text:
    William H. Laird et al. v. The Atlantic Coast Sanitary Company.
    [Submitted July 17th, 1907.
    Decided July 17th, 1907.]
    1. The operation of a crematory and fertilizer plant, in which ordinary garbage and other waste matter are subjected to a burning process, and the residue, in the shape of ashes, used in connection with other elements to make a fertilizer, in such a manner that, under certain conditions of the atmosphere and direction of the wind, the smoke arising from the cremation and odor due to the method of handling the elements of the fertilizer compels those residing within a distance of from two thousand to two thousand five hundred feet to keep their windows closed, and renders their houses uncomfortable for habitation, and prevents them from sitting out of doors, constitutes a nuisance.
    2. That a crematory and fertilizer plant was established and maintained with the consent of the municipal authorities does not warrant its operation in such a manner as to create a nuisance.
    3. Persons residing in the neighborhood of a proposed crematory and fertilizer plant did not attempt to enjoin the construction thereof on the ground that it would create a nuisance. The amount of offensive matter dealt with at first was small, and the resultant nuisance correspondingly slight. Subsequently, and after carrying on his business for six or seven years, the same was increased, by a contract with the municipal authorities to dispose of the entire waste material of the city, to such an extent that the smoke and odor coming therefrom rendered uncomfortable for habitation houses within from two thousand to two thousand five hundred feet thereof. — Held, that persons affected by the nuisance were not guilty of such laches as to estop them from maintaining a bill to abate or enjoin the same.
    On final bearing on bill, answer and proofs.

      Mr. Winfield 8. B. Parker and Mr. George W. Yarn Gelder, for the complainants.

      Mr. Thomas P. Fay, for the defendant.
   Pitney, Advisory Master.

Tlie object of the bill is to abate or enjoin a nuisance in the shape of noxious odors alleged to be diffused through the air partly by means of smoke and partly in the ordinary mode.

The complainants are residents and severally owners of property in the extreme northerly part of the territorial limits of the borough of Long Branch.

The defendant has for the last six or seven years been engaged in the business of the disposal of the ordinary house garbage and kitchen waste, coal ashes, the contents of old-fashioned dry privy vaults, and of cesspools. For this purpose it has a plant occupying about one acre of land, more or less, situate in the most northerly corner of the corporate limits of Long Branch.

The plant was established there by the consent of the municipal authorities. It consists of what is called a “crematory,” in which the ordinary garbage, including half decayed meat, and dead animals and the like, are subjected to a burning process, and the residue, in the shape of ashes, is used in connection with the night soil collections and ordinary stable waste to make a fertilizer. It is the smoke arising from this cremation which, it is alleged, is offensive as smoke in that neighborhood.

The contents of the privy vaults are collected principally in the winter time, but occasionally in the summer, and deposited in a shallow earthen pit and covered and mixed with ordinary stable manure and straw, and allowed to ferment and rot, and, being mixed with the ashes from the crematory, constitutes the fertilizer.

The contents of the cesspools are brought to the plant in tank wagons and emptied into a large cesspool, from which the liquid soaks away gradually into the ground and also evaporates, and what does not soak away or evaporate runs over into a small tidal stream which rises in the immediate neighborhood.

The allegation of the complainants is that the liquid cesspool, and the mode of dealing with the contents of privy vaults, tends to create and does create and give off an offensive odor.

Another ground of complaint is that in gathering up ashes from dwellings and. hotels a large amount of garbage, including the heads and entrails of chicken and ñsh and other waste animal matter, is mixed with the coal ashes. This mixture is dumped on the low ground forming a part of the defendant’s plant, and, being there exposed to the sun, gives off a strong odor of carrion flesh.

An immense amount of evidence was given on both sides upon the effect of the operation of the defendant’s plant in the matter just stated, covering first, the actual production of the noxious odors, vapors and smoke, and second, the distance in which it was felt to an appreciable and offensive degree. I shall not here go into a discussion in detail of this evidence. While it was being given I had before me a map of the neighborhood, with the residences of the different complainants accurately marked thereon, and with a scaled ruler in my hand I fixed in my mind approximately the distance from the crematory in each case and had it entered on the stenographer’s notes. Of course that distance to which the odor reached varied with the strength and direction of the wind. When the air was rare, or in common language “heavy,” the smoke from the crematory tended to quickly subside, and its presence was at once made known by its smell. And so with the smells from the handling of the elements of the fertilizer on the surface of the earth. With the same rare condition of the atmosphere, and the wind blowing in the direction of these dwellings, both these sources of offensive odors were clearly distinguishable a distance of from two thousand to two thousand five hundred feet in an air line.

Naturally the odor from the fertilizing plant proper was more pungent immediately on the plant than at a distance, while on the contrary there was very little smell from the crematory smoke at-and near the plant, it being carried to a considerable height by a smokestack and naturally would not be observed until it became cool and began to descend.

