text:
    Margaretha Schreiber, complainant-respondent, v. Charles Schreiber et al., defendants-appellants.
    [Decided November 20th, 1916.]
    On appeal from an order of the court of chancery advised by Yice-Chancellor Stevenson and reported in 85 N. J. Eq. SOS.

    Appeal of William M. Schultz.

      Mr. John J. Fallon, for the appellants.

      Mr. Charles W. Kappes, for the respondent.
   Per Curiam.

This is an appeal from an order of the court of chancery forfeiting a ne exeat bond, -and directing the surety thereon to pay to the clerk of that court the penal sum mentioned therein.

The first ground qf appeal is that the chancellor was without jurisdiction to make the order because the bond does not comply with rule 192 of the court of chancery (which regulates the procedure on writs of me exeat), in; that it was not taken by the sheriff at the time of the arrest of the defendant; and, further, because the condition of the bond varies from that required by the rule. In' disposing of this contention, it is enough to say that so far as the obligation of the surety is concerned, it is immaterial whether the bond is in exact conformity to the requirements of the chancery rule or not. Itl was voluntarily executed by Schreiber and his surety for the purpose of obtaining the release o| the former from custody under the writ of ne exeat, and it effected that purpose. It was open to the court of chancery to accept this bond in lieu of one in the prescribed form, if it saw fit to do so. As was said by Chief-Justice Beasley, speaking for the supreme court in Sooy ads. State, 38 N. J. Law 329, an instrument of this kind, although variant from that required by statute (or rule of court), given for a lawful purpose and not violative of any public policy, when made without an illegal coercion, is clearly obligatory in law. This pronouncement was approved by this court in 41 N. J. Law 395. We conclude, therefore, that the first ground of appeal is without merit.

The next contention on the part of the appellant is that the cause in which the order was made was abandoned by the respondent prior to the making of the order, and that it is therefore void. The fact,-however, is to the contrary. Although no step or proceeding in the cause was taken for many terms of the court, no move was made by Schreiber, the defendant therein, to bring about its termination. He had a right, had he seen fit, after the suit had been suffered to lie for a year without prosecution, to move its dismissal, and would have been entitled to an order to that effect unless good cause for the apparent laches in prosecution had been shown by the complainant. This, however, he did not see fit to do; and the order having been made in a cause then pending in the court was clearly not comm non judice.

The only other ground of appeal is that the laches and delay of the respondent in proceeding against the appellant makes the order unconscionable. A reading of the affidavits which were submitted in support of and against the application to enforce the bond satisfies us, as it did the learned vice-chancellor before whom the matter came for adjudication, that, under the circumstances therein exhibited, no laches or unreasonable delay in the prosecution of the bond is imputable to Mrs. Schreiber.

The question of the propriety of enforcing this bond by a summary proceeding in the court of chancery is dealt with at length in the opinion promulgated by tliát court. But as it is not raised by any ground of appeal taken before us, it has not received consideration at our hands.

The order under review will be affirmed.

For affirmance — The Chief-Justice, -Garrison, Swayze, Trenci-iard, Parker, Bergen, Minturn, Kaliscii, Black, 'White, Heppenpieimer, Williams, Taylor, Gardner — 14.

For reversal — None.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    In the matter of the will of Whitehead.
    [Argued June 22d, 1916.
    Decided November 20, 1916.]
    On appeal from an order of the prerogative court advised by Vice-Ordinary Learning, whose opinion is reported in 85 N. J. Fq. llJh

      Mr. Louis II. Miller, for the appellant.

      Mr. Walter II. Bacon, for the respondent.
   Per Curiam.

The decree of the court below is affirmed, for the reasons stated in that court by Vice-Ordinary Learning. We ought to say, however,' that the illustration-as to legislative limitations upon the certiorari power involves considerations that are quite aside from the matter in hand, and that may give rise to implications that would be misleading.

By pointing out that our concurrence does not extend to such implications, we shall avoid any possible misconception on this head.

For affirmance — Ti-ie Chiee-Justice, Garrison, Trenchard, Parker, Bergen, Minturn, Kalisch, Black, White, Williams, Taylor, Gardner — 12.

For reversal — None.


text:
    Edwin F. Able, respondent, v. Phoebe Gutman, appellant.
    [Submitted July lOth, 1916.
    Decided November 20th, 1916.]
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Backes and reported in 85 N. J. Fq. F86.

      Mr. H. Burdett Iierr and Mr. Harry J. Able, for the respondent.

      Mr. William O. Gebhardt and Mr. Francis J. Blatz, for the appellant.
   Per Curiam.

The- decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Ordinary Backes.1

For affirmance — The Chiee-Justice, Garrison, Swayze, Trbnchard, Parker, Bergen, Minturn, Kalisoh, Black, "White, Heppenheimer, Williams, Taylor, Gardner — 14.

For reversal — Hone.


text:
    Lida T. Allen, complainant-appellant, v. Charles S. Allen, defendant-respondent.
    [Submitted July 10th, 1916.
    Decided November 20th, 1916.]
    On appeal from a decree in the court of chancery advised by Vice-Chancellor Learning and reported in 85 N. J. Eq. 55.

      Messrs. Wescott .& Weaver, for the appellant.

      Mr. G. Fore Cogswell, for the respondent.
   Per Curiam.

The bill in this cause was filed by the complainant for the annulment of her marriage to the defendant upon the ground that when the marriage took place the defendant knew that he was afflicted with a taint of insanity inherited by him and transmissible to his offspring; and that he fraudulently concealed the fact from her. The marriage took place in 1895. In 1901 the defendant’s mental condition became such as to necessitate his confinement in an insane asylum, where he has ever since been, and, apparently, without any improvement.

Our examination and consideration of the testimony submitted in the court below leads us to the conclusion that there was no adequate proof that the defendant at the time of his marriage to the complainant was afflicted with a taint of insanity. The most that can be said is that he believed that he was, although no basis for such a belief is disclosed in the proofs. The mere fact that one of the parties to a marriage ceremony has such a belief, although there is no real justification for it, and does not communicate it to the other contracting party, affords no ground for a subsequent annulment of the marriage. Nor does the defendant^ mental breakdown — six years after complainant was married to him he became insane — afford ground of support for his belief that at .tire time of his marriage there was a taint of insanity in his blood. We conclude, therefore, that the complainant’s bill was properly dismissed for the failure of proof to support the allegations of her bill. Beaching this conclusion; for the reasons stated, we find it unnecessary to consider the interesting question discussed by the learned vice-chancellor in his opinion, viz., whether the fact that one of the parties to a marriage is insane at the time when the marriage takes place, and intentionally conceals that fact from the other party to the marriage, affords just ground for its annulment.

For affirmance — Ti-ie Chief-Justice, Garrison, Sway?e, Trencpiard, Parker, Bergen, Minturn, Kalisoi-i, Black, White, Heppenpibimee, Williams, Taylor, Gardner — 14.

For reversal — None.


