text:
    Caroline Wood, guardian, &c., v. Robert A. Price et al.
    [Decided August 2d, 1910.]
    1. On a petition of the wife of a mortgagor to have the surplus left after foreclosure held to answer a writ of sequestration issued in her pending suit for alimony, and to secure her inchoate right of dower, where the surplus was claimed both by a purchaser of the husband and a judgment creditor, evidence of the proceedings in the suit by the wife against the husband was competent against both purchaser and creditor to show that such a proceeding was pending, but not to prove the truth of the allegations therein.
    2. Where the wife of a mortgagor who has brought suit for alimony is after foreclosure entitled to subject the surplus to her inchoate right of dower, she is entitled to have one-third of it reserved, even though the mortgagor’s judgment creditor has levied on such surplus.
    On petition oí Alice C. Price to have surplus money held to answer writ of sequestration and to secure her inchoate right of dower in the mortgaged premises.

      Mr. Charlton A. Reed, for the petitioner, Alice C. Price.

      Messrs. Vreeland, King, Wilson & Lindabury, for the respondents, Martha E. Struble and Jacob C. Price.
   Pitney, Chancellor.

Pending the determination of the petition of Jacob C. Price to have the surplus money in this cause paid to him as purchaser of the equity of redemption from the mortgagor, Mrs. Price, the wife of the mortgagor, filed her present petition praying that the money paid into court by the sheriff in excess of the amount due to Martha E. Struble, defendant, a judgment creditor, should be held to answer any order which might be made in Mrs. Price’s pending suit for alimony against her husband, Eobert A. Price, the mortgagor, pursuant to the command of a writ of sequestration issued in that proceeding; and also praying that one-third of the whole amount of the surplus money might be impomrded to secure Mrs. Price’s inchoate right of dower.

Upon the filing of this petition an order was made requiring Martha E. Struble and Jacob C. Price to show cause why the relief prayed should not be granted to Alice C. Price, the petitioner. Upon the return of the order to show cause, Mrs. Struble and Jacob C. Price appeared, and the matter has been heard before me upon proofs taken viva voce in open court. Besides the testimony of witnesses, there were introduced in evidence all the original files and proceedings in the main foreclosure suit, including the pleadings, proofs, decree, writ of fieri facias, return, &e., the petition of Jacob C. Price for surplus money, and the orders made and testimony taken thereon; a previous petition of Alice C. Price respecting the surplus money, and the proceedings thereon; also all the proceedings and files in the pending suit of Alice C. Price on her bill for alimony, including the writ of sequestration and return thereof, and all other papers and' proceedings therein.

Objection was taken to the introduction in evidence of the proceedings in the alimony suit, on the ground that they were not evidential as against Martha E. Struble and Jacob C. Price. They were admitted, however, not as tending to prove the truth of the averments made by Alice C. Price against her husband in the proceeding, but only for the purpose of showing that such a proceeding is pending, the nature and object of it, and what has been done in it by virtue of the issuing and execution of a writ of sequestration to fix a lien upon the mortgaged premises and upon the surplus money arising from the sale thereof.

Jacob C. Price’s petition has now been disposed of by denying his prayer to have the surplus money presently paid to him as purchaser, but reserving his rights as against all other parties than Mrs. Price. The decision was that by the writ of sequestration issued in the alimony suit, and by the execution of that writ upon the mortgaged premises, a lien was secured in favor of Mrs. Price prior to the claim of Jacob C. Price as purchaser; and that Mrs. Price’s lien is transferred to the surplus money; besides which she is entitled to have her inchoate right of dower protected.

,By the final decree in the main cause, and by an order subsequently made under date April 12th, 1909, disposing of Mrs. Price’s previous petition herein, it was established that Martha E. Struble, as judgment creditor, was entitled to a lien upon the mortgaged premises next after the first mortgage of Caroline Wood, guardian, the complainant; and by the order just mentioned the sheriff was required to pay to Mrs. Struble the amount directed to be paid to her by the final decree and the execution issued thereon, less the sum of $12 which had been paid to her on account of her judgment on June 15th, 1908, and before the final decree.

Prior to this order of April 12th, however, the sheriff had paid into court all the proceeds of sale that remained after satisfying the complainant’s mortgage, with interest and costs. The money thus paid in, and to which Mrs. Price’s petition is addressed, is $5,260.34. The date of payment into court was April oth, 1909.