Previous and up to the spring of 1906 the plant' was maintained by the patronage of such residents as chose to employ it. But in the spring of 1906 the defendant made a contract with the municipal authorities of Long Branch to gather in, remove and dispose of the waste material from the whole town, including the contents of dry privy vaults, cesspools, kitchen garbage and house waste, including small paper and packing boxes and other inflammable material, and coal ashes and dead animals wherever found.

This undertaking cast a large burden on the defendant and taxed the capacity of its works by a sudden increase of work.

The population had been in the habit of casting into their back yards their coal ashes and kitchen waste and garbage in one pile, and when this was drawn out and spread on the ground in the sun it became decidedly offensive.

The municipality passed an ordinance requiring the inhabitants to keep the garbage separate from the coal ashes. This was naturally difficult to enforce and was, in fact, only partially enforced. Then there was’ proof’ tending to show that there was carelessness on the part of the employes of the defendant in maintaining the separation of these matters in their transport from the dwellings to the disposal plant, so that the nuisance arising from the putrid odors arising out of the ash bank continued to a greater or less extent throughout the whole summer season of 1906.

Then with regard to the privy vaults and cesspools. Naturally enough, so long as the inhabitants were obliged to pay for the cleansing and removal of the contents of those receptacles they were liable to allow them to be improperly clogged, but when and as soon as they could'be relieved of the putrid contents at the expense of the city through the agency of the defendant, it became the duty of the defendant, as well as the pleasure of the inhabitants, to have them thoroughly cleansed as soon as practicable. The result was, as before remarked, that a great increase of work was put upon the defendant b}r its contract with the city made in the spring of 1906.

With regard to the character for offensiveness and the intensity of the odor. The complainants and their families are not over sensitive people, but plain, every-day folk, and their evidence must be considered accordingly. Their evidence was that in the conditions of the atmosphere and the direction of the wind,, •which. I haye mentioned, .and especially and mainly in warm weather, the odor was very unpleasant, so much so that they felt constrained to close their windows and keep them close.d. They wgre rendered uncomfortable both at their meals and when sitting in their houses .and on their pi.azzas in the.summer time,

This situation of things is serious. They have the right to have the air. come to them in a state, of ordinary purity so that they can comfortably enjoy, during the .hot months, the. ordinary currents of air, , .

In all these .cases it is a question of degree. In this case the evidence satisfies me that the degree of.intensity was guch that ordinary plain.people would be rendered uncomfortable by it.

The conclusion at which I have, arrived is,that the defendant’s works, as they were conducted.in the summer of 1906, both before and immediately after .the filing .of the bill, created a nuisance of which each one of. the complainants has a. right to complain and from which they have a right to be relieved and protected by this court.

Of course the fact that the defendant had the permission, of the municipal authorities to establish and maintain its plant cannot sanctify or justify the defendant in creating a nuisance. It is not within the power of the municipality to authorize any conduct which would produce that result. Simmons v. Paterson, 58 N. J. Eq. (13 Dick.) 1; S. C., on appeal, 60 N. J. Eq. (15 Dick.) 385. The distinction was there taken between riparian proprietors on tidal streams and riparian proprietors on streams above tide, and it was held distinctly that the legislature could not, as against the latter class of riparian owners, authorize the pollution of the waters, of the Passaic river by the city of Paterson without providing for just compensation.

The case cannot be classified or put on a. level with .the ordinary trades which are more or less objectionable to nearby residences, such as green grocers, fish and meat markets. See Ross v. Butler, 19 N. J. Eq. (4 C. E. Gr.) 294; Cleveland v. Gas Light Company, 20 N. J. Eq. (5 C. E. Gr.) 201; Duncan v. Hayes, 22 N. J. Eq. (7 C. E. Gr.) 25, for a statement of the degree of discomfort which will warrant the interposition of this court.

It was argued by the defendant that the complainants had been guilty of laches in preferring their complaint. I am unable to perceive the least ground for this defence. Palpably, if they had filed their bill while the crematory was being constructed they would have been met, precisely as they are here, by the assertion that the works would not result in any nuisance and the court would -not have interfered. The amount of offensive matter dealt with by the defendant was naturally at first very small, and the resultant nuisance correspondingly slight. In fact the complainants were willing to give the defendant a chance to demonstrate the harmless character of its works. They first applied to the board of health and, failing to get relief there, came to this court. It does not appear that the defendant took any irretrievable steps in reliance upon complainant’s acquiescence. There is not the least ground for estoppel.

The serious question in the cause, and the only one that gives me the least trouble, is as to the extent of the remedy. Ought the court at once to abate the nuisance radically by stopping all further operations, or ought it simply to enjoin the defendant from continuing the nuisance in terms that will not stop its operation, but permit it to proceed at its peril.

The taking of evidence extended over a long period of time.

The bill was filed on' the 29th day of August, 1906, with several ex parle depositions annexed.

The answer, with a large number of affidavits, was filed on the 11th day of September, 1906.