text:
    Supreme Council of the Royal Arcanum, complainant-respondent, v. Sidney Herbert Alexander et al., defendants-appellants.
    [Submitted July 10th, 1916.
    Decided November 20th, 1916.]
    On appeal from a decree of the-court of chancery advised by Vice-Chancellor Backes, who filed the following opinion:
    A member of the Boyal Arcanum caused his death benefit certificate to be made payable to his wife. Later, while the certificate was in his wife’s possession, he obtained a new certificate payable to his son. On interpleader between mother and son for the proceeds, Held, that (1) the member had the right to change the beneficiary and that an affidavit by the member, submitted to the Arcanum to procure the change of beneficiary, setting forth the loss, or ignorance of the whereabouts of the first certificate, even if false, did not affect the legality of the second certificate as between the beneficiaries inasmuch as the fraud could only be taken advantage of by the Arcanum, which right it had waived by the filing of the bill and surrendering the fund; (2) upon payment of the fund into' court, equity will treat it as the property of the member and will dispose of it upon equitable principles according to the rights of the claimants. — Held, also, that as between the two claimants the holder of the last certificate has the superior legal right which may, however, be displaced by superior equities of the prior certificate holder. —Held, also, that equities of the latter, as a purchaser of the first certificate, or as holder thereof as security for moneys lent to the member, were not sustained by the proofs.
    I will dispose of tlie case now. There is no material conflict in the testimony — due perhaps to the fact that the witnesses testified to matters and occurrences not related to the same period; and the principles of law 'involved and to be applied are not seriously disputed by counsel.
    On May 3d, 1889, William Henry Alexander became a member of the Boyal Arcanum and entitled to a death benefit of $3,000. The death benefit certificate issued at that time was made payable to his wife, Madeline Alexander. On September 4th, 1912, at the request of the member, the Royal Arcanum issued a new certificate, payable to the member’s son, Sidney Herbert Alexander. Upon the death of the member, November 28th, 1914, the widow and son each made claim to the benefit, whereupon the Royal Arcanum, being disinclined to determine the rights of the claimants, paid the money into court and obtained a decree that they interplead, and the parties are now here — the mother on one side, the son on the other — asking that the court award to them as against the other, the money.
    ■ Aside from the special equities set up by the mother, and to which I will hereafter refer, the status of the claimants as beneficiaries under the laws of the Royal Arcanum is equal. Each is, within the class designated by the laws of the order, qualified to be a beneficiary; by those laws the selection is left entirely to the member; having once nominated a beneficiary, it is also his right under the provisions of the order, to change the beneficiary. And from a moral and equitable viewpoint, as this case developed, it seems to me that the mother, as a dependent and an object of the member’s bounty, has no greater claim than the adult son. In the strictly legal aspect of the case, tire son, as the holder of the last certificate, occupies the superior position, and the first attack, in order to overcome this, is as the mother contends, that the son’s certificate was procured by the member fraudulently, in violation of the rules of the organization, and that it is void. As I recall the law of the order as it was read to me, a member of the order has the right at any time, upon surrender of the certificate, to change the beneficiary, or, if the certificate is lost or beyond his control, upon proof of the fact, by affidavit or otherwise, to the satisfaction of proper officers, he may obtain a new certificate with the change of beneficiary.
    It is claimed that in 1912, when the new certificate was issued, and to obtain it, the member in writing, under oath, stated that the old certificate was lost and beyond his control, or words to that effect — I do not now recall the exact language — and the claim is that the member at the time knew the policy to be in his wife’s possession, and that he knowingly falsely and fraudulently made the affidavit. I have very serious doubts whether, even though the affidavit was thus false, the question can be raised in this litigation over the fund by the beneficiaries. I am inclined to think that the naming of a beneficiary in the certificate of a benevolent society is for the guidance of the organization, and that the fraud can only be taken advantage of by the organization in testing its liability under its certificate, and that this defence is waived when the fund is paid unto court. But I need not pass upon that, because the evidence does not satisfy me that the affidavit was fraudulently false. The mother testified that on Eriday, April 14th, 1911, about ten o’clock in the forenoon, at Arlington, just while they were getting ready to go to Atlantic City to open up their summer home, her husband handed her four papers, saying, “These are yours; take care of them; put them in the bank-box.” Their little daughter, who was then ten years old, and who now lives with the mother, says she saw the occurrence and' that father said, “Mother, these papers belong to you; take care of them.” The four packages contained an old will, a deed for a cemetery lot, a policy in the Prudential, and the certificate in the Eoyal Arcanum. The mother says that her husband had a satchel full of papers at the. time; that he spread them all over the table, and selected these four. She does noti say, nor does it appear, that the member identified any of the papers by their proper designation; or, from anything he said, that he knew one of them was the Eoyal Arcanum certificate.
    Mow, the deduction I am asked to make from this testimony is, that fourteen months afterwards the member, knowing where the policy was, deliberately perjured himself. I cannot believe that the widow and this little daughter intended that their testimony could, or should, have that effect; but, that is the implication. If the member delivered over these four papers, as the mother and daughter say he did — taking into consideration the other testimony in the case, that in 1910 he stated to a . fellow member of his lodge that he intended to make a transfer to the son, and in 1912 to the same member and another that he intended to make the transfer, and' at that time to one of them that he did not know where his certificate was; that it was somewhere about, and he thought his wife had it — isn’t it a fairer inference that, when he turned the four bundles over, he was not mindful that one was the certificate, or else that he had forgotten the event? There was no reason for him to resort to something so sordid as a false affidavit to obtain the change. If he knew that his wife had the certificate, he could have so stated, and probably truthfully, that it was beyond his control, and that would have sufficed. The proofs in the case are far from satisfying me'that the affidavit was deliberately falsely made. On this score the mother fails.
    So I will take up the matter of the special equity of the mother, to which I have referred, and upon which her counsel chiefly relies. Her claim is that after the certificate was delivered to her, in April of 1911, she, on the strength of it, at various times advanced to her husband $9,000, in the expectation that she would be partly reimbursed out of the fund at his death. How, as I understand the authorities in cases of this kind, where the fund is paid into this court and the strife is, as it here is, between two claiming it, equity will treat the fund as the property of the member, and make disposition of it upon equitable principles. So that, even though the son’s legal right in this case is superior to that of his mother, he may.be outclassed bj^ her equities. I have some misgiving as to the accuracy, I will not say truthfulness, of the mother’s, and daughter’s testimony that the father made formal delivery of the certificate to the mother on April 14th, 1911, because only a short time before, in 1910, if we believe the disinterested witnesses, he had intended to transfer it to his son. That this was a firm resolve appears from a reiteration of his intention, made in 1912, just before the transfer to the son was made. And, in this regard, I may say that the apparent keenness of the memory of the daughter, who was then only ten years old, attracted my attention. It may be that in the bundle of four papers the mother got, the. certificate was included, but I question whether it was handed over knowingly. But, if it was handed over, it seems to me it was done only for safekeeping. How, when the certificate was delivered in 1911, if it then was delivered, the mother took it upon condition of the member’s right to make a change in the beneficiary, unless she at that time obtained it for a valuable consideration; or, later on, passed a valuable consideration referable to it. That she gave no valuable consideration for the certificate at the time it was delivered to her i§ admitted. So it appears that she cannot lay claim to the whole fund by way of purchase at that time; and it does not appear in the evidence, if in fact she thereafter advanced money to her husband, that any money was advanced — lent—on the strength of the security of the certificate. If she did lend her husband money thereafter, then the burden is upon her to show me, in dollars and cents, how much she advanced, and only to that extent will her equitable rights be superior to that of her son. And this she has not done with any degree of satisfaction. She does say, in so many words, that she lent to her husband $9,000 and upwards, and to her counsel stated that she had tabulated the various sums for him, but the tabulation was not produced, that I recall. She produced this bundle of checks, made out in her husband’s favor, and which she claims represents that amount and exceeds it. I am not at all satisfied she lent her husband any money, in the legal sense. If she advanced him any money at all, I am inclined to think that it was of their joint fund, and if she lent him any I am satisfied that it was fully repaid. And let me explain how I come to the conclusion that there was no money lent. They were married in 1883, and were in humble circumstances. He was a plumber and prospered in his business. She was thrifty, took in boarders, made money on a smale scale and saved it. They saved and accumulated money in common interest. In 1905 the husband turned all of his real estate,' some of which he got from his parents, over to his wife. In fact, all that he possessed, up to within a month of his death, he turned over to her. Their joint accumulations represented by real estate at the time of his death, in his wife’s hands, amounted to about $35,000. The only property she did not get is the fund now in dispute. After her husband turned his property over to 'her in 1905, she became the dominant factor in the matter of finances, at least, and I think she managed her part well, too. She looks like a clever, shrewd, calculating woman, who, as a man, would have made her mark in the business world. Thereafter, notwithstanding her ascendency, he continued in his occupation and they worked together, probably as they had before, but he appears to have surrendered thq financial management pretty much to her. She was in control of their affairs.
    ISTow, I have said that there were no loans made by her to her husband in the legal sense. By that I mean that the amount said by her to have been advanced, and represented by the bundle of checks before me, were of moneys belonging to the two, although held in her name, and that these moneys were spent by the husband in the interest of both. Pie engaged in business, bought real estate from time to time, and many of these checks, according to Mrs. Alexander’s admission, were used in improving the realtjr which was either in her name at the time, or which afterwards her husband conveyed to her. She benefited and I think to the full extent of the moneys represented by the checks which she gave to her husband. In 1911 or 1912 he sold his Arlington avenue property and bought a home in Philadelphia, which he placed in his wife’s name. Another property in Philadelphia, which he bought with money she gave him to engage in the haberdashery business, he afterwards conveyed to her; and a month before he died, he conveyed to her his last piece of property, Uo. 4 Palisade' avenue, for which he had an offer of $17,000, and on which there was a mortgage of $7,500. These sums, represented by the checks given by her to her husband, it seems to me, were used in a joint enterprise, the fruits of which she now enjoys. The checks were for moneys advanced but not lent. Hot a single item of this mass of checks has been pointed out and proved as representing an out and out loan, to which the certificate in question may be attached as security. The burden of doing this was upon the widow, and in this she has failed.
    After the death of her husband, Mrs. Alexander paid some of his debts, something like $1,000, as she says, in the expectation that she would be reimbursed out of this death benefit. It must not be overlooked that she at that time also had as much coming to the estate from the Prudential Insurance Company. It is not shown how these debts were contracted, or for whose benefit, but from the general complexion of the case, it does appear that whatever there was beneficial from the exertions of Mr. Alexander, after his wife took hold, went to their joint benefit, and whatever losses were sustained came from their joint funds. The debts were debts of the combination — quasi copart-, nership debts — which she paid, not in reliance upon the benefit certificate, but because it was her obligation to pay, and she must have realized that had she not done so, a bill in equity would have enforced payment out of the Palisade avenue property, which was conveyed to her only a month before her husband died.
    To summarize: The certificate was not delivered to the wife for a valuable consideration, and on that score she had no equity superior to her son. It was not .delivered to her upon any understanding of security for future advances. She has not proved that she lent her husband any money upon the security of the certificate, expressly or by implication, and for this reason she has no rights outreaehing those of her son. She held the certificate, if by deliver, without any contractual rights, and at all times subject to the right of change of beneficiary.
    . I said before, that from a moral viewpoint the widow, as a dependent, was not entitled to any greater consideration than the son. There has been an estrangement between mother and son since 1909, but none between father and son. Mr. Alexander realized that on his death the son could expect nothing from his mother, and the wife then being in comfortable circumstances, it was not unnatural to give to the son the only bit of property then under1 his control and subject to his disposition.
    The money in court will be awarded to the son. Under the circumstances, costs will not be imposed.

      Mr. Harrison H. Yoorhees, for the respondent.

      Mr. William M. Seufert, for the appellant.
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Backes.

For affh'mmce — Ti-ie Ci-iiee-Justice, Gareison, Swayze, Teenchaed, Paeker, Bergen, Minturn, Kalisci-i, Black, White, Heppenheimer, Williams, Taylor, Gardner — 14.

