text:
    S. Elizabeth Sell v. John Steller, Jr.
    A creditor agreed that if his debtor would apply for and procure the insurance of his (the debtor’s) life in an indicated insurance association, and for a designated sum in a specified manner, that he (the creditor) would, from time to time, pay the premium assessments necessary to keep the insurance alive, and, at the debtor’s death and the creditor’s receipt of the proceeds of the insurance, would apply the same to the reimbursement of the expenditures for premiums, with interest, and then to the satisfaction of his debt, with interest, and pay over to the debtor’s wife whatever balance should remain of such proceeds. — Held, (1) that there was sufficient consideration to support the creditor’s promise, and (2) that the proceeds of the insurance in the creditor’s hands are there upon a trust, the performance of which the debtor’s wife may enforce by suit in equity.
    On demurrer to bill.
    The bill alleges that the complainant’s husband, George W. Sell, prior to the 6th of March, 1884, was indebted to the defendant in the sum of |800, and that the complainant proposed to him that he should secure such indebtedness by taking out life insurance policies on his life, to the aggregate amount of $8,500, in the Northwestern Masonic Aid Association, payable to Ida Steller, the defendant’s wife, who was a sister of George W. Sell, as a beneficiary of the blood of George W. Sell, and hence recognized by the association, to whom the insurance money should be paid upon the event of George W. Sell’s death, and that he (Steller) would pay the assessments necessary to keep the policies alive, and upon the payment of the insurance money to Ida Steller and the transfer of the same by her to him, the defendant, he, after deducting therefrom the $800 indebtedness with interest and such sums as he should pay for assessments to keep the policies alive, with interest, would pay the remainder of the proceeds of the policies to the complainant; that George W. Sell acquiesced in this proposition, and, upon the date stated, made application for insurance on his life to the amount of $8,500 in the association named, and was duly insured therein; also, that he died on the 29th of March, 1894, and that the insurance money was afterwards paid to’ Ida Steller and transferred by her to the defendant, to whom there was then owing upon the $800 debt, and for assessments paid by him with interest, something less than $2,500; and. that the defendant refuses to pay to the complainant the surplus of the insurance moneys over the amounts so due to him, according to his agreement with her husband, and prays that he may be required, by a decree of this court, to pay the same to her.
    To this bill the defendant demurs, first, for want of equity; second, because the agreement to pay the residue of the proceeds from the insurance is not supported by consideration; and third, because the complainant has no standing to maintain her bill.

      Mr. Thomas Anderson, for the complainant.

      Mr. George F. Tuttle, for the demurrant.
   The Chancellor.

The case, shortly stated, is that the complainant’s husband was indebted, to the defendant, and the defendant desired to obtain the security which life insurance of h.is debtor would afford him, and, being aware that he could not get that security without the co-operation of his debtor, proposed that the debtor should apply for and obtain such insurance in an indicated association, for a designated sum and in a specified manner, promising him that if he would do so, he, the defendant, would pay the assessments necessary to keep the insurance alive, and, upon the death of the debtor and the receipt of the proceeds of the insurance by the defendant, would first, out of such proceeds, reimburse himself his expenditures in keeping the insurance alive with interest, and next pay himself his debt with interest, and then pay the complainant whatever remained of the proceeds. The debtor agreed to the proposition, and, relying upon the promise of the defendant, applied for and obtained the ini surance in the association, for the sum and in the manner proposed. He died. The proceeds of the insurance have come to the defendant, and, after paying the agreed payments to himself, he has a balance in his hands which the debtor’s widow demands from him.

His promise to pay her that balance was not a mere voluntary undertaking. It was conditioned upon the debtor doing that which he hoped would secure his debt — that is, apply for and obtain insurance. In performing that condition the debtor gave valuable consideration for the promise, because he secured that which benefited the defendant in providing a possible means for the recovery of his debt, and, at the same time, at the defendant’s. request, he put himself to the inconvenience, trouble and expenditure of time in applying for and securing the insurance.

Mr. Justice Depue, in Conover v. Stillwell, 5 Vr. 57, said that “ a consideration emanating from some injury or inconvenience to the one party, or from some benefit to the other party, is a valuable consideration.” And in Traphagen v. Voorhees, 17 Stew. Eq. 31, Vice-Chancellor Van Fleet said, “a very slight advantage to one party, or a trifling inconvenience to the other, is a sufficient consideration to support a contract.” Prior to the latter decision the same distinguished judge had, in Day v. Gardner, 15 Stew. Eq. 202, defined consideration in the same way.

The courts will not inquire into the adequacy of consideration in absence of the suggestion of fraud or deceit.

I think that, in this instance, there was sufficient consideration, both in the benefit the defendant received and in the inconvenience the complainant’s husband suffered, to support the promise' in question.

When the proceeds of the insurance reached the defendant’s hands they became' a trust fund which he was to apply to the satisfaction of his demands already specified and to the payment of the surplus thereof to the complainant. The enforcement of this trust by a beneficiary under it is sought in this suit. That she may maintain this action is consequent upon her beneficial interest, and is a well-recognized right. In Cubberly v. Cub berly, 6 Stew. Eq. 86; affirmed on appeal, 6 Stew. Eq. 591, Chancellor Runyon said : “ If one person makes a promise to another, on lawful consideration, for the benefit of a third person, such third person may maintain an action, even at law, upon it. Joslin v. Car Company, 7 Vr. 141." The citation of other cases in support of this principle is unnecessary.