The amount due upon this date on Mrs. Struble’s judgment is shown by the following statement:

Amount of judgment as established by final decree ........................ $2,519 06
Interest, July 10th, 1908, to April 5th, 1909, at six per cent................ Ill 39
Costs ................................ 7 56
Interest, July 20th, 1908, to April 5th, 1909, at six per cent................ 32
$2,638 33
Deduct, as per order of April 12th, 1909, 72 00
- $2,566 33

The amount just stated, with accumulations of interest thereon from April 5th, 1909, as computed according to the rules of this court, should be paid to Mrs. Struble.

Out of the .residue of the money paid into court, Mrs. Price is entitled to have reserved one-third of the entire sum of $5,-260.34 (for of course her inchoate right of dower is not affected by Mrs. Struble’s judgment), and such one-third, or $1,753.45, should be held to secure Mrs. Price’s dower, so that in case she survives her husband she may receive the income thereof during the remainder of her life.

But the entire amount of money that was paid into court by the sheriff, after deducting therefrom the amount due to Mrs. Struble, is subject to the process of sequestration issued in Mrs. Price’s alimony suit.

The order will be, therefore, that the sum of two thousand five hundred and sixty-six dollars and thirty-three cents ($2,-566.33), with accumulations from April 5th, 1909, be paid to Mrs. Struble in satisfaction of her judgment; and that the residue of the money paid into court by the sheriff, such residue amounting to two thousand six hundred and ninety-four dollars and one cent ($2,694.01), be transferred to the credit of the alimony suit, to be there treated as subject to the writ of sequestration and the proceedings thereunder; reserving, however, Mrs. Price’s right to have $1,753.45 out of this money retained to secure her right of dower in the event of her surviving her husband, and reserving Jacob C. Price’s rights as against all other parties than Mrs. Price.


source: Caselaw Access Project

author: Pitney, Chancellor.

license: Public Domain

text:
    Allen L. Ramsey v. The Perth Amboy Shipbuilding and Engineering Company.
    [Decided August 4th, 1911.]
    Claimant in 1903 presented its claim for advances of money to a corporation to its receiver, by whom it was rejected, and thereafter for nearly three years engaged in foreclosure proceedings in an attempt to realize on its second mortgage security and acquiesced in the suggestion of New Jersey counsel that, pending the foreclosure proceeding, no appeal from the receiver’s rejection of the claim should be taken, and took no appeal until March, 1907, and after appeal took no action until after the appointment of a new receiver and his unexpected realization of a large sum of money in August, 1910.'—Held, that, in view of the rights of other claimants, the probable delay in winding up the receivership and the possible loss of evidence on the disputed claim, an application to revoke an order of October, 1910, dismissing the appeal for want of prosecution, would be denied.
    On petition of Theodore Francis Green for the revocation of an order made by the chancellor herein bearing date October 25th, 1910, whereby the appeal of George H. Newhall, receiver of the Nautical Preparatory School, from the rejection of his claim by the receiver was dismissed for want of prosecution.

      Messrs. McCarter & English, for the petitioner.

      Mr. Adrian Lyon, contra, for the receiver.
   Pitney, Chancellor.

The claim in question was presented by the Nautical Preparatory School, a corporation of the State of Rhode Island, to Hon. Willard P. Voorhees, at that time receiver of the Perth Amboy Shipbuilding and Engineering Company, in the month of November, 1903. The claim was for the amount of $76,500, and was based upon advances of money made by the Nautical Preparatory School to the shipbuilding company under a contract for the construction of a vessel. The receiver rejected the claim. About a year later George PL Newhall was appointed by the supreme court of Rhode Island receiver of the claimant, and through Messrs. Alan H. & Theodore Strong as his solicitors, filed in this court on March 1st, 1907, an appeal from the determination of Receiver Yoorhees rejecting the claim.

In August, 1909, Adrian Lyon, Esq., was appointed receiver of the shipbuilding company in the place of Receiver Yoorhees, who had been appointed a justice of the supreme court. About a year later, Mr. Lyon, somewhat unexpectedly, realized a large sum ($190,000) from the sale of certain real estate of the shipbuilding company which before had been apparently unsalable.

