source: Caselaw Access Project

author: Gummere, Chiee-Justice.

license: Public Domain

text:
    Gideon Lee Stout, surviving executor, &c., respondent, v. Margaret S. Cook et al., appellants.
    [Submitted December 5th, 1910.
    Decided November 21st, 1911.]
    1. Where there is a devise or bequest for life followed by a devise or bequest to the “surviving children” of the testator, at the termination of the life estate, the quoted words mean those of the children of the testator who survive at the death of the life tenant, and unless, on taking the whole will into consideration, the words are plainly used in another sense, they do not include surviving children of predeceased children of the testator.
    2. Where a testator ordered his residuary estate to be divided into seven-equal parts of which he gave one to each of his sons absolutely, and directed his executors to invest the remaining shares and pay the interest and profits therefrom to his daughters during their lives, and provided that on the death of either of the daughters leaving no child or children. her share should be a part of the residue, the interest and profits of which were to be paid in equal proportions to his surviving children during their natural lives, the share of a daughter dying childless goes to the surviving children of testator, and no part of it to the children of predeceased children of testator.
    3. Where a testator provides that on the death of one of his daughters without child or children, her share of the residuary estate is to go to his surviving children, the fact that in the event of the death of all other children before the death of a daughter without child or children the testator would die intestate as to such share if the provision of the will be construed as excluding children of predeceased children, does not require a construction giving the children 'of the predeceased children a share in such remainder.
    On. appeal from a decree of the court of chancery advised by Vice-Chancellor Howell, whose opinion is reported in 77 N. J. Bq. (7 Buch.) IBS.

      Mr. Halsey M. Barrett and Mr. William J. Magie, for the appellants.

      Mr. JohnB. Hardin and Mr. Joseph D. Lee (of the New York bar), for the respondent.
   The opinion of the court was delivered by

Gummere, Chiee-Justice.

The appeal in this case was filed by the executor and trustee of John W. Stout, deceased (who died in the year 1861), to obtain a construction of the will of the decedent.

After providing for the payment of his debts, and setting aside a portion of his estate for the use of his wife during her life, and making certain bequests of small amounts to friends and relatives, the testator then disposed of his residuary estate as follows:

“The whole residue of my estate I order and direct shall be divided into seven equal parts or shares, and to each of my sons, to wit, Jacob, Thomas and Gideon Lee, I give and bequeath absolutely, and without condition or qualification, one full part or share, and the remainder four shares of the residue of my estate I order and direct my executors, the survivors or survivor of them, to invest at interest on good landed security, and the interest and profits arising therefrom I direct to be paid from time to time as the same may be received in equal shares or proportious to each of my four daughters (their respective receipts to be a full discharge for the same), during their respective natural lives, and on the death of either of my said daughters I give and bequeath her share of the said residue of my estate to the child or children of such deceased daughter in equal shares or proportions; and in case such deceased daughter shall leave no child or children such share shall be esteemed as part of the residue of my estate, the interest and profits of which to be paid in equal proportions to my surviving children during their natural lives, and on their respective deaths the principal to be paid to the child or children of such deceased child, such child or children to take the parent’s share.”

He then provided that any advancements made to either of his sons-in-law should be deemed and taken as advancements made to the one of his daughters who was the wife of such son-in-law, and should be charged to and deducted from such daughter’s share or proportion of his estate; and that any advancements made by him to any of his children should be charged to and deducted from such child’s share of his estate. Finally, he provided that the portion of his estate which had been set aside for the benefit of his wife during her life should, at her death, be added to the residue of his estate, and be subject to the provisions of his will touching the same.

The testator’s daughter Augusta died in 1907, without leaving a child or children, and the complainant seeks by his bill to be informed by the court which of the testator’s lineal descendants, by the true construction of his will, are entitled to take that share of his estate which was invested for the benefit of his daughter Augusta during her life.

But two of the testator’s children were living at the time of the death of Augusta, viz., her brothers Gideon Lee and Thomas. Her brother Jacob had died before her, without issue, but leaving an adopted daughter surviving him who is a defendant in this litigation; her three sisters were also dead, each of them having left children who are also parties defendant. Her brother Thomas died during the pendency of this suit, leaving children surviving him, and upon his death his executor was substituted for him as a party defendant. Gideon L. is still living, and has issue who are also defendants herein.

The question to be determined is whether, by the terms of the bequest over

“to my surviving children during their natural lives, and at their respective deaths the principal to be paid to the child or children of such deceased child; such child or children to take the parent’s share,”

only those of the testator’s children who survived Augusta—that is to say, Gideon L. and Thomas, and their respective children, take the share of the testator’s estate which was set apart for the benefit of Augusta during her life, or whether the children of her respective sisters who had predeceased her are also entitled to participate in the distribution of that share; and if, by the true construction of the testator’s will, these children are so entitled, then whether the adopted daughter of her deceased brother Jacob is also entitled to share in such distribution.

It is entirely settled by the decisions in this state that where there is a devise or bequest for life, followed by a devise or bequest to the “surviving children” of the testator, at the termination of the life estate, the words “surviving children” are to be taken as meaning those of the children of the testator who are surviving at the death of the life tenant; and that, unless, upon taking the whole will into consideration, the words are plainly used in some other sense, this meaning, which is the ordinary and natural one to be given to them, must prevail. Ashurst v. Potter, 53 N. J. Eq. (8 Dick.) 610; S. C. on appeal, 54 N. J. Eq. (9 Dick.) 699. Unless, therefore, an examination of the whole will of the testator makes it plain that, in using these words, he did not intend that they should be read in their ordinary and natural sense, the property which was held for the benefit of his daughter Augusta during her life passed at her death to his sons Gideon L. and Thomas for their lives, and to their children after their respective deaths, to the exclusion of all other descendants of the testator. And that this is so is conceded by counsel for the children of the other daughters of the testator, and is not controverted by counsel for the adopted daughter of the son Jacob; but they contend that the natural construction to be given to these words is plainly shown by the general scheme of the will not to be the one intended by the testator, and their claim is that the clear purpose of the testator, as exhibited by a consideration of the whole will, was to bestow this portion of his estate upon those of his children who should survive Augusta, and upon the issue of those of his children who should have died before her, in equal shares per stirpes, in case Augusta should leave no child or children surviving her.

From the previous recital of the provisions of the testator’s will it is obvious that no portions of that instrument, except the provision which disposes of the residuary estate, and that which directs the deduction of advancements made to his children and to the husbands of his daughters, throw any light upoxf his purpose with regard to the participation of his children in his estate. The argument is that those two provisions exhibit “an intention to divide his estate equally between his children, showing no favoritism whatever;” and this intention.is said to be made manifest by the fact that he divided his residuary estate, including the portion set aside for his widow during her life, into seven equal parts, and gave to each of his children either outright, or by stirpes, one of those equal shares. A like contention was made in the case of Ashurst v. Potter, supra, where the question before the court involved the construction of a will quite similar in its purport to that now under consideration, and the children of a son of the testator who had predeceased a daughter who died without issue claimed to be entitled to take as the representatives of their father, and was thus dealt with by Vice-Chancellor Emery, before whom the case was heard (opinion, page 613) : “'This argument, as applied to the present dispute, seems to me to beg the very question in issue. So far as relates to the original share of the residuary estate, the brothers are put on a basis of equalitjg both as to shares and extent of estate, but the sister’s original share is made unequal in extent by being limited to a life interest. The estate in remainder, in the share given to the sisters, is a new subject of disposition, as to which the testator has disclosed no intention whatever, except by the clause now in dispute. This clause gives the remainder, as he might well have intended to give it, to the surviving brothers and sister of a daughter dying without issue and without reference to the children of a deceased brother. Nowhere in the will have the children of tire sons been mentioned as objects of the testator’s bounty, and as the words of limitation over in their natural construction exclude these children, the theory that they must be so construed as to include them in order to effectuate a supposed 'intention of the testator to equalize the brothers and their respective children as to this share, seems to me to be without foundation.” The decision in that case was affirmed in this court upon the opinion of the learned vice-chancellor, and the portion just quoted is, consequently, the expression of our view upon the soundness of the argument there made. It seems to us to be dis-positive *of the present contention, for, although the words used by. the testator in the cited case were “her” (that is, his daughter’s), “surviving brothers and sisters,” the reasoning of the learned vice-chancellor would have been equally applicable had the testator used the words “my surviving children.”

It is further contended that the intention of the testator that the issue of a child who should predecease a daughter dying without issue surviving her, should share in the portion of his estate set aside for her benefit, is plainly evidenced by his providing that such portion should be esteemed as part of the residue of his estate, such residue having already been divided into as many shares as he had children. The claim seems to be that such portion was not only thereby directed to become a part of the residue, but was, by necessary inference, to be distributed in the same way in which the original residue was distributed. But this, obviously, is not so. Under the scheme of the will the sons, as has already been pointed out, were to take their shares of the original residue outright, while their interest in that part of the added residue, if they take anything as survivors, is merely the income thereof so long as they shall live, with remainder to their children. In other words, the testator intentionally made a different disposition of so much of his estate as should fall into the residue by reason of the death of a daughter without leaving issue, from that which he made of the primary residuary estate.^ Further than this: he dealt with this added portion of the residue upon the theory that no part of its corpus would be distributable immediately upon its falling in, for he provided that only the interest and profit should be paid to the first takers of it during their natural lives, and that the corpus should then be paid to their respective children, a disposition of it which negatives the idea that the children of deceased children should share in it.