For reversal — None.


text:
    Commonwealth Title Insurance and Trust Company, complainant-respondent, v. New Jersey Lime Company et al., defendants-appellants.
    [Argued June 26th, 1916.
    Decided November 20th, 1916.]
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Stevenson, who filed the following opinion:
    The bill is filed to foreclose two mortgages, the first to secure thirty-three outstanding bonds of the mortgagor, the defendant the New Jersey Lime Company, in the sum of $500 each, and the second to secure sixty-seven bonds of the mortgagor, the same defendant, in the sum of $500 each. All of these bonds are owned by the defendant the Bethlehem Steel Company, and the bill alleges that as such owner the said company requested the complainant to foreclose the second mortgage to secure the sixty-seven bonds by reason of default in the payment of interest. No objection has been made to the alignment of the Bethlehem Steel Company, the complainant’s sole beneficiary as a defendant instead of a co-complainant, and in this ease the matter seems to be merely technical. There is no difficulty in dealing with these motions in the same manner as if the mortgagee trustee and its sole beneficiary had been joined as complainants. The motion to strike out the portions of the answer is made on behalf of the complainant, the Commonwealth Title Insurance and Trust Company, trustee, mortgagee, and the motion to strike out or dismiss the answer by way of cross-bill is made on behalf of the complainant, and also on behalf of the Bethlehem Steel Company, which is a defendant .to the cross-bill.
    1. The question which has been the subject of extensive argument, and around which this whole case turns, may, I think, be briefly stated with substantial accuracy as follows:
    Can a party desiring and intending to overwhelm the owner of mortgaged property with financial embarrassments in order that he may acquire the property at a foreclosure sale, first, enter into a contract with the mortgagor with intent to break it; second, break this contract and thereby cause great money damage to the mortgagor, then buy up the outstanding mortgage which the mortgagor has been unable to maintain, and last of all, foreclose the mortgage and thereby force the mortgaged property to a judicial sale under conditions of market which favor the purchase of the property by the complainant, the holder of the mortgage, for a price below its value?
    2. The defendant the New Jersey Lime Company files an answer and answer by way of cross-bill. The prayer of the answer is in the usual form that the “defendant be hence dismissed with its reasonable costs and charges,” with an additional prayer for further and other relief.
    The prayer of the cross-bill is, that the complainant and the defendant the Bethlehem Steel Company, its sole beneficiary, be restrained 'from prosecuting any suit or proceeding in law'or in equity to enforce the payment of the above-mentioned bonds, or any of them, or-to foreclose the mortgages given to secure the same for the period of two years after the date of the decree to be entered in this suit, or such other length of time thereafter as the court may deem just.
    The cross-bill further prays that the Bethlehem Steel Company and its agents, &c., be enjoined from acts which would injure the credit and financial standing of the defendant, and from purchasing any additional bonds or obligations of the defendant the lime company, and from doing any act or making any statement that might tend to prevent the lime company from bringing about a financial reorganization and commencing to do business again.
    The cross-bill further prays that the damages of the defendant caused by the wrongful acts of the Bethlehem Steel Company be assessed, and that- the defendant the Bethlehem Steel Company be directed to pay the same to the defendant the lime company.
    The cross-bill alleges that the defendant the lime company had been damaged by the wrongful acts of the defendant the Bethlehem Steel Company in the sum of $75,000.
    3. That the cross-bill is demurrable, so far as it asks for a decree for damages, seems to be clear. The damages are unliquidated, and therefore are not the proper subject-matter of a set-off in a foreclosure suit under our existing laws. The answer, however, does not set up these damages by way of a set-off, but denies the right of the complainant to foreclose the mortgages, and prays for a dismissal of the bill. The damages are not pleaded as a set-off or abatement of the mortgage debt, and if such were the case such set-off or abatement could not be allowed.

      4. The prayer of the cross-bill for an injunction restraining the steel company and its agents from injuring the financial standing of the lime company, and from purchasing additional obligations of the lime company, &c., above set forth, may be dismissed, I think, without any special and separate consideration. There is nothing set forth in the cross-bill which would warrant such an extraordinary use of the injunctive power of a court of equity.
    5. The prayer of the cross-bill for a stay of all proceedings for the collection of tírese bonds at law or in equity for the arbitrary period of two years, is without support in any equitable principles of which I am aware. No reason is suggested why a stay for two years, no more or no less, should be allowed. If any stay should be granted, the duration of such stay should be measured in some way by the financial exigencies of the complainant which the defendant the Bethlehem Steel Company may be adjudged to have caused. The apprehension of this view,' no doubt, induced the pleader, after asking for a stay for the arbitrary period of two years, to add in the alternative a prayer for a stay for “such other length of time” as the court might deem just.
    If the court should adopt the theory of this cross-bill, it would have to enter upon an almost impossible task. The court would be obliged to learn all the facts and circumstances relating to the financial condition of the defendant the lime company, determine the relative importance of the various factors which entered into the financial failure of the lime company to continue the prosecution of its business, and then hold off the complainant and the defendant the Bethlehem Steel Company from the collection of this mortgaged indebtedness for a period in some way to be measured which would enable the defendant the lime company to recover from the injuries which resulted from the wrongful conduct of the defendant the steel company.
    In large numbers of instances of financial failure in business like this, recovery cannot be effected bjr the debtor, however long the period may be during which the particular wrong-doing creditor may be stayed in the collection of his debt. There is absolutely nothing to show in this case that a stay of ten years would meet the alleged equities of the case of the unfortunate defendant the lime company. It may be observed, also, that the defendant the lime company, by its cross-bill, seeks to recover $75,000 of damages, and such recovery is denied in this case because in respect of these alleged unliquidated damages, the remedy of the defendant the lime company is at law. Are the complainant and the Bethlehem Steel Company to be stayed for a period of time in the collection of these debts because of the wrongful conduct of the steel company in preventing the defendant the lime company from paying them, or carrying them in some way, while this same defendant the lime company may, by an action at law, recover from the steel company all the damages which it has suffered according to the rules of law which define the measure of damages recoverable in such cases?
    If a court of equity or a court of ethics had jurisdiction to enjoin the collection of these honest debts, against which there is no suggestion of a defence in the hands of the original creditors, on the ground that the defendant the steel company, which is seeking to collect the debts, had before acquiring them been guilty of malicious, malevolent or even illegal conduct, with the intent and effect of hindering or even preventing the debtor, the lime company, from paying these debts, it would seem that the lime company obtaining such injunctive relief should be subjected to an injunction restraining it from prosecuting its action or actions at law for the recovery of the $75,000 of damages. I have used the phrase “illegal” because it is charged that the defendant the steel company intentionally committed a breach of its legal contract with the lime company. It is not necessary to discuss the theoretical question in precisely what sense the breach of an ordinary legal contract is illegal. It may be borne in mind that some theoretical writers maintain that at common law all contracts contain the implied alternative that each party may either perform his contract or pay the damages. Notwithstanding some exceptional and anomalous instances, the general proposition stands that “the mere non-performance of a promise” does not constitute a tort. Poll. Torts SS9.

    With the steel company enjoined from foreclosing, and the lime company enjoined from suing at law for its damages, we have a situation of great difficulty for a court of equity which does not undertake to administer divine justice in granting, modifying and vacating injunctions.
    6. If the defendant the steel company has committed a breach of an independent contract with the lime company, 'the remedy of the lime company is at law. If the defendant the steel company has committed any tort which has caused damages to the lime company, the remedy of the lime company likewise is at law, and legal rules defining the measure of damages in case of a breach of contract, or in case of a tort, fix the limits of the defendant’s liability. The argument on behalf of the lime company would, in some instances, add a novel penalty or element of damage in cases of a breach of contract and in cases of tort, viz., the imposition upon the party who broke his contract, or committed the tort, of an incapacity to acquire and forthwith enforce outstanding overdue pecuniary obligations of the other party, against which there is no defence while they remain in the hands of their original holders. The doctrine contended for would in many cases also involve the infliction of a penalty upon innocent third parties by depriving them of the natural and oftentimes the sole market in which they could realize the amount of the obligations which they hold. There is nothing in this case to suggest that the one hundred bonds of the lime company, which the steel company acquired after the steel company had done the things of which the lime company complains, were not in the hands of holders who were entirely innocent of all the alleged wrong-doing of the steel company. It is a familiar rule of equity that with a single exception, which we need not notice, the whole market is open to the bona fide holder for value, im eluding parties who had notice.

      7. The fact that no authority has been cited sustaining this cross-bill indicates that the novel equitable principles contended for as a foundation of the cross-bill cannot be a part of our juridical system.
    The case of Farmers’ Loan and Trust Co. v. New York and Northern Railway Co., 150 N. Y. 410, upon which the counsel for the lime company rely in their elaborate brief, and which they allege to be “on all fours with the present case,” it seems to me very plainly does not in the slightest degree support the theory of the cross-bill. If the steel company had bought up a majority of the stock of the lime company, had placed a board of directors in control of the business of the lime company, and through such board had caused the diversion of the 'income and disarrangement of the business of the lime company, with the intent and with the effect of preventing the lime company from carrying this mortgage indebtedness so that it, the steel company, might buy up the mortgage indebtedness, and the steel company then had in fact bought up thé indebtedness and forced on this foreclosure, the case cited might have been an authority in point. There is absolutely nothing to show in this case that all the contracts and other dealings between the lime company and the steel company before the latter acquired these bonds, were not regular business transactions not affected bjr any fiduciary relation, and without the slightest taint of fraud. The answer and cross-bill allege that the steel company made certain representations affecting the credit of the lime company, but there is no allegation that the steel company alleged anything which was not strictly true. The steel company and the lime company dealt at arms-length.
    8. A motion to strike out a cross-bill, as has often been pointed out, is the exact equivalent of a demurrer. Bullock v. Bullock, 52 N. J. Eq. 561, 563; Hanneman v. Richter, 63 N. J. Eq. 753, 755; Holton v. Holton, 72 N. J. Eq. 312, 314; Stevenson v. Morgan, 63 N. J. Eq. 707, 805; Schulz v. Ziegler, 80 N. J. Eq. 199, 202.