Thereafter, Mr. Alan H. Strong, in behalf of Receiver New-hall, or of the present petitioner, to whom the claim had been assigned, made a motion before me, on notice to Receiver Lyon, for an order to refer to a vice-chancellor the appeal of New-hall, receiver, from Receiver Yoorhees’s decision; and Mr. Lyon at the same time made a counter motion to dismiss the appeal for want of prosecution. Thereupon the order of October 25th, 1910, was made dismissing the appeal. Revocation of this order is now asked for by Theodore Francis Green, assignee of New-hall, receiver. He holds the claim in question in trust for certain of the creditors of the Rhode Island corporation.

The ground of the present application is that the failure to prosecute the appeal was due solely to the negligence of Mr. Strong, and not to any negligence of Mr. Newhall or his representatives.

Mr. Newhall confided the matter to his counsel in Rhode Island, and they dealt with Mr. Strong mainly through correspondence, most but not all of which has been preserved and was put in evidence before me on the present application.

It appears that as evidence of and security for its claim for $76,500 of advances, the Nautical Preparatory School held a bond and mortgage upon lands given to it in the month of June, 1903, by the shipbuilding company, the mortgage being subject to a prior mortgage held by the Perth Amboy bank or its receiver.

The general claim was rejected by Receiver Voorhees in August, 1904. At the same time its validity was incidentally brought into question in a suit in which the validity of the mortgage was litigated and adjudicated. This was Campbell, Receiver, v. Perth Amboy Shipbuilding Co., brought for the foreclosure of the first mortgage, and in which Mr. Strong, as counsel for the Nautical school, filed an answer disputing the validity of that mortgage, and also, by cross-bill, set up a lien upon the land under the mortgage of the Nautical school. The former controversy was decided in this court November 3d, 1905. Campbell v. Perth Amboy Shipbuilding Co., 70 N. J. Eq. (4 Robb.) 40; affirmed, 71 N. J. Eq. (1 Buch.) 302. The controversy about the validity of the mortgage of the Nautical school was decided July 31st, 1901 (Barrett v. Perth Amboy Shipbuilding Co., 73 N. J. Eq. (3 Buch.) 62), with the result that the mortgage was established as a lien to the extent of $1,-500 and except to this extent was adjudged void.

It does not appear what instructions were given by the Nautical Preparatory School to Mr. Strong about the presentation and prosecution of its general claim against the receiver of the shipbuilding company. But in October, 1904, upon the appointment of Mr. Newhall as receiver for the Nautical school, Messrs. Edwards & Angelí, his counsel, wrote to Mr. Strong asking for full information about the situation in New Jersey, in reply to which Mr. Strong wrote explaining the questions raised in the pending foreclosure suit, stating that “the mortgage would seem to be good for the $1,500 loan, and perhaps for the $9,000 paid at the time the mortgage was given,” &e., and that “these questions are to be disposed of on the cross-bill;” and then stated

“A separate claim has been presented by Nautical Preparatory School as a general creditor for $76,500, being the total amount paid to the shipbuilding company on account of its contract for the building of the Young America’ and the $1,500 loan as aforesaid, which claim the receiver has rejected. An appeal from his decision, however, lies to the chancellor; hut as the appeal involves the same questions as the cross-hill, it may he held over to abide the result on the cross-bill.” (The italics are mine.)

Thereafter the instructions to Mr. Strong came wholly from Messrs. Edwards & Angelí, and in the main were in the form of correspondence. For more than two years the parties busied themselves about the litigation of the questions raised in the foreclosure suit referred to, and nothing was said about the claim against the general assets of the New Jersey receivership nor about the receiver’s decision rejecting that claim. The Ehode Island parties manifestly accepted the suggestion of Mr. Strong that the question of an appeal from the receiver’s decision should be held to abide the result of the decision on the cross-bill. And I think it clear that the expressions contained in the letters of Messrs. Edwards & Angelí between the fall of 1904 and the beginning of the year 1907, making inquiries as to the situation of the litigation in New Jersey, were intended to refer, and were naturally understood by Mr. Strong to refer, to the litigation respecting the validity of the underlying mortgage and of the mortgage of the Nautical Preparatory School. In short, the Ehode Island receiver and his counsel fully acquiesced in the suggestion that no appeal should be made for the present from the decision of the receiver adverse to the general claim.

In January, 1907, notice reached the Ehode Island receiver of an order made by this court in the present cause limiting to March 1st, 1907, all appeals from disallowance of claims by Beceiver Voorhees. This notice was forwarded by Messrs. Edwards & Angelí to Mr. Strong, who, without express instructions, but with the approval of the Ehode Island parties, filed an appeal. From that time forward, while the Ehode Island counsel frequently wrote making general inquiries as to the situation of the litigation in New Jersey, its probable duration and the like, the inquiries, so far as they were at all specific, related solely to the litigation respecting the mortgages, and no mention was made of the appeal from the decision of Eeceiver Voorhees nor any inquiry as to the prosecution of that appeal.