Further affidavits on the 'part of the complainants and the defendant were filed on the 18th of September.

The taking of testimony was commenced on. the 13th of February, 1907, continued on the 14th, again on the 13th of March, on the 28th of March, and on the 25th of April.

The defendant, in giving its evidence on the later days, attempted tó show to the court that'it was making improvements in its works and mode of doing business which would result in making them innocuous.

On the other hand the complainant produced the evidence of a highly intelligent and apparently trustworthy expert who had examined the defendant’s works, and who gave evidence tending to show that the crematory itself was incapable of being so conducted as not to give off offensive smoke. The theory of the affair is that the offensive matter shall be subjected to such an intense heat as to actually destroy all odors. The expert stated that this could only be done by subjecting them to a temperature of two thousand degrees and upwards, but he stated that the defendant’s furnace was supplied with a cold air draught which prevented it from ever attaining such a degree of temperature, and that it would require to be supplied with what is known as the “hot blast” in order to make it effectual in this respect.

The furnace is somewhat complicated in its construction, and so arranged that the hot air is first driven under the garbage, &c., which is placed in a large cast-iron pan, the result of which first application is to dry it thoroughly. The evaporation from this drying process is drawn by a back draught downward through the fire and there supposed to be destroyed. When this is accomplished there is a shifting of certain dampers and the stream of hot air is driven over the iron pan and its contents are incinerated. It is the resultant smoke that has been found to be offensive.

In order to be effective the fire must be made of thoroughly dry wood and kept up to a steady blaze and heat, and the dampers must be kept in perfect order and adjusted with watchful care.

The evidence satisfies me, and in fact it was admitted, that these processes were not, at all times, conducted in a perfect manner, with the result that it was proven and admitted by the defendant that on those occasions the smoke was offensive.

It was quite impossible to distinguish on all occasions just what the situation of affairs was when the smoke became offensive. And this was natural enough when we consider that if the air was clear, and a fine breeze blowing in a northwesterly direction, the smoke was carried quite away from the neighborhood, and if it were foul it was not discernible. As before observed, it was only in- certain conditions of the atmosphere, and when the wind was in ■ certain directions, that the odor became .offensive.-

My individual opinion- is that- the defendant will find it very difficult, if not impossible, to ■ conduct- the crematory- in its present condition in such a manner as not at times to create a nuisance, nevertheless I feel disposed -to give it -the opportunity and not to require at first the stoppage of its use.

With -regard to the handling- of the various materials on the ground, I feel some degree of confidence that if proper care is exercised in' dealing with the offensive material the defendant will be -able to avoid any serious injury to - its neighbors. At any rate, as in- the other matter, I am willing to give it the opportunity to attempt it for the present season.

I will advise a decree declaring that at and before the filing of the bill the defendant’s works were so conducted as to create and maintain a nuisance as to each and every one of the complainants! and that the defendant be and is enjoined and restrained from further continuing its works in such manner as to injure and annoy the complainants and each of them. • The complainants are entitled to their costs and a counsel fee to be fixed on notice.

I -will add that the evidence tended to show that proper care in collecting- and carrying these offensive matters along the street to the crematory plant was not exercised, and that some of the individual complainants suffered from foul matter being-dropped in the streets in the neighborhood of the defendant’s plant. But these matters were not within the scope of the bill and only affected a few of the complainants, and are not made in any degree the base of my judgment. They are peculiarly in the jurisdiction of the municipality. -


source: Caselaw Access Project

author: Pitney, Advisory Master.

license: Public Domain

text:
    William M. Walton et al., surviving executors, &c., complainants, v. Samuel T. Walton et al., defendants.
    [Decided July 23d, 1907.]
    Testator in one clause of his will gave a sum of money to trustees, to pay the income to his daughter O. during her life, and directed that on her death the fund should be divided among her children, and provided that in case no children survived her she might dispose of the fund by will. Another clause gave the residue of the estate to testator’s wife. C. died without issue, and without exercising her power of appointment by will. At the date of the execution of the will O. was thirty years of age and unmarried. Another clause of the will provided that, in case of the death of a certain legatee for life without issue, the fund given such legatee should go over to testator’s children. — Held, that testator supposed that the power of disposition given to C. resulted in an absolute final disposition of the fund, and the gift of the residue did not include the legacy to C., but as to the same testator died intestate.
    On final hearing on bill, answer and proofs.

      Mr. Elmer W. Demurest and Mr. Philip F. Bolzong, for .William M. Walton et al.

      Mr. Edward M. Colie, for Samuel T. Walton et al.

      Mr. Charles A. Reed, for Robert E. Pendleton, administrator.
   Pitney, Advisory Master.

This is a triangular contest between the next of kin of Elisha L. Walton, late of the county of Hudson, deceased, and the beneficiaries under the will of Mary L. Walton, who was the widow of the said Elisha L. Walton, and Robert E. Pendleton, who was the surviving husband and administrator of Caroline M. Pendil ton, who was one of the children of the said Elisha L. and Mary JL. Walton.