The demurrer will be overruled.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    John P. Stockton, attorney-general (on the relation of John R. and Frank W. Miller, informants), and John R. and Frank W. Miller, v. The American Tobacco Company et al.
    Where a supplemental bill is filed under authority from the court, had upon notice to the defendants, and makes an essentially different case from that contemplated and intended by the permission given, it will be ordered to be taken from the files.
    On motion to strike supplemental information and bill from the files.
    The original bill and information was filed by the attorney-general in behalf of the State of New Jersey, and by the relators for themselves and other cigarette jobbers in New Jersey.
    The case presented by it is, that five parties who have heretofore manufactured and sold ninety-five per cent, of the cigarettes manufactured and sold in the United States and have competed with each other in that business — conspiring together to monopolize and control the entire business of manufacturing and selling paper- cigarettes in the United States of America and to crush outrivals and destroy and prevent competition among themselves and others 'engaged in that business — consolidated their respective businesses into one, and, under the laws of New Jersey, organized a corporation for the purpose of conducting that single business, and then, with the purpose stated, instead of selling outright to jobbers, they have made and yet make the jobbers, in the product of their manufactures, their agents, and have fixed prices at which cigarettes consigned to them shall be sold, reserving the right to withdraw the goods .consigned and to terminate the agency if their cigarettes shall not be handled to their satisfaction, the tendency of such combination and conduct being to prevent the jobbers who deal with the American Tobacco Company from handling the cigarettes manufactured by competing and rival manufacturers.
    The relators and complainants claim to be jobbers, doing business in Newark, in this State, who, because of the conspiracy complained of, have been deprived of the advantage of a business with the American Tobacco Company because they sell cigarettes manufactured by the National Cigarette and Tobacco Company, and they suffer special injury from the combination complained of.
    The relief sought is a decree which will declare that the American Tobacco Company was organized for an unlawful purpose and is without power to use its franchises for the purpose of destroying competition in the manufacture and sale of paper cigarettes, or for the purpose of destroying or injuring the business of the National Cigarette and Tobacco Company, or of the relators, or of any jobber customers of the National Cigarette and Tobacco Company, and which will restrain the defendants from using the corporate organization of the American Tobacco Company in promoting the manufacture and sale of papér cigarettes, and from transacting business in the name of that company, and from refusing to sell cigarettes to the relators, and from the use of the franchises of the American Tobacco Company to stifle competition in the business of manufacturing paper cigarettes, and to destroy the business of the relators, the business of the National Cigarette and Tobacco Company or the business of any jobbers or dealers who may desire to be customers of the National Cigarette and Tobacco Company, and will grant to the attorney-general or the relators other relief which may be just.
    The bill and information do not contemplate the prevention of any injury to the relators and complainants or the State of New Jersey, by depreciation of the price of leaf tobacco in the States of "Virginia and North Carolina, which may be consequent upon the consolidation of the business referred to.
    In February, 1895, after the cause was at issue and the testimony had been partially taken, the attorney-general and the complainants, by their petition, presented upon notice to the defendants, represented to the chancellor that the alleged illegal combination was not only such as was mentioned and set forth in the information and bill, but, in the language of the petition,
    "it also operated very oppressively and injuriously upon a large number of persons in the States of North Carolina and Virginia, wherein was grown the leaf tobacco out of which said cigarettes were made, and that the combination led, not only to abolition of all competition in the sale of such paper cigarettes, but also in the purchase of raw material of which they are manufactured, and that thereby great injury was done to the public in that part of the country where such tobacco was grown; that they had applied to the chancellor to amend their information and bill by inserting therein a new paragraph, to be numbered ten and a half, as follows:
    “ That the principal quantity and amount of raw or leaf tobacco from which paper cigarettes are made, has been and still is raised in the States of Virginia and North Carolina by farmers and tobacco growers, large numbers of whom have for a long time been and still are engaged in the business of raising such tobacco for sale, and the principal market for such product was among the local tobacco dealers and brokers in tobacco, and the manufacturers of cigarettes, who competed with each other for the purchase of such tobacco, and made a varied and extensive local market of the active competition between ¡said brokers and dealers and manufacturers and other purchasers of said tobacco, the producers thereof were enabled at all times to secure the highest market price for their said product, and while competition was kept up in the business of making and selling cigarettes as herein mentioned, the said growers and producers of raw tobacco had the advantage of competition amon'g the purchasers of the tobacco so raised among them, out of which an extensive and remunerative business had grown up, not only of great value to such tobacco growers, but also of great value to such local dealers, brokers and other competitive dealers in said product, and also of great advantage to the several communities in which the said kinds of business were carried on, and affording well-remunerative labor to a large number of laborers and workmen, merchants, brokers and dealers who depended upon the continued prosperity of said business for the support of themselves and their families,” and by adding to paragraph fifteen, then existing, the following language:
    “And also with the further wicked and malicious intent, unlawfully to control the purchase of said raw or leaf tobacco, so that they would have no ■competitors in the market for such producers, and that they might by such means compel all persons so engaged in raising tobacco to sell their product at whatever price said combination might fix, and that the effect of such combination had been not only to greatly depress the selling price of such product to manufacturers, and to inflict great loss on said producers of tobacco, but also to break up and drive out of business the local dealers and brokers hereinabove mentioned who had been accustomed to compete with each other for the purchase of said tobacco, and has thereby inflicted great loss on said producers of tobacco and said local dealers therein, and great distress upon their families and on the communities in which they live and in which they had before such legal combination carried on their said business,”
    but in no other respect; that the chancellor denied the application to amend, saying, among other things:
    “ The new issue proposed, I think, is of doubtful materiality in the case ■either to the public represented by the attorney-general or to the relators. It is difficult to perceive how either can he injuriously affected by the reduction in the price of raw tobacco in the States of North Carolina and Virginia. It may be that in the immediate practical working of a combination to monopolize the manufacture and sale of certain products from raw tobacco, the profit from depreciation in the price of the raw material will enure to the benefit of the monopolists, but the natural ultimate tendency of such reduction appears to be, not to increase the price of the manufactured product to the customer, but to benefit him by a reduction in that price, and incidentally to benefit the relators by the increased consumption of the product which will naturally ensue from its being cheapened.
    “I understand from the statement of counsel for the relators that it is proposed to examine a large number of witnesses upon this new issue.
    “ It would be a hardship to require the defendant to go into such an examination before it shall have opportunity to have it deliberately adjudged that ■such issue is proper and material in this suit. Such adjudication cannot, with satisfdction, be had upon this motion, of which only five days’ notice is necessary.
    “The proposed amendment so substantially alters the case, and is of such consequence, that the complainants should resort to supplemental bill to introduce it. Seymour v. Long Dock Co., 2 C. E. Gr. 169. I will deny the motion; ”
    and that pending proceedings looking to the proposed amendment, additional facts in regard to the effect of such combination on the public, as set forth in the proposed amendments, had come to their knowledge, rendering the proof they desired to introduce, as indicated, important and essential, and they, therefore, prayed that they might have leave
    “ to file a supplemental bill in said cause, for the purpose of introducing into the information and complaint in the cause, such allegations as those herein set forth by way of amendment, or such other allegations of that character as they shall be advised by counsel will permit them to introduce and offer proof which would not be admissible under the present allegations of said information and bill.”
    The parties having been heard upon that petition, the chancellor made an order that the prayer of the petition should be granted, reciting in said petition as follows:
    “A petition having been presented to the chancellor on behalf of the attorney-general and the complainants in the above-stated cause, in which it was prayed that the court grant leave to said petitioners to file a supplemental bill in said cause for the purpose of introducing into the information and complaint in said cause, by way of amendment, certain allegations in said petition set forth, relating to the illegal and injurious effect alleged to be produced upon the business of growing, producing and dealing in leaf or raw tobacco in the States of North Carolina and Virginia, by the combination complained of in said original information and bill, as by the proposed amendment set forth in said petition (to which reference is hereby made) will more fully appear.”
    The supplemental bill and information, which has been filed under authority of that order, purports to be by the attorney-general on behalf of the State of New Jersey “ and the public,” and by the complainants “ in behalf of themselves and the public,” and it broadens its complaint so as to reach injury “ to the public in that part of the country where such tobacco was grown,” and, as well, to the public generally, and seeks relief accordingly.

      Mr. Richard V. IÁndabury and Mr. Gilbert Collins, for the motion.

      Mr. Thomas N. McCarter, contra.

   The Chancellor.

The present motion is based upon the objection that the supplemental bill and information is broader than the authority-under which it was filed. The insistment is that the intention of the court was to grant permission to the informant and complainants to supplement their case by allegations which would show an injury to the State of New Jersey and to the complainants and other cigarette jobbers in New Jersey, through the effect of the combination charged, upon the growing, producing and dealing in leaf or raw tobacco in Virginia and North Carolina, and not to extend the suit to the assistance of the persons who are engaged in such occupations. The chancellor’s remarks upon the application to amend the original bill and information, when the complainants and attorney-general were required to act by supplemental bill and information, expressly state his understanding that the complainants’ object was in accordance with this insistment. The allegation sought to be introduced by the proposed new section lOJ, and the addition to section 15, undoubtedly charged grievances to tobacco growers, brokers &c. in Virginia and North Carolina, but as there was no suggestion that the limited range of the complaint, in behalf of the State of New Jersey and cigarette jobbers of New Jersey, should be broadened to include other affected parties, it was assumed that the allegations would in some way show injury to those who were then within the protection of the complaint. When leave to file the supplemental bill and information was asked, the request was avowedly made for the purpose of introducing the amendments theretofore proposed, the expression of the petition being

for the purpose of introducing into the information and complaint in this cause such allegations as those herein, set forth by way of amendment or such other allegations of that character as ” &c.

There was no suggestion that the scope of the bill and information was to be enlarged to the extent of the instrument now objected to. The order which gave authority to file the supplemental complaint recited its inducement to be to allow the introduction, by way of amendment, of allegations relating to matter indicated by proposed amendments set forth in the petition upon which the order was based. The change in the scope of the suit was a substantive matter and not a mere incident to the proposed amendments, authority for which might be implied from their allowance. An allegation incidental to the amendment would rather have shown the applicability of the matter introduced to the existing scope of the.suit. If the design was to reconstruct the suit by the introduction of an additional case, that design' should have been clearly disclosed, so as not only to afford the defendants an opportunity to be heard as to the propriety of the change, but so that that object would have commanded the court’s consideration.

It is obvious, I think, as the complainants and informant have acted upon leave of the court, had upon notice to the defendants, which was intended by the court and understood .by the defendants, to authorize the presentation of an essentially different case from that which the supplemental bill and information makes,that the motion of the defendants should be granted. Buckingham v. Corning, 2 Stew. Eq. 238. I will, therefore, order that the supplemental bill and information be taken from the files.


text:
    John E. Murphy et al. v. Margaret A. McKeon et al.
    A testator devised lands to a brother who died before the enactment of the amendment to the act concerning wills, which was approved March 29th, 1887 (P. L. of 1887 p. 63), but during the life of the testator, leaving children who survived the testator. — Held, that the statute referred to does not apply to the case so as to give the brother’s children the lands intended for their father.
    On motion to open and amend decree of distribution in partition.

      The partition is of lands which were the property of John Murphy, deceased, who died on the 29th day of March, 1892, leaving a will dated on the 5th of September, 1873, with a codicil thereto dated on the 28th of March, 1892.
    By the will, among other provisions, he made this:

      “Second. I do give and bequeath unto my beloved wife, Bridget, all my real and personal property, wheresoever situate, during her natural life, and, in the event of her death or marrying again, then it is my will that all my real and personal property shall go to my brother Hugh, absolutely.”
    By the codicil to the will he gave two nieces, Mary and Margaret McKeon, a parcel of his real estate, appointed an esecutor of his will, and concluded with this clause:

      “In all other respects I confirm my will heretofore made.”

    ' He died without issue. His wife survived him until December 29th, 1893. His heirs-at-law were the children of two sisters and of his brother Hugh, his sisters and brother having predeceased him. The date of Hugh’s death was September 11th, 1884.
    All the heirs-at-law are parties to the partition suit. The master has reported that they are each entitled to a share in the proceeds of the partition sale, and the‘decree for distribution has ordered accordingly. Now the children of Hugh Murphy move to open and amend the decree, claiming that, in virtue of the will and the statute to amend the act concerning wills of March 29th, 1887 (P. L. of 1887 p. 68), they alone are entitled to the proceeds of sale.