Meanwhile, in August, 1901, Mr. Strong notified the Ehode Island counsel of the decision of Advisory Master (former vice-chancellor) Pitney concerning the second mortgage, and forwarded to them a copy of the opinion as now reported in 73 N. J. Eq. (3 Buch.) 62. This led to some correspondence, or at least some inquiries by letter preferred by Messrs. Edwards & Angelí to Mr. Strong, Ho which he did not reply as promptly or as fully as they desired.

About three years more were permitted to elapse without any definite instructions given by or in behalf of the Ehode Island receiver to Mr. Strong looking to the substantiation of the general claim for $16,500. It was not until the spring of the year 1910, when the litigation in respect to the Nautical Preparatory School had terminated in the Ehode Island courts and the claim of the school against the Perth Amboy Shipbuilding and Engineering Company arising out of the bond and mortgage had been assigned to Theodore Francis Green, the present petitioner, that any special effort was made by the Ehode Island interests looking to a decision upon the validity of the general claim. And not until the month of August of that year, and after Eeceiver Lyon had realized, as already mentioned, an unexpectedly large sum from the sale of the real estate of the company and was making ready to wind up his receivership, was any earnest effort made by the Ehode Island parties, now represented by Theodore Francis Green, to prosecute the appeal from Eeceiver Voorhees’s decision.

In the light of all the evidence it seems to me that the Ehode Island interests concurred with Mr. Strong in the view that it was not worth while to prosecute the appeal. They seem to have had little confidence in the merits of the claim, and little expectation that the receiver of the shipbuilding company would be able to pay a substantial dividend to the general creditors; and it would appear that for these reasons they did not care to expend money in the effort to establish the claim. I do not characterize their non-action, or that of Mr. Strong, as negligent; rather it seems to have been due to caution—perhaps over-caution—about “sending good money after bad.”

Whether responsibility for such non-action should be equally shared by the New Jersey counsel and the Rhode Island counsel for the receiver of the Nautical Preparatory School is of course not the principal question that concerns me. I have indicated my view about this. But whether I am right or wrong in that view, I adhere to the opinion expressed when I made the order of October 25th, 1910, dismissing the appeal for want of prosecution, that the appellant had consciously forborne to prosecute the appeal, and had in effect speculated upon the outcome of the receiver’s efforts to realize upon the assets of the shipbuilding company. The laches has been such, I think, as not only to justify but to require the dismissal of the appeal. It would be most unjust to creditors and others interested in the prompt winding up of the affairs of insolvent companies if claimants, whose claims are disputed and rejected by the receiver, could await the outcome of the receiver’s efforts to realize upon the assets of the insolvent corporation before making up their minds whether to prosecute an appeal from his decision. And besides, the delay in the present case has been so great as to render it highly probable that evidence has been lost, through death of witnesses or failure of their memories, and to leave it by no means certain that the result of a trial of the disputed claim, if now held, would be the same as it would have been if the appeal had been promptly brought to a hearing after it was taken. It is true that Receiver L3ron cannot point to any particular witness or piece of evidence that has been lost by the delay; but this may be because'the present petitioner, who holds the claim, has made no attempt to show that it has substantial merits, and so Mr. Lyon has had neither occasion nor opportunity to investigate its merits.

Upon the whole, I feel constrained to deny the application for a revocation of the order dismissing the appeal, and it will be denied, with costs.


author: Emery, Y. C.