    In the absence of any precedent supporting this cross-bill, and with the views which I entertain in regard to the novel principles upon which it is based, I feel constrained to sustain the demurrer. The extent to which a court of equity has any discretion to withhold its judgment upon the case presented by a bill when the sufficiency of the same is properly challenged 'by a demurrer, is quite limited. The discretionary power referred to certainly cannot be exercised in favor of the demurrant in this ease. The motion to strike out the cross-bill, therefore, will be granted.
    9. The motion to strike out the answer occupies a very different position from the motion to strike out or dismiss the answer by way of cross-bill. There is no demurrer in equity to an answer.
    The motion to strike out an answer is equivalent to exceptions. Doane & Jones Lumber Co. v. Essex Building and Land Co., 59 N. J. Eq. 142; Habermann v. Kaufer, 60 N. J. Eq. 271, 274, 275; Condict v. Erie Railroad Co., 77 N. J. Eq. 282, 284.

    In this instance, the motion stands before the court precisely as if under the old practice the complainant had filed exceptions to the portions of the answer to which it objects on the ground of impertinence.
    Assuming in deciding that this cross-bill should be dismissed —that the demurrer to it should be sustained — that the law laid down necessarily condemns the portions of the answer objected to as inadequate, as setting, up no defence, and no matter in aid of any defence, it does not therefore follow that the motion to strike out these portions of the answer must be granted. Uo doubt it may sometimes be hard to draw the line between an impertinent answer and a legally inadequate answer, but this distinction, must be made. In Habermann v. Kaufer, supra, Viee-Clianeellor Grey undertook to formulate a practical definition by stating that to succeed in a motion to strike out matter from an answer it must be shown that “the matter criticised is so unrelated to the complainant’s -claim as to be unworthy of any consideration as a defence,” and that if the part of the answer objected to “be found to be so connected with the subject-matter of the complainant’s suit that it may fairly be deemed to present some question of either law or fact which the court ought to hear and determine, then it cannot be stricken out as impertinent, but must be considered, and its sufficiency must be passed upon as a defence either of fact or of law to the action.” The fact that the court upon a motion to strike out- a cross-bill made concurrently with the motion to strike out portions of the answer has based its decision to grant the motion upon principles which, if true, necessarily render the answer inadequate, makes no difference in the situation. A demurrer very often is sustained after an elaborate discussion and consideration of complex questions of law, but the moment it is conceded that an answer presents any matter of law which is in any degree open to argument and consideration, the answer cannot be excepted to or stricken out as impertinent.
    Demurrers in equity should be discouraged as tending to unnecessary delay and as presenting often to the judgment of the court purely academic questions, the discussion and determination of which frequently embarrass rather than aid the administration of justice, the application of law to the facts of the case when those facts are actually proved at the final hearing. Among the proposed amendments to our chancery practice is one abolishing demurrers. In my opinion, demurrers to bills should never be allowed excepting by leave of the court.
    The motion to strike out an answer, or a portion of an answer, which is appealable under our practice, is less worthy of favor than a demurrer to a bill. This motion is a proceeding often involving only expense and delay. »
    In this case I do not think that it can be said that the portions of the answer objected to do not present any question of law which the court ought to hear and determine. The foregoing memorandum, which deals with the legal theory of the cross-bill, I think indicates that the allegations of the answer objected to are not impertinent and immaterial, but exhibit an arguable question.
    But the judgment of the court, upon a demurrer that a cross-bill presents no cause of action in equity in a case like this, does not necessarily involve the proposition that the same matter set up by way of defence in an answer is ineffectual and inadequate. The conduct of the Bethlehem Steel Company in this case may not prevent a cause of action in equity on behalf of the New Jersey Lime Company, but that same conduct may bar the Bethlehem Steel Company from any relief against the New Jersey Lime Company. It must be borne in mind that we are treating the Bethlehem Steel Company as the actual complainant in this cause, the nominal complainant, the Commonwealth Title Insurance and Trust Company being its trustee and representative.
    In order to present the matter under consideration in a convenient form, let us suppose that the defendant in a foreclosure suit sets up by way of answer that the complainant, with actual intent to ruin the defendant financially, and to acquire his valuable real estate, first burned the complainant’s buildings in which he carried on a lucrative business, and thereby caused his insolvency, and then bought up outstanding mortgages covering the land, and immediately, or at a convenient period when times were hard, commenced foreclosure suits. The defendant in such case invokes the rather vague and somewhat criticised doctrine that equity will not afford relief to a complainant who comes into court with unclean hands. The question is not whether the answer presents a legal defence. Under the well-settled principles above stated, a demurrer to the answer will not be allowed. The sole question.is whether an arguable question is presented to the court. This question in the present case has been the subject of extensive argument, and-.authorities have been cited which the court has been obliged to examine with some care. Farmers’ Loan and Trust Co. v. New York and Northern Railway Co., supra; Ewart v. Irvin, 1 Phil. Rep. 78; Davis v. Flagg, 35 N. J. Eq. 491; Dickeman v. Northern Trust Co., 176 U. S. 181; Morris v. Tuthill, 72 N. Y. 575; Comstock v. Johnson, 46 N. Y.

      615; Wilson v. Bird, 28 N. J. Eq. 352; Thorne v. Mosher, 20 N. J. Eq. 257; United States v. Peck, 102 U. S. 64, are a few of these authorities bearing upon various matters of law which were thrashed over in the argument.
    In the foregoing consideration of the cross-bill, it was not decided, but assumed, that a case of a willful breach of a valid contract was presented, although that matter was the subject of large dispute. Of course, the same assumption must be made in dealing with this motion to strike out a portion of the answer, because no such motion could be granted as the result of an argument, which convinced the court, after careful consideration, that no meeting of minds had occurred, or that the alleged contract was void under the statute of frauds.
    In dealing with the cases in which the complainant in a foreclosure suit had been defeated, where the mortgage had been made to become due under a forfeiture clause because the complainant himself had caused the forfeiture, it must be borne in mind that the right to'foreclose the second mortgage in this case, securing sixty-seven bonds ($33,500), is based upon non-payment of interest and taxes. If the matter objected to in this answer presents a debatable question as to the complainant’s right to foreclose the second mortgage, or as to the complainant’s right to collect any portion of the indebtedness for which it seeks to sell the defendant’s land, the matter objected to in the answer cannot be stricken out as impertinent, but must stand, although it may be inevitable that the complainant will be entitled to a decree for the sale of the mortgaged property.
    Whatever views covering this ease, or a part of it, have controlled me in deciding the demurrer to the cross-bill, although the elaborate argument of this case and its subsequent consideration on my part may have induced in my mind the firm conviction that this answer is inadequate, and does not present any defence to this foreclosure suit, I am satisfied that this motion to- strike out the answer could not be granted without practically allowing a demurrer to- an answer, and that the portions of the answer criticised are not “so unrelated to the complainant’s claim as to be unworthy of any consideration as a defence.” The result is that the motion to strike out the paragraphs of the answer of the New Jersey Lime Company specified in the notice will be denied.

      Mr. Theodore Simonson, for the respondent.

      Mr. Hugh B. Reed, for the appellants.
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Stevenson.

For affimnance — The Chief-Justice, Gaeeison, Swaysze, Tbenchabd, Paekee, Bekgen, Mintubn, Black, White, HepPENHE1MEE, IVlLLIAMS, TAYLOR, GABDNEE-13.

For reversal — None.


text:
    The Commonwealth Title Insurance and Trust Company, trustee, et al., complainants-appellants, v. New Jersey Lime Company et al., defendants-respondents.
    [Argued June 26th, 1916.
    Decided November 20th, 1916.]
    On appeal of the Bethlehem Steel Company.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Howell, who filed the following opinion:
    As I read the statute relating to counsel fees (P. L. 1910 p. 1/-27), this court is authorized to make allowances by way of counsel fee to successful litigants only, and it was so held by Vice-Chancellor Learning in Sparks v. Ross, 82 N. J. Eq. 121. This authorizes an allowance to the complainant solicitors according to the rates, fixed by rule 224. I have made a calculation in accordance with this rule, and find that the complainant’s counsel are entitled to a counsel fee of $695.
    I do not think that the Bethlehem Steel Company should be granted any allowance. The statute plainly contemplates the granting of an allowance, if any is granted, upon a basis- of a percentage of the amount recovered by the successful litigant. There was no award of money to the Bethlehem Steel Company, hence there is no basis for making a calculation.
    The rule above mentioned was made for the purpose of giving effect to an act passed in relation to the subject on April 3d, 1902. This rule was not promulgated until February 6th, 1910; the act now in force took, effect on April 11th, 1910-. No new rule has been promulgated since the act of 1910, but I understand the practice to be to follow rule 224.
    The result is that the complainant’s counsel are allowed $G95, and that there is no allowance to any other of the parties to the cause.