      Mr. Charles JD. Thompson, for John E. Murphy etah, children of Hugh Murphy, deceased.

      Mr. Gilbert Collins, for Ellen McKeon et al.

      Mr. Joseph M. Noonan, for Margaret A. McKeom

      Mr. James A. Gordon, for Thomas C. McKeon.
   The Chancellor.

The question is whether the devise to Hugh Murphy is within the direction of the amendment to the act concerning wills, approved March 29th, 1887 (P. L. of 1887 p. 63), so that the proceeds of the sale of the lands shall be distributed among his children to the exclusion of the children of the testator’s sisters.

The section of the act concerning wills which the statute of 1887 amends, was first enacted in 1824. Elm. Dig. 601. It is now fouud in Rev. p. 1346 § 33, as follows:

“That whensoever any estate of any kind shall or may be devised or bequeathed by the testament and last will of any testator or testatrix, to any person being a child or other descendant of such testator or testatrix, and such devisee or legatee shall, during the life of such testator or testatrix, die testate or intestate, leaving a child or children, or one or more descendants of a child or children who shall survive such testator or testatrix, in that case, such devise or legacy to such person so situated as above mentioned; and dying in the lifetime of the testator or testatrix shall not lapse, but the estate so devised or bequeathed shall vest in such child or children, descendant or descendants of such legatee or devisee, in the same manner as if such legatee or devisee had survived the testator or testatrix and had died intestate; but this provision shall not apply where the testator or testatrix shall, by said will and codicil thereto, or other instrument, have otherwise directed in regard to the children or descendants of the said devisee or legatee dying as aforesaid.”

The amendment of 1887 extends the benefit of the original statute to brothers and sisters of the testator and their descendants, as follows:

That whenever any estate of any kind shall or may be devised or bequeathed by the testament and last will of any testator or testatrix, to any person, being a child or other descendant of such testator or testatrix, or being a brother or sister or any descendant of a brother or sister of such testator or testatrix, and such devisee or legatee shall” &e.,

following, to the end, the language of the section amended.

The rule is that a devise or legacy will lapse by the death of the devisee or legatee before the testator, unless provision shall be made, by will or by statute, against a lapse. 4 Kent Com. 541; Theob. Wills 601; Maybank v. Brooks, 1 B. C. C. 84; Dildine v. Dildine, 5 Stew. Eq. 78, 80.

There is a distinction, also, between a lapsed and a void devise. In the former case the devisee dies in the intermediate time between the making of the will and the death of the testator, but in the latter case the devise is void from the beginning, as if the devisee be dead when the will was made. 4 Kent Com. 541.

Eliminating from the statute language superfluous to this case, ■ it reads in this way: “ Whenever estate shall or may be devised to a brother who ‘shall die’ during the life of the testator, leaving children surviving the testator, the devise shall not lapse/ but vest in the children of the brother as if he had survived the testator and died intestaté.”'

It is observed that by strict grammatical construction the event provided against is a lapse of the devise. This language has led to the objection that the statute,is not applicable to the case of a void devise, as where the devisee dies before the making of the will.

Such interpretation of similar statutes has been adopted. In Billingsley v. Tongue, 9 Md. 575, the testator made his will on the 20th of September, 1853, by which he devised property to a sister who had died the day previous. The children of the sister invoked the authority of the statute. The court held that, as the statute provided that no devise should lapse or fail of taking effect,” the latter expression being a mere amplification of the word “lapse,” that the language imported the happening of a future contingency to defeat the devise, providing against that, and did not give effect to the mere expression of a devise in a will which was void and without effect at the time the will was made.

Upon the same reasoning, also, was decided the case of Almy v. Jones, 17 R. I. 265.

But I think that the better opinion gives a broader meaning to the word “lapse,” upon a construction of similar statutes which regards rather their beneficial policy and ends than the strict meaning of their language.

In Nutter v. Vickery, 64 Me. 490, a testator gave real and personal estate to a sister, who was dead when the will was made, leaving descendants. In his opinion in that case, Mr. Justice Barrows said:

“ We are satisfied, upon reason, principle and authority, that the lineal descendants of a relative of the testator having a bequest in-the will are entitled to the legacy given to their ancestor by virtue of Rev. Stat. oh. LXXIV. § 10, though the original legatee was, in fact, dead at the date of the will. The statute is in furtherance of what may fairly be presumed to have been the intention of the testator, and, in order to effect its object, it should be construed liberally, as remarked by Mr. Justice Hubbard, in Paine v. Prentiss, 5 Meta. §99. Any other interpretation of the statute which has been the law of this state for nearly a century, we think, would be liable to operate harshly and adversely to the intent of the testator almost universally.

“ The adverse argument is based upon the distinction between lapsed and void devises, and the assumption that the statute takes effect only in cases of lapse. But no such limitation of its effect is found in the statute, the intent of which obviously is to save the lineal descendants of the person named as devisee in the will, the benefit of a devise which would at the common law fail of effect by reason of the death of the original devisee before the testator. The statute has regard rather to the class of individuals for whose relief it is interposed, than to any technical distinction in the manner of the failure against which it proposes to guard them. As to them the result at the common law would be the same whether their ancestor died before or after the date of the will, if he died before the testator. Against this result, in either case, the statute places a barrier.”

In Minter’s Appeal, 40 Pa. St. 111, a bequest by a testator to his sister was declared to be valid, though she was dead when the will was written, having left children that survived the testator. In that case Chief-Justice Lowrie said :

“ This interpretation of the law is so just and presents itself bo naturally that we need waste no words about it.”

Another case of this class is Winter v. Winter, 5 Hare 306, which construes the thirty-third section of 1 Vict. a. 26, that was passed in July, 1837, and went into opei’ation on the 1st of January, 1838, and is in this language:

“ Where any person, being a child or other issue of the testator, to whom any real or personal estate shall be devised or bequeathed for any estate or interest not determinable at or before the death of such person, shall die in the lifetime of the testator, leaving issue, and any such issue of such person shall be living at the time of the death of the testator, such devise or bequest shall not lapse, but shall take effect as if the death of such person had happened immediately after the death of the testator, unless a contrary intention shall appear by the will.”

The facts of that case were that John Winter, by his will, dated November 13th, 1833, gave a share of his residuary estate to his eldest son, John Palmer Winter, and that during the year 1838 the son died, leaving issue which survived John Winter. The will was confirmed and ratified by a codicil made in 1839.

It was held that, under the thirty-fourth section of the same statute, the effect of the republication of the will by the codicil was to remake the will as of the date of the codicil, the result being that a share of the residuary estate was given to John Palmer Winter, who was then dead. The court then, with a view to decide whether the act would apply where the devise was to one who was dead when the will was made, proceeded to consider the force of the words “shall die,” referring to the devisee dying in the lifetime of the testator, upon the suggested question whether those words, which, without question, were assumed to import that the event death considered was in the future, referred to death after the making of the will or to death after the statute should go into operation.

The vice-chancellor (Wigram) said:

“Now, the policy of the act and the objects it was intended to accomplish are, for the present purpose, sufficiently manifest. It was intended to prevent a portion given by a testator to a child, going from the estate of such child, and his family being left portionless by reason only of the death of the child under circumstances — a consequence of law which the common feelings of mankind declared to be a disappointment of the intention of the father.
“ The cases in which this event most commonly happened and against which the act was intended to provide, were cases in which the child died in the testator’s lifetime after the bequest was made, and cases in which the testator, in providing for an abseut child, was ignorant of the fact that such absent child was dead. In both cases the family of the child dying after or dead at the time of the bequest, was left unprovided for; and it was to remedy this evil, amongst others, that the thirty-third section of the Wills act was passed.
“ The construction of the act, which alone will include all the cases which the act must presumably have been intended to include, is that which makes the time of the legatee’s death unimportant, provided he died after the act came into operation and the bequest to him is by will made after that date, and, as far as I can see, that construction cannot possibly include any case not obviously within the purposes of the act.”

This decision was reaffirmed by the same vice-chancellor, in Mower v. Orr, 7 Hare 473, where the devise was to a son, by a will made after the statute of Victoria had gone into operation and after the death of the son, which was subsequent to the acts taking effect. In the argument of the latter case, attention was called to the decision in Wild v. Reynolds, 5 Notes of Cas. Ecc. & Mar. Cts. 1, where a testatrix, by will made in 1825, bequeathed property in trust for three children who died in her lifetime, prior to 1838, one of them leaving a child, and thereafter, in 1840, by codicil, republished her will, and it was held that the legacies had lapsed, and were not revived under the thirty-third section of the statute of Victoria, by the codicil.

It is observed that the construction of the act of 1 Viet, in Winter v. Winter and Mower v. Orr, brings within the act the case of a devisee who dies before the will is made, and that thus far it serves the case in hand. But this case and Wild v. Reynolds differ from those cases in the particular that in those cases the devisee was alive while the statute was in effect, while in this case and in Wild v. Reynolds the devisee was dead before the enactment. In Winter v. Winter the vice-chancellor most plainly says that in such an event the statute will not save the lapse.