text:
    Amelia Koch v. Herman Koch.
    [Decided June 15th, 1911.]
    1. The construction of a particular provision of the Divorce act (act May 17th, 1907, P. L. p. 474) should be made in view of and in connection with the other sections of the act, and the intention of the entire act.
    2. In construing the Divorce act (act May 17th, 1907, P. L. p. 474) > resort might properly be had if the construction were doubtful to the public acts and proceedings showing that some Of the clauses were adopted on the recommendation of a congress held to frame a uniform divorce law.
    3. The petitioner for divorce was deserted in New York and shortly returned to New Jersey, where the desertion continued .for more than two years. The Divorce Revision act of May 17th, 1907 (P. L. p. 474) > provided that absolute divorce might be had for desertion for two years. Section 33 provided that, if any inhabitant of the state shall go into another state to obtain a divorce for a cause which occurred while the parties resided in the state, the decree so obtained should be of no force in the state. Section 6 provided that no action for absolute diyorce shall be commenced for any cause other than adultery, unless one of the parties has been for two years next preceding the commencement of the action a l>ona fide resident, and that jurisdiction might be obtained upon a cause which occurred without the state, when since the cause, either party has been a resident for two years, and the cause was recognized in the jurisdiction in which such party then resided.—Held, that a cause of action for desertion does not arise until the entire two years have elapsed, and therefore the cause of action in this instance accrued in New Jersey»
    On petition for divorce. On exceptions to master’s report.

      Mr. Leon Abbott, for the exceptant.
   Emery, Y. C.

The petition for divorce from the bonds of matrimony filed July 16th, 1909, is based on desertion. It alleges a separation of the parties in August, 1904, at which time they were living in New York, the return of both parties at that time to the homes of their respective parents in Hoboken, and the subsequent residence of both parties in Hoboken up to the time of filing the petition. The desertion is alleged to have occurred on January 1st, 1905, and to have continued since. The master reports that the parties were married in the city of New York in 1902 and lived together until some time in 1904; that the wife’s uncorroborated evidence fixes the date of separation as August 17th, 1904, but that the desertion existed from July or August, 1905, is shown by corroborative evidence. On these facts the master reports that the cause of action arose in the city of New York where the petitioner then resided, and inasmuch as there is no allegation in the petition or testimony, that at the time of desertion the cause of action was recognized in New York as a ground for the same relief asked in this state, he reports that the petition should be dismissed.

It .appears by the wife’s uncorroborated evidence in the case that on or about August 14th, 1904, when they were residing in New York, the husband, without offering to take the wife with him, left the home there after telling his wife that he himself intended to return to live with his parents in Hoboken, and that she could do as she chose, either stay in New York or return to her own parents in Hoboken. She returned to Hoboken on August 17th, and has since that time resided there, with her father or father’s mother. Her return and subsequent residence in this state is proved by corroborative evidence. The precise date of the return is fixed only by the wife’s evidence, but that there was a desertion as existing from July or August, 1905, and her residence then in this state is fixed by conversation of another witness with the husband at that time.

in this case personal service of process was made upon the defendant within this state, and the section of the Divorce act of 1907, applicable to the case, is section 6, which is as follows:

“6. For purpose's of divorce, either absolute or from -bed and board, jurisdiction may be acquired by personal service of process upon the defendant within this state, under the following- conditions:
“(a) When, at the time the cause of action arose, either party was a bona fide resident of this state, and has continued to be down to the time of the commencement of the action, except that no action for absolute divorce shall be commenced for any cause other than adultery, unless one of the parties has been for the two years next preceding the commencement of the action a bona fide resident of this state.
“(b) When, since the cause of action arose, either party has become, and for at least two years next preceding' the commencement of the action has continued to be, a bona fide resident of this state; provided, the cause of action alleged was recognized in the jurisdiction in which such party resided at the time the cause of action arose, as a ground for the same relief asked for in the action in this state.”

Upon tbe evidence the master’s opinion was that the cause of action on this petition for divorce for two years desertion arose in the State of New York (the place where, according to the wife’s evidence, she resided at the beginning of the term of the desertion), and not in the State of New Jersey, the place where she resided at the expiration of the two years fixed by the act as a cause for divorce, and that the case came not under paragraph (a) but under paragraph (6), the proviso of which required petitioner to prove that the cause of action alleged was recognized in New York as a ground for the same relief asked for in the petition. For the failure either to make such allegation in the petition, or proof thereof before him, he advised dismissal of the petition. In this view, as to the place of petitioner’s residence when the cause of action arose, within the meaning of this section, the master was in error.

This section must of course be read in connection with the previous sections of the act, and also in view of the object of the entire Divorce Revision act of 1907. P. L. 1907 p. 474. This act, which embraced the subjects of divorce, decrees for nullity, alimony and maintenance, made substantial changes in the existing laws, especially with reference to the jurisdiction of this court, and the scope of the act may be briefly stated, for present purposes, as follows: Subdivision I. relates to “Decrees for Nullity,” and subdivision II., page 475, to “Causes for Divorce,” the word “causes” being here used in the sense or meaning of “grounds” or “reasons” for decrees of divorce, either absolute (section 2) or limited (section 3). As to absolute divorces, the provision is:

“Causes for Divorce.
“2. Divorces from the bond of matrimony may be decreed for the following causes:
“I. Adultery by either of the parties;
“II. Willful, continued and obstinate desertion for the term of two years.”