      Messrs. Griggs & Harding and Mr. Martin Gonboy, of New York, for the appellants.

      Mr. Hugh B. Reed, for the New Jersey Lime Company.
   Per Curiam.

This appeal relates to the refusal of the vice-chancellor to award a counsel fee to the appellant Bethlehem Steel Company. This refusal was put upon the ground that under chancery rule 224, the amount of counsel fee is based on an award of money to a successful litigant, and that there was no such award to the steel company, the decree running in favor of complainant as its trustee.

The authority to award counsel fees is derived from the statute of 1910 (Comp. Stat. p. 445), amending section 91 of the Chancery act of 1902; and it is argued that the vice-chancellor was not limited by the rule of his own court but was entitled to award a counsel fee to any "party obtaining the order or decree,” and that the steel company as cestui que trust bearing the brunt of the litigation is such a party. It does not seem to be claimed that the act is mandatory.

We do not find it necessary to deal with these matters at length, because it is conceded that the counsel for the complainant below also represented the steel company and acted in its interest in the litigation, so that the award of counsel fee to the complainant was in effect an award to them for their services in protecting the interests of the steel company, the complainant having no .direct interest in the matter. For this reason the refusal to award counsel fee to the steel company in addition was proper and should be affirmed.

For affirmance — The Chief-Justice, Garrison, Swayze, Trenci-iard, Parker, Bergen, Black, White, Heppeñi-ieimer, Williams, Taylor, Gardner — 12.

For reversal — None.


text:
    Celia Brooks et al., eomplainants-respondents, v. Elias Goldberg, defendant-appellant.
    [Submitted July 10th, 1916.
    Decided November 20th, 1916.]
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Howell, who filed the following opinion:
    The bill in this case is framed upon the theory that the defendant holds certain real estate and personal property in trust for the complainant Celia Brooks.

      The facts are these: Marks Brooks was the owner of lands in Essex county which he caused to be conveyed to' one Joseph Levy, of Brooklyn, as trustee for his wife, Celia. The bill alleges that the defendant, Goldberg, offered to loan Mrs. Brooks or her husband $2,000, less a bonus of $200, for the purpose of starting building operations upon one of the tracts, and that Goldberg insisted that as security to him for this advance of cash he should have the title conveyed to him, and that the whole transaction should be carried out in his name as if he were the true owner.
    The evidence shows that in the course of time Levy came to Newark on two occasions, on the last of which he and his wife made a conveyance to Goldberg of the premises in question at the office of Greenfield, a lawyer, at which time there passed, according to some of the witnesses, the sum of $1,000 in cash, and, according to other witnesses, a check for $1,800, or thereabouts, to make it appear as if there was a consideration for the conveyance. The building operations were carried on apparently with a considerable degree of financial success, and the complainants now bring this suit for the purpose of having a declaration by the decree of this court that Goldberg holds the premises in question and certain personal property derived from the sale of portions of the realty as trustee for'Mrs. Brooks and to have the trust determined and the property transferred to her. The answer denies the right of the complainant and asserts that Goldberg purchased the lands in question from Mrs. Brooks and paid her by means of money furnished by Greenfield in cash the sum of $1,000 for her equity in the premises.
    At the hearing the additional defence was set up, viz., that at the time that Brooks conveyed the property to Levy in trust for Mrs. Brooks he was indebted to various creditors, and that the conveyance was made in fraud of the creditors, and, being so, the title could not be recovered from Goldberg. This defence does not appear in the answer, and, indeed, it would be, if it were there, entirety inconsistent with the defence that was interposed by that pleading. And further, while it appears that at the time the conveyance was made Brooks did owe persons who still stood to him in the relation of creditors, it likewise appears that he had settled all, or nearly all, the claims against him which, if true, would purge the transaction of its original fraudulent character. Payment of the grantor’s debts to the full value of the property purges the fraud. Oriental Bank v. Haskins, 3 Metc. 332; Crowninshield v. Kittridge, 7 Mete. 520. Besides the defendant by his answer attempts to purge himself of any fraud alleged in the transaction by stating that he was a holder for value and without notice of any circumstances which would charge him as particeps criminis. In my opinion, therefore, this oral defence has failed; and it must be determined from the evidence whether a meritorious cause of action has been presented by the bill and sustained by the proofs. I think it very doubtful whether in the face of the statute of frauds a trust can 'bo declared because there was no note or writing to toll the statute. Neither does it appear that there is any trust ex maleficio or a trust that results from the act and operation of law. The evidence, however, in my opinion, will support a bill to redeem upon the theory that Goldberg loaned Mrs. Brooks $2,000 (less the bonus of $200) and took title to the property in question, the same to be held as collateral security for the payment of the debt.
    The transaction was either a loan of money with the real estate as security, as is alleged by the complainants, or it was an out and out sale by Brooks and wife to Goldberg, as is claimed by the defendant. I incline to the belief that the truth lies with the complainant. The evidence on the part of the defendant on this point was principally given by Greenfield, the lawyer. It was equivocal, evasive, uncertain and unsatisfactory in the highest degree, and, as compared with the evidence of the complainants, failed to impress one. I was much impressed with the evidence of Levy and his wife, who are wholly disinterested witnesses. They testified to the facts concerning the conveyance to Goldberg, but the evidence of the contractors for some of the work on the ’buildings which were erected in Goldberg’s name clinch the matter, so that in my opinion it is beyond question. Two at least of these contractors testified that Goldberg said to them, in effect, that he wanted a commission out of their contract moneys, for the reason that the property belonged to the Brooks, and that such commission was the only thing that he could get out of it.
    My conclusion, therefore, on the facts as proved is that the real estate in question, and such personal property as Goldberg derived from the sale of the real estate, should be made subject to redemption by Mrs. Brooks upon payment to Goldberg of whatever moneys were advanced by him over and above the amount in which he has reimbursed himself. This will require an accounting, and the matter will be referred to a master to ascertain the state of the account between the parties.
    This view of the case renders it necessary that at least the prayer of the bill should be amended to make it conform to what I conceive the true pbsition of the complainants is, and it may be that the same amendment will have to be made to the stating part of the bill. I will hear counsel on this point at the time of settling the decree.

      Mr. William L. Brunyate, for the respondents.

      Mr. Philip J. Schotlmd, for the appellant.
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Howell.

For affirmance — The Chiee-Justice, Gabeison, Swayze, Teenchakd, Paekee, Beegen, Mintuen, Kalisoi-i, Black, White, Heppbkheimee, Williams, Tayloe, Gaedhee — 14.

For reversal — None.


author: Walker, Chancellor.

text:
    Edwin Robert Walker, Chancellor.
    Frederic W. Stevens, Eugene Stevenson, Edmund B. Leaking, Vivian M. Lewis, John H. Backes, John Grieein, John E. Foster and ■Merritt Lane, Vice-Chancellors.
    Henry W. Bull et al. v. International Power Company.
    [Decided September 26th, 1916.]
    1. Under section 69 of the Corporation act (Revision of 1896), P. L. p. 800, the property, franchises, rights and effects of a corporation should not be reconveyed to it unless its debts have been paid or their actual payment provided for, and the acquisition of such debts by assignment from the debtors to those who thereby become merely substituted creditors, does- not make a proper case, moving the court in the exercise of sound discretion, to direct the receiver to reconvey to the corporation its property and franchises.
    2. -When a corporation would repossess itself of its property and resume its business under section 69 of the Corporation act, supra, corp rate action looking to that end is required; and the owners of a majority of the stock, who have acquired the debts against the company, cannot, in the capacity of stockholders only, invoke the aid of the court in behalf of a scheme to rehabilitate the corporation.
    3. The court, upon proper application, will permit a corporation, while it is in the hands of a receiver, to take appropriate action looking to the restoration of its property.
    4. When application is made for the restoration of its property and the discharge of a receiver of a hopelessly insolvent corporation, under section 69 of the Corporation act, supra, its debts not -having been paid, the acquisition by purchase of the claims of the creditors by those who in turn become themselves the creditors of the company to the full amount,, of its debts, is not a provision for the payment of the debts of the insolvent corporation and does not make' a proper case for , relief under the act.
    5. As holding corporations can no longer be formed under the laws of this state, such a company when insolvent and in the hands of a receiver, will not have its property restored to it with a view to its resuming business in a doubtful case, public policy forbidding such action.
    6. The rule against characterizations, hearsay, conclusions and argumentative statements in evidence applies as well to etc parte affidavits as to testimony given in open court.
    On application of Dominion Mining and Manufacturing Corporation for restoration of its property to defendant corporation and for discharge of receiver.

      Messrs. Collins & Corbin, for the motion.

      Messrs. Yroom, Diclcinson & Bodine and Mr. Robert II. McCarter, contra.

   Walker, Chancellor.

The defendant company was adjudged to have been eondncting its business at great loss and greatly prejudicial to the interests of its creditors and stockholders, and also to be insolvent, and General Sadler was appointed receiver for it by this court. The company has not yet been wound up and the receiver is still in the discharge of his duties. A petition has been presented by the Dominion 'Mining and Manufacturing Corporation, a body corporate of the State of Virginia, in which it represents that it has acquired a large majority of the shares of the preferred and common stock of the defendant, International Power Company, and offers to lend to the company on its promissory notes at six per cent, such part of $250,000 as may be necessary to pay or provide for the debts of the company and such expenses of, and compensation for, the receiverships in this state and in the State of New York as may be payable by the company, and for capital to enable it to resume its business. It is pertinent to remark that a receiver was appointed for the International Power Company by the supreme court of New York, upon the application of the American and British Manufacturing Company, one of the subsidiaries of the International Power Company, the defendant corporation.

