. The other son, Louis P. Cron, answered, insisting that the money belonged to him, because previous to the death of his mother, Elizabeth Cron, she had made him a gift of the mortgage. His story is this: That in March, as his mother died on the 11th of May following, she, being tiren ill, gave him this bond and mortgage; in other words, made him a present of it. That he took possession of the bond and mortgage, and had since held it in possession. Mr. Wilson, an attorney, was on the 16th day of April, preceding her death in May, present to obtain the material for drafting a will for Mrs. Cron, and he testifies that during a conversation''on that occasion she told him that she had given this bond and mortgage to her son Louis; that he inquired how she had made the transfer, and finding that it was only by delivery, he advised her that she would have to make a formal assignment of it, which he says was afterwards carried out. It appears in the case that the only persons in the house taking care of Mrs. Cron during her last illness were her son Louis, the donee, and a Mrs. Reddinger, who was employed as a nurse; that the- care and attention which she received during the latter days of her life came entirely from these two persons. Under this condition of affairs it seems to me that the burden of maintaining this gift is cast upon the party claiming it, and that this conclusion is sustained by the opinion written in Black v. Bees, 66 N. J. Bq. (121 Dick.) W, by the chief-justice, in a case determined by the court of errors and appeals of this state. The chief-justice, illustrating the conditions in that case, used the following language, which I will read: “For a period of nearly three months prior to his death he was an inmate of his daughter’s home. He was, during all that time, dependent upon her for the care and service which a man in his weakened physical and mental condition constantly requires. The normal relation of parent and child as it had existed in earlier years had been reversed, and the daughter had become the guardian of the father. In this situation the Jaw presumes that a gift made by the parent to the child is the produce of undue influence, and casts upon the latter the burden of proving the contrary.” And the chief-justice, in another part of the opinion, speaking of the finding of the vice-chancellor, used the following language: “He seems to have considered, however, that such relationship was not shown, unless it was made to appear that the donee occupied such a dominant position toward the donor as to raise the presumption that the latter was without power to assert his will in opposition to that of the donee. But this is not the situation. The rule has a much broader sweep. Its purpose is not so much to afford protection to the donor against the consequences of undue influence exercised over him by the donee as it is to.afford him protection against the consequences of voluntary action on his part, induced by the existence of the relationship between them, the effect of which upon his own interests he may only partially understand or appreciate.’'' In using this latter language the chief-justice was referring to the absence of independent advice as affecting the paper that was being executed. Applying the facts to this case, we find that Mrs. Eeddinger testified that in August, 1903, shortly after the death of the father, the mother said to her that she wanted her son Louis to have this bond and mortgage for $1,500.
    Without now calling attention, as I shall hereafter, to the apparent interest of this witness, it is enough to say that if Mrs. Cron used any such language at that time, she afterwards radically changed her mind, because on the 6th of December following she gave instructions to have a codicil to her will prepared, which Mr. Schmidt has testified was executed by her, in which she made no attempt to give her son Louis this mortgage of $1,500, but, on the contrary, directed how it should be disposed of, which was in a manner entirely different from that suggested by Mrs. Eeddinger. Under the codicil her funeral expenses were to be paid, half out of the $1,500 and the other half out of some money she had in the savings bank. Then her son was to be paid for services which he had rendered to her, and which he might render to the estate after her death, without fixing the amount, and the balance of this $1,500 was to become part of .her estate, to be divided between her children, so that on the 6th day of December, 1903, she certainly did not have in her mind any determination whatever to give to this son this $1,500 mortgage. The next step in this proceeding occurs in February—either the latter part of February' or the beginning of March, I do not recall the exact date—when the son Louis .and Mrs. Reddinger testified