Following Winter v. Winter, I think that the true interpretation of the words shall die,” as used in our statute with reference to the devisee, is that they speak of his death after the statute shall have taken effect. It is impossible to give those words retrospective operation. Their meaning clearly has reference to the future, and, as determined in Winter v. Winter, that future is not after the making of the devise, but after the taking effect of the statute.

My conclusion is that the statute of 1887 is not applicable to the case in hand, because Hugh Murphy did not die after that act had taken effect, and I will, therefore, deny the motion.


text:
    Mutual Benefit Life Insurance Company v. The Rector, Wardens and Vestrymen of Grace Church, Westfield, N. J., Alfred Mills, Edward K. Mills and William Davison.
    M. and wife, in consideration of $1, conveyed a lot of land, in fee, to a religious corporation, upon the express conditions that the grantee should not mortgage or sell the land and should not permit any building to be erected thereon except a church edifice for use in worship of a prescribed religious character; but they expressly consented in the deed that a described mortgage of even dale with their deed might be given, which should not be affected by the conditions but should have the same validity as if it had been mado by them prior to the conveyance to the religious corporation. The mortgagee has commenced suit in this court to foreclose its mortgage, and to that suit it has made a judgment creditor of the religious corporation a party defendant, who claims the right to payment from the surplus proceeds of the foreclosure sale. — Held, (a) that the grantors did not intend to create a trust for charitable use, but to grant an estate upon condition, so that, upon breach of condition, the land granted would come back to them; (6) that the foreclosure sale was a possibility contemplated in the assent to the mortgaging, and does not amount to a breach of condition ; (e) that the foreclosure sale will be a sale m invitum and not within the condition; (d) that as the condition not to sell wholly restrains alienation, and, in so doing, is repugnant to the nature of the fee granted, it is void; and (e) that, as there will be no breach of condition in the foreclosure sale, and as thereafter no breach of condition will be possible, the surplus proceeds of sale will belong to the religious corporation and be subject to its debts.

      On motion to strike out cross-bill under Rule 213.
    The bill is filed by the Mutual Benefit Life Insurance Company to foreclose a $2,000 mortgage made to it by the rector, wardens and vestrymen of Grace Church, in Westfield,-New Jersey, on the 14th of June 1875, which encumbers a plot of ground upon 'which a church edifice has been erected.
    The plot of land was conveyed to the church corporation by deed bearing even date with the mortgage, which deed was made by Alfred Mills and his wife, the former being the owner of one undivided eighth and the latter the owner of seven undivided eighths of the land conveyed. Their deed is one of bargain and sale, expressed to have been made in consideration of $1, and is without covenants. It purports to convey the plot of land to the church corporation and its successors. The habendum is, using the language of the instrument,
    “ to the said party of the second part and their successors forever, with this express condition and limitation, that neither the said party of the second part, nor their successors, shall at any time sell, mortgage, or in any way convey the said land and premises, or any part thereof, and that no building shall be kept, maintained or erected thereon, except for the purpose of public worship and teaching in accordance with the uses, rights and ceremonies of the Protestant Episcopal Church in the United States of America, and also except the proper outbuilding's appurtenant thereto; but it is expressly provided and hereby stated that the above conditions and limitations do not apply to the conveyance by way of mortgage, bearing even date herewith, about to be executed by the party of the second part to The Mutual Benefit Life Insurance Company of Newark, New Jersey, to secure the payment of two thousand dollars with interest, but tlia.t the said parties of the first part, for themselves and their heirs hereby expressly authorize and empower the said party of the second part to make and execute such conveyance by way of mortgage, hearing even date herewith to secure the payment of said sum of two thousand dollars with interest and agree and covenant with said party of the second party to ratify said mortgage so to be made, and that said particular mortgage and the estate which it is intended to convey shall be as full and complete to the said The Mutual Benefit Life Insurance Company, their successors and assigns, as though said mortgage were now before the execution hereof made directly by said parties of the first part to the said The Mutual Benefit Life Insurance Company, their successors and assigns.”
    Subsequent to the conveyance and mortgage, in May, 1886, Mrs. Mills died testate, her will bearing date in 1869. By the will she bequeathed and devised her entire estate to her husband, failing to make any provision therein • against the case of after-born children. The defendant Edward K. Mills was born after the will was made and has been made a defendant to this suit because of his interest in virtue of the statute. Rev. p. 12J¡.6 § 19.

    The defendant Davison, on April 13th, 1894, recovered a judgment against the church corporation for $1,554.07.
    To the foreclosure bill the church corporation has answered, admitting the mortgage and the judgment of Davison, but referring it to the court to determine what is due upon the mortgage and whether Davison shall be paid his judgment out of the proceeds of the foreclosure sale, and claiming that the surplus proceeds of sale will not in any event belong to the Messrs. Mills, but will go entirely to the church corporation if Davison is not to be paid his judgment thereout. By the answer it consents that this court may make a decree for the sale of the land, and asks that that decree shall contain full and specific directions as to what disposition shall be made of the surplus proceeds of sale after the payment of the complainant’s mortgage with interest and costs.
    The defendant Alfred Mills has answered, admitting the mortgage, denying that the Davison judgment is a lien on the land, and submitting the ascertainment of the amount due to the court. Then, by way of cross-bill, he sets out that the deed to the church corporation was made as a gift, without consideration, and that upon its execution and delivery there remained in him and his wife a reversionary interest and estate in the land conveyed. He insists that the church corporation, in acccepting the deed from him and his wife, impliedly covenanted to pay the mortgage and prevent its foreclosure and the sale of the land mortgaged, and that its neglect to pay the mortgage and thus prevent its foreclosure was a breach of a condition of the deed. . He alleges, among other things, that the church cost $6,500; that the land was worth .$1,500, and that Mrs. Mills contributed in money towards the erection of the church $2,900, making the aggregate of the contributions of himself and his wife $4,400 out of the $8,000 expended, $2,000 of the remainder being represented by the complainant’s mortgage; also, that the church corporation, knowing that Mr. Davison’s judgment is not a lien on the land, and that effort or attempt by Davison to collect the judgment out of the land is a breach of the conditions and a violation of the restrictions and limitations of the deed, is collusively conniving and abetting the efforts of Davison, with purpose to aid him to collect his judgment from the land or the proceeds of the foreclosure sale thereof.
    He prays that, upon the foreclosure sale, the surplus proceeds may be paid to him and his son, if the son be entitled to any part therein.
    The cross-bill is framed upon a theory of the breach of condition which- will cause the land to revert to the grantors, and the motion to dismiss it rests upon the insistment that it does not show any title to the surplus proceeds of the sale of the land in the Messrs. Mills, or either of them, or a situation which will defeat the payment of the Davison judgment out of the proceeds of sale.

      Mr. Craig A. Marsh and Mr. Charles A. Reed, for the motion.

      Mr. Alfred Mills, contra.

   The Chancellor.

I am unable to find, in the acceptance of the deed from Mr. and Mrs. Mills, anything that will justify the implication of a covenant upon the part of the church corporation with the grantors of the land, which so obliges it to pay the mortgage that its failure to do so will amount to a breach of either of the conditions contained in the deed. Nor do I find that the allegations of the cross-bill charge such a collusive production of the foreclosure sale as will, if true, amount to a breach of either condition. In connection with the fact that Mr. Davison is .not attempting to sell the land under his judgment, but is merely insisting, in this suit, upon his right to payment out of the surplus proceeds of the foreclosure sale, I look upon the charge of collusion in the cross-bill as nothing more than an averment of a friendliness between the church corporation and Mr. Davison, which has not taken such shape as can amount to a breach of condition. It is not charged that either the church or Mr. Davison has procured the complainant to foreclose its mortgage and thus bring about a sale, and I do not understand that a mere desire that Mr. Davison shall be paid out of the proceeds of the foreclosure sale, however strong that desire may be, can amount to a breach of condition. Hor can the unnecessary assent of the church, in its answer, to the foreclosure sale, which it is unable to prevent, amount to such breach.

It is to be remembered that conditions subsequent are not favored either in law or in equity, and that they are, therefore, to be strictly construed. Den v. Lawrence Church, Spenc. 555.

How, is the foreclosure sale to be regarded as a breach of either condition of the deed ?

I think not, for three reasons — -first, because the sale is one which the deed from Mr. and Mrs. Mills contemplates and assents to as not being within the condition or limitation; second, if the sale be not expressly assented to, it is not a voluntary sale by the grantee, but a sale in invitum, against which the condition will not be held to be directed (4 Kent Com. 184); and third, because the condition or limitation, which is designed to restrain altogether alienation of land, imposed in the deed by which the land is granted in fee, is repugnant to the nature of the estafe granted, and void. 4 Kent Com. 134; Magie v. German Church, 2 Beas. 79; affirmed on appeal, 2 McCart. 500; 2 Washb. Real Prop. 9; 2 Dev. Deeds § 965; Gray Res. Al. §§ 13, 23, 43, 279.