Elisha L. Walton died in 1873, testate of a will.

His widow, Mary L. Walton, died in 1894, testate of a will, and Caroline M. Pendleton died intestate and without issue in 1902.

The contest in the cause is over a sum of $8,000, which remains, after certain losses, out of a sum of $10,000, in the hands of the executors of Mary L. Walton, who file this bill.

The contest arises out of two clauses in the will of Elisha L. Walton, namely, item eight and item fifteen.

Item eight is as follows:

“Item, 8. I give and bequeath, unto my executors and the survivors and survivor of them the sum of ten thousand dollars in trust to invest the same and keep the same invested and to pay the interest and income thereof semi-annually to the sole and separate use of my daughter, Caroline Matilda Walton, during her natural life, and upon and immediately after her decease the said sum of ten thousand dollars shall be equally divided between her children share and share alike, but if at the time of her decease she shall have no children her surviving, then and in such case she shall be at liberty to dispose of the said sum of ten thousand dollars by her last will and testament.”

Tlie fund therein provided for was set aside and kept in the hands of the executors of Elisha L. Walton, one of whom was his widow, Mary L. Walton, and after her death was retained by her co-executor, William M. Walton, who was also one of the executors of the will of Mary L. Walton.

The fifteenth clause of the will of Elisha L. Walton is as follows:

“Item 15. I give, devise and bequeath all the rest, residue and remainder of my estate, both real and personal, of every name and nature whatsoever, to my beloved wife, Mary Louisa, to have and to hold the same, to her and her heirs forever.”

The said Caroline M. (Walton) Pendleton not only died without issue but she did not, at any time, exercise the power of appointment by will given to her by the eighth item of her father’s will.'

The result is that the sum of money here in question did not pass to her and her administrator took no interest therein. The cases of Downey v. Borden, 36 N. J. Law (7 Vr.) 460, and Pratt v. Douglas, 38 N. J. Eq. (11 Stew.) 516, are conclusive on that subject and this result was not disputed by counsel for her administrator.

The sole question in the cause is whether, under the circumstances of this case, the fund passed under the residuary clause to the original testator’s widow.

If so, it passes under the terms of her will to the beneficiaries thereunder.

If it did not pass under the residuary clause then the first testator died intestate as to that sum of money and it goes to his next of kin.

The question then is this: What did the testator mean by the words, in the fifteenth item of his will, “all the rest, residue and remainder of my estate, both real and personal, of every name and nature whatsoever ?”

In ascertaining the intention of the testator here, as in all other cases, we must examine the admitted circumstances and consider each and every part of the will.

He left four children and he made separate provision for each one, and also for several relatives, by giving specific sums of money. He gives nothing in shares. It follows that he naturally felt that there might and probably would be a residue after making provision for the several legacies given to his children and relatives.

The testator’s daughter, Caroline M. Walton, was the youngest of the family, and was, at his death, a young lady about thirty years old. She was unmarried. He gave her a life estate in $10,000 with remainder to her children, if she had any, and with power of disposition, by will, over the fund if she left no children. Now, in ascertaining the condition of the testator’s mind it seems to me extremely difficult to suppose that he, at that time, anticipated that his widow would survive his daughter and that his daughter would die in his wife’s lifetime without exercising her power of disposition. Putting one’s self in the place of the testator, is it possible to believe that he supposed that under any contingency the. provision for his daughter would pass under the words “rest and residue?” Are we not, then, compelled to believe that when he came to the fifteenth claus,e of his will to dispose of the rest and residue he excluded from that rest, and residue the- previous legacies which he had given to a considerable amount and that he included in that exclusion the provision for his daughter - Caroline ? . ■

In answering this question we must not forget that we are to inquire, not what the testator meant to say, but what he meant by what he did say. ... • . . .

The will is drawn by a draughtsman who was familiar with .all the verbiage in ordinary use by such artists. There is no ambiguity or lack of clearness in any of the language, nor is there any evidence of haste or lack of deliberation, or any failure on the part of the draughtsman fo express all that was given him to be expressed.

It is quite impossible to believe that the testator’s attention was called to the possibility that the gift to his daughter might fail by reason of her neither having children nor using the power of disposition plainly given. The precision with which all the provisions are expressed and the completeness of the expression indicates that the failure to provide for the contingency which has happened was due to an absence of any will or intention on the part of the testator to make such provision.

In item eleven of the will we find that the testator makes a provision for a life interest in a fund for his sister, Rebecca, for her life and then provides that at her death that legacy should be divided between his four children, with a full provision that in case of the death of either of those four children the issue of each of them should take the share of their parents.