that this mortgage was given to the son Louis by delivery. It will be observed that this took place after Dr. Quinn testifies her last illness began, which was the 23d of February.. From the 23d of February until her death, on the 11th day of-May following, Dr. Quinn was in constant daily attendance, oftentimes going there more than once a day. And at that-time this old woman, declining in life, under the influence only of her son and this nurse,.and without independent advice, is said to have given this mortgage to her son. Standing just there, manifestly, under the case I have read from, it would not be a good gift. Next, we have the calling in of the attorney to draw the will. In this connection we must recollect that the old friend of Mrs. Cron, a person who had always advised her, the witness Mr. Schmidt, the person who had drawn her previous wills and codicils, and who had drawn a codicil as late as December previous, and who afterwards, in March, had been sent for and asked to prepare, and who did prepare, another codicil to her will, when he went there with the witness to have the codicil executed refused to have it executed, because, as he said, he was satisfied that this woman was not then in a mental condition to know what she was doing with her property. What turned this old woman from this lifelong friend ? Why did she have someone else draw a will for her, whom it is admitted had never done any' business for her before? The person upon whom she had always relied was unwilling to have the will executed or changed. Who sent for this new lawyer? The evidence is very vague, to say the least. At any rate, this is apparent: That the two people who were interested in having this mortgage assigned were the only people about the house with whom this dying woman could communicate, and they'- procured and had brought there a lawyer who not only drafted a will, but who caused this mortgage to be formally assigned.
    I confess, with reluctance, that I cannot accept as true much of the evidence of the lawyer. It is manifest that he was drawing upon his imagination when he testified here that Mrs. Cron had told him that she had given Louis this mortgage, and that he had had it a long time, because he had collected interest on it.. Mrs. Cron, if she did say that, told him what was not true, as a matter of. fact, and which she knew was not true. I am satisfied that the attorney, owing to his many duties, and perhaps to the fact that he afterwards, as the attorney for Louis Cron, collected this interest, supposed, that she told him. Certainly it was not told him, because the fact did not exist at the time he testified she told him about it. I know how it is with the lawyer in active practice. He is very apt to forget or overlook, but he ought not to permit his imagination to run away with him, and. testify that he was told by Mrs. Cron that Tjouís Cron had collected interest on that mortgage, when, as a matter of fact, he had not collected it, and did not collect any interest on it until after his mother’s death. My notion of the case is that the claimant, the donee, has not met the burden of proof. What he should have done would have been to have immediately told his brother that he had been preferred, and that this mortgage had been assigned to him, instead of keeping it in secret until the person who had executed this assignment was dead. On the contrary, he refrains from telling about it, and the assignment is not even put on record until a long time after the death of the mother, and I think not until after the will had been probated, although I may be wrong as to that fact. Now, as to the interest of Mrs. Reddinger. I cannot dispose of this case without referring to it. As far as I can see, there is no reason why she should remain at that house with Louis Cron for more than a year after the death of the person who employed her. She testified that she is staying there because she promised Mrs. Cron that she would remain there until the estate was settled. There is nothing in this estate for her to settle. There can be no difficulty about tire settlement of the estate. The only difficulty is about the settlement of this controversy, in which she is one of the most important witnesses; and coupled with the fact that she still remains in this house with this man for more than a year after her duties there ceased, and, so far as this case shows, without employment, and without compensation, her interest, as I look at it, is substantially as strong as that of the claimant, and I am persuaded that the assignment of this mortgage was a matter arranged between Mrs. Reddinger and Louis P. Cron to get the property away from the old lady to his advantage.
    I will therefore advise a decree that this fund belongs to the estate of Elizabeth Cron. •