There is, then, a sale which does not amount to a breach of condition, but which effectually puts such a breach beyond future possibility.

It follows that, as the breach can never happen, the title of the church corporation to the surplus proceeds of sale has become absolute, and they may be taken by its judgment creditor.

I have considered the insistment of Mr. Mills, that the deed should be regarded as establishing a charitable use, to which the .surplus proceeds of sale should be devoted. The purpose of the deed, as shown by that instrument itself and as reiterated in the allegations of the cross-bill, was to give to a religious corporation a certain lot of land so long as it should be devoted to a specified use. The deed attempted to procure the fulfillment of that purpose, not by expressing, as the intent of the grantors, that the deed should be to the church corporation in trust, irrevocable reliance being had upon remedies for the enforcement of that trust, but by the imposition of conditions designed to defeat the gift if their terms should be violated; and the obvious reason for this form, as is exhibited by the cross-bill, was that the grantors of the lot did not contribute all that was required to establish the church, but a part only, which part they had the right to give upon condition, and have it returned to them upon the breach of the conditions they imposed.

I cannot find an intent to create a trust and thus bring the case within the decisions which construe the conditions into mere regulations of the trust and so maintain the gift as one to a charitable use.

I will grant the motion to strike out the cross-bill.


author: The Chancellor

text:
    John P. Stockton, attorney-general, in behalf of the state and on the relation of George W. Stillwell et al., and said George W. Stillwell et al. v. The Atlantic Highlands, Red Bank and Long Branch Electric Railway Company and David S. Arnott et al.
    1. A street railway company having, by grant recognized by the provisions of the act of March 16th, 1893 (P. L. of 189$ p. $42), the right to construct and operate its railway upon a turnpike, is not exempt from the performance of the conditions precedent to the construction of its railway which are required by the act of May 16th, 1894.

      2. The attorney-general and abutting property-owners, relators and complainants with him, are entitled to a preliminary injunction to restrain the construction of such a street railway, if it shall not comply with those conditions precedent.
    On order to show cause why preliminary injunction shall not issue. Heard on bill and affidavits.

      Mr. John P. Stocldon, attorney-general, and Mr. Henry M. Nevius, for the application.

      Mr. Daniel H. Applegate, contra.

   The Chancellor

The attorney-general and the relators and complainants ask that the Atlantic Highlands, Red Bank and Long Branch Electric Railway Company be restrained from constructing a railway, to be operated by electricity supplied by overhead wires according to that, which is known as the trolley system; over that portion of the highway, between Red Bauk and Eatontown, in Monmouth county, which was formerly the Red Bank and Eatontown turnpike, lying within Shrewsbury township.

The highway in question was originally a country road, laid out about a century ago, ■which subsequently, in 1865, by authority of a charter granted by the legislature (P. L. of 1865 p. 7), was taken possession of by the Red Bank and Eatontown Turnpike Company, and thereafter was maintained as a turnpike and toll road until 1891, when the turnpike company ceased the ■collection of tolls and the maintenance of the road. By an act approved March 16th, 1893 (P. L. of 1893 p. 574), the charter of the turnpike company was repealed, subject to the proviso that its repeal should not affect any authority, permission or franchise to construct and operate a street railway on the roadbed of the turnpike which might have been granted, sold or ■conveyed by the company prior to the passage of the repealing act, but that such authority, permission or franchise should be as valid as if the repealing act had not been passed. The same day that this repealing statute ■ was approved another statute was enacted entitled “An act to authorize and regulate the construction of street railways upon turnpikes ” (P. L. of 1893 p. 31$), which provides:

“That any duly-incorporated street railway company of this state may construct and operate a street railway upon and along the road-bed of any turnpike company located within counties of the second class in this state which shall have granted or conveyed such right or privilege to such stieet railway company; ”

and further, that the township committee of a township through the limits whereof such turnpike shall extend may, upon petition and proof of such grant, locate the tracks of such street railway company, and after such location shall have been made the street railway company shall, in other respects, conform to the law concerning horse and street railways.

The defendant corporation was organized April 6th, 1895, under the act entitled “An act to authorize the formation of traction companies for the construction and operation of street railways or railroads operated as street railways and to regulate the same,” approved March 14th, 1893, for the purpose of operating and constructing a street railway. A proviso in the first section of that acfrrequires that no corporation created under the act shall enter upon a highway for the construction of new lines of railway or for the operation thereof without the consent of the body of the township into or within the limits of which such new line of railway is proposed to be extended.

By an act of the legislature approved May 16th, 1894 (P. L. of 1894 P- 374), entitled “An act to regulate the construction and maintenance of street railroads in this state,” it was prescribed that

“in addition to the provisions or restrictions now required by law, no street railroad shall from and after the passage of this act, be constructed in, over and upon any street, avenue, highway, land or other public place in any municipality, town, township, village or borough of this state except upon the consent of the governing body of such municipality, town, township, village or borough, which consent shall only be granted upon a petition of the corporation desiring to construct, * * * filed with the clerk,”

nor until public notice of such application shall have been given by publication in newspapers and by posting for fourteen days before the governing body shall meet. The consent is to be by ordinance and not otherwise, and is not to be granted until there shall be filed with the clerk

“ the consent in writing of the owner or owners of at least one-half in amount in lineal feet of property fronting on such street, highway, avenue or other public place through which permission to construct, operate and maintain a street railway is asked.”

On the 10th of March, 1893, six days before the repeal of its charter, the Eed Bank and Eatontown Turnpike Company, by its deed to the Eatontown and Long Branch Turnpike Company, essayed to convey to the latter company the right to construct and maintain along and upon the road-bed of the former company’s turnpike a street railway operated by horses, electricity or other power, and on the 2d of May, 1895, the Eatontown and Long Branch Turnpike Company, by its deed, purported to grant to the defendant street railway corporation the right to construct its proposed railway over the former turnpike of the then defunct Eed Bank and Eatontown Turnpike Company.

Subsequent to that deed, the defendant company petitioned he township committee of Shrewsbury township to locate the tracks of the street railway it proposed to build upon that road and such location was made, and thereupon, without having obtained the consent of the township committee or the consent of the owners of abutting property, the construction of the railway was commenced and was being pushed when it was stopped by the order to show cause herein.

It may well be questioned whether any right was had in virtue of the deed from the Eed Bank and Eatontown Turnpike Company. I do not find any statute which authorizes one turnpike company to grant to another turnpike company the right to construct and operate a street railway on the road-bed of the granting company. The act entitled “An act relating to street railways within incorporated towns and boroughs in this state,” approved April 30th, 1887 (P. L. of 1887 p. 240), authorizes the conveyance of a portion of a turnpike within an incorporated town or borough, and thirteen hundred yards out of the town or borough either way, to a street railway company to be operated by horses, and a supplement to that act approved March 31st, 1890 (P. L. of 1890 p. 166), gives authority to a turnpike company to construct and operate a street railway upon its own road-bed; but there is no act which permits one turnpike company to acquire the right to operate a street railway, or to operate a street railway upon the road-bed of another turnpike company. It is difficult to see huxw a grant of such a right caii have any validity. But that is not the question in this application.

Assuming the deeds to have lawfully made the grant, so that under the act of 1893 (P. L. of 1893 p. 31$), the defendant company may construct and operate its street railway upon the former road-bed of the Red Bank and Eatontown Turnpike Company, is it lawful for it to proceed with the construction of its railway, without obtaining the consent of the township committee as the act under which it is incorporated requires, and without complying with the conditions precedent which the act of 1894, above mentioned, prescribes?

It is remembered that the act of 1893, which permits the operation of a street railway over a turnpike when the turnpike company shall have granted such right of way, provides that after the township committee shall have located the tracks on the turnpike upon which the street railway is granted the right of way, the street railway company shall in other respecls conform to the law concerning horse and street railways. The purpose of the act obviously was not to make the street railways on turnpikes a privileged class, exempt from such requirements of the law as the legislature might be pleased to impose in the protection of the public and abutting property-owners. They were to conform to the law applicable to all street railways. The grant gave them the right as against the grantor turnpike company to run upon the turnpike, in the location the township committee should designate, and nothing more.

Before the defendant street railway corporation came into existence, before the deed to it and before the location of its tracks, the act of 1894, to regulate the construction and maintenance of street railroads in this state, had been enacted. It therefore incorporated and took a deed from the Eatontown and Long Branch Turnpike Company, with full notice and knowledge of that which, under the act of 1894, it was bound to do before it could commence the construction of its railway. The act of 1894 prescribes conditions precedent to the construction of any street railway upon a highway, which conditions are expressly declared to be additional to the requirements of law then existing. The statute obviously was intended to have universal application to all classes of street railways, and to prescribe conditions which must in all cases be complied with before the highways can be entered upon. Its scheme is not to repeal other conditions precedent, but to add to them. Its intended application to all street railways is emphasized not only by its unmistakable language, but also by necessary implication from its second section, which excepts from its operation railways whose locations had been theretofore granted and whose construction had theretofore been commenced, but not those roads whose applications for locations were then pending.