Lastly, it is said that a construction of this will which permits only those of the children of the testator who should survive a daughter dying without leaving children to share in the distribution of that part of his estate which was set apart for her benefit, and excludes children of deceased brothers and sisters from participation therein, cannot be justified because, under such a construction, the testator might readily have died, intestate as to a part of his estate—for example, by the death of all of his children before Augusta—and that it will not be presumed that the testator intended to leave any part of his estate undisposed of. It must be conceded that no presumption of an intention to die intestate as to any part of his estate is allowable, when the words of a testator’s will may fairly carry the whole. But, although no such intention will be presumed, it, nevertheless, not infrequently happens that a testator, unintentionally, dies intestate as to some part of his estate, by reason of his failing to contemplate the happening of a contingency which actualy occurs after his death; and, as was said by Lord Chancellor Halsbury in Inderwick v. Tatchell (1903), L. R. App. Cas. 122, courts are not at liberty, because an event has happened which the testator has not provided for, to disregard the ordinary rule of construction that words must be read according +o their natural and reasonable meaning, and inject into the will a provision which the testator would probably have made had lie contemplated the happening of the contingency. In the present case a reading of the will satisfies us that the testator did not contemplate the contingency suggested by counsel, and did not attempt to provide against it. We find nothing in any of its provisions which will justify the conclusion that the testator used the words “my surviving children” in other than their ordinary and natural sense; and, therefore, we hold that, by the true construction of the provision under consideration, the two sons of the testator, Gideon L. and Thomas, and their respective children, were alone entitled, upon the death of their sister Augusta, to share in the distribution of that portion of the testator’s estate which had been set aside for her benefit during her life.

Reaching this conclusion we hold that the decree appealed from which adjudged that the children of the deceased sisters of the daughter Augusta were entitled to share in such distribution must be reversed, and a decree in conformity to the views herein expressed must be entered; and it will be so ordered.

For reversal—The Cpiiee-Justice, Garrison, Swayze, Trenchard, Parker, Bergen, Bogert, Vredenburgh, Vroom —9.

For affirmance—None.


author: GrUMMERE, CíIIEE-JuSTICE.

text:
    William B. Riker & Son Company et al. v. United Drug Company.
    [Argued June 21st, 1911.
    Decided March 4th, 1912.]
    1. The power of corporations to consolidate and merge exists only by virtue ,of plain legislative enactment.
    2. Revised Corporation act (P. L. 1896 p. 809 § 10J/), authorizing consolidation of corporations, is limited to those organized under the laws of New Jersey, and does not empower a New Jersey corporation to merge with a Massachusetts company.
    3. Where an alleged reorganization of a New Jersey corporation was in fact an illegal attempt to consolidate with and turn, over its business to a Massachusetts corporation, such transaction could not be accomplished by a vote of the majority of the stockholders; and hence a dissenting stockholder is entitled to an injunction restraining the completion of the plan.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Emery, whose opinion is reported in 78 N. J. Eg. (8 Buck.) 819.

      Mr. Robert II. McCarter and Mr. Albert E. Seibert (of the New York bar), for the appellants.

      Mr. John B. Hardin, for the respondent.
   The opinion of the court was delivered by

GrUMMERE, CíIIEE-JuSTICE.

This is an appeal from an order denying a preliminary injunction restraining the defendant, its officers, directors, tellers and inspectors from submitting to the stockholders of the company a proposition to take action upon a resolution of the board of directors providing that the defendant corporation should be dissolved, and prohibiting them from passing any resolution or receiving or counting any votes in favor of any resolution designed to carry into effect or accomplish any proposition to dissolve the said company.

The United Drug Company is a New Jersey corporation. The proposed dissolution is a step in the carrying into execution of a plan formulated by the board of directors of the company for its "reorganization,” and outlined by the board in a communication, sent by it to the several stockholders of the company upon the same day that a resolution was passed by it, reciting that, in the judgment of the board, it was for the benefit of the corporation that it should be forthwith dissolved and that a meeting of the stockholders should be held to take action upon that resolution.

The material parts of the resolution (so far as the matter before us is concerned) are as follows:

“To the stockholders of the United Drug Company. Your directors have had under consideration for some time the desirability of a reorganization of the affairs of the United Drug Company. They have had in mind, among other things, the accomplishment of the following results —first, owing to the remarkable increase in the business of the company, it is necessary to provide not only for additional capital to meet its immediate requirements, but also to put the company on such a basis that it can obtain from time to time in the future such additional capital as may be needed; second, * * * ; third, a substantial part of the business of the company is now conducted by the United Laboratories Company, the United Perfume Company, the United Candy Company and the United Stationery Company, all subsidiary corporations of the parent company. It is proposed to eliminate these subsidiary companies, to place the ownership of all these in one corporation, and obtain greater simplicity in accounting, and to some extent eliminate an unnecessary duplication of expense. With the approval of your directors, therefore, the following plan for the reorganization of the affairs of the United Drug Company has been proposed: Your directors have authorized the organization of a corporation under the laws of Massachusetts by the name of United Drug Company. * * * The United Drug Company (of Massachusetts) has offered to purchase-all the property and assets of the United Drug Company (of New Jersey), subject to all its indebtedness, and to pay therefor as follows

viz., by delivering to the holders of stock of the New Jersey corporation in exchange for that stock shares of the stock of the Massachusetts corporation. The communication then concludes thus:

“Your directors unanimously recommend the acceptance of the proposed plan of reorganization, and pending action by the New Jersey Company recommend an immediate exchange of the stock of the New Jersey company for stock of the Massachusetts company in accordance with the terms of the offer. If for any reason it should become either necessary or desirable to delay'the dissolution of the New Jersey corporation and the transfer of its assets, or even to continue its corporate existence, the practical accomplishment of the plan -would not be affected, as the Massachusetts corporation would by the exchange become the controlling stockholder of the New Jersey corporation.”

Manifestly, the prime purpose of the scheme outlined in this communication is not the winding up of the New Jersey corporation and the distribution of its assets, or the proceeds of the sale thereof, among its stockholders, but the absorption of that company by the Massachusetts corporation, the transfer not only of its assets but of its business, to that corporation, and the future carrying on of that business by the Massachusetts corporation under the name of the defendant company. .The scheme, in its essence, whatever it may be in form, is not a plan for the reorganization of the New Jersey company, nor even for the winding up of its business and its dissolution within the meaning of the latter word as used by our Corporation act, but is a scheme for its merger into or consolidation with the Massachusetts corporation. State v. Atlantic City and Shore Railroad Co., 77 N. J. Law (48 Vr.) 466, 483.

Consequently, the fundamental question now to be decided is whether a corporation of this state, organized under our General Corporation act, may legally be merged into or consolidated with a corporation created by and organized under the laws of a sister state. The answer to this question seems to us not to be in doubt. As was said by this court in Colgate v. United States Leather Co., 75 N. J. Eq. (5 Buch.) 229, the power of corporations to consolidate and merge is not to be implied, and exists only by virtue of plain legislative enactment; and no statute of our state can be found which authorizes the proposed scheme. The only right given, by our legislature, to two or more corporations to merge or consolidate into a single corporation, is expressly limited to those which are organized under the laws of our own state. Revised Corporation act § 104; P. L. 1896 p. 309. The proposed plan for the so-called “reorganization” of the defendant company is, therefore, in violation of the law of the state rvhose creature it is; and, this being so, any stockholder who refuses to consent thereto is entitled to the aid of a court of equity to prevent its being carried into execution. Each stockholder of the company owns a share in its property and assets, and is entitled to have a proportionate share in its profits. They have invested their capital in it, and in it alone, and they are entitled to every dollar that it earns. This is the agreement of the stockholders among themselves. They each contract with the other that their money shall be employed for the purposes specified in the certificate of incorporation, and for no other purpose, and that the profits of the enterprise shall be ratably apportioned among them. In the absence of legislation permitting a variation of the provisions of this fundamental contract, by vote of a majority of the stockholders, no majority, however large, has a right to divert any part of the joint capital, however small, to any purpose not consistent with and growing out of this original, fundamental agreement. Black v. Delaware and Raritan Canal Co., 24 N. J. Eq. (9 C. E. Gr.) 456, 463; Mills v. Central Railroad Co. of New Jersey, 41 N. J. Eq. (14 Stew.) 1; Colgate v. United States Leather Co., supra.

The scheme, in the carrying out of which the dissolution of the company is a proposed step, is a fraud upon the statute (the word is used in a legal, not a moral sense) ; and every act done in furtherance thereof, no matter whether it be legal, standing alone, or not, is equally a fraud upon the statute. This being so, the complainants were entitled to an injunction to restrain the proposed invasion of their rights under the contract of incorporation, as soon as it was made manifest that such invasion was in fact contemplated.

The order denying the preliminary injunction will be reversed and the case remitted to the court of chancery, with a direction that an injunction do issue restraining the defendant company, its officers and directors, from submitting to its stockholders for action thereon by them the resolution of the board of directors of the company advising its dissolution.

For affirmance—None.

For reversal—The Chief-Justice, Garrison, Trenci-iard, Parker, Bergen, Yoorhkes, Minturn, Ualisch, Bogert, Yredenjburgi-i, Congdon, White—12.


author: Gummere, Chief-Justice.

text:
    The United States Fidelity and Guaranty Company, appellant, v. The Mayor and Common Council of the City of Newark et al., respondents.
    [Argued June 22d, 1911.
    Decided November 21st, 1911.]
    A stipulation in a contract for work for a city that ten per cent, of the final estimate should be retained for one year from the acceptance of the work as a guaranty that the contractor had executed his contract, and at the end of the year the amount remaining after making necessary repairs should be paid to the contractor after satisfactory evidence that laborers and materialmen have been paid, is not a provision for the retention of the money for the protection of laborers and materialmen, and an assigment by the contractor of the moneys due under the contract prior to the filing of a.ny lien for labor or material passes the amount so retained free from any lien.