      Mr. Patrick H. QiThooly and Mr. Samuel Koestler, for the appellant.

      Messrs. Hudspeth & Carey, for the respondent.
   The opinion of the court was delivered by

Fort, J.

It is unnecessary to repeat the facts in this case, in view of the full and accurate discussion of them in the opinion of Vice-Chancellor Bergen, who advised the decree from which this appeal is taken. With his statement of the facts we agree, and to them refer for the details of tire case.

But upon these facts we think the complainant is entitled to a decree, not upon the ground that the donor of the mortgage in question was without independent advice at the time it is alleged she gave it to her son, the defendant, or at the time she made the formal assignment thereof to him, but because we think- the facts established by the proof raise a presumption of undue influence on the part of the defendant in procuring the alleged gift, and that, because - of that presumption, the burthen was cast upon the defendant to- show, by clear, convincing and satisfactory evidence, that the gift of the mortgage was the voluntary and intelligent act of the donor. Coffey v. Sullivan, 63 N. J. Eq. (18 Dick.) 296, 302; 20 Cyc. 1219.

In this respect he has failed to carry this burthen of proof, and therefore we think the decree below was right, and that the case is governed in its decision, by the opinion of this court in Haydock v. Haydock, 34 N. J. Eq. (7 Stew.) 570, rather than by that of Slack v. Rees, 66 N. J. Eq. (21 Dick.) 447, upon which the learned vice-chancellor who advised the decree below seems to have put it.

In Haydock v. Haydock, supra, Mr. Justice Reed, speaking for this court, said: “I take the rule to be settled that where a person enfeebled in mind, by disease or old age is so placed as to be likely to be subjected to the influence of another, and makes a voluntary disposition' of property in favor of that person, the courts require proof of the fact that the donor understood the nature of the act, and that it was not done through the influence of the donee. * * * The presumption against the validity of the gift is not limited to those instances where the relation of parent and child, guardian and ward, or husband and wife, exist, but in every instance where the relation between the donor and donee is one in which the latter has acquired a dominant position.”

In the case before us the facts stated by the vice-chancellor, and justly found by him, show that the donor, the mother of the defendant in this case, was an old woman, enfeebled in mind by disease or old age, or both, and under the influence of the defendant and the nurse, who were with her constantly, and practically her sole attendants.

These facts bring the case clearly within the rule laid down by Mr. Justice Reed in the case of Haydock v. Haydock, above cited.

The decree of the court of chancery is affirmed.

For affirmance—The Chief-Justice, Garrison, Eort, Hendrickson, Pitney, Swayze, Reed, Trenchard, Bogert, Vre-DENBURGH, GREEN, GRAY, DlLL-13.

For reversal—None.


author: Swayze, J. Garrison, J.

text:
    Johnson & Johnson, respondent, v. Seabury & Johnson, appellant.
    [Argued June 20th, 1906.
    Decided June 17th, 1907.]
    Where a complainant seeks to protect a trade name from unfair competition, he will not be refused relief merely because for several years he circulated catalogues and price lists containing false statements as to his exclusive right to the name, where it is not proved that the trade name owes its value in a material degree to the false representations, and the publication has ceased prior to the filing of the bills.
    On appeal from a decree of the court of chancery, advised by Vice-Chancellor Bergen, whose opinion is reported in 69 N. J. Eq. (i& Robb.) W¡6.

      Mr. Willard P. Voorhees and Mr. Archibald Cox (of the New York bar), for the complainant, respondent, Mr. Charles G. Coe, on the brief.

      Mr. Charles L. Corbin and Mr. William Brinkerhojf, for the defendant, appellant.
   The opinion of the court was delivered by

Swayze, J.

The evidence establishes that the absorbent cotton and gauze of the complainant have been known for a number of years as “Bed Cross Cotton” and “Bed Cross Gauze;” that the words “Bed Cross,” as applied to absorbent cotton and gauze, have acquired in the trade a secondary meaning and designate goods of the complainant’s manufacture. The time when this secondary meaning was acquired is not and probably cannot be fixed with certainty. Doubtless it was, as usually happens in cases of the kind, a gradual growth. We see no reason to doubt the testimony of witnesses who fix the date as early as 1892 or 1893. The testimony of other witnesses fixing later dates does not conflict with these statements, since the later dates fixed by them are necessarily only the dates of their own knowledge of that use of the words. The time when the manufacture was begun by' the complainant, the prominence given by it to the red cross on its packages, the persistency of its use on large and small packages alike, and the vigorous efforts of complainant to protect its use of the words against harmful legislation in 1894, sustain this view.

We are satisfied also that the defendant has unfairly simulated the complainant’s packages of absorbent cotton. The original business connection between the predecessors of complainant and the predecessors of defendant, the competition which resulted from their separation, and the original controversy as to the merits of interleaving cotton with tissue paper,' show that the defendant was familiar with complainant’s method of packing goods.