Then, by the sixth item of his will, he made a provision for a legacy for his granddaughter Elizabeth, for her benefit during her life and at her death the sum to be divided between her children, but if she died without children, “then the said sum of two thousand dollars shall be equally divided among such of my children as shall then be living,” &c. By the seventh item he gives the sum of $10,000 to be invested for the benefit of his daughter, Mrs. Brown, during her life and at her death the same to be equally divided among her children, but if she left no children surviving her then that daughter should be at liberty to dispose of said sum by her last will and testament.

Then follows the provision for his daughter Caroline, here in question.

It thus appears that the attention of the testator was in several instances called to the contingency of the legatee for life dying without children, and in one case he provides that the money shall go over to-his children, and in two cases he provides that for want of children the legatee for life shall have the power of disposition by will.

Now, it seems to me that these circumstances show that the testator supposed that the power of disposition by will resulted practically in an absolute final disposition of the fund and that he did not suppose that there was any occasion for any farther disposition of either of those legacies for life, and that in fact he entertained no will or wish as to the disposition of his property in the contingency which has arisen in the present case.

. The conclusion to which I am compelled is that the testator did not intend to include, and that we are not driven by any hard and fast rule of construction to the conclusion that he did intend to include in his gift of the residue, the legacy here in question.

1 have examined a great many authorities found in the books on this subject and I find none that govern the present ease, and I merely repeat what has been, said frequently of late years, by judges, that the construction of a will should be governed by the language itself with the circumstances and not by precedents, unless they be precisely the same.

One class of cases may be mentioned and that is those of lapsed legacies, such as Tyndall v. Tyndall, 24 N. J. Eq. (9 C. E. Gr.) 512. They constitute a class by themselves. The present case is not in that class. The legacy here took effect. The intention of the testator as to it has been entirely carried out. I can find nothing in the will that shows that he had any further intention in regard to it.

I will advise a decree that the testator died intestate as to this fund and it will be disposed of .accordingly.

As before remarked, tbe testator’s will is clear that his daughter Caroline took no more than, a life estate-in the fund, hence her persona] representative is not entitled to any share of it.


text:
    Halsey M. Barrett, receiver of the Middlesex County Bank, v. The Perth Amboy Shipbuilding and Engineering Co.
    [Decided July 31st, 1907.]
    A corporation under contract to construct a vessel for á company became unable for want of funds to proceed, and it suspended business. The company had paid installments called for, except $9,000 of an installment, which was withheld because of the unwillingness of the company to trust the corporation. The corporation mortgaged its property to the company for an amount in excess of the contract price to enable the company to raise money to meet the further payments called for. The company paid the $9,000, and later advanced $1,500. The financial condition of the corporation was known to the company. — Held, that though tbe parties in good faith expected that the giving of the mortgage would enable the corporation to continue its business, the mortgage was given in expectation of insolvency, and was void, under the Corporation act of 1896 (P. L. p. 298 § 64), declaring that conveyances by insolvent corporations shall be void, except as to the $1,500 advanced.
    On final hearing on cross-bill and answer thereto.
    This cause was before the court on final hearing between the complainanf's predecessor in office and the defendant, as reported sub nom. Campbell v. Perlh Amboy Shipbuilding and Engineering Co., 70 N. J. Eg. (4 Robb.) 40, and on appeal was affirmed, as reported in 71 N. J. Eg. (1 Buch.) SO2.

    That decision left undecided an issue raised by bill and cross-bill between the receiver of the Perth Amboy Shipbuilding and Engineering Company and the receiver of the Nautical Preparatory School, both being defendants.

      The issue raised by those pleadings was as to the validity of a mortgage given by the shipbuilding company to the Nautical Preparatory School on the 18th day of June, 1903. The testimony on that issue had been taken at the hearing on the main cause, but its determination was postponed by consent of counsel until after the final determination of the validity of the first mortgage held by .the receiver of the Middlesex County Bank.
    That matter having been determined by the court of errors and appeals argument was had upon the issue between the two defendants just named.

      Mr. Adrian Lyon, for the receiver of the Perth Amboy Shipbuilding and Engineering Company.

      Mr. Alan H. Strong, for the receiver of the Nautical Preparatory School.
   Pitney, Advisory Master.

The execution of the mortgage by the Perth Amboy Shipbuilding and Engineering Company to the Nautical Preparatory School was admitted. It was also admitted that no payment had ever been made thereon. Its validity is attacked by counsel for Mr. Yoorhees as receiver of the Perth Amboy Shipbuilding Company on the ground that it was made in contravention of section 64 of the Corporation act (P. L. 1896 p. 298), as follows:

“Sec. 64. Whenever any corporation shall become insolvent or shall suspend its ordinary business for want of funds to carry on the same, neither the directors nor any officer or agent of the corporation shall sell, convey, assign or transfer any of its estate, effects, choses in action, goods, chattels, rights or credits, lands or tenements; nor shall they, or either of them, make any such sale, conveyance, assignment or transfer in contemplation of insolvency, and every such sale, conveyance, assignment or transfer shall be utterly null and void as against creditors; provided, that a boma fide purchase for a valuable consideration, before the corporation shall have actually suspended its ordinary business, by any person without notice of such insolvency or of the sale being made in contemplation of insolvency, shall not be invalidated or impeached.”