      On appeal from a decree of the court of chancery advised by Vice-Chancellor Howell, whose opinion is reported in 76 N. J. Eq. (6 Buck,.) 230.

      Messrs. McOarter <& English, for the appellant.
    ilir. Sherrerd Depve and Mr. George Gordon Battle (of the New York bar), for the respondents.
   The opinion of the court was delivered by

Gummere, Chief-Justice.

The complainant, the United States Fidelity and Guaranty Company, filed its bill under the provisions of the Municipal Lien iarv to enforce a lien on moneys in the hands of the city of Newark under a contract between the city and John L. Stewart and Frederick W. Abbot, partners, for the construction of the Cedar Grove reservoir. Stewart & Abbot subcontracted the embankment and borrow pit work to one James Seme, who entered into a bond with the complainant, the United States Fidelity and Guaranty Company, as the surety thereon to indemnify and save harmless Stewart & Abbot from any pecuniary loss resulting to them from a breach of any of the terms of the contract between them and Seme. This bond also provided that in case of default by Seme in the work the complainant could at its option assume and complete his contract. Seme did default in his work and the complainant exercised its option to complete his contract, and did in fact perform the work and furnish the materials called for therein to an amount exceeding $35,000. Not being paid by the principal contractor the money due them for such work and materials they, on December 12th, 1904, filed their lien with the city in compliance with the statute. On the 18th of November, 1904, Stewart & Abbot made a written assignment to Alexander M. Stewart and James C. Stewart of all moneys due and to become due to them from the city of Newark under their contract with the municipality. The question at issue between the parties was whether this assignment took precedence over the lien subsequently filed by the complainant. The learned vice-chancellor held that it did, and for this reason advised a dismissal of the complainant’s bill.

We concur in the conclusion reached by the vice-chancellor and have nothing to add to his discussion of the matters treated by him in his opinion. There is, however, one ground upon which the complainant rested its right to relief, and which was relied upon in the argument before us which is not referred to by the vice-chancellor in his opinion, viz., an alleged right conferred upon laborers and materialmen by the eighth section of the contract between the city and Stewart & Abbot. That section, after providing for the payment of ninety per cent, of the final estimate, upon the completion of the work in accordance with the provisions of the contract and its acceptance by the city, provides as follows:

“The remaining ten percentum of said final estimate shall be retained by said city for one year from date of said acceptance of the work as a guarantee that the contractor has faithfully executed his contract, and shall be used by said city in making good any defects or making any repairs to the work executed under this contract which may be necessary. At the end of said one year the said ten percentum, or such portion of it as may remain after making said repairs or remedying any defects, shall be paid to the contractor after the party of the second part shall furnish the said board of street and water commissioners -with satisfactory evidence that all persons who have done work or furnished materials under this agreement and who may have theretofore given written notice to said board of any balance unpaid for work or materials furnished or done on said work have been fully paid or satisfactorily secured, and in case such evidence is not furnished as aforesaid such amounts as may be necessary to meet the claims of the persons aforesaid may be retained from the money due the party of the second part under this agreement and until the liabilities aforesaid shall be fully discharged or such notice withdrawn.”

The contention of the complainant is that bjr virtue of this clause in the contract the ten per cent, was retained for the protection of laborers and materialmen, including the complainant, and so, consequently, subject to lien by them notwithstanding the assignment made by Stewart & Abbot.

Although the contention is plausible, no authority is cited in support of it, and it is opposed to earlier decisions both of the court of chancery and of this court. In the case of Grassmann v. Bonn, 30 N. J. Eq. (3 Stew.) 490, the litigation arose out of the work of improving a pnbiie road in Hudson county under a contract by wbieb it was provided that so much of the money due to the contractors under the contract as might be considered necessary by the public authorities should be retained by them until any suits or claims against them for damages or for errors in payment to workmen, or for material furnished, should have been settled, and evidence to that effect furnished to them. The contention was that this provision of the contract operated as an equitable assignment in favor of unpaid laborers and material-men. ■ It was held that the provision was probably intended for the indemnity of the public authorities against suits or claims for wages or the price of materials which though unmaintainable might nevertheless be brought against them; that it did not create a lien in favor of laborers and materialmen, "but was intended as a means of coercion to compel the contractors to pay their debts contracted in connection with and for the work; that the public authorities were charged with no duty toward these classes of persons and whether they would retain the fund or not was entirely at their option; and finally that the provision was not an equitable assignment on the part of the contractors of so much of the fund as might be necessary io pay such debts.

In the case of Shannon v. Hoboken, 37 N. J. Eq. (10 Stew.) 123, the litigation was over a .contract for the repaving of a part of one of the streets of the city of Hoboken. It contained this provision:

“And the said party of the second part (the contractor) covenants and agrees to promptly pay for all labor done and material furnished on said work, and in case he fails so to do * * * any money due or to grow due to said party of the second part may be used to pay for such labor and material, and the mayor and common council may order warrants drawn to the order of parties doing work or furnishing material, or may issue certificates to them for the amounts due them. And the receipts of said parties shall be a full discharge for the mayor and common council of the city of Hoboken in settlement with the parly of the second part or his sureties.”

The contractor assigned moneys due him under the contract, and after the assignment claims for labor done and material furnished in the performance of the contract were presented to the municipality and payment therefore demanded. These laborers and materialmen claimed that they were entitled to be paid out of the funds in the hands of the city, notwithstanding the assignment upon the ground that the covenant recited deprived the contractor of the power of transferring his claim. Vice-Chancellor Van Fleet, before whom the case was heard, held the claim to be without substance, saying: “The covenant on which it rests merely authorized the municipality to withhold and appropriate the moneys earned under the contract. No beneficial interest is transferred, nor is the municipality made subject to any. duty or liability. Such a covenant does not render the municipality liable either at law or in equity to the creditor of the contractor, nor does it operate as an equitable assignment of the fund to such creditors.” This case subsequently came to this court on appeal, and the decree of the court of chancery was affirmed upon the opinion delivered by the vice-chancellor. 37 N. J. Eq. (10 Stew.) 318.

In Freeholders of Essex v. Lindsley, 41 N. J. Eq. (14 Stew.) 189, the litigation arose over a contract for the doing of the mason work of the new lunatic asylum which was being built by the county. The contract provided that

"should any person or persons that have furnished materials for or done any labor or work on the building' herein contracted for, present to the parties of the first part (the board of'freeholders) any claim or claims for such materials, work or labor, then the said parties of the first part shall have the right to withhold any and every one of the above payments until such claim or claims so presented are settled and a receipt for the same delivered to the parties of the first part.”

The contractor assigned the money due to him under the contract to Lindsley. Subsequently, claims were presented to the board of freeholders by laborers and materialmen for work done upon and materials furnished to the building. It was claimed that this provision of the contract operated as an assignment of all moneys earned by the contractor under the contract for the benefit of such persons as should become the contractor’s creditors in consequence of having furnished him with any of the means which he used in performing the contract, and that thereby the. board became obligated to hold such funds for the benefit of- such creditors until their debts were paid. Vice-Chancellor Van Fleet, who also heard this cause, thus disposed of the claim: “I can find, in the language used by the parties, no glimpse of a purpose like that attributed to them by this construction. It is certain that no assignment is made by express words, nor am I able to find, in the language of this provision, the slightest indication that either of the parties supposed that it was possible for anything to occur which, without a further act on the part of the contractor, would operate to transfer his rights under the contract. His dominion over the money earned under the contract is left just as complete and as absolute as it would have been if this stipulation had formed no part of the contract, except in one event, namely, on the presentation of a claim for material or labor, the board of chosen freeholders shall have the right to withhold any moneys due until such claim shall be paid. They are not authorized to pay, but merely to withhold. The contractor, however, exercised his right to do with his own as he pleased while his dominion was complete, and before any attempt had been made to impound the moneys in the hands of the board of chosen freeholders. His act in that regard is not in violation of his contract ; he has not even promised that he would not collect or assign the moneys earned under the contract; all that he has stipulated is that on the presentation of a claim for material or labor, the board should, as against him, have a right to withhold, but, until a claim is presented, his power and dominion over the fund remain free and unfettered.” Npon this reasoning he concluded that it must be held that the assignment was effectual to pass to Lindsley whatever rights the contractor had under the contract.

These decisions, we have already stated, are opposed to the contention made by the complainant, and that in the case of Shannon v. Hoboken is controlling. The reasoning of these decisions leads to the conclusion that the ten percentum of the final estimate, which is retained under the eighth section of the contract now under consideration, passed under the assignment free from any liability to be subjected to a lien which might thereafter be filed with the municipality by a laborer or materialman.

The question whether the municipality may, notwithstanding the assignment to Stewart & Stewart, retain the ten percentum until satisfactory evidence has been furnished to the board of street and water commissioners that all claims of laborers or materialmen of which notice was given to the municipality have been fully discharged or until such notices have been withdrawn, is not involved in the present litigation, and we therefore express no opinion upon it.

The decree under review will be affirmed.

For affirmance—The Chiee-Justicb, Garrison, Swayze, Trencitard, .Parker, Bergen, Voorhees, Kalisoit, Bogert, Vredenburgit, Congdon, White—12.