In view of this knowledge, vre cannot explain the change in the color of the carton in which an inferior grade of defendant’s cotton was packed, from granite and chocolate to dark blue, the use of granite cartons for the best grade and dark blue for the inferior grade, the use of the “Mercury” seal on the former and the “Bed Cross” seal on the latter, the increased prominence given to the red cross by defendant after a somewhat irregular-use for so many years, and the adoption of the interleaving by tissue paper of the same color as complainant’s, upon any theory except that of an effort on the part of defendant to profit by complainant’s trade. The injury was increased by the attempt to confuse the complainant’s cotton with an inferior grade. If the defendant had desired to avoid confusion it had only fo continue its previous course of business.

The question as to gauze is more difficult. The defendant was the first ‘to use an amber glass jar, and the color was later adopted by the complainant, whose motive in doing so does not seem to be questioned. The defendant then changed from a round jar to a square jar like that of complainant. The change is suspicious, but in view of the fact that the red cross was not used on defendant’s jar, we are not prepared to say that there was an intent to simulate complainant’s packages. The use of the red cross seal on the “glazed container,” however, indicates a desire to connect the name “Red Cross” with defendant’s gauze, and although we think, for reasons to be stated, that the use of the seal itself was permissible, the complainant is entitled to protection in the use of 'the name. The additional wrapper which was used by the defendant as an excuse for the use of the red seal was an extra trouble and expense, and the reason alleged for adopting it—the protection of the ornamental labels—does not appeal to us with any great force. The protection had not been found necessary during the previous use of the glazed containers for some years, and it was quite unnecessary to seal the exterior packing with a red cross seal when the red cross was not elsewhere used in connection with gauze.

The greatest difficulty we have had has been with the right of the complainant to claim relief in equity. Beginning with 1894 and continuing for several years, at least until 1899, the complainant circulated catalogues and price lists containing a statement that an act of congress had vested the use of the red cross symbol in the American National Red-Cross Society, and that the society in recognition of the services of the complainant, in perfecting surgical appliances and medicinal preparations, had granted to complainant the exclusive right to use the red cross trade mark upon this class of preparations. This statement was untrue. The only foundation for it was that the red cross society, in order to induce the complainant to withdraw opposition to a pending bill intended to secure the exclusive use of the red cross to the society, had recognized the exclusive right of the complainant to the red cross as a trade mark on chemical, surgical apd pharmaceutical goods, and had agreed not to contest complainant’s exclusive right in case the bill passed.

There is no question about the principle that a false representation in a trade mark will prevent equitable relief for its protection. The cases cited by the defendant are, with one exception, cases-where the false representation was contained in the trade mark itself. In such a case it is quite impossible to determine to what extent good will, fox which protection is sought, has been created by the false assertion, and to afford protection to a trade mark containing a false representation would perpetuate the falsehood by the decree of the court. A very different question is presented where, as in this case, the false representation is contained in trade literature, which may or may not have contributed to the good will which is to be protected. Allowance must be made for what in the law of sales is called mere dealers’ talk and for trifling inaccuracies or faults. No one has ever supposed that every statement of a trade advertisement is a warranty and must be proved true on penalty of losing the whole good will of the business. The difficulty is to determine what inaccuracies may be disregarded as mere puffing. An illustration of a trifling inaccuracy is found in Clark Thread Co. v. Armitage, 67 Fed. Rep. 896; 74 Fed. Rep. 936. The English courts have even gone so far as to hold that the false statement that a shirt was patented when made only in invoices and advertisements, would not debar the complainant from relief. In that case the complainant described himself as patentee of the shirt in every invoice which he gave to every purchaser as well as in publications. Yet the court of appeal reversed Vice-Chancellor Bacon and gave relief. Lord-Justice Hellish, with the approval of Lord-Justice James, said: “I am, therefore, very clearly of opinion, and I do not think there can be any doubt about it, that the fact of these false representations of the article being a patent having been made to some of the public, would be no answer at all to an action. Indeed, there would be this great difficulty to be solved, how much misrepresentation must be made to be an answer to an action? Not only that, but it would be very difficult to say, where the fraud is not in the trade carried on, how far the misrepresentation must go or to what extent the misrepresentation must extend, before it would be an answer to an action or a suit.” Ford v. Foster, L. R. 7 Ch. App. 611; 41 L. J. Ch. 682. The particular question has never been reviewed in the house of lords, but the extent to which the English courts will go in protecting a trader whose conduct has, in the main, been fair, is shown in the case of Cochrane v. Macnish, A. C. 225 (1896); 65 L. J. P. C. 20. The appellants claimed a trade mark for “Club -Soda,” upon which were the words “Manufactured in Ireland by H. M.’s Royal Letters Patent.” The court of Jamaica held the statement false and refused relief. The appellants contended before the privy council that the words meant “manufactured in Ireland by means of patented machinery,” and that thus interpreted the words were true. The privy council took this view and reversed the judgment.