This section was under consideration by the court of errors and appeals in the Empire State Trust Co. v. Trustees of Wm. F. Fisher & Co., 67 N. J. Eq. (1 Robb.) 602, where a mortgage given by a creditor corporation in embarrassed circumstances to a creditor for a loan of cash previously made was held void under our statute, although not void under the National Bankruptcy law.

(Perhaps it will not be deemed out of place for me to say here that at the hearing of that cause in this court the counsel for the trustee in bankruptcy distinctly disavowed any assistance from the state statute, but placed himself entirely on the section of the National Bankruptcy act.)

Coming now to the present case. The solution of the question whether the receiver of the mortgagor has brought himself within the purview of the statute just quoted involves a consideration of the history of the shipbuilding company and, in a measure, that of the Nautical Preparatory School.

As mentioned and set forth in the former opinion in this cause, Hugh Ramsay died seized of the mortgaged premises intestate, leaving a widow and several children, one of whom was at that time an infant.

His principal indebtedness, about $50,000, was that to the Middlesex County Bank, then in the hands of a receiver, Mr. Edward S. Campbell, and was secured by three mortgages, the validity of which was contested and settled in the previous part of this suit.

In addition to that mortgage indebtedness he owed a few thousand dollars for taxes. He had been a successful shipbuilder and had a large and valuable plant at Perth Amboy. After his' death his widow and adult children conceived the idea of organizing a corporation to continue the business. With this view-the Perth Amboy Shipbuilding and Engineering Company was organized, with a large nominal capital.

Proceedings were taken in the orphans court by the widow, who was administratrix, to have the lands sold to pay the debts, and the whole of this valuable plant and, I infer, machinery on it, was sold for. the amount of the encumbrances, and ultimately transferred to the shipbuilding company without the payment of a dollar in cash.

Then one or more of his sons attempted to carry on the shipbuilding business under the name of the corporation. They had not a dollar of working capital. It sufficiently appears that they attempted to raise money by floating coupon bonds, secured by a mortgage on the plant, but met with no success.

About the same time a project was started in and about Providence, Ehode Island, for the establishment of a nautical school, being in substance an ordinary high school established on board a ship, which should be navigated about the waters of our coast and perhaps elsewhere, where the pupils could receive, in addition to an ordinary college education, special instruction in navigation.

This affair took the shape also of a corporation with, so far as appears, little or no capital, and it in turn, sooner or later, resorted to floating bonds.

In the meantime, relying on a few thousand dollars actually received upon the issue of either bonds or stock or benevolent gifts, it sought parties willing to undertake to build it a ship, and in that manner was brought into contact with the Perth Amboy Shipbuilding Company. The result was that a contract was entered into between the shipbuilding company and the school company on the 29th day of October, 1902, for the building of a ship, called the “Young America,” for the sum of $202,-000, to be delivered on the 20th day of August, 1903.

This sum was to be paid as follows: $25,000 cash at the date of the contract; $25,000 on January 15th, 1903; $25,000 on April 15th, 1903; $25,000 on delivering the vessel, and the balance, $102,000, was to be paid in a sixty-day promissory note, with interest, payable at the Union Trust Company of Providence.

The scheme of the shipbuilding company was that they could manage to carry on the business either by the sale of their bonds, or, failing therein, upon credit based on the great value of the plant and the contract which they had with the school company. Its banker in Perth Amboy was the Perth Amboy Trust Company, and that bank agreed orally to give them a running credit of $25,000 on the strength of their contract with the school company. But out of abundant caution the Perth Amboy Trust Company, following the usual fashion of bankers, corresponded with the Union Trust Company of Providence as to the credit of the school company and on the strength of that correspondence they later on declined to continue the credit to the shipbuilding company.

At the execution of the contract, instead of receiving $25,000, the Nautical Preparatory School was able to pay only $15,000, and when the next $25,000 came due on January 15th, 1903, only $5,000 was paid and on January 20th another $5,000; the total paid to that date was $25,000 instead of $50,000, as was called for by the contract.

On February 24th, 1903, a supplemental agreement as of February 21st was made and $25,000 was paid. That supplemental agreement was a modification of the agreement of October 29th, 1902. By it the time of the delivery of the ship was postponed from August 20th to September 27th, 1903, and the payment due on January 15th was postponed to February 21st.

In the meantime the shipbuilding company had further complicated itself by entering into a contract with. Colonel Wheeler, assistant quartermaster-general of the United States, for the building of two harbor steamers, one in four months and one in five months. The contract was dated January 24th, 1903, and approved by the war department, at Washington, on the 3d of February.