For reversal—None.


text:
    Herbert C. Gilson et al., receivers, respondents, v. J. Charles Appleby, appellant.
    [Argued July 6th, 1911.
    Decided November 21st, 1911.]
    A decree made upon a bill filed by the receiver of an insolvent corporation, whose assets are insufficient to pay its debts, directing an ascertainment of how much, if anything, remains unpaid by the several stockholders of the corporation upon the stock held by them respectively, and what amount, if anything, should be collected from and paid by them for the purpose of meeting such deficiency and for the payment of the expenses of the receivership, and ordering those of the stockholders who had not paid for their stock to pay the balance due upon their respective shares, or so much thereof as might he necessary to satisfy creditors and meet the expenses of the winding-up proceedings—is conclusive upon non-resident stockholders who have not been served with process, or submitted themselves to the jurisdiction of the court, so far as it adjudges that an assessment is necessary, and fixes the amount of money required to be raised thereby, and as to the pro rata of each share of stock upon which the assessment is directed to be made. But it is open to such nonresidents when the receiver attempts to enforce the assessment against them to show that they are not stockholders; or that they have paid their stock subscriptions in full; or that they have valid set-offs against the assessment.
    On appeal from an order of the court of chancery advised by Vice-Chancellor Garrison, whose opinion is reported in 78 N. J. Eq. {8 Buch.) 96.

      Messrs. Hartshorne, Insley & Leake, for the appellant.

      Mr. J. Merritt Lane, for the respondents.
   The opinion of the court was delivered by

Gummere, Chief-Justice.

The appeal in the present case challenges the validity of an order of the court of chancery overruling a plea filed by the defendant denying the jurisdiction of the court to afford the relief sought against him by the receiver in his bill. The ground upon which jurisdiction was denied was that the defendant had not been served with process; that he was not a resident of this state, and was not subject to service of process within it; and that any order or decree made against him would, therefore, be in violation of the fourteenth amendment of the federal constitution. The basis of the decision, holding the plea bad, was that it failed to disclose any attempt made by the court to obtain jurisdiction over the defendant, either by the issuance of subpoena against him or by any other method.

We incline to think that the averment of an attempt on the part of the court to obtain jurisdiction over the person of the defendant is not essential to the validity of a plea such as is now under consideration. In the case of Wilson v. American Palace Car Co. et al., 65 N. J. Eq. (20 Dick.) 730, in which a plea to the jurisdiction had been overruled by the court of chancery, the view expressed by this court was that the only question for determination was whether the matters set out in the plea showed the defendants to be beyond the compulsory jurisdiction of the court; and we held that if it was so shown, it was the duty of the court to dismiss the defendants from a controversy in which they declared themselves unwilling to participate.

But, although we are not prepared to approve the ground upon which the learned vice-chancellor based his decision overruling the plea, we, nevertheless, agree with him in his conclusion that it was bad.

The bill in the cause was filed by the receivers of the J. C. Appleby Sand and Clay Company setting up a deficiency of assets available to pay the debts of the corporation amounting to at least $20,000, and praying that an ascertainment should be made by the court of how much, if anything, remained unpaid by the several stockholders of the corporation upon the stock held by them respectively, and what amount, if anything, should be collected from and paid by them for the purpose of meeting such deficiency, and for the payment of the expenses of the receivership; and,-further, that those of the stockholders who had not paid par for their stock should be ordered and directed to pay the balance due upon their respective shares, or so much thereof as might be necessary to satisfy creditors and meet the expense of the winding up proceedings. All the stockholders, including the appellant, were made parties defendant.

The twenty-first section of our Corporation act provides that where the whole capital of a corporation has not been paid in, and what has been paid in shall be insufficient to satisfy its debts and obligations, each stockholder shall be bound to pay, on each share held by him, such proportion of the sum necessary to complete the amount of such share as shall be required to satisfy such debts and obligations. The collection of such unpaid subscriptions, in case of insolvency, and of an insufficiency of assets to pay debts, is vested, by the sixty-sixth section of the act, in the receiver. As a prerequisite to such collection an ascertainment must be made of -the proportionate amount of the unpaid subscriptions thus required in order to satisfy the debts of the company, and the expenses of winding up; and this ascertainment is to be made by the court of chancery under our system of jurisprudence. The present proceeding, consequently, is in conformity to the scheme of our statute. Our Chancery act permits non-resident stockholders, who are made defendants in proceedings of this character, to be brought into court By notice mailed to them at their respective post-office addresses. So entirely are these matters settled that none of them are controverted by the defendant.

The sole contention upon which his plea is rested is that the court of chancery is without power to make such a decree as is asked for by the receiver against him, unless he is brought into court by the service of process upon him within the state, or voluntarily submits himself to the jurisdiction. The contention is based upon the idea that such a decree rendered against him under the circumstances indicated would be in violation of the right guaranteed to him by the fourteenth amendment of the federal constitution as construed in Pennoyer v. Neff, 95 U. S. 714. But the doctrine of that case does not go to the extent claimed for it. Although it was there held that a personal judgment obtained against a defendant who was not a resident of the jurisdiction in which it was rendered, and who had not been served with process in that jurisdiction, and had not appeared, was void, the court was careful at the end of its opinion, in order “to prevent any misapplication of the views expressed” in it, to make the following statement: “'We do not doubt that a state, on creating corporations for pecuniary or charitable purposes, may provide a mode iu which their conduct may be investigated, their obligations enforced, or their charters revoked, which shall require other than personal service upon their officers or members. Parties becoming members of such corporations or institutions would hold their interest subject to the conditions prescribed by law.” That a proceeding like that now before us, when it results in an adjudication against a non-resident stockholder, not served with process, such as is prayed for by the receiver, neither deprives a stockholder of his property without due process of law, nor denies In'm the equal protection of the law, is settled, as we read its opinion, by the United States supreme court in the case of Burnheimer v. Converse, 206 U. S. 516. In that case a corporation of Minnesota became insolvent and a receiver was appointed for it by the district court of Washington county in that state. On the petition of the receiver to that court for the purpose of enforcing the liability of stockholders on their stock subscriptions, in order to provide funds for the payment of the indebtedness of the corporation, and the expenses of the receivership, an order was made requiring notice of a hearing on the petition to be given to the defendant company and to each stockholder. On the hearing, it having been shown that notice thereof had been published, and also mailed to each of the stockholders, an order was made for an assessment of thirty-six per cent, of the par value of each share of the capital stock of the company to be assessed upon each and every share of such stock, and agáinst each and every person liable as such stockholder, and each such person was directed to pay to the receiver within thirty days after the date of the order the sum assessed against his stock, and the receiver was authorized, upon failure to pay such’sums, to prosecute actions or proceedings against the persons liable in any court having jurisdiction in the State of Minnesota or elsewhere. The defendants not having paid suit was brought against them by the receiver in the United States circuit court for the southern district of New York to collect the amount assessed against them. In that suit they contended that the statute of Minnesota, which permitted an assessment to be made against them without service of process upon them, deprived them of their property without due process of law, and that the Minnesota, court was, therefore, without jurisdiction to make the order of assessment against them. This contention was overruled by the court and judgment went against the defendant. The United States supreme court upon a review of that judgment declared that it was not necessary that a stockholder should be served with process in the action wherein the assessment was made, for the reason that no personal judgment was rendered against him in that proceeding; that it had reference to a corporation of which he was a member by virtue of his holding stock therein, and had for its purpose the liquidation of the affairs of the corporation, the collection and application of its assets to be administered for the benefit of creditors; that in such case it had been frequently held that the representation which a stockholder has by virtue of his membership in the corporation is all that he is entitled to, and that it had already been decided by the court in Hawkins v. Glenn, 131 U. S. 319, and Great Western Tel. Co. v. Purdy, 162 U. S. 336, that when an assessment is necessary to be made upon unpaid stock subscriptions for the benefit of creditors, the court may make the assessment without the presence or personal service of stockholders.

A decree of the character sought by the receiver in the present proceeding is conclusive upon the stockholders as to the fact that an assessment is necessary, as to the amount of money required to be raised by the assessment, and as to the pro mica of each share of stock upon which the assessment is made; but it is open to a non-resident against whom an assessment has been made as a stockholder, and who has not been served with process, or submitted himself to the jurisdiction of the court, when the receiver attempts to enforce the assessment against him, to show that he was not a stockholder, or that he had paid his stock subscription in full, or that he had a valid set-off against the assessment. Swing v. Consolidated Fruit Jar Co., 74 N. J. Law (45 Vr.) 145.

It follows from what has been said that the court of chancery has jurisdiction to render the decree asked for against the defendant, notwithstanding the fact that he has not been served with process, and the order overruling his plea must, therefore, be affirmed.

For affirmance—The Chiee-Justice, Garrison, Swayze, Trenchard, Parker, Bergen, Voori-iees, Kalisch, Bogert, Vrebenburgh, Congdon, White—12. .

For reversal—None.


author: Garrison, J.

text:
    Edmund Braddock, respondent, v. Rachael E. Hinchman et al., appellants.
    [Submitted September 12th, 1911.
    Decided March 4th, 1912.]
    Where a decretal order that disposes of the merits of a question expressly reserves for further consideration and subsequent decision a single-point of practice which is disposed of later by a separate order an appeal from such last-mentioned order does not bring under review the propriety of the main order from which no appeal was taken.
    On appeal from an order of the court of chancery advised by Vice-Chancellor Walker.

      Messrs. French & Richards, for the appellants.

      Messrs. Gaskill & Gashill, for the respondent.
   The opinion of the court was delivered by

Garrison, J.