I think that it is too plain to admit of doubt that the defendant corporation, in order to a lawful construction of its road, must first comply with the conditions imposed by the act of 1894.

Now, this being so, may the attorney-general have a preliminary injunction to stay the construction until that statute shall be obeyed ?

The statute of 1894 prescribed its conditions precedent for the protection of the public and the owners of property abutting on highways through which street railways may be constructed, and thereby it creates rights -which are entitled to protection and imposes duties which must, in obedience to the law, be performed.

In the recent case of The Inhabitants of the Township of Franklin v. Nutley Water Co. (opinion filed July 15th, 1895), Vice-Chancellor Emery has discussed the principles which,' I think, are here applicable. He reached the conclusion that the township of Franklin was entitled to a preliminary injunction to prevent the Nutley Water Company laying water-pipes in the highways of that township without its consent, such consent being, by statute, made a condition precedent to such work. He said:

“For the full protection of the statutory rights of municipalities, a preliminary injunction is necessary, and in this respect the case rests upon the same basis as the right of the court of equity to interfere by preliminary injunction where a public company, under cover of statutory authority, attempts to appropriate the lands of another without complying with the legal conditions precedent, either constitutional or statutory. * * * Where the statutory right is clear, it seems to me it would imperil the public control of highways and deprive'municipalities of the powers and advantages intended to be given by statutes if, on the mere claim of right to occupy the streets without consent, this court should decline to interfere pending the final determination upon the. claim.”

There can be no question that the attorney-general has at least an equal standing with the township committee in the protection of the public right, and I think, because there is a condition in the act of 1894 that the consent of property-owners abutting on the highway shall be had, that such property-owners are accorded rights which they likewise may have protected by the same instrumentality. The present application is by both attorney-general and property-owners, who also are a part of the general public.

Without adverting to other questions discussed at the hearing, I will make the order to show cause absolute and grant the inj unction. sought.


text:
      Frank W. Wildes et al. v. The Rural Homestead Company, Julius H. Pratt, Henry F. Torrey, Samuel W. Bower et al.
    At the suit of individual stockholders of a corporation, a transaction of the directors, which, though intra vires and lawful in itself, is executed by them and the person with whom they deal, in pursuance of a scheme to make and perpetuate themselves directors in the control of the company, and is conspicuously unwise and injurious to the corporation and its stockholders, will be set aside in equity.
    On bill, answer, replication and proofs.

      Mr. J. Flavel MoGee, for the complainants.

      Mr. Charles H. Voorkis, for the defendants.
   The Chancellor.

The object of the suit is to set aside a transfer, of two hundred and thirty-eight shares of the capital stock of the Rural Homestead Company to one Samuel W. Bower, which, it is claimed, was effected by the directors of that company for a grossly-inadequate consideration, in bad faith, to the injury of the company and incidentally to the injury of the complainants, who are stockholders of the company; the directors’ motive in making such transfer being the perpetuation of themselves in office as directors.

It is disclosed that the entire capital stock of the company consists of two thousand four hundred shares of the par value of $50 each, and that all of the stock was issued, but that subsequently a portion of'it came back to the company and was held in its treasury and disposed of from time to time to produce money for the needs of the corporation.

Immediately prior to the transaction now objected to, two hundred and thirty-eight shares of that capital stock remained in the treasury, the other shares being held by various stockholders, among whom were the defendants Julius H. Pratt, who owned eight hundred and ninety-one shares, and Henry F. Torrey, the son-in-law of Mr. Pratt, who held eighty-five shares, both of whom were officers and directors of the company. Mr. Pratt was the president and Mr. Torrey was the secretary and treasurer. Besides these, the defendants John Linn and his son, Clarence Linn, and David W. McCrea were directors, each holding one share of the stock.

The company was originally organized through the instrumentality of Mr. Pratt, for the purpose of disposing of land at Arlington, New Jersey, in building sites. But after the land had been laid out into lots, owing to the depreciation in real estate values, the original project so failed that it was concluded to abandon it and parcel out to the different stockholders the several lots into which the land had been divided, in proportion to their respective holdings of stock in the retirement of that stock. But after that determination had been partially carried into effect, a scheme was devised to organize a cemetery corporation, under the statutes of this state, tó which the land should be conveyed, in order that, through such instrumentality, they might find a market. Accordingly, the major part of the land, divided into lots, approximately thirty-five acres, was returned to the company, and, on the 1st of December, 1882, was conveyed to the Arlington Cemetery Association, by which, in turn, it was to be sold in graves and graveyard lots for the burial of the dead.

The nominal consideration of the deed was $1, but, by concurrent agreement, it was arranged that the Homestead company, after it should expend $20,000 in surveying and laying out the lands for cemetery purposes, should receive one-half of the receipts from sales of graves and lots. The other half was to be used by the cemetery association in paying the expenses of conducting and maintaining the graveyard.

In 1883 this agreement was modified so that forty-five per cent, of the receipts were to go to each corporation, and the remaining ten per cent, was to be retained and accumulated by the cemetery association as a fund for the perpetual maintenance of the cemetery.

Much of the stock held by Messrs. Pratt and Torrey was issued for land purchased, and it became necessary that stock in the treasury should be sold to meet the expenditures which were required to put the cemetery in operation. Accordingly, from time to time, stock was sold.

Among other purchasers of it were the complainant Daniel L. Shearer, of Boston, and others of the complainants who were induced by Mr. Shearer to invest in the enterprise. Mr. Shearer had been interested by Mr. Pratt, who had been his college classmate, and in whom Mr. Shearer for a time reposed-implicit confidence.

From the outstart of this renewed enterprise, both corporations were controlled and managed by Messrs. Pratt and Torrey, who associated with themselves as directors such persons as they chose. The entire income- from the sale of cemetery lots was insufficient to adequately conduct the enterprise, and consequently the share of it which otherwise, under the agreement referred to, would have gone to the Eural Homestead Company, was used for cemetery purposes, and for that shax-e the Homestead company received merely ei’edit in account with the cemetery association.

From 1885 to 1890 no elections for directors of the Homestead company were held, and the accounts of both corporations were so neglected that they were kept, in the shape of loose memoranda and were not written up in books of account. The excuse for this neglect was the inability of Mr. Torx’ey to attend to all the duties which were thrown upon him, including the keeping of the accounts. The validity of that excuse has been disputed, but it is not pertinent to the present inquiry that such dispute should be determined. ■ It is sufficient for present pux-poses that the condition of the accounts and the fact that the cemetery company was déeply involved in debt, beyond that which it owed to the Homestead company, led to dissatisfaction upon the part of the complainants, who, because they almost all reside in Boston, have been called “the Boston stockholders,” and they insisted upon examining the accounts and having them written up, furnishing assistance to that end. They also insisted upon having Mr. Shearer made a director of the company, and he was, in June, 1890, so elected. Later in the summer of 1890 their dissatisfaction grew to such extent that the complainant Frank W. Wildes, one of them, declared that they would change the management of the company by taking it away from Messrs. Pratt and Torrey, and after that, in apparent fulfillment of his threat, commenced to buy up stock wherever he could find it for sale.

Though Mr. Shearer' held over four hundred shares of stock he was not re-elected a director in 1891, but Mr. McCrea, a young lawyer and the owner of a single share, was chosen a director in his stead.

When the annual election in 1892 came, the Boston stockholders represented one thousand one hundred and twenty-four shares of stock, which they voted for a board of directors nominated by them, leaving the old management one thousand and thirty-eight shares in support of their ticket, which, Avith the two hundred and thirty-eight shares now claimed to have been fx-audulently transferred to the defendant BoAvei’, elected Messrs. Pratt, Torrey, John and Clarence Linn and Bower directors. Those gentlemen still retain the direction of the company.

The transaction complained of may be stated in this way: Mr. Bower is a lawyer of the State of New York, resident in the city of Brooklyn. In his professional capacity several years ago he became concerned for the estate of one Huntley, who in his lifetime was the owner of some lots of land at Arlington and also of several shares of the stock of the Rux'al Homestead Company. Through his concern in this property he became acquainted Avith Mr. Pi’att and eventually was professionally employed by that gentleman.

Adjoining the Arlington cemetery is a tract of upland and meadow comprising some fifteen or sixteen acres, yet in Tough, uncultivated condition, upon which there was erected an old frame house of little value. The tract formerly belonged to one John Van Emburgh, who, by his will proved in 1870, devised it to his daughter, Eachel Meyers, and her daughter Mary, as tenants in common. Eachel Meyers, by her will, proved in September, 1883, devised her undivided half of the tract to her son, Moses C. Meyers, for the life of the daughter Mary, upon condition that Moses would support and care for his sister while she lived, she being of weak mind.’ After the death of Mary, the undivided half was to be divided equally between six children of Eachel, who are named, among whom is the son Moses.