Subdivision III.—“Jurisdiction”—contains the provision as to jurisdiction (sections 4 to 8), section 4 being as follows: “4. The court of chancery shall have jurisdiction of all causes of divorce or nullity and of alimony and maintenance by this act directed and allowed.” In this section, intended to designate the court in which suits for divorce are to be brought, the words “causes of divorce” are used in the sense of suits or actions for divorce.

Section 5 prescribes the manner of acquiring jurisdiction in annulment cases—first, by personal service of process within the state, and second, by publication, followed where practicable by other notice as directed.

Sections 6 and 7 prescribe the manner of service for acquiring jurisdiction “for purposes of divorce, either absolute or from bed and board,” the former section giving jurisdiction by personal service of process within the state; the latter, by publication, followed by other notice or service. In both sections 6 and 7 the acquiring of jurisdiction is prescribed to be upon conditions connected with bona fide residence in this state, and prescribed by paragraphs (a) and (b) in each section. These conditions are similar in the paragraphs of the two sections, except that in section 6, where jurisdiction is obtained by personal service within the state, the conditions apply to the residence of either party, while under section 7, where jurisdiction is obtained by publication, the- conditions refer solely to the petitioner’s residence.

The conditions now under consideration in paragraphs (a) and (6), under these two sections, contemplate that when that, which is called in these sections “the cause of action,” arises, either of the parties (under section 6) or the petitioner (under section 7) may be a resident of this state or may be a resident of another jurisdiction, and a condition of jurisdiction of the court is added, which depends upon the place of residence at the time when the cause of action arises, and differs in the two cases of domestic or foreign residence at that time. Paragraph (a) in both sections gives jurisdiction “when, at the time the cause of action arose, either party (under section 6) or the petitioner (section 7) was a bona fide resident of this state.” Paragraph (5) in both sections gives jurisdiction “when, since the cause of action arose, either party (under section 6) or the petitioner (section 7) has become a bona, fide resident of this state.” In such case, i. e., where the cause of action arose in another state, a further limitation is added by the proviso in paragraph (b) of both sections:

“Provided, the cause of action alleged was recognized in the jurisdiction in which such party resided at the time the cause of action arose, as a ground for the same relief asked for in the action in this state.”

The remaining sections of the act, with the exception of section 33, relate to “Procedure and Practice,” subdivision IV., sections 9-24; “Alimony and Maintenance,” subdivision V., sections 25-j21'; “Miscellaneous Provisions,” subdivision VI., sections 28-32, and have no bearing on the present issue.

Section 33, however, was a new provision relating to “Foreign Decrees,” subdivision VII., and should be considered in connection with the jurisdiction clauses of the act, to which this section expressly refers for its test or standard of the validity in this state of the foreign decree.

This section provides that

“Full faith and credit shall be given in all courts of this state to a decree of annulment of marriage or divorce by a court of competent jurisdiction in another state, territory or possession of the United States when the jurisdiction of such court was obtained in the manner and in substantial conformity with the conditions prescribed in sections five, six and seven of this act. * * * provided, that if any inhabitant of this state shall go into another state, territory or country, in order to obtain a decree of divorce for a cause which occurred while the parties resided in this state, or for a cause which is not ground for divorce under the laws of this state, a decree so obtained shall be of no force or effect in this state.”

The present question relates to the construction of these clauses in the sixth and seventh sections prescribing conditions connected with the residence of parties “at the time the cause of action arose,” and they must be construed in view of and in connection with the previous sections of the act, and also with the object of the whole act in view.

And if doubt as to the construction of the words should arise on the face of the act, it would be proper, I think, to resort to the public acts and proceedings showing that the adoption of the jurisdiction clauses in their present form was on the recommendation of a conference or congress of commissioners from a large number of states (in which New Jersey was represented) held for the purpose of framing a uniform divorce law to be adopted by the several states. (Special message of the" governor of New Jersey, March 12th, 1907. Minutes of Assembly, pages 392, &e., and report of commissioners referred to in same.)