The defendants in the court of chancery have appealed from-an order of that court directing them to file with its clerk a certain account that the said court by its previous order of August 31st, 1909, had ordered the defendants to make in connection with the picking and marketing of a cranberry crop that was the-subject of litigation. This order of August 31st, 1909, which was made upon petition, affidavits and the argument of counsel,

“ordered that said defendant J. Clarence Hinchman be required to keep a strict account of the berries picked from the bog mentioned and described' in vhe bill of complaint, and of all expenses in connection with the picking-, storing, cleaning, packing, shipping and marketing said berries, an® submit or file said account as the court may hereafter direct.”

From this order, no appeal having been taken, the matter therein expressly reserved for a future direction, viz., whether the account should be submitted or whether it should be filed, was subsequently disposed of by the order now before us which directs that the account be filed. From this order the defendants have appealed.

Assuming, as we must, that the order of August 31st, 1909, from which no appeal has been taken was properly made, the appellants have not even remotely suggested how they are injured by an order that the account, the propriety of which is not challenged, be filed with the clerk in chancery rather than “submitted,” which was the question reserved in the order of August 31st, 1909, and the only matter dealt with in the order brought here by this appeal.

The appeal is totally devoid of merits, as also is the contention that the order should be reversed because of a change in the entitling of the cause at an earlier stage of the litigation in the court below. The order is affirmed, with costs.

For affirmance—The Chief-Justice, Garrison, Swayze, Trenchard, Parker, Bergen, Voorhees, Minturn, Bogert, Vredenburgh, Vroom—11.

For reversal—None.


text:
    Josiah White et al., appellants, v. Young's Pier and Hotel Company, respondent.
    [Argued November 23d, 1911.
    Decided March 4th, 1912.]
    The pier of Young’s Pier and Hotel Company at Atlantic City which was in existence at the time of the execution of “the boardwalk easement deed of April 30th, 1896,” is not affected by the proviso therein contained forbidding the sale of commodities upon any pier thereafter erected; and the restrictive covenant contained in said deed against placing or erecting any building or structure on the ocean side of the boardwalk is not violated by the internal alteration o£ an existing structure and its subdivision into booths or shops by means of partitions.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Walker, whose opinion is reported in 78 N. J. Bq. (8 Buck.) 198.

      Messrs. Bourgeois & Coulomb and Mr. Robert II. McCarter, for the appellants.

      Messrs. Godfrey & Godfrey and Mr. Richard V. Lindabury, for the respondent.
   The opinion of the court was delivered by

Garrison, J.

The bill in this case was filed by the appellants to enjoin the respondent from conducting a mercantile business on lands lying oceanward of its pier and from erecting on said lands stores for that purpose. The decree dismissing this bill proceeded upon the ground that the alteration of the internal arrangement of an existing structure upon said pier by means of partitions was not an erection upon said pier within the meaning of the restrictive covenants on which the appellants rely.

The cases in this court and in the court of chancery dealing with the restrictive covenants affecting land oceanward of the boardwalk at Atlantic City and the specific application of some of these covenants and their provisos to the respondent’s pier are collected in the opinion of the learned vice-chancellor.

We concur in the conclusion reached by the learned vice-chancellor that the respondent’s pier, which was in existence at the time of the execution of “the boardwalk easement deed of April 30th, 1896,” is not affected by the proviso therein contained forbidding the sale of commodities upon any pier thereafter erected; and that the restrictive covenant contained in said deed against placing or erecting any building or structure on the ocean side of the boardwalk is not violated by the internal alteration of an existing structure and its subdivision into booths or shops by means of partitions.

Concurring as we do in the conclusion that the appellants have not shown themselves entitled to the relief prayed for, the decree of the court of chancery is affirmed.

For affirmance—Tiie Chief-Justice, Garrison, Swayze, Teenchard, Parker, Bergen, Voorhees, Kalisch, Bogert, Vredeneurgh, Vroom—11.

For reversal—None.


author: Swayze, J.

text:
    Luella Aumack et al., respondents, v. W. Scott Jackson, executor, et al., appellants.
    [Argued July 6th, 1911.
    Decided March 4th, 1912.]
    In order to establish a parol trust against a legatee, which equity will enforce on account of the legatee’s fraud, the evidence must be clear and satisfactory. The evidence in this case falls short of that standard.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Walker, tvhose opinion is reported in 78 N. J. Eq. (8 Buck.) 189.

      Mr. Edmund Wilson, attorney-general, and Mr. Aaron E. Johnston, for the respondents.

      Mr. William tl. Corbin and Mr. Foster M. Voorhees (Mr. Isaac W. Carmichael, on the brief), for the appellants.
   The opinion of the court was delivered by

Swayze, J.

The object of this bill is to enforce a parol trust. The theory of the complainants is that Louise C. Aumack, wife of Selah S. Aumack, induced her husband to devise and bequeath all his property to her upon her promise to distribute it, after her death, among his next of kin, the complainants in the cause. The law is settled by the decision of this court in Williams v. Vreeland, 32 N. J. Eq. (5 Stew.) 734. Equity will enforce a parol promise made by a legatee to a testator to hold the legacy for the benefit of a third person where the conduct of the legatee amounts to a fraud. This case therefore involves a decision upon the facts only. The rule of evidence was thus stated by Mr. Justice Yan Syckel: “Courts of equity act in these cases with the utmost

caution, and they will not interfere, unless the promise and the intended fraud on the beneficiary are established by clear and satisfactory proof.” In that case it was proved by the express written declaration of the legatee. It is most important to bear in mind this rule as to the extent to which the evidence must go, unless we are to open the door for an invasion of the provisions which the legislature has adopted by the statute of wills and the statute of frauds. Is the proof then clear and satisfactory ? The evidence is summarized in the opinion of the learned vice-chancellor, and we need not repeat it. Much of his opinion, and much of the brief of the respondents, is taken up with a discussion of the conduct of the defendant, W. Scott Jackson, in procuring the execution of a will by Louise C. Aumack, the alleged fraud-doer. This evidence is irrelevant. If, as the vice-chancellor thought, Mr. Jackson procured this will from his sister by the exercise of undue influence, the only persons wronged by his conduct were the next of kin of Louise C. Aumack. The complainants were not thereby injured since, if she had executed no will but had died intestate, they would have been excluded from the enjoyment of the property as effectually as they are by her will. If the theory of the complainants is correct, her duty was to execute a will contemporaneously with that of her husband, or, at any rate, immediately after his death, and her failure to do so for more than two years was a fraud with which Jackson was not connected. The only difference between the case that would have been presented, if she had executed no will, and the present case is that in that event her next of kin would have been defendants and not her executor and legatees.

The case must therefore be decided without regard to any opinion that may be entertained as to the validity of the will of Louise C. Aumack. It turns' entirely upon the question whether she induced her husband to leave his property to her upon her promise to devise and bequeath it to his next of kin and upon her failure to perform that promise. She was not present when her husband executed his will. He told the scrivener at the time that he had never made a will because he did not know how to leave Ms property, and that he guessed he would leave it all to his wife and she could do what she pleased with it; that she helped to earn it. This statement óf the intent of the testator, contemporaneous with the actual execution of his will and made in the absence of his wife, is corroborated by the testimony of neighbors and acquaintances with whom he talked, and the statement that his wife helped to earn the property is corroborated by the facts. To meet this, the complainants produced evidence of statements by Selah Aumack indicating affection for some of his relatives, particularly nieces who lived near Mm, and statements by Louise C. Aumack after his death. His statements, however, are of the general character that might be expected, and did not indicate any settled testamentary intention. Upon the contrary, all the evidence shows that there was no settled testamentary intention on his part prior to the execution of his will. The strongest evidence produced by the complainants is an admission of Louise, after her husband’s death, that he started to make a will a short time after a stroke of paralysis, but said that he had so many relatives that it hurt his head to think about them all; and that she told him not to bother about his affairs, but to make a short will, leaving everything to her and she would make a will and fix it for his relatives just as she knew he wished to have it. How she could know his wishes when he had not defined them in his own mind and was unable to do so, is incomprehensible. It is unnecessary to decide whether Mrs. Aumack would have been bound as trustee for her husband’s heirs and next of kin, in case it were established that she had assented to this undefined arrangement. The fact that Selah Aumaek had never decided in what proportions he would distribute his property among his-own relatives is most persuasive that no agreement had been made between him and his wife prior to the execution of his will. If he and his wife made an agreement that his relatives should have the property after her death in shares.to be fixed by her, it would have been easy for him to devise and bequeath the property to his wife for her life onty, and, after her death, to such of his next of kin as she might appoint. This would have avoided the difficulty which the witnesses for the complainants rely upon as an explanation of his failure to make the distribution by his own will. In view of his long and successful experience in business, we find it impossible to explain his failure to protect the interests of his next of kin, unless he meant to do exactly what he told the scrivener and what his will accomplished. The circumstances of the case sustain this conclusion: Louise C. Aumaek, immediately after her husband’s death, transferred the property to her own name, and, although she might have done this without the knowledge of her husband’s relatives, she did more, which those of them who lived in the neighborhood must have known, for she made considerable gifts of real estate to the church and to her brother without objection on the part of any of the complainants who, if the theory of their bill is correct, were defrauded thereby. Even her admissions, as testified to by witnesses for the complainants, upon which they rely, indicate that the arrangement between her husband and her permitted her to use as much of the estate as she chose for herself so that there might not be very much left. The will of Selah Aumaek was a natural expression of the wishes of a man of proper feeling. He and his wife were aged people, who had lived together many years, and who, by their joint efforts, their industry and frugality, had accumulated their fortune, and, if we assume that he was a man with the ordinary feelings of affection toward the wife who had lived with him so long and helped him so well, he would, naturally and property, when he came to dispose of his property, leave it to her for the reason that he gave the scrivener, that she had helped earn it. ' The complainants do not claim that the decree effectuates the intention of Selah Aumaek. Confessedly, he did not mean to distribute his property among his heirs and next of kin in the proportions fixed by statute in case of intestacy, nor is there evidence justifying the conclusion that the legacies given by Mrs. Aumaek to her husband’s nieces were not exactly what he had intended. If we are to go contrary to the intention of Mr. Aumaek and make an equal distribution where he intended an unequal distribution, we are not enforcing a trust, but are making a new will, which he confessedly would not have made. The evidence as to his varying intentions is contradictory. No doubt he expressed himself differently at different times as his mood varied, but the 'evidence does not justify us in annulling in effect a man’s will supported as it is by his oral declaration of intent at the time of execution, and in finding his widow guilty of fraud, on the uncertain and contradictory testimony of neighbors after both are dead. The case differs widely from In re Boyes, L. R. 26 Ch. Div. 531, on which complainants rely. In that case the legatee admitted the trust.