In 1886, Mary Meyers conveyed to her brother Moses her interest in about two acres of the land upon which the house stood. Mary died, and thereupon Moses, as one of her heirs, took one-sixth of her interest in the property, which interest was one-half of the whole, less the two acres, and in virtue of his mother’s will he also took one-sixth of the other undivided half. Thus his entire holding became seven-twelfths of the two-acre lot and one-sixth of the remainder of the land. He yet occupies the house. I should say here that it was assumed at the argument that Moses Meyers obtained title to the whole two acres upon which the house was built. I do not gather from the proofs this fact, but it is of little materiality one way or the other. The taxes were suffered to remain unpaid, and, in 1887, the whole tract was sold, in enforcement of a tax lien, by the township authorities and bought in by the township for the term of thirty years. In 1890 the defendant Bower took a conveyance from the township, paying some $900 in satisfaction of municipal liens. He then commenced proceedings in ejectment against Moses Meyers, which were not defended against and in which a judgment by default was had. Pending the sheriff’s removal of Meyers from the premises, Meyers, in consideration of $1, conveyed his interest in the land to Mr. Bower and was accorded the right to stay upon the property, at a nominal rent, for three years.

Thus Mr. Bower secured a tax title to the whole property which has now some twenty-two years to run, and seven-twelfths or the whole of the two-acre lot and one-sixth of the remaining property in fee, subject to the inchoate dower right of Moses’ wife.

It is apparent that unless the other interests in this tract of land shall be secured, and until that time, the tract cannot be used for cemetery purposes. If the tax title be valid, it will not render the land available for cemetery purposes, because each succeeding year lessens its duration, and it is admitted that it is impossible to sell, to any appreciable extent, for burial purposes, for less term than a fee. If the deed from Moses Meyers to Mr. Bower be valid, it conveys only undivided interests and does not retrieve the situation. Until the outstanding interests can be had, thé cemetery cannot safely afford to even clear and enclose the land. The only practical purpose seemingly served in such a purchase is to prevent the use of the land for a rival cemetery, but in face of the difficulties in the title and the fact that the cemetery is substantially in the country, adjacent to many as large parcels of unoccupied lands, this advantage is insignificant.

The ability of the company to control and utilize their property for cemetery purposes depends upon not only contingencies in title, but also upon the expenditure of further considerable sums of money.

Moreover, the complainants object that the tax title is not valid. Moses Meyers’ wife refuses to part with her interest in the property, and Moses himself claims that the deed from him was had by fraud.

It is such interest in the land that Mr. Bower has exchanged for the two hundred and thirty-eight shares of the capital stock of the Rural Homestead Company.

The defendants claim that the exchange on the part of the company was made in the bona fide exercise of the directors’ judgment for the best interests of the corporation. They urge that, for a long time before the exchange, persons interested in the cemetery deemed it desirable to have the Meyers land, not only to prevent its being converted into a rival cemetery, but also in order that the Arlington cemetery might be enlarged by it. They say that the undivided interest of the Meyers heirs, other than Moses, may be purchased, and in that way title to the whole land may be perfected.

But confronting this excuse appear the facts that, when the purchase from .Mr. Bower was made, the cemetery association was burdened with a large indebtedness, more than $7,000 of which was in the shape of judgments under which the cemetery company receipts were passing into the hands of sequestrators; that it was absolutely impossible for it to pay any part of its indebtedness to the Homestead company, or if the Homestead company should exact its forty-five per cent, of the current receipts from the sale of lots and graves, to maintain itself, and that it was not in need of additional land, béeause, in the ten years of its existence, it had not sold more than one-tenth of the land it already had.

It cannot but be concluded that, in face of the financial situation of the companies and the character of the property purchased, in absence of allegation or suspicion of bad faith, the transaction would have been conspicuously indiscreet and unwise. But it cannot be set aside merely because the directors acted indiscreetly or unwisely. It has not been suggested that the act was ultra vires, and the well-established rule is that individual stockholders cannot, in litigation, question the acts of directors intra vires, unless they can show that they are fraudulent in character. Cook Stockh. § 684-

In Ellerman v. Chicago Junction Railway &c. Co., 4 Dick. Ch. Rep. 232, Vice-Chancellor Green stated the rule upon this subject in this language :

Individual stockholders cannot question, in judicial proceedings, the corporate acts of directors if the same are within the powers of the corporation and in furtherance of its purposes, are not unlawful or against good morals, and are done in good faith and in exercise of an honest judgment. Questions of policy, of management, of expediency, of contracts or actions, of adequacy of consideration not grossly disproportionate, of lawful appropriation of corporate funds to advance corporate interests, are left solely to the honest decision of the directors if their powers are without limitations and free from restraint. To hold otherwise would be to substitute the judgment and discretion of others in the place of those determined on by the scheme of incorporation.”

In Elkins v. Camden and Atlantic Railroad Co., 9 Stew. Eq. 241, where an injunction was sought to restrain the making of certain contracts which were within the powers committed to the directors, Vice-Chancellor Van Fleet said :

“ Unless the complainant has clearly demonstrated that in doing them [the acts sought to be enjoined] they will be controlled by a fraudulent or dishonest purpose and that injury will result to him, it is clear he has no case. * * * There can be no doubt that the question as to the expediency of making a contract, which is within the capacity of the corporation, is committed to the judgment of the managers of the corporation by whom alone it can act, and so long as they keep within the power committed to the corporation and act in good faith with honest motives and for honest ends, their acts are valid though the result may show that what they did was unwise and inexpedient.”

The same judge repeats the rule thus stated in Park v. Grant Locomotive Works, 13 Stew. Eq, 114, 122.

The question in the present case then is, was the transfer to Mr. Bower made in good faith and in the exercise of an honest judgment, to which judgment honest motives and ends are essential ?

A charge that directors do not act in good faith and with honest judgment must be established by evidence which is strong enough to overcome the usual presumptions in favor of good faith and honesty of purpose. The question in such a case is one of intent, which ordinarily is susceptible of establishment only by inferences from proved circumstances, for rarely is dishonest intent admitted. Those proofs must usually contend with excuse or reason, more or less plausible, which will be insisted upon as having been sufficient at the time of the act in question to command honest judgment in its favor, and hence the truth is not always susceptible of easy demonstration.

In the present case the complainants insist that the motive which induced the transaction complained of was the perpetuation of Messrs. Pratt and Torrey in control of the company, and not the welfare of the enterprise in which the corporation had embarked. They point to the proof that they were dissatisfied with the management of the homestead and cemetery companies and the manner in which the accounts of those companies had been kept, and that in consequence of that dissatisfaction Mr. Wildes had threatened to change the management of the' companies ; also that he and others subsequently had commenced to buy stock for that purpose, all of which was known to Messrs. Pratt and Torrey. Added to which facts they argue a conscious- ■ ness upon the part of Messrs. Pratt and Torrey that they could not calculate upon a control of a majority of the stock issued, and their appreciation of the plain problem that if to Mr. Pratt’s eight hundred and ninety-one shares and Mr. Torrey’s shares there should be added the two hundred and thirty-eight shares remaining in the treasury of the company, the control of a majority of the whole two thousand four hundred shares would securely be theirs.

Then they call attention to the fact that the two hundred and thirty-eight shares of treasury stock represented at par $11,900; that twice in the history of the company, since its revivification in 1882, although no dividends had been declared, money had been raised by apportionment of treasury stock among the stockholders at par, and the two hundred and thirty-eight shares yet in the treasury remained for similar purpose in the future; that the cemetery company had about reached the end of its power to raise money; that it had not only exhausted its own receipts, but also the entire receipts of the homestead company, and, in addition, had had recovered against it two judgments aggregating about $7,000, under which sequestrators had been appointed to absorb whatever they might lawfully lay their hands upon; that neither company could mortgage, for such action would effectually remove the mortgaged property from the market which the cemetery afforded, and that it was at this pecuniary crisis that Mr. Bower, with a slender holding, by tax title and disputed deed for an undivided interest in a few acres of rough, uncultivated land, partly upland and partly meadow, bounding the southerly side of the cemetery, appeared upon the scene and was permitted to sweep from the treasury the remaining two hundred and thirty-eight shares of stock.

That the land in which Mr. Bower was interested was without market value I think is conspicuously demonstrated by the vast discrepancy in the values placed upon it by the several witnesses •examined in that behalf, ranging from about thirty thousand •dollars to about half as many hundreds of dollars. That it could not be utilized for cemetery purposes is made clear by the statement of the broken title and fractional interests whereby it was held. That it was not needed for the cemetery appears by the fact that in ten years not one-tenth of the land already owned by the cemetery had been disposed of.