The statute under which the present petition has been preferred is section 69 of the Corporation act (Revision of 1896, P. L. p. 300), which reads:

“Whenever a receiver Shall have been appointed as aforesaid and .it shall afterwards appear that the debts of the corporation have been paid or provided for, and that there remains or can be obtained by further contributions sufficient capital to enable it to resume its business, the court of chancery may, in its discretion, a proper case being shown, direct the receiver to reconvey to the corporation all its property, franchises, rights and effects, and thereafter the corporation may resume control of and enjoy the same as fully as if the receiver had never been appointed; and in every case in which the court of chancery shall not direct such reconveyance, said court may, in its discretion, make a decree dissolving the corporation and declaring its charter forfeited and void.”

I have been pointed to but one case in which this section of the Corporation act has been construed, and that is Fleming v. Fleming Hotel Co., 70 N. J. Eq. 509. There a receiver refused to adjourn an advertised public sale of the assets of a hopelessly insolvent corporation at the request of ninety-seven per cent, of the creditors and all of the stockholders. They set up that an agreement had been made by a large number of the creditors for an.extension of time for the payment of the company’s debts. At the time of sale it did not appear that there was any capital, present or obtainable bjr further contributions, to enable the resumption of the company’s business. The sale was had and confirmed. Vice-Chancellor Bergen, in deciding the matter, observed that it did not appear that the debts had been paid or provided for, and he thought it doubtful whether the words “provided for” were answered by the extension of time of payment, but rather that payment itself should be provided for.

It should be observed that on the hearing of this matter it appeared that the $250,000 was not sufficient to pay the debts of the International Power Company, which had increased by reason of expenses of receiverships, &e., and the aggregate sum which the Dominion Mining and Manufacturing Corporation was willing to lend ■ was increased to a sum not to exceed $300,000.

The statute, as already seen, provided that when the debts of the corporation not having been actually paid, but their payment being provided for—that is, provision for payment having been made, and there remains or can be obtained by further contributions, sufficient capital to enable it to resume its business, this court may, in its discretion, a proper case being shown, direct a reconveyance of the property.

This statute, it seems to me, looks to action by the corporation itself in an endeavor to repossess itself of its property and resume its business. There has been no corporate meeting here and no action taken by the company to this end. The endeavor appears to be one by a coterie of capitalists to obtain control of ' the American and British Manufacturing Company, a majority of whose stock is owned by the International Power Company, which is a holding corporation, so called.

In my opinion, corporate action is required by an insolvent company that would resume its business under the scheme provided by section 69 of the Corporation act. It is not an answer to say that the corporation is in the hands of a receiver and its officers are enjoined from exercising any of its ■ privileges or franchises. In such circumstances the court, upon proper application, would permit the board of directors to take appropriate action looking to the discharge of the receiver and the restoration of the company’s property and franchises. See Lehigh Coal and Navigation Co. v. Central Railroad Co., 5 N. J. L. J. 214. Chancellor Runyon said in that case (at p. 21.7) that should the court deem it advisable to'turn over the property to the company, the stockholders must receive it by the hands of the board of directors.

Nor is it any. answer to say that the parties preferring the • present petition own a majority of the stock of the defunct corporation, and that, therefore, they would control the directors to tlje end which they desire; for in a meeting of a board of director's there may be a dissenting member whose arguments might convince the majority of the unwisdom of their proposed' action. Holcombe v. Trenton White City Co., 80 N. J. Eq. 122; affirmed, 82 N. J. Eq. 364. It is to be observed in this connection, that while a majority of the stockholders desire the discharge of the receiver and the restoration of the company’s property, a minority of the stockholders protest and declare that it is unwise under all the circumstances to permit, such action to be taken. Now, at a meeting of the board of directors, one or more members of that body might protest and convince the majority that the company should be wound up-. What'the result in such a meeting of the directors of the International • Power Company would be I cannot know, but certainly such an application as the one before me should only be made through proper corporate channels after an opportunity has been afforded to thoroughly canvass the matter by tire directors-, at least, and, probably, by the stockholders also. In othpr words, it seems to me it would be unwise for the board of directors of an insolvent coiqporation in the hands 'of a receiver to petition for a restoration to the corporation of its assets, looking to a resumption of its business, without canvassing the stockholders as to their de-' sire in the premises; for the.court, in the end, has to pass upon the whole matter, and it must at least be shown that the corporation itself is desirous of resuming business, not merely that a majority of the stockholders axe. In other words, it should appear that the company itself, after formal and' deliberate corporate action, is desirous of resuming its business; not that resumption should be thrust upon it. However, this question was not raised in the argument before me, and I will, therefore, proceed to dispose of this matter on its merits.

The defendant, International Power Company, like the Fleming Hotel Company, is hopelessly insolvent. When the receiver was appointed it had “book assets” of millions, comprised of the' capital stock of other corporations, none of which had paid a dividend for years, and had debts totaling, in round numbers, a. quarter of a million dollars. This condition has continued and grown worse. The debts of the' corporation have not been paid;' nor have they been provided for in any true sense. “Provided for,” as used in the act of the legislature, means .payment provided for. In no true sense are the debts of a corporation provided for when their present liquidation simply consists in their discharge by persons who acquire them, and, in turn, become creditors of the corporation in the place of those whose debts have been assigned to them. To discharge the receiver and restore the International Power Company’s property to it would be to put it in exactly the same plight in which it was when it was adjudged insolvent and the receiver appointed. To say that this meets the requirements of the statute and malees “a proper case” for the discharge of the receiver and the restoration to the insolvent corporation of its property and franchises, seems to me illogical. Nor have I overlooked the binding promise of the petitioner to forego tire collection of the debts for a certain period—that is, to give the company an extension of time for their payment.

I have no hesitation whatever in concluding that a proper case has not been shown under tire statute, and that the application should be denied.

This is not all. There is another cogent reason for its denial. Since February 19th, 1913, a corporation having for its object the holding of stocks and bonds of other corporations could not be formed under the laws of this state. P. L. 1918 p. 82. Public policy forbids the organization of any such corporation. The legislature makes the public policy of the state. Earle v. American Sugar Refining Co., 74 N. J. Eq. 751 (at p. 762). If the question whether or not this application should be granted were a doubtful one on the facts, it would properly be refused on tire ground that to doubt is to deny, but, in addition, considering the ascertained and declared public policy of the state, I would be moved to deny it, unless the requirements of the act were fully complied with; but, as before remarked, the case on the facts is not one which presents a proper ease for the granting of the relief which is sought.

Another thing: The act in question provides that in these cases where the court shall not direct a reconveyance of its prop-. erty ho a corporation in the hands of a receiver, it may make a decree dissolving the company and declaring its charter forfeited and' void. The respondents in this matter applied for this on the hearing. I see no reason why it should not be done.

Before leaving the subject I think I ought to observe that the affidavits submitted on the pending motion contain some characterizations, hearsay and conclusions, and are somewhat argumentative, when they should'have stated only matters of fact, leaving all inferences to be made by way of argument. The same rules, as far as may be, apply to ex parle testimony as to that in litigated matters. See Palmer v. Palmer, N. J. Eq. 88; Topfer v. Topfer, 68 Atl. Rep. 1071.

An order may be entered denying the motion and dissolving the corporation defendant. The respondents are entitled to costs.


author: Walker, Chancellor

text:
    In the matter of the application of Rebecca H. Shreve and Lucy E. Shreve for sale of lands limited over, &c.
    [Decided February 13th, 1917.]
    1. When a ■ sale of lands of adults in given circumstances would be confirmed, a sale of infants’ lands, in like circumstances, should be confirmed.
    2. Infants’ rights are not superior to those -of adults; the difference between the two classes of persons is, that the rights of infants must be protected by the court, while.adults must protect their own interests..
    3. The superior equities of adults are no.t to be defeated because the adversary parties are infants.
    On application for confirmation of sale.

      Mr. Scoil Scammell, for the St. Regis Corporation.

      Mr. Harold B. Wells, for the petitioners.

      Mr. Ellis L. Piersonfor Robert H. • McAdams, guardian . ad liiem.

   Walker, Chancellor

(orally).

On July 28th, 1913, an order was made to sell certain lands in the city of Trenton limited over, &c., at public or private sale in fee, for not less than $56,200, subject to a mortgage of $5,-000. On February 23d, 1916, the master who was ordered to make the sale reported that he had secured the St. Regis Corporation to purchase the real estate in the order described, subject to the mortgage of $5,000, at private sale for the sum of $58,-400, $1,000 having been paid to the master upon the acceptance of the offer and the balance of $57,400 to be paid in lawful money upon the delivery of a proper deed, provided that the sale should be confirmed by the court; the $1,000 to be returned in the event of non-confirmation. The offer to purchase was made pursuant to the terms of a certain agreement, in writing, dated July 11th, 1914, between Rebecca H. Shreve and Lucy E. Shreve, life tenants of the premises, and Lucy E. Shreve, guardian of Dorothy I. and E. Mercer • Shreve, infant remaindermen, and certain other contingent remaindermen of the first part, and the St. Regis Corporation of the second part. The agreement, among other things, recited that upon its signing the St. Regis Corporation would deposit in the Broad Street National Bank of Trenton, in the names of W. Henry Elfreth and Ellis L. Pierson, trustees, the sum of $1,600 to secure the payment to Clifford A. Worthington, a real estate broker, commissions claimed by him for the sale of the premises in question. The time of conveyance under the agreement 'was to be July 1st, 1916. Of course, this agreement did not-obligate the ' infants. It is because their estate in the premises could only be sold by sanction of this court that these proceedings were instituted.