The shipbuilding company immediately purchased and had in its yards a large amount of material to put into these vessels and therein incurred a heavy indebtedness. It also employed a large pay-roll of artisans to work upon the vessels.

In the meantime the next payment was due from the school company on April 15th, but was not paid. Payments on account thereof were made as follows: May 2d, $10,000; May 25th, $1,000; May 29th, $1,000; June 4th, $2,000; June 6th, $2,000; total, $16,000. It abundantly appears by the letters of Lieutenant-Commander Charles H. Harlow, of the United States Navy, who was president of the school company, on board the United States steamship “Ealeigh” at first, at the navy yard at Portsmouth, New Hampshire, and later on at the navy yard at New York, that the school company was very much embarrassed for funds and unable to meet its third payment.

The shipbuilding company was unable to proceed with the work on any of its ships for want of funds to meet its pay-roll. It made a strenuous and desperate but unsuccessful effort to induce the assistant quartermaster-general to advance some money on the strength of the work done on the two government vessels, but he declined.

A scheme was then devised to create an asset which would ■enable the school company to raise money to pay the balance on $9,000 due on its third payment and provide funds for further payments on account of its contract to an amount exceeding the .amount of cash provided for in the original agreement. That scheme was as follows: That a mortgage should be made by the ■shipbuilding company upon its valuable plant to. the school company in the sum of $150,000 to be composed substantially as follows: $100,000 covering the original $100,000 cash payment provided for in the original contract, and $50,000 additional ■cash provided for covering that much of the promissory note of $102,000 to be given when the ship was finished, leaving to be paid by note $52,000. With that' mortgage in its hands the nautical school expected to be able to raise money to meet the fourth payment of $25,000 to fall due under the original, contract on the delivery of the vessel and also the additional cash pajunent of $50,000 to be substituted or applied in reduction of the promissory note of $102,000.

As a part of the transaction for the giving of the mortgage the school company was to raise and pay in cash the $9,000 still remaining due on its third cash payment of $25,000. As a part ■of the scheme the delivery of the vessel was to be postponed until May 1st, 1904. That agreement and arrangement was embodied in a recital in the mortgage now in question, which was dated June 18th, 1903, and verified by Mr. Eiswald, the vice-president •of the school company, on the 19th of June in a special affidavit. ‘That recital is as follows:

“Whereas, The said party of the first part has entered into a contract with the said party of the second part for the building of the vessel Young America to be delivered on or before the twenty-seventh day of September, in the year nineteen hundred and three, at the price' therein mentioned; and
“Whereas, Certain amounts have already been paid by the said party of the second part to the said party of the first part on account of said contract for the construction of said vessel; and
“Whereas, Other amounts for a like purpose will hereafter be paid .on account of said contract, making the aggregate amount of such payments made and to be made on account of said contract the sum of one hundred thousand dollars ($100,000) upon the delivery of said vessel; and “Whereas, Said party of the second part has agreed and does agree to advance as loans to the said party of the first part certain sums of money, as follows:
1903— August 15.................... $11,666.66
September 1................... 5,000.00
October 1..................... 10,000.00
November 1................... 5,000.00
December 1................... 1,666.67
1904— January 2.................... 6,666.67
February 1................... 5,000.00
March 1...................... 5,000.00
aggregating the sum of fifty thousand ($50,000) dollars, such sums so advanced and loaned to be used specifically for the construction of and the payment for materials, labor and services in and about the construction of said vessel Young America, and to further pay on account of .the said contract on the fifteenth day of February, nineteen hundred and four, the sum of fifteen thousand dollars, and on the fifteenth day of March, nineteen hundred and four, the sum of ten thousand dollars, and upon May 1st, nineteen hundred and four, to deliver its certain promissory note for fifty-two thousand ($52,000) dollars, payable sixty days after date, the balance of the purchase and contract price of said vessel, whereby the said party of the first part may become justly indebted to the said party of the second part in the sum of one hundred and fifty thousand ($150,000) dollars and interest thereon, as hereinafter stated; and
“Whereas, Such advances and an indebtedness are secured to be paid to the said party of the second part by the certain bond or obligation of the said party of the first part, bearing even date with these presents, in the penal sum of three hundred thousand ($300,000) dollars, lawful money as aforesaid, with a condition thereunder written that if the said party of the first part shall well and sufficiently construct and deliver the said vessel Young America on May 1st, 1904, shall forthwith upon demand repay to the said party of the second part such sums as shall have been loaned to the said party of the first part as aforesaid, and also such sums as have been paid to the said party of the first part as aforesaid by the said party of the second part on account of the said contract for the construction of said vessel, together with lawful interest upon such several sums from the dates of such payments and advances, respectively, then said obligation to ;be. void, otherwise,to be and remain in full force and virtue, as by reference to the said bond, or obligation and the condition thereof, reference being thereunto had may 'more .frilly appear.” ■ 1 - ■ ■