The decree must be reversed and the record remitted to the end that a decree may be entered dismissing the bill. The defendants are entitled to costs in both courts.

For affirmance—Ralisch, Bogert, Vredenburgh, White —4.

For reversal—The Chief-Justice, Garrison, Swayze, Parker, Bergen, Voorhees, Minturn, Congdon—8.


text:
    Alexander Murray et al., complainants-respondents, v. Beattie Manufacturing Company et al., defendants-appellants.
    [Argued December 6th, 1911.
    Decided March 4th, 1912.]
    1. Upon the organization in 1882 of a corporation under the general act of 1875, the incorporators owning all the stock adopted a by-law which provided that dividends should be declared and paid semi-annually of such portion of profits as the directors should deem advisable; the directors acted thereon for many years.—Held that, even if the by-law was in conflict with section 52 of the act requiring dividends of the whole accumulated profits after reserving as a working capital a sum not exceeding one-half the capital stock, it is not open for a stockholder now to raise the objection.
    2. The Corporation act of 1896 is a revision, and was intended to take the place of the act of 1875; and a construction which would limit the applicability of section 47 to a corporation created after the act of 1896 took effect, is too narrow'; the section apjjlies also to corporations organized under the act of 1875.
    3. The legislature may alter the provisions of the Corporation act, even as to the relations of the stockholders inter sese where all the stockholders assent. „
    4. Under the Corporation act of 1896, when the by-laws authorize the directors to determine the amount to be reserved for working capital, their power to determine the amount of dividends is absolute as long as they act in the exercise of an honest judgment.
    5. Under the Corporation act of 1896, when the by-laws authorize the directors to determine the amount to be reserved for working capital, it is not illegal to pursue a policy to secure stability in the dividend rate by making the earnings of the prosperous years help out the deficiencies of other years.
    On appeal from a decree of the court of chancery advised by Yice-Chancellor Stevenson, whose opinion is reported ante p. 822.

    The complainants are stockholders of the Beattie Manufacturing Company and seek by this bill to compel the directors to declare a dividend of all the net earnings and accumulated profits not, needed for the legitimate purposes of the company’s business. The bill was filed September 20th, 1905. Evidence was taken in 1906, and, on June 27th, 1910, the vice-chancellor held that the complainants were entitled to relief; but a further hearing was had to ascertain the condition of the company at the time, and in 1911 the vice-chancellor held that a dividend of twenty per cent, should be declared, payable not on demand as the statute requires, but in three equal installments, on the 1st of April, the 1st of July and the 1st of October, 1911. From this decree both parties appealed, the defendants because they denied the right to compel the payment of any additional dividend; the complainants upon the ground that the dividend of twenty per cent, is insufficient because it should be of the whole amount of the accumulated profits in excess of its capital stock paid in and not legally reserved as a working capital. The company was organized under the act of April 7th, 1875, by a certificate dated June 24th, 1882. One of the purposes of the corporation was to purchase of Robert Beattie, one of the corporators, his carpet and woolen factory, and the lands adjoining, together with the water power and privileges. Robert Beattie and his two sons were the sole incorporators and held all the capital stock, amounting to $300,000. Among the objects of the corporation was the manufacture and'sale of carpets- and other merchandise, the erection of buildings, mills and machinery, for the purpose of the manufacture, the improvement,, renting and selling of real estate, and the carrying on of any other business necessary for the proper management and development of the property. Robert Beattie transferred his business and a large amount of valuable real estate to the company, the value of the assets transferred exceeding the nominal capital stock. A portion of the real estate has since been sold to the East Jersey Water Company for $515,000, and a mortgage for $315,-000 has been taken from the water company to secure part of the purchase-money. At the beginning Robert Beattie owned one-thousand six hundred shares of the stock, and each of his sons seven hundred shares. By Robert Beattie’s will, a portion of his stock was bequeathed to his sons, Robert and William, and his two sons-in-law, Dixon and Gedney, in trust for his daughters during life, with the provision that upon the death of a daughter the stock held in trust for her should go to her issue, if any; if none, then to her heirs-at-law. One of the daughters is unmarried and two of the others are childless, so that the two sons have a personal interest in the reversion. William Beattie, one of the sons, has died, and has been succeeded as a director of the company by the son of Robert. By the will of the deceased son, Robert is appointed executor with his widow, and stock of the company is bequeathed to them in trust, to be held for the testator’s widow and daughter during their lives. By the will of Robert Beattie, Sr., two hundred of his one thousand six hundred shares were bequeathed to his two sons, so that after his death they held a majority of the stock. By virtue of the trusts, Robert Beattie also controls most of the balance of the stock.
    The company has been very successful. Its assets, which amounted to $381,519.53 in 1882, had increased to $1,394,445.69 in 1910, of which amount over $200,000 was in actual cash. It had been declaring dividends at the rate of ten per cent, (one year, twelve) for the six years prior to the filing of the bill. Its earnings during the six years had varied from $33,073.31 in 1905, the year the bill was filed, to $78,045.99 in 1903.

      Mr. John B. Humphreys and Mr. John IF. Harding, for the complainants-respondents.

      Mr. Gilbert Collins, for the defendants-appellants.
   The opinion of the court was delivered by

Swayze, J.

The first question that arises is a legal one. The corporation was organized under the General Corporation act of 1875, and the complainants insist that it is a manufacturing corporation within the meaning of section 52 of that act, and for that reason required, after reserving as a working capital a sum to be specified by the directors not exceeding one-half the capital stock, to declare a dividend of the whole accumulated profits. The defendants claim that, because the corporation had objects other than the manufacture and sale of goods and because a considerable amount of the assets it took over from Robert Beattie consisted of land, it was not a mamifacturing corporation within the meaning of the statute. It is unnecessary to decide this precise question, for the reason that the provisions of section 52 were made inapplicable by the conduct of the stockholders. Immediately upon the organization of the corporation, the three incorporators owning all the stock adopted a by-law, which provided that dividends should be declared and paid semi-annually of such portion of profits as the directors shall deem advisable. Even if this bylaw was in conflict with the fifty-second section of the act, it would not be open at this late day for a stockholder to raise the objection after the directors' had acted upon the by-law for so. many years. The principle applicable is that established by the New York court of appeals in Kent v. Quicksilver Mining Co., 78 N. Y. 159, and approved by this court in Camden and Atlantic Railroad Co. v. May’s Landing, &c., Railroad Co., 48 N. J. Law (19 Vr.) 530. The rule was applied by the court of chancery to a case like the present. Raynolds v. Diamond Mills Paper Co., 69 N. J. Eq. (3 Robb.) 299. The directors have been permitted to invest the earnings, over and above the dividends declared, in machinery, merchandise and other assets necessary for the successful conduct of the business of a growing company and the stockholders, having assented thereto, ought not to be allowed to embarrass the directors or the company by now asserting rights in conflict with their previous conduct. The statute itself has been* modified as the legislature from time to time found necessary as the result of the experience of our numerous corporations. In 1891 (P. L. 1891 p. 176) a proviso was attached to section 52 enacting that, when the accumulated profits consisted in part of real property or merchandise necessarily employed in the business of the corporation, the same should not be regarded as profits for the purpose of the declaration or payment of a dividend unless a majorit3r of the directors or stockholders should, by resolution, declare that all, or some part, of the accumulated profits invested in real estate or merchandise should be used as a part of the accumulated profits for the purpose of a dividend. In 1896, when the Corporation act was revised, a still further change was introduced. By section 47 of the act of 1896, the directors are required, after reserving as a working capital such sum as shall have been fixed by the stockholders, to declare a dividend of the whole accumulated profits exceeding the amount reserved. By a proviso the corporation was authorized in its certificate or by-laws to give the directors the power to fix the amount to be reserved as a working capital. It is argued that this section is inapplicable to the present case, because the Beattie Manufacturing Company is not incorporated under the act of 1896. The act of 1896, however, is a revision, and was intended to take the place of the act of 1875, which is repealed except so far as expressly re-enacted, and section 2 provides that every corporation shall be governed by the provisions and subject to the restrictions and liabilities of the act so far as the same are appropriate to, and not inconsistent with, the charter or act under which the corporation was formed. We think a construction which would limit the applicability of section 47 to a corporation created after the revised act of 1896 took effect, is too narrow, and that the section applies also to corporations organized under the act of 1875, for which the act of 1896 was a substitute. After the passage of the act of 1896, the stockholders of the defendant company, in 19.00, unanimously adopted a by-law authorizing the directors to determine from time to time the amount to be reserved by the corporation as working capital. With this power in the directors, it is a mere matter of form whether they determine the amount of working capital and declare the balance as a dividend, or whether they declare a dividend, leaving the balance of the earnings undistributed, and in fact working capital. It is urged that section 52 of the act of 1875 regulated the rights of the stockholders inter sese, and that it was beyond the power of the legislature to impair the obligation of this contract without the unanimous assent of the stockholders. In fact, this unanimous assent was had, and the effect was, in substance, to adopt the provisions of the act of 1896. There can be no objection to the legislature, by virtue of its reserved power, altering the act, provided ail the stockholders assent. This court has expressly approved a change which materially changed the voting power of stockholders. In re Newark Library Association, 64 N. J. Law (35 Vr.) 265. This is as far as the facts of the present case require us to go. We must not be understood, however, as deciding that the legislature was without power to make the change that was made by the act of 1896 even if the stockholders did not assent. The provision limiting the amount to be reserved as working capital had a twofold aspect. It had the effect of securing dividends to the stockholders where the corporation was successful, and of limiting the power of the corporation to increase its assets largely beyond the capital authorized by its original certificate. This was a matter of state concern, for the state might well desire to avoid the accumulation of capital in the hands of a single corporation even though the increase came wholly out of its own earnings; and it is also a matter of state concern that a corporation should be permitted to accumulate a sufficient fund to secure its credit and make permanent its successful operation.