In this country we have a case in a federal court of first instance in which a different view was taken. Preservaline Manufacturing Co. v. Heller Chemical Co., 118 Fed. Rep. 103.

The question was suggested by Vice-Chancellor Emery in Stirling Silk Manufacturing Co. v. Sterling Silk Co., 59 N. J. Eq. (14 Dick.) 394 but not decided.

We think the rule laid down in Ford v. Foster is too favorable to the complainant. If it can be established in any case that the trade name which the complainant seeks to protect owes its value in any material degree to false representations on his part, we think he is not entitled to the protection of a court of equity. To give him relief would not perpetrate a falsehood by decree of the court as in a case where the false representation is on the face of the trade mark or label, but it would enable a man to profit by his own wrong, and the court would be in the position of protecting a property right acquired by fraud. But we think there is no presumption that a trade reputation is due to the highly-colored or false statements in advertisements. Such statements are not so uncommon as to mislead an ordinary man; most persons discount them. In the present case the complainant’s goods had come to be known as “Red Cross Cotton” and “Red Cross Gauze” before the first publication in question; it was the already existing reputation which led it'to oppose with vigor the proposed legislation by congress. To afford relief does not, .as the case stands, give prolonged life to the misrepresentation, for the publication had been discontinued before this suit was begun. We do not say that the mere discontinuance of publication before suit brought would cleanse the complainant’s hands; we hold that in the absence of proof that the trade name was due to false representations, and upon proof that the false representations had ceased, the complainant is entitled to protection.

Although we think the complainant is entitled to relief, an examination of the decree advised by the learned vice-chancellor convinces us that it goes too far. It restrains the defendant from all use of a red cross in connection with cotton or gauze. The proof shows that the red cross has long been commonly used in connection with surgery, and that the defendant, prior even to the beginning of business by the predecessors of the complainant, had used a red cross in connection with some surgical goods, and, if not on absorbent cotton and gauze, on articles of the same general class. This right ought not to be taken from them. The extent of the restraint to which the complainant is entitled is such as will prevent the confusion of the defendant’s goods with the complainant’s, except so far as such confusion must necessarily arise out of the continued use of the red cross by the defendant as it was formerly accustomed to use it. 'In fixing the extent of this use, justice will be done if the defendant is allowed to use the red cross in no more conspicuous way than in its Exhibits D 3, D 4, D 6, D 7 and D 12. This excludes the use of two red crosses.