When the, transaction with Mr. Bower was in progress, although it was known by Messrs. Pratt and Torrey that the complainants were endeavoring to secure the control of a majority of the stock, and, for that reason, that they would most strenuously have resisted any disposition of the treasury stock which would not have given them an opportunity to acquire it, no notice of the intended transfer of it was given to them. Lastly, the event of the transaction was that Mr. Bower did, in fact, vote upon the stock transferred to him, to perpetuate Messrs. Pratt and Torrey in control of the company, when without such vote the complainants would have removed them.

Shortly recapitulated, the leading circumstances relied upon in proof of bad faith in the transaction objected to are — the dissatisfaction of the complainants with the management, their threat to change it, their effort to procure sufficient stock for that purpose, the uselessness of the purchase from Bower, the shocking indiscretion of that purchase in view of the financial condition of the cemetery and homestead companies in the absence of any necessity for an addition to the cemetery and the valueless character of that which was purchased, the secrecy observed in the transaction and the eventual use of the stock transferred to defeat the purpose of the complainants to change the management of the company.

I think that their strength is sufficient to overcome any presumption of good faith upon the part of the directors and Mr. Bower, and that the professions of good faith by those of them who were sworn, amounting, it may be said, to mere opinions, are entitled to but little weight against them.

The Messrs. Linn do not appear to have fully understood the situation of affairs, and, I think, under an insufficient realization of the exact situation, partly through indifference, because of their slight pecuniary interest and their great confidence in Mr. Pratt, and partly through lack of particular information, were led, without dishonest purpose, to acquiesce in that which Messrs. Pratt and Torrey advocated.

Messrs. Bower and Torrey possibly satisfied‘themselves that the transaction was lawful by the specious argument advanced in the excuse for it, to which I have adverted, under the predisposition thereto which their self-interest created. Messrs. Pratt and McCrea were not sworn. Mr. McCrea was not in the state when the testimony was taken, but Mr. Pratt was cognizant of the production of all the proofs, was the master spirit in the transaction, was declared by a witness to have said that he procured Mr. Bower to buy the land for the cemetery and yet remained silent.

I am of opinion that the transaction must be set aside, and will decree accordingly.


author: Bird, V. C.

text:
    Charles C. Hughes et al. v. Lambertville Electric Light, Heat and Power Company.
    1. The claim of an attaching creditor, a citizen of New Jersey, will be preferred to that of the assignee, a resident of another state, who claims under an assignment for the benefit of creditors, and consequently to one who claims under such assignee by virtue of a bona fide purchase subsequent to the levying of the attachment.

      2. Wires and insulators which are used in forming and completing the connection between an electric light and power plant and the dwellings, stores and other public places, for the purpose of conveying or transmitting light and heat thereto, are fixtures within the provisions of the Mechanics’ Lien law.
    On application for directions as to distribution of funds.

      Mr. James Buchanan, for the receiver.

      Mr. £>. Stuart Robinson (of Philadelphia), pro se.

      Mr. Charles A. Skillman, for Zeigler’s administrators.

      Mr. Henry A. Fluch, for Morrison, assignee.
   Bird, V. C.

The defendant is an insolvent corporation. It was organized for the purpose of constructing an electric light and power plant. It constructed a building suitable for the purpose, and placed therein all of the machinery and appliances necessary for completely transmitting light and power throughout the city of Lambertville. It erected poles at suitable distances on the sides of several streets. It strung wires from the building, after securely attaching them to the necessary apparatus upon said poles, and from said wires and poles the Southern Electric Company strung wires to and into a large number of houses for the purpose of transmitting light into said houses. After the work was completed in accordance with the intention, it was put in operation and light was thereby communicated to the dwellings, stores and other business places. Soon after the practicability of the undertaking was demonstrated, the company was obliged to confess its insolvency, and, in winding up its affairs, the receiver has been presented with a claim in the name of the Southern Electric Company. This claim, with all its other assets, was assigned by the latter company, in 1893, for 'the benefit of its creditors. While its assets were still in the bands of the assignee and in process of administration, one Zeigler, a resident of New Jersey, and creditor of the Southern Electric Company, issued an attachment against it, and levied upon the credit of said company in the hands of the defendant, the Lam- . bertville Light and Power Company. As this attachment was issued and levied in January of 1894, in March following the assignee sold and assigned the claim of the Southern Electric Company to one Morrison, who now claims to be entitled to such dividends as the Southern Electric Company would be entitled to if it had made no assignment, and, consequently, disputes the claim of Zeigler under his attachment. That the claim of Zeigler must be satisfied out of any credit to which the Southern Electric Company would be otherwise entitled, is so clear that discussion is unnecessary. See Moore v. Bonnell, 2 Vr. 98.

But Morrison insists that he is entitled to the benefit of the Mechanics’ Lien law, and therefore entitled to be preferred as to the proceeds of the sale of the plant. This claim to a lien arises from the fact that the Southern Electric Company supplied the wires and insulators, and did the work or labor of • connecting the said wires, with the poles and wires erected upon and along the streets, with the dwelling-houses, stores and other places of business; and that because of such connection they became part of the plant.

This claim to the benefit of the Lien law should be supported. The fifth section of the Mechanics’ Lien law (Rev. p. 669) provides that any fixed machinery or gearing or other fixtures for manufacturing purposes, shall be considered a building for the purpose of this act.”

The phrase “ or other fixtures for manufacturing purposes ” is as comprehensive as the .language will admit of. Certainly whatever appliances may be used for the accomplishment of a given purpose, through the use of fixtures in a manufacturing establishment, may fairly be considered a building within this act. Whatever is so attached to the freehold is to be denominated a fixture, and is essential to the successful operation of the plant, will pass with the freehold.

Without the connection to the dwellings, stores and other public places by means of the wires, as above stated, the plant could not be operated according to the design. Such connection' is absolutely essential. These wires connect with the main wires which were strung upon the poles along the streets, which last-named wires were all connected with the building or plant in which the electricity is generated.

It is very well settled that where a thing is annexed to the freehold by the owner, with the intention of making it a part thereof, and it is essential to the enjoyment of the freehold, it will be regarded as a fixture. Blancke v. Rogers, 11 C. E. Gr. 566; Potts v. New Jersey Arms and Ordnance Co., 2 C. E. Gr. 396; Crane v. Brigham, 3 Stock. 29; McMillian v. New York Waterproof Co., 2 Stew. Eq. 610; Watson v. Watson Manufacturing Co., 3 Stew. Eq. 484.

In Van Keuren v. Central Railroad of New Jersey, 9 Vr. 165, it was held that a railroad track, consisting of ties to which were fixed the iron rails, constructed for the purposes above indicated, was a fixture and passed with the title to the land.

In Philbrick v. Ewing, 97 Mass. 133, it was held that a water-pipe attached to a main pipe in the street and running across the land of a third person into a dwelling-house upon the side of the street, for the purpose of carrying water into such dwelling, was a fixture and passed with a conveyance of the lot.

In The Badger Lumber Co. v. The Marion Water Supply, Electric Light and Power Co., 48 Kan. 182, it was held that poles placed in the street upon which wires were strung, which wires were connected with an electric light and power plant, were within the Kansas statute, which secured a lien upon buildings and the appurtenances to laborers and material-men.

In Beatty v. Parker, 141 Mass. 523; 6 N. E. Rep. 754, it was held that “ a pipe connecting a house with a sewer built in the street, necessary to the use of the house and included in the contract for building it, is a part of the house, and it is immaterial whether it is inside or outside of the walls of the house, under or above ground, whether extended one foot or thirty feet, or whether the fee of the land in the street was or was not in the owner of the lot on which the house was built.” A petition to enforce a mechanics’ lien for the labor in placing said pipe was sustained.

In Steger v. Arctic Refrigerating Co., 11 L. R. A. 580, it was decided that “ a mechanics’ lien for material furnished in laying pipes for a refrigerating company, which supplies vapor for (cold storage’ to customers at a distance through pipes in the ground, extends to the whole plant as an entirety and may be enforced against the ground upon which the manufactory is located, although the pipes, are laid on the land of strangers.”

The fact that these poles, which support the wires along the streets, stand upon,land the title to which may be in others, and that the wires which connect the main wires with the several dwellings, stores and other public places pass into and are fixed to the dwellings and stores and public buildings of persons who were strangers to the company except as they gave their consent to such erection and the making of such connections, does not alter the rights of lien claimants. The effort is not made to enforce the lien against the land upon which the poles are erected, nor against the dwellings, stores or other places into which the connected wires aré extended, but only against the plant itself and land whereon it stands. It is this which the Lien law makes liable for materials and labor, and not the thing which becomes a fixture. For I apprehend that whether things furnished for a structure, whether a dwelling or manufactory, whether such thing be brick, lumber or machinery, a lien will lie whether the thing be actually placed in the building or not. The two cases last above cited show that it makes no difference in whom the ownership of the fee may be, upon whose land or in whose dwelling the poles may be set or the wires extended.