The unanimous assent of the stockholders to the by-laws of 1900 was an assent only of the persons owning the legal title to the stock. This is all that is necessary, for, under the statute, they alone have the right to vote, and trustees are expressly authorized to represent the stock held in trust and to vote thereon as a stockholder. (Section 39 of the act of 1875, Revision 184,. which is now a part of section 37 of the act of 1896, C. S. 1622.) The evidence, however, goes further. The complainants received dividends for years without objection, and must be held themselves to have waived any right to object so long as the directors acted honestly and fairly. The action of the stockholders in assenting to this by-law was, of course, not the act of the directors, but of the stockholders as such. Not only was there this tacit approval of the conduct of the directors, but even when this bill was filed, the complainants did not rely on the act of 1875 and ask for a distribution of all accumulated profits in excess of the working capital permitted by that act. They very properly limited their prayer for relief to a distribution of profits not needed for the legitimate purposes of the companj^s business. The proofs make clear the reason for this limitation; the business has grown so that more capital is necessarily employed. The complainants evidently had this in mind, and for their own advantage, as well as that of the other stockholders, refrained from asking a distribution. of ail the profits to which they would have been entitled under the act of 1875.

This brings us to the question of fact in the case; the propriety of the court of chancery ordering the declaration of the additional dividend. The rule of law that governs was clearly stated in this court by M'r. Justice Garrison in Laurel Springs Land Co. v. Fougeray, 50 N. J. Eq. (5 Dick.) 756. After stating the power of the court to order the directors to make a dividend of unused profits when they improperly refused to do so, he adds that the authority of the directors is absolute as long as they act in the exercise of an honest judgment. To put it in the language used by the court of chancery in another case, "the court should not intervene if there is any room for doubt.” Raynolds v. Diamond Mills Paper Co., 69 N. J. Eq. (3 Robb.) 299, 307. The question, therefore, is not Avhether a vice-chancellor, or this court, with all the light that has been thrown upon the case by a prolonged litigation, during which the company has continued to thrive and has increased its assets, shall now say that the directors should have declared a larger dividend more than six years ago; but whether the directors, in view of their knowledge at the time, their experience of the business, their reasonable apprehension of its future hazards, were justified in withholding from the stockholders all the profits, except the ten per cent, dividend declared. It would be very unfair, after the directors had for six years conducted a corporation successfully, for the court to say that they ought to have anticipated the successful operation of the company for six years in advance. The very conduct of this case is sufficient to show the difficulty that an honest director must have felt in November, 1905. The evidence was taken in 1906, and for four years thereafter the vice-chancellor held the matter under, consideration, and even then decided to decree an additional dividend only tentatively, and found it necessary, before actually making the decree, to take further testimony as to the then existing, condition of the company, so that the final decree was not made until February, 1911, five years and three months after the bill was filed. The vice-chancellor, even then, did not venture to decree that the whole dividend of $60,000, awarded by him, should be payable on demand; but he allowed it to be paid in three installments, the last more than seven months distant. No doubt this was a proper precaution; but the statute requires that dividends declared by the directors' shall be payable on demand, and, if proper caution prohibited such a payment in 1911 after years of business (some of which were extremely profitable), how can it be said that the directors failed to exercise an honest judgment in not declaring a larger dividend in 1905, which would necessarily be payable on demand ? It may be that the directors were overcautions; but, in view of the'fact'that the earnings of the company for the year 1905 were only eleven per cent., we think there was no failure to exercise an honest judgment when they declared only a ten per cent, dividend. It is true that they had gradually accumulated a surplus, but the profits of their business had varied from year to year. They had gone through a change of fashion which decreased the demand for carpets and forced them to go into the new business of manufacturing rugs. They must naturally have felt that a similar change of fashion might again involve them in unusual expense. They had the experience of the panic of 1893, and might well dread a recurrence of a similar business depression. Moreover, the very increase of their business made it necessary to have a larger circulating, or working, capital. It is clear that if they had pursued the policy which the complainants now insist they were legally bound to pursue, and had limited their working capital to fifty per cent, of their capital originally subscribed, they would have been quite unable to conduct their business successfully, and would probably have had to succumb to the competition of stronger concerns. The learned vice-chancellor himself recognized in an earlier case the necessities presented by such a situation. Stevens v. United States Steel Corporation, 68 N. J. Eq. (2 Robb.) 373. Even the complainants did not venture in their bill to pray for a distribution of all the accumulated profits, but limited their prayer to a declaration of a dividend of all the net earnings and accumulated profits not needed for the legitimate purposes of the company’s business. Naturally, the amount needed for the legitimate purposes of the eompanjf’s business must be determined by the directors who are entrusted with the management of the company. Even upon this appeal, counsel for the complainants urge that the directors might obtain the cash necessary to pay the large dividend demanded by reducing their stock of merchandise, and by using the credit with the banks to be obtained by means of the East Jersey Water Company mortgage. The merchandise seems to have been higher in 1910 than in previous years; but, even if we assume that it was higher than was necessary, it does not follow that the directors were wrong Jive years before. The amount is not so great that we can say it indicates an attempt to invest cash in order to avoid a-dividend. In fact, the dividends have been doubled pending the suit as the company prospered.

The total net profits of the company from its organization until November 30th, 1905, were $1,106,104.35, as stated in complainants’ brief. The dividends declared amounted to $633,000; in some years the dividends exceeded the earnings of the year. We cannot say that the retention of the difference in this developing and successful business indicates any lack of honest management. It is proper to look with suspicion vupon the conduct of directors who have a personal interest adverse to the declaration of dividends, but we are unable to draw the same conclusion as the vice-chancellor from the facts. Nor can we say that it is illegal for the directors under our present statute and the by-laws of this corporation to pursue a policy to secure stability in the dividend rate by making the earnings of the prosperous years help out the deficiencies of other years. The natural inference to be drawn from our cases is that such a method is legal. Goodnow v. American Writing Paper Co., 73 N. J. Eq. (3 Buch.) 692; Bassett v. United States Cast Iron Pipe and Foundry Co., 75 N. J. Eq. (5 Buch.) 539.

The decree in this case should be reversed, with costs. This, necessarily, disposes of the question raised as to the allowance of a counsel fee. Since the complainants are not entitled to costs, but are liable for costs awarded against them, they, of course, cannot be entitled to a counsel fee.

For affirmance—None.

For reversal—The Chief-Justice, Gateison, Swayze, Parker, Bergen, Vooriiees, Kalisch, Bogert, Yredenburgh, Yroom, Congdon, White—12.


author: Trenchard, J.

text:
    Bernard Meyer et al., complainants-appellants, v. The Somerville Water Company et al., defendants-respondents.
    [Submitted December 11th, 1911.
    Decided March 4th, 1912.]
    1. The object of a preliminary injunction is to prevent some threatening, irreparable injury pending a full and deliberate investigation of the •case upon the merits.
    2. A preliminary injunction will not be ordered unless from the pressure of an urgent necessity, and where the damage threatened during the pendency of the suit is of an irreparable character.
    3. A preliminary injunction will not be granted merely to allay the fears and apprehensions of individuals. They must show the court that the acts against which they ask protection are not only threatened, but will, in probability, be committed to their injury.
    4. An order of the court of chancery denying a preliminary injunction, without prejudice to the complainants to renew their application should the necessity therefor arise, will not be reversed on appeal where the material facts of the bill, on which the complainants’ equity depends, are met by a full, explicit and circumstantial denial under oath.
    On appeal from a decree of tbe court of chancery advised by Vice-Chancellor Walker, denying a preliminary injunction.

      Mr. Edward P. Johnson, -Jr., for the appellants.

      Mr. Alvah A. Clark and Mr. Richard V. Lindabury, for the respondent the Somerville Water Company.

      Mr. John A. French, for the respondent the board of chosen freeholders of the county of Somerset.
   The opinion of the court was delivered by

Trenchard, J.

This is an appeal from an order of the court of chancery denying a preliminary injunction.