An injunction should’issue restraining the defendant from selling, offering to sell or otherwise disposing of any absorbent cotton not by or for complainant made in packages to which a representation of two red crosses shall be attached or applied, or to which a representation of one red cross shall be attached or applied in any way except as part of a label substantially as in defendant’s Exhibits D 3, D 1±, D ¡6, D 7 and D M; and likewise from selling and from offering to sell or otherwise disposing of any gauze not by or for complainant made in packages to which a representation of two red crosses shall be attached or applied, or to which a representation of one red cross shall be attached or applied in any way except as part of a label substantially as in defendant’s Exhibits D 3, D 4 D 6, D 7 and D 12; and likewise from using in connection with the sale of absorbent cotton the package or packages complained of in the bill of complaint heretofore by it the defendant used, or any other package or packages which shall so closely resemble the package of the complainant by it availed of in connection with the sale of its absorbent cotton and described in the bill of complaint as to be caleulated to deceive; and from unlawfully imitating the complainant’s absorbent cotton or gauze packages; and likewise restraining the defendant from using the designation “Red Cross” in connection with the manufacture or sale of absorbent cotton or gauze not by or for the complainant made; and from using a representation of a red cross in connection with said manufacture or sale except as a part of a label substantially as in defendant’s Exhibits D 8, D 4, D-6, D 7 and D 12; and from doing any .act or thing whatsoever which may be calculated to cause the absorbent cotton or gauze of the defendant to be mistaken in the market for, or confused with, the absorbent cotton or gauze of the complainant or offered or sold as and for the complainant’s absorbent cotton or gauze.

The decree should be reversed and a decree entered in accordance with this opinion.

Garrison, J.

The complainant is not, in my Opinion, entitled to enjoin the use of the red cross by the defendant.

With regard to the simulation by the defendant of the complainant’s packages in other respects, I concur in the view of Mr. Justice Swayze.

I shall vote to reverse the decree in order that it may be modified in the manner above indicated.

I am authorized by Judges Bogert, Dill and Green to say that they concur in the above modification.

For affirmance—None.

For reversal—The Chief-Justice, Garrison, Fort, Hendrickson, Pitney, Swayze, Reed, Trenchard, Bogert, Vroom, Green, Gray, Dill—13.


author: Sway-ze, J.

text:
    The Ecuadorian Association, Ltd., v. The Ecuador Company et al.
    [Argued June 22d, 1906.
    Decided March 4th, 1907.]
    An agreement to exchange property for fully-paid capital stock, of a company to be thereafter issued cannot be enforced in a case where the property is not of the value of the nominal par of the stock, and there has been no adjudication by the board of directors that it is of such value.
    On appeal of Charles C. Black, receiver, from a decree of the court of chancery, advised by -Vice-Chancellor Stevens, whose opinion is reported in TO N. J. Bq. (L Robb.) 277.

    The facts -are stated 'in his opinion.

      Mr. Charles L. Corbin, for the appellant.

      Mr. Robert E. McCarter, attorney-general, for the respondent Eobert C. Prnyn.
   The opinion of the court was delivered by

Sway-ze, J.

This case does not involve the liability of a stockholder .on stock issued fox property at an overvaluation. The evidence satisfies ns, as it satisfied the vice-chancellor, that the stock was never actually issued to Mr. Pruyn. A certificate was indeed made out in his- name, but it never actually came into his possession, and was never accepted by him.

His liability turns upon a contract to take stock. We agree with the vice-chancellor that the deposit of stock of the Ecuadorian Association with the London bankers, in response to the circular letter to the stockholders of the association, evinced his assent to the terms of the letter. The question is whether these facts imposed a legal liability upon the. defendant. Counsel for the appellant dwells upon the remark of the vice-chancellor that this was a binding contract, but this remark was a mere inadvertence since the opinion proceeds to decide the case upon the theory that the contract was not binding. In this view we concur. The agreement was to exchange the Ecuadorian Association stock for the Ecuador Company stock to be issued, and one of the terms was that the Ecuador Company stock was to be fully paid. Both Pruyn and the Ecuador Company knew that this was an original 'issue of stock, and that the only payment to be made therefor was the Ecuadorian Association stock to be given in exchange. The evidence shows that tire Ecuadorian Association stock issued to Pruyn could not be worth its nominal par. It had been issued in exchange for stock of other companies organized by Pruyn for the purpose, whose only valuable assets were Pruyn’s agreement to acquire thereafter for them certain properties in Ecuador.

Moreover, the board of directors of the Ecuador Company never adjudged, even in form, that the value of the Ecuadorian Association stock to be acquired from Pruyn was equal in value to the nominal ]Dar of the Ecuador Company stock to be issued therefor.