On July 11th, 1914, an indenture of lease was entered into between Eebecea H. Shreve and Lucy E. Shreve, the life tenants, and Lucy E. Shreve, guardian of Dorothy I. and E. Mercer Shreve, infant remaindermen, and the other contingent remaindermen of the first part, and the St. Eegis Corporation of the second part, wherein the premises in question were demised to the party of the second part for the sum of $3,250 per annum, for the term of five j^ears, payment to be made solely to Rebecca H. Shreve if she should live throughout the term, and, in the event of her death, then to Lucy E. Shreve for the balance of the term, and, in the event of - the death of both during the term, then to a certain attorney for the persons entitled to receive the same. By the terms of the lease the party of the second part was to pay all taxes, water- rents and municipal assessments; keep the buildings insured against loss by fire; make all necessary repairs to the demised premises; the leases then in existence between Rebecca H. Shreve and the tenants of rooms, offices and stores in the building were assigned to the party of the second part, together with rents reserved therein; the party of the second part at its own expense might make alterations, improvements and additions to the demised premises, and tear down all or any portion of the buildings then or subsequently on the premises and erect other buildings in their place, upon certain conditions set out.

On April 8th, 1916, an order was made on application of the solicitor of the St. Regis Corporation that the other parties in interest show cause why the report of the special master should not be ratified and confirmed and the master directed to execute • a good and sufficient deed to the purchaser upon its compliance with the terms of the sale. On the return day confirmation was resisted by Eobert H. McAdams, guardian ad litem of the infants, Dorothy Inskeep and Edwin Mercer Shreve. An order was made that testimony be taken, which was done, and the matter is now before the court on the question as to whether or not the sale shall be confirmed.

The ground'of objection to the sale is that the property has appreciated in value between the time that the order for sale was made and the time of the hearing, and that the interests of the infants no longer require a sale of the property.

The petitioners, Rebecca H. Shreve and Lucy E. Shreve, are the owners of successive life estates in the property, and the infant remaindermen, who axe the children of Lúcy E. Shreve and grandchildren of Rebecca Ii. Shreve, are entirely dependent for their support, maintenance and education on the income derived from the property in question and a small income derived from another property in Rijrerton. The net income derived from the Shreve building (the premises in question) when the order for sale was made was eight hundred odd dollars per annum, which, together with the income derived from the other property, was insufficient for the proper support and maintenance of the parties dependent on it, to say nothing of the education of "the minors.' The building, which was used for office purposes', was unsuitable, and its value was constantly diminishing, and its carrying expenses constantly increasing. The land on which it stood'was worth, apparently, $1,200 per front foot, and the building was of comparatively little value. The difference between the income of five ’ per cent, on the proposed selling price, and the net income derived from the property at that time, it appeared, would equal any reasonably anticipated increase in value of the property. The confirmation of the master’s report, and the order 'for sale of the premises at the price proposed, was an adjudication of the adequacy of the price and of the advisability of tire salé at the time it was entered. As title was not to be passed immediately upon the making of the agreement above mentioned,' the scheme of the lease was adopted, the rental being fixed at five per cent, of the gross sale ¡Dricé, namely, $65,000; that is to say, $58,400' t'o be paid to the 'owners' of the fee, $1,600 to be deposited to cover Mr. Worthington’s commissions, ¿nd $5,000, the amount of the mortgage on the premises, making $65,000 in all. By' order of July 18th, 1914, a modification was made to the order for sale so as to permit o'f it free of the mortgage and for a payment of $10,000. in cash and the balance in a purchase-money mortgage. The St. Regis Corporation went into possession' almost immediately after the execution of the agreement and lease, and has paid the taxes and the'rent and improved the property (a motion picture theatre) at considerable cost, approximately $11,500 by cash outlay and an indebtedness incurred of some $16,000.

The ground of objection to the confirmation of the sale is, as already stated, that the land has increased in value since the making of the order to sell, and real estate agents have testified that that increase has been about $100 per front foot, or $5,100 in all.

There can be no doubt that if we were dealing with adults aione in this case, the sale ought to be confirmed, and the mere presence of infants ought not to defeat it. It is not disputed but that the order for sale was properly made—that is,, based upon a proper showing. In reliance upon that order the St. Regis Corporation has gone into possession and improved the property by expenditure of a considerable sum of money and the incurring of considerable liability, and it is therefore quite apparent that it would be ruinous to it if the sale were not confirmed. Those who are sui juris have rights against infants; in fact, I do not understand that infants’ rights are superior to those of adults, only that the rights of infants must be protected by the courts, while those of adults must be looked after by themselves. It is for this reason that whenever infants are present a guardian is appointed for them;, which was done in this case, and these infants have had their day in court. If the sale had been reported and confirmed immediately upon its authorization, the infants’ situation would be the same now as then, and, it appears, will continue the same for years, for they cannot come into possession until the termination of the particular estates upon the death of their grandmother and mother, and this only upon surviving both of them. During the lifetime of the grandmother she has the entire income, and upon her death, the mother surviving, she will have it, and upon the death of both, the infants will possess the estate, if living. While they Jrave no present legal interest in the income from the property the testimony shows that their support, maintenance and education áre derived from it, and the other small property of the Shreve estate, and that they are and have been beneficiaries of the income derived under the agreement, which increases that income approximately fourfold from what it had been previously. The agreement and lease were executed in reliance upon the lessee ultimately acquiring the property under these proceedings, and to defeat that expectation now would do far greater injustice to the St. Regis Corporation than confirmation of the sale would do the Shreve children. On guy theory of balancing equities the case-is with the former. I do not understand that the company’s equities are to be defeated because the adversary parties are infants.

In my opinion, the sale should be confirmed, and that will be done. The terms of the order will be settled on application.


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    John Collins v. Mary Kiederling et al.
    [Decided May 23d, 1916.]
    1. A selling master acts under a naked power; that is, one which is without interest in the property which he is to sell; and it is his duty to conduct a sale as ordered in the decree. He has no power to sell free from liens, unless the decree so provides.
    . 2. No one but a party to a suit can make any motion in it except for the purpose of being made a party; and a petition filed by a stranger to a suit will be dismissed.
    3. A purchaser at a judicial s.ale, not a party to the suit is made a party by the purchase, so far as questions arising from the sale are concerned.
    4. A decree cannot be made as to any person who is not a party to the suit; and, as to persons who are interested as parties and are not before the court, the case may stand over until they are made parties. «
    5. Semble, that under the proviso of section 35 of the act concerning the sale of lands (4 Oomp. Stat. p. 4686), taxes due a municipality, which are a lien on the entire premises, and a mortgage, which is a lien upon the entirety of one of the tracts sold, can, upon the municipal corporation and the mortgagee being brought in as parties, be ordered paid out of the proceeds.

      On petition of selling master for leave to pay liens out of proceeds of sale in partition, the lien holders not being parties, and there being no direction in. the decree for such payment.
   Walker, Chancellor.

This is a partition suit in which a decree for sale was made, and the property described in the bill was sold by the special master appointed for that purpose. The decree ascertains the rights of the 'persons seized of undivided interests therein and orders the premises sold, including the inchoate right of dower of the wife of the complainant. The selling master made his report of sale in the usual form and it was duly confirmed. He subsequently filed a petition in the cause in which he recites that the master to whom the cause was referred for a report as to whether the lands could be partitioned, or should be sold in lieu thereof, found and reported, among other things, that it appeared from the abstract of title produced before him that the undivided estate or interest in the lands of none of the parties was subject to any lien by mortgage, judgment, decree, or otherwise, but that one of the tracts of which partition was sought was subject to a mortgage held by Michael Mooney! The special master in his petition also states that in making the report of sale he omitted to set forth that the tracts were sold free of all known liens and encumbrances, and that at the time of sale the mortgage mentioned and • certain taxes in arrears were liens against the lands, and that the premises were sold free and clear thereof. He prays that out-of the money arising from the sale he be ordered and directed to pay the amount of principal due on the mortgage on part of the premises into court, and that the mortgage be canceled of record by order of this court;' and further, that he be ordered to pay the amount of taxes in arrears.

1. The bill prays that in case of a sale the money arising from the share or interest of any party against whom there are existing liens or encumbrances held by a creditor of such party, who was a party defendant, be brought into court, &c. No creditor of any party was made a party to the suit. There was no direction in the decree for a sale free from liens and encumbrances, and yet the master reports that he made such sale "free from all known liens and encumbrances,” but omitted to make mention of that fact in his report of sale. The master, therefore, assumed a power which was not delegated to him. It was his duty to conduct the sale in the manner ordered in the decree. Furthermore, he has no right to file a petition in the cause praying for the distribution of the moneys raised by the sale, or any part of them.

2. No one but a party to a suit can make any motion in it, except for the purpose of being made a party. Linn v. Wheeler, 21 N. J. Eq. 231. And a petition filed by a stranger to a suit will be dismissed. Esterbrook Company v. Ahern, 31 N. J. Eq. 3. The conduct of suits belongs to the parties to them, and only they have the right to apply for order or direction.