The bill of complaint alleges that the complainants are riparian owners on the Earitan river; that the defendant, the Somerville Water Company, was organized in 1881, under the act of April 21st, 1876 (P. L. 1876 p. 318), for the purpose of supplying the towns of Somerville and Earitan, and the inhabitants thereof, with water; that it has been engaged in the business authorized by its charter ever since its incorporation; that in 1907 it contracted with the Piseataway Water Company, the Earitan Township Water Company and the Elizabethtown Water Company to furnish water not to exceed twenty million gallons per day; that it has laid without lawful authority a thirty-six-inch water main from a point near its pumping station in Earitan, through Earitan and Somerville, and has made application to the board of chosen freeholders of the county of Somerset for permission to extend the main along a county road from the Somerville line to a point in the county of Middlesex. The bill then charges that the main is much larger than is necessary to supply Somerville and Earitan; that the company’s real purpose in laying the main is to use it for the purpose of taking and diverting water from the Earitan river at a point above the lands of the complainants in order to fulfill its contract with the other water companies. The bill prays that the company be enjoined from the further laying of the thirty-six-inch main, and from taking or diverting any waters of the Earitan river, or its tributaries, other than are necessary for the use of Somerville and Earitan; and that the board of chosen freeholders be enjoined from granting a permit to lay the main in the county road.

Both parties submitted affidavits. It is conceded that the complainants are riparian owners, that the Somerville Water Company has entered into a contract with the other companies and has laid a thirty-six-inch main as alleged in the bill.

The affidavits on the part of the complainants state that, by reason of the several matters stated in the bill, the deponents believe it is the intention of the Somerville Water Company to take and divert from the Earitan river and its tributaries large quantities of water to fulfill its contract, to the great damage of the complainants.

On the other hand, the reply affidavit submitted by the Somerville Water Company denies that the thirty-six-inch main was laid without, lawful authority, and that it is enormously excessive for the requirements of Somerville and Raritan, although it may be in excess of such present needs. It admits that the water main was laid with the idea of fulfilling the contract with the other water companies, and that the company does not own or possess a sufficient water supply to enable it to fulfill such contract, but it denies that the company proposes to divert or take water from tiie Raritan river or its tributaries from any point above the lands of the complainants without lawful authority. It avers that the company has under consideration several schemes for furnishing a supply of water, but that no final plan has been determined upon. It further states that the company has not, and never has had, any intention of taking any water from the Raritan river, or any of its tributaries, in order to fulfill its contract with the other companies, or for any purpose other than to supply Somerville and Raritan, without first acquiring as against the complainants a right so to do, either by purchase or condemnation; and that the company lias never claimed, and does not now claim, to have any such right.

Upon the hearing of the rule to show cause, the application for preliminary injunction was denied,

“without costs, and without prejudice to the complainants to renew their application i£ the defendant should attempt to divert, transport, convey, sell or use the waters of the Raritan river, or its tributaries, from a point therein above the lands of the complainants, except for the purpose of supplying Somerville and Raritan.”

We are of opinion that such denial was proper.

The object of a preliminary injunction is to prevent some threatening, irreparable injury pending a full and deliberate investigation of the case upon the merits. Thompson v. Paterson, 9 N. J. Eq. (1 Stock.) 624.

It will not be ordered unless from the pressure of an urgent necessity, and where the damage threatened during the pendency of the suit is of an irreparable character. Citizens’ Coach Co. v. Camden Horse Railroad Co., 29 N. J. Eq. (2 Stew.) 299; West Jersey Railroad Co. v. Cape May, &c., Railroad Co., 34 N. J. Eq. (7 Stew.) 164.

lt will not be granted merely to allay the fears and apprehensions of individuals. They must show the court that the acts against which they ask protection are not only threatened, but will, in probability, be committed to their injury. Lutheran Church v. Maschop, 10 N. J. Eq. (2 Stock.) 57.

The general rule is that a preliminary injunction will not issue where the material facts in the bill, on which the complainants’ equity depends, are met by a full, explicit and circumstantial denial under oath. Citizens’ Coach Co. v. Camden Horse Railroad Co., supra; Grand Castle of the Golden Eagles v. Bridgeton Castle, 40 Atl. Rep. 849; West Jersey Railroad Co. v. Cape May, &c., Railroad Co., supra.

In the present case the material facts averred in the bill on which the complainants’ equity depends are those which unexplained tend to show that the defendant companjr intends to take and divert water, other than for Somerville and Raritan, from the Raritan river or its tributaries above complainants’ lands to their irreparable injury.

The complainants do not aver that the company ever expressly claimed the right to take such water for such purpose, nor that the company ever expressly or directly threatened or announced an intention so to do. But we are asked to reverse the court below, because it is said that the acts of the company are consistent with such unlawful intention. Granting that to be so, they are also consistent with lawful purposes, among others, the taking of such water only if and when it has obtained the right to do so by purchase. When, therefore, the duty-authorized officer of the defendant company states under oath that the company has not and never had any intention of taking or diverting such water without first acquiring as against the complainants the right so to do by purchase, or in other lawful manner, the court below was quite justified in denying the preliminary injunction, without prejudice to the complainants to renew their application if the defendant company should attempt to take or divert such water, except for the admitted lawful purpose.

The order under review will be affirmed, but since the complainants were quite justified in making their application in order to avoid the impatation of laches in any subsequent proceedings which may be necessary to maintain their rights, it will be without costs.

For affirmance—The Chief-Justice, Garrison, Swayze, Trenchard, Parker, Bergen, Voorhees, Minturn, Kalis ch, Bogert, Vredenburgh, Vroom, Congdon, White, Treacy —15.

For reversal—None.


author: Bergen, J.

text:
    Samuel D. Hoffman et al., complainants-respondents, and James J. Quigley et al., defendants-respondents, v. Carlton Godfrey, appellant.
    [Submitted November 24th, 1911.
    Decided March 4th, 1912.]
    In the absence of fraud, irregularity, accident or mistake judicial sales will not be set aside for inadequacy of price, unless the inadequacy is so gross as to justify an inference of fraud.
    On appeal from an order of the court of chancery made by the Chancellor.

      Messrs. Bourgeois & Coulomb, for the respondents.

      Mr. Gilbert Collins and Mr. H. Starr Biddings, for the appellant.
   Tlie opinion oí the court was delivered by

Bergen, J.

As the result of proceedings in partition the lands described in the bill of complaint filed in this case were decreed to be sold by the special master at private sale for not less than $120,000, or if this could not be done before a day named in the decree, then at public sale, subject to or free from mortgage encumbrances amounting to $20,000, as he should determine.

The master not being able to make a private sale, sold the lands at public auction to Carlton Godfrey for $78,000, subject to the mortgage encumbrances, and reported the sale to the chancellor, by whom it was confirmed December 9th, 1910. The property was owned by Mary E. Quigley and her children, as legatees of Francis P. Quigley, deceased, Samuel D. Hoffman and Lee Land Company as tenants in common, tod after confirmation of the sale, Mary E. Quigley filed a petition in the cause praying that the sale and order of confirmation be set aside and the property resold, which was ordered, from which order the purchaser, Godfrey, appeals. The petition set out, among other things, that one Franklin B. Lippincott was ready to enter a bond to bid $115,000 for the property if resold, which offer he verified by affidavit attached to the petition.

In the absence of fraud, irregularity, accident or mistake, judicial sales will not be set aside for inadequacy of price, unless the inadequacy is so gross as to justify an inference of fraud. Morrisse v. Inglis, 46 N. J. Eq. (1 Dick.) 306.

As in this case the special master, whose fairness is not questioned, was not able to sell it for $120,000 at private sale, and the only offer by a bona fl/de bidder is $115,000, the difference between the selling price and the subsequent offer or obtainable price at private sale is not so inadequate as to warrant an inference of fraud or unconscionable conduct in conducting the sale, and as the right of one to have the benefit of a reasonable bargain when he buys at a judicial sale should not be denied without a just e'ause, if bidding at judicial sales is to be encouraged, and it would seem that if this sale is to be set aside it must be because it was so managed as to discourage bidders, either by the master who conducted the sale, or by those interested in buying it at a lower price than eoul'd be obtained if the sale was fairly conducted, and this is substantially what the petitioner claims was done in this case. She testifies that she did not attend the sale because in a conversation with Mr. Lee, president of the Lee Land Company, in October, 1910, she asked him what he thought the property would bring, to which he replied, “Not a cent less than $165,000,” and therefore she was sure it would bring that price. She also testifies to other conversations of a like nature with her co-tenants, but all were nothing more than expressions of opinions as to value, or price likely to be obtained at public sale, and the petitioner was not justified in relying on such statements as conclusive or misleading regarding the price which it would certainly sell for at the sale.

Again, petitioner claims that because Godfrey agreed after the sale that both Hoffman and Lee might become his partners in the purchase, that is evidence of a fraudulent sale. We think the testimony, shows that both Lee and Hoffman did all they could to advance the sale. They induced Godfrey to attend and purchase, agreeing to aid him by loaning him their share in the proceeds as an inducement- to bid. We fail to find in the testimony any such proof of collusion or connivance as would warrant a finding that the sale of this land was in any way unfairly influenced by Lee or Hoffman. Godfrey was an independent buyer, and after the sale had a right to negotiate with Lee and Hoffman, the owners of two-thirds of the land and entitled to that proportion of the proceeds, to join him in the purchase, and there is no proof that the conduct of Godfrey was in any way detrimental to the sale.

There being no sufficient proof of any act by either Godfrey, Lee or Hoffman tending to discourage bidders, and the price not being sufficiently inadequate to justify the setting aside of the sale, we think that the order appealed from should be reversed, with costs.

For affirmance—Swayze, Trenchard, Bogert, Vroom—4.

For reversal—The Chief-Justice, Garrison, Parker, Bergen, Voobhees, Kalisch, Vredenburgh, Congdon, White—9.