It was an essential and inseparable term of the agreement that the Ecuador Company stock should be fully paid. There was not an absolute contract to take stock, with an independent agreement to pay for it in property. All the terms of the agreement were mutually dependent, and one term was illegal. If Pruyn had sought an enforcement of the agreement, the company might properly have said that it was without power to issue fully-paid stock for the consideration proposed. Donald v. American Smelting Co., 62 N. J. Eq. (17 Dick.) 729.

In an action by the company or its receivers Pruyn may, with equal propriety, urge the illegality of the contract in his defence. Volney v. Nixon, 68 N. J. Eq. (2 Robb.) 605.

The decree should be affirmed.

For affirmance—The Chief-Justice, Garrison, Garretson, Hendrickson, Pitney, Swayze, Trenci-iard, Vroom, Green, Gray, Dili—11.

For reversal—-Keed, Bogert, Veedenburgit—3.


author: Seed, J.

text:
    Somers Brick Company et al., respondents, v. Frank A. Souder, Excelsior Terra Cotta Company and City of Atlantic City, appellants.
    [Argued June 25th and 26th, 1906.
    Decided June 15th, 1908.]
    1. Several parties, who had furnished materials to a contractor for the building of a fire-house for a city, served notices of claims against the contractor under the act of 1902 (P. L. 1903 p. S69), and afterward filed bills to enforce their liens upon the contract price due from the city to the contractor. In each bill it was averred that an order had been given upon this fund by the contractor to the Excelsior Terra Gotta Company to pay for materials furnished, which order had been accepted by the financial officer of the city, but averred that the lien of such order was subsequent to the lien of the complainants’ notice.
    2. The answer to the terra cotta company to- each bill averred that the lien of its order was prior to the lien of complainants’ notice.—Held, that the priority and validity of the order was put in issue by the pleadings.—Held, that it appearing that the answer of the terra cotta company was true, the order operated as an assignment of such portion of the fund, due the contractor, and only the remaining portion of the fund remained to be distributed to the claimants.
    On appeal from a decree of the court of chance^, advised by Vice-Chancellor Grey, whose opinion is reported in TO N. J. Eq. (If Robb.) SSS.

      Messrs. Godfrey &. Godfrey, for Horan, Freeman and Atlantic City Lumber Company.

      Mr. Enoch A. Bigbee, for the Excelsior Terra Cotta Company.
    ili?\ Barry Wooiton, for the City of Atlantic City.
   The opinion of the court was delivered by

Seed, J.

Upon the original argument of this cause, the question arose whether the point involved in this case should be decided without the presence as appellant of the city of Atlantic City, a defendant below. For this reason the decision of the' cause was postponed until Atlantic City had taken and perfected an appeal, and filed a brief in the cause.

It appears that in 1902 one Souder entered into a contract with the city of Atlantic City, by the terms of which contract Souder was to build a fire-house for the city for the sum of $25,587.

The Excelsior Terra Cotta Company contracted with Souder to furnish to Souder all the terra cotta required by him in executing his contract. Up to January 23d the terra cotta company had furnished goods to the value of $2,359.32, and had $1,000 worth of goods ready to be shipped. At this point the terra cotta company refused to ship any more goods until the payment of the contract price by Souder was in some way secured. By an arrangement with Mr. Wootton, the solicitor for the city, and with Mr. Yaughan, tire architect in charge of the erection of the fire-house, an order for tire payment of the entire amount due and to become due for the terra cotta was obtained from Mr. Souder, the contractor, drawn upon Mr. Heston, the comptroller of Atlantic City. On January 23d, 1903, the comptroller accepted the order, and six days later the remaining terra cotta was shipped.

Among those who had furnished materials to Souder for tire construction of the fire-house were Mr. Horan, Mr. Freeman and the Atlantic City Lumber Company. These gentlemen, in May and June following, filed notices of claims with the financial officer of Atlantic City, under the provisions of the act of 1892 (P. L. W&8 ¶. 369), “to secure the payment of claims for materials furnished for work done on public improvements-in á municipality of this state.” Each of these claimants filed bills to enforce their respective liens upon the money due from Atlantic City to Souder.