Two days after the date-and one day after the-delivery and record of that instrument,’$9,000 was paid which was .the balance due on the third payment -of $25,000 ’then in arrears-.from the, school company to the shipbuilding, company.-' This aspect of the affair is distinctly- stated by the shipbuilding company, in its answer and is recognized by Mr. Eiswald in- -his affidavit annexed to the mortgage stating the consideration. It is to be observed that though it is not mentioned in the mortgage yet as a matter of fact and in law I find that .it was actually made as ■ payment of the balance of $9,000 -due from the school company to the- shipbuilding company on the payment of $25,000 due under the original contract on April 15th. . •

Moreover, there was no provision in the contract of October 29th, 1902, or-the supplement and modification of February, 1903, providing that the several payments of $25,000, except the last payment, should be conditioned or contingent upon the construction of the vessel having reached any particular stage of progress. In point of -fact a great deal of work had been done upon the vessel. The terms of the contract in this respect, however, were manifestly in favor of the school company, since upon the completion of -the vessel only one-half of it was to be paid in cash.

It follows, then, that this $9,000 has the same standing in the mortgage here in controversy that the previous, payments- have, with the single exception that it- was held back and not made until after the mortgage was executed. .

• The only other money advanced by the school company wéís a promissory note or due bill for $1,500, dated July 17th and paid on August -15th. No attempt was made• to -raise the:payment due on that day, amounting to $11,666.66, and the shipr building company was unable to go on with its business-. •

. After the expenditure of the $9,000 received on.the 20th day of June, and after the failure to-obtain an advance .from the government on account of the government ships, a conference was had with the counsel of the Nautical School Company, Mr. Semple, in New York, and it’ was agreed that the shipbuilding company should go into insolvency, a receiver be appointed and authority obtained from the court for the receiver to proceed with the construction and finishing of the vessel- with funds to be advanced by the Nautical School Company. The result of this meeting in New-York was the appointment of Mr. Willard P. Yoorhees as such receiver as 'a person entirely satisfactory to the Nautical School Conrpan}', he being-in fact nominated by that company. Nothing was ever accomplished in the way of undertaking to finish the vessel, and on the 21st day of- October, 1904, Mr. Newhall, of Providence, Ehode Island, was appointed receiver by the supreme court of Ehode Island, of the Nautical Preparatory School. He thereafter filed an answer to the shipbuilding company’s cross-bill.

Now, we come to the question, what was the pecuniary condition of the shipbuilding company when this mortgage was given ?

There is no-proof that it had been sued by any creditor, but that it was absolutely unable to proceed and conduct its ordinary business without pecuniary aid-is an indisputable fact in the case.

It was also, at the time, considerably indebted, as shown by the balance sheet, for materials purchased, and it had no pecuniary credit. . • . . ■ . ■ ' •

•I am unable to -perceive any- material difference between its condition at that time and the condition of the Fisher company in the ease above cited, on the day on which the mortgage there in question was given, as set forth on page 60.4 of K57- N. J. Eq. (1 Robb.). It had no available assets and it had no pecuniary credit and- it had suspended its ordinary-' business for want of funds to carry on the same.

That this condition of things was known to the Nautical School Company is quite clearly shown. It was a subject of conversation and correspondence between-the officers of the two companies and it is impossible to consider the mortgage itself, in connection with the known condition of the mortgagor, without feeling a conviction that it was given in expectation of insolvency, and to secure the mortgagee for the money already invested in the contract of October 29th, 1902. One of the reasons given by the school company for withholding the payment of $9,000 was that they were unwilling to trust the shipbuilding company.

Nor can I see any ground for holding the mortgage valid on the ground that the parties in good faith expected that the result of giving it would be that the shipbuilding company would be able to go on and finish the ship and be relieved from its situation of practical insolvency. Undoubtedly if the additional $125,000 had been advanced at or about the time of the giving of the mortgage or shortly thereafter, the parties would have been justified in supposing that the scheme on which it was attempted to be based would probably work fully out and relieve the shipbuilding company from its then present embarrassment. But there was no ground for believing that the payment of $9,000 would so relieve the shipbuilding company, and the next payment under the mortgage was not due until the middle of August and then only to the extent of $11,666.66.

Undoubtedly the school company hoped, or pretended to hope, that it would be able to raise money upon this mortgage according to the scheme which I have previously mentioned, but in this it was entirely unsuccessful, and we have its officers and counsel at or before the first day of August advising and inducing the shipbuilding company to go into insolvency and that was two weeks or thereabouts prior to the time fixed for this first payment under the mortgage.

The circumstances of the ease do not bring it within the principle upon which Vice-Chancellor Stevens sustained the mortgage in Regina Music Box Co. v. Otto & Sons, 65 N. J. Eq. (20 Dick.) 582.

My conclusion, therefore, upon the whole matter is that the mortgage is clearly invalid unless it be to the extent of $1,500, advanced in the due bill of that amount of July 15th, and as to that I will advise that it stand valid, but will advise no costs for either side.