3. This is not the case of a purchaser asking to be relieved of his bid because of the existence of any lien or encumbrance on the premises sold, under section 35 of the act relating to the sale of lands (Comp. Stat. p. 4686), and yet, under the proviso of that act, the court might direct the liens to be paid out of the proceeds of the sale on application of the purchaser or other party. A purchaser at a judicial sale, not a party to the suit, is made a party by the purchase, so far as questions arising from the sale are concerned; and he has standing in court sufficient to be heard upon the subject of the disposition of the purchase-money, so far as he may be interested in its distribution. Shann v. Jones, 19 N. J. Eq. 251. In that case it was held (at p. 254 of 19 N. J. Eq.) that a sheriff was not authorized to release the purchaser from his bid or yield any substantial right affecting the defendant. In the case at bar, the special master occupied relatively the same position as the sheriff. He is the mere selling officer of the court and acts under a naked power—that is, one which is simply collateral and without interest in the property which he is ordered to sell and convey. When the court ordered the sale of the premises, in question without authorizing that sale free from liens, a sale cried off on such terms, namely, free from liens, if consummated, would divert some of the purchase-money for the payment of the liens, and would therefore invade the substantial rights of the defendant owners of the property. Of course, the liens, if valid, may be collected by the creditors, and may, ultimately, be made out of the property sold in this suit, 'but the question on this record is whether they shall be paid out of the owner’s funds, being the proceeds of the sale, without their consent and without any proper proceedings looking to that end.

Directions as to the conduct of a judicial sale are given by the decree for sale in the particular case, and the sale must be according to such directions. 21¡. Cyc. 21. And title depends upon the master’s execution of the powers as directed. Craig v. Smith, 84 N. J. Eq. 593, 598. Such title may be defeated in whole or in part, as the case may be..

4. A decree cannot be made as to any person who is not a party to the suit. Armstrong v. Armstrong, 19 N. J. Eq. 357. As to persons who are interested as parties and are not before the court, the case may stand over until they are made parties. Id. 360.

5. It seems that under the proviso of the act concerning the sale of lands (section 35, supra), the taxes due a municipality, and which are a lien on the entire premises sold, and the mortgage which is a lien upon the entirety of one of the tracts, can, upon the municipal corporation and the mortgagee being brought in as parties, be ordered paid out of the proceeds. As to the taxes, see Craig v. Smith, supra.

The petition of the special master will be dismissed. The parties to the suit, or any of them, may apply for a resale, or to make lienholders parties, or for other relief, as they may be advised.


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    George Conover v. West Jersey Mortgage Company.
    [Decided December 16th, 1916.]
    1. The proper course of procedure upon application of a receiver to punish for contempt under section 71 of the Corporation act (Revision of 1896), Oomp. Stat. p. 161/7, is to allow an order to show cause if the facts set forth in the receiver’s report warrant it.
    2. Upon an examination under section 71 of the Corporation act, a witness may not decline to be sworn upon the ground that the evidence sought to be adduced is incriminatory. I-Ie may, as the questions are put, assert his privilege of protection and give his. reason for invoicing it.
    3. Section 71 of the Corporation act is not ,in conflict with the due process clause of the fourteenth amendment of the constitution of the United States.
    4. Upon an examination under section 71 of the Corporation act, a receiver may exclude from the room any person who is to be examined as a witness.
    5. Persons, whether interested or not, have no right to obtain copies of the testimony taken before a receiver under section 71 of the Corporation act.
    On report and petition of receiver praying an adjudication of contempt and punishment therefor against certain persons.

      Mr. 'Harvey F. Carr, for the receiver. •

      Mr. Clarence L. Cole, for the accused.
   Walker, Chancellor.

The receiver of the West Jersey Mortgage Company appointed under the Corporation act (Revision of 1896), Comp. Stat. p. 1592, presents a report and petition to this court, setting forth that under section 71, page 1647, he caused summons, to be. served upon Carlton Godfrejr, Herman M. Sypherd, Frederick C. Robbins, John W. Hackney and Raymond P. Read, all directors or officers of the corporation, requiring them' to appear before him and testify concerning its affairs; that the respondents appeared, but upon advice of counsel refused to be sworn. Notice of this application was given by the receiver to the recusant witnesses. They appeared and objected to any order upon the grounds, first, that the notice was inefficacious to compel them to defend against a charge of contempt, that it was not process; second, that section 71 of the Corporation act, supra, is in conflict with the provisions of the fourteenth amendment of the constitution of the United States, in that it denies to the respondents due process of law, for the reason that the statute does not in terms provide for a hearing before an-adjudication of contempt; third, because the respondents might be compelled to incriminate themselves.

The first objection is certainly valid. The notice must be directed to be given by the court—must emanate from the court; in other words, must be process. It cannot originate with the parties; they cannot put the proceedings en train of their own volition—the court only may do that upon a proper showing made.

The section of the statute under consideration has been in force approximately eighty-seven years. It has received consideration in but two cases cited by counsel. The first one is Smith v. Trenton Delaware Falls Co., 4 N. J. Eq. 505, in which the chancellor, referring to the statute, said (at p. 509) :

“Under the act the receivers have due authority to compel any person to disclose any knowledge he may possess respecting the affairs and transactions of the company; and the complainant, on proper application to the receivers, could have had such disclosure.-”

Here is an adjudication in this court made in 1845 that the power existed in receivers, under legislative sanction, to send for persons and compel a disclosure by them on oath or affirmation (which the receiver may administer) respecting the affairs and transactions of an insolvent corporation. The question in that case was as to whether a judgment creditor of the defendant company could have a discovery concerning its assets after the. company had been declared insolvent on a bill filed for that purpose and receivers appointed, and it was held that a discovery could only properly be had in the insolvency proceedings. This adjudication of the chancellor just adverted to appears to have remained unchallenged during all the succeeding years, although innumerable proceedings of the kind in question have been had by receivers under the act. This is common knowledge.

The second case is Fidelity and Casualty Co. v. McAfee Company, 72 N. J. Eq. 279, in which Vice-Chancellor Garrison held that a summons issued under the statute was of no effect outside of the state.

In the administration of the affairs of insolvent corporations,"" it is essential that such powers as are here questioned 'should be vested either in the' administrator or in some tribunal. The legislature has deemed it wise to vest the power of examination in the receiver.

The due process clause of the fourteenth amendment to the constitution of the United States does not require any particular form of process. It is .sufficient that there be accorded, before final judgment, an opportunity to be heard. Davidson v. Administrators of New Orleans, 96 U. S. 97; 24 L. Ed. 616.

The statute vests this court with jurisdiction to punish for contempt, and it follows that the procedure must be according to the course and practice of the court.

It is not necessary that the legislature, when jurisdiction is vested in a court of general jurisdiction, shall specifically provide for the steps which will amount to notice. 6 R. C. L. § 452, and' cases. The proper and necessary procedure upon applications of this nature is for the receiver to obtain an order to show cause, and upon the return of that order, the respondent will be given an opportunity to be heard. B That is all that the federal constitution requires. See Con. Ren. Co. v. Vermont, 207 U. S. 541; 52 L. Ed. 327.

The respondents before' the receiver attempted to raise in limine the question as to whether or not they were compelled to incriminate themselves. The protection against se]f-incrimination is the privilege of a witness and cannot be asserted by him until the question is put. He then may be compelled to give his reason, so that the court may judge whether the protection claimed is valid. Fries v. Brugler, 12 N. J. Law 79; 40 Cyc. 2550. While the examination by the receiver is not in the presence of the' court, a witness is, nevertheless, protected in this regard; because, upon the question put .which would tend to incriminate him, he could refuse to answer and the receiver would then be obliged to have recourse to the court, to compel an answer, which would not be done except in a proper case, and, therefore, before submitting to answer, the witness would have the benefit of the court’s protection just as though the examination had taken place in its presence.

While this proceeding was pending the receiver summoned witnesses before him under section 71, supra, other than those concerning whom this proceeding was undertaken. One of the respondents here presented himself at that proposed examination as an auditor, and the receiver excluded him from the room upon the ground that he was to be examined as a witness. This the receiver had a right to do; and, considering the nature of the proceedings, he doubtless has a right to exclude all other persons. It is a matter of discretion for courts to exclude witnesses pending an examination, so that they will not hear the testimony given by other witnesses. The receiver was acting as the arm of the court and had at least quasi-judicial capacity.

The respondents in this proceeding have applied for an order compelling the receiver to furnish them- with a copy of the testimony given by any witnesses before him in proceedings under the section mentioned, upon their request therefor and proper compensation made. To this they are not entitled.

The proceeding is statutory, and, without any provision entitling persons to obtain copies of the testimony taken before the receiver, they cannot have it. This is not jike the case of depositions taken de lene esse under the Evidence act, which provides (Comp. Stat. p. 2236 § 54) that the parties to the action, at their cost, shall be entitled to copies of depositions as soon as they are filed in the clerk’s office. The examination of witnesses by a receiver is a proceeding to inform him of the affairs of the insolvent corporation, so that he may better discharge his duties in the way of bringing or defending suits, or otherwise, and the beneficent purpose of the act might be entirely frustrated if parties,-whether interested or not, could obtain copies of the testimony taken by a receiver for the purposes mentioned. Besides, the depositions^ so taken, are not made files of the court.

The adjudication of contempt against the. respondents asked for by the receiver must be denied; also their right to have copies of any testimony taken before him. This will be without-prejudice to the receiver applying for an order to show cause, upon the respondents as to why they should not be adjudged in contempt and committed under the provisions of the act, until, they shall submit to be examined and pay the costs of the contempt proceedings.