It may be remarked that subsequent to the filing of the claims already mentioned five others who had furnished materials filed claims, four of whom also instituted suits to enforce their claims. The claims of the latter, however, were excluded by the vice-chancellor because of non-conformity with the statute, and there is no appeal on their behalf.

The several suits to enforce the claims of the materialmen were consolidated, and the causes were 'tried together.

On the trial it was proved by the terra cotta company that its debt was due from Souder; that the order was given and accepted by the city comptroller on January 23 d, as already stated. It appeared that all notices of the materialmen were filed subsequently to the giving and acceptance of the order, and that the order was a complete assignment of so much of the amount due from Atlantic City to Souder as equaled the amount of the order. It was not merely an equitable, but a legal assignment of the amount.

The learned vice-chancellor, however, disregarded the existence of this order, and ignored its effect upon the funds in the hands of Atlantic City still due to the contractor. The ground assigned for disregarding the order was that the terra cotta companjq having filed a bill to enforce its claim under a notice like the other materialmen, had not relied upon this order-for a decree, but solely upon its notice. If the rights of the terra cotta company rested upon this'bill alone, the conclusion of. the vice-chancellor would seem to -be entirely correct, for it is obvious that no question concerning the validity or precedence of the order was raised, or intended to be raised, by the bill filed by the terra cotta company.

The validity and priority of the order, however, was put in issue by the bills filed by-the other claimants, in which it was charged that the order was not a lien upon the fund, or if a lien, one subsequent to that of the claimants, to which charge the terra cotta company, by its answer to these bills, averred that the said order and its acceptance was a valid lien upon the moneys due from the city of Atlantic City, and a lieil prior to that of the claimants.

The answer of Atlantic City also, a defendant to these bills, admits the giving and acceptance of the order.. So it is manifest, under these pleadings, the existence of this order and its effect upon the claims of the materialmen was directly in issue.

The question of the relative priority of the order and the claims being before the court, it is too obvious for discussion that the rights of the terra cotta company, as holder of the order, were superior. As already remarked, the order was not only an equitable, but a legal assignment for the amount of so much of the fund still due the contractor. The notice of claims of the materialmen became liens only from the time of the notice, as was correctly held by the vice-chancellor, and the notices were given subsequently to the giving and acceptance of the order.

In this situation, however, it is not essential, even if regular under the pleadings, that Atlantic City should be directed to pay to the terra cotta company the amount of this order. The relative rights of the claimants, of Atlantic City and of the terra cotta company, in the fund held by Atlantic City can be settled without such an affirmative decree. It is obvious that the question to be settled is, What portion of the contract price remained due to Souder at the date when the claims of the materialmen were filed? The vice-chancellor found there was due the sum of $7,457.40, and upon this sum he fixed the liens of three claimants, whose claims amounted to $6,784.89. Now, the order of the terra cotta company operating as a previous legal assignment for $3,359.32 of that fund of $7,457.40, there was in the hands of Atlantic City due to Souder, not $7,457.40, but only $4,098.08 at the moment when the materialmen filed their notices. The latter was all of the fund there was to be distributed by the court of chancery.

It was essential, therefore, that the order should be recognized, although no specific relief was asked for, or should be given, to the holder of the order. The terra cotta company is in a position to stand upon its legal right to recover from Atlantic City the amount of the order, and Atlantic City, as left by the decree below, would be compelled, after paying to Horan, Freeman and the Atlantic City Lumber Company all but $672.51 of the.original fund, to pay $3,359.32 to the terra cotta company.

The decree of the court of chancery should, therefore, be modified, so that the claims of Horan, Freeman and the Atlantic City Lumber Company should be paid in the order fixed by the decree below, but out of the fund of $-1,098.08 still existing in the hands of Atlantic City.

For affirmance—None.

For reversal—Trie Chancellor, Ciiiee-Justice, Garrison, Swayze, Reed, Trenchard, Bogert, Yredenburgri, Yroom, Green, Gray, Dill—12.