If these be examined, it will appear that these provisions, as to jurisdiction and the effect of foreign decrees, were recommended by the divorce congress for adoption by all the states, for the purpose of establishing uniform rules which should remedy the evils of the so-called “Migratory Divorces,” and reach all cases relating to the effect of foreign decrees not covered by the federal constitution as interpreted by the supreme court.

As it seems to me, however, the construction of the act, so far as relates to the case in hand, does not give rise to any doubt.

The view of the master seems to have been that inasmuch as the desertion originated in New York, the “cause of action” arose there. This view treats mere desertion in New York, without regard to its continuance, as being a “cause of action,” within the meaning of section 6, and as a cause of action arising in New York.

Section 2 of the act which prescribes the “causes for divorce” from the bond of matrimony as being—first, adultery, and second, desertion for two years, omits altogether any reference to the place where the offence is committed, and relates merely to the substantive grounds or reasons for ■ divorce, without regard to whether the offences are committed in the state or elsewhere. The clauses (&) in both sections 6 and 7 show that the offence defined in section 2, and which is made by that section a “cause” or “ground” for divorce in New Jersey, may arise either in this or another state. As to adultery, one of the two causes for divorce, residence at the time the cause of action arose by reason of a specified act, is necessarily referable to a certain time and place. Desertion, the second cause of divorce, on the other hand, being a continuous act, may or may not become a completed “cause or ground for divorce” in New Jersey, within the second section, and the cause of action or ground for divorce under the New Jersey statute—desertion for two years does not arise until the termination" of two years. But in both cases, it is the intention of the statute to refer the question of residence to a certain and fixed instant of time, and this time, in desertion cases, must, I think, be taken to be the time when the cause or ground for divorce for desertion, under the second section, is terminated and a cause of action arises upon this cause or ground for divorce. This time is the end of the two years continuous desertion, whether in this state or elsewhere, and cannot be taken to mean the commencement of the desertion, or any other time before the termination. If, at this time, either party (under section 6) or the petitioner (under section 7) afterwards becomes a resident, then the two further conditions as to'jurisdiction prescribed by the proviso to paragraph (5), in sections 6 and 7, become applicable; and it must be shown—first, that one of the parties (under section 6) or the petitioner (under section 7) becoming a resident of this state after the cause of action arose, has continued to be such resident for at least two years before bringing the action; and second, that the cause of action (meaning here cause of divorce) alleged in the petition was recognized in the jurisdiction where the party (under section 6) or the petitioner (under section 7) resided at the time 'the cause of action arose, as a ground for the same relief asked 'for in the action in this state.

On this construction of the act, the petitioner, upon the evidence before the master, resided in this state when the cause of action arose, and the case came under paragraph (a) of section 6 instead of paragraph (&).

The other conditions of jurisdiction annexed to paragraph (a), viz., continuance of residence in this state from the time the cause of action arose to the time of commencing the action, and two years’ residence next preceding the action, have both been complied with in the present ease.

A decree sustaining the exceptions and granting a divorce will be advised.


author: Emery, V. C.

text:
    The State of New Jersey, ex rel. Board of Health of Pompton Lakes, v. E. I. DuPont de Nemours Powder Company.
    [Decided August 4th, 1911.]
    The Health act (2 Gen. Stat. 1895 p. 1640 § 28) provides that any local board of health, instead of .summarily abating a nuisance hazardous to the public health, may file a bill in chancery in the name of the state for an injunction to prohibit its continuance, and that such action shall proceed according to the practice in such cases on the relation of individuals, and emergency cases shall have precedence over other litigation, and may be heard on final hearing within such time as a chancellor directs.—Held, that the statute only contemplated the granting of an injunction on final hearing, and a preliminary injunction should not be granted, especially where defendant’s affidavits made a substantial question as to the existence of a nuisance dangerous to the public health at the time of the hearing of the motion for a preliminary injunction.
    On. application, for preliminary injunction. Heard on bill and affidavits, answer and affidavits, and affidavits in reply.

      Mr. Allan G. Rowe, for the complainant.

      Mr. Frederick J. Faulks and Mr. J. P. Laffey (of the Delaware bar), for the defendant. Messrs. Lindabury, Depue & Faulks, solicitors.
   Emery, V. C.

The bill in this ease is filed by a local board of health under the Health acts, to enjoin the continuance of a nuisance hazardous to the public health, alleged to be created by the defendant’s operation of its fulminate of mercury plant, spreading noxious fumes and vapors in the borough. On the bill and ex parte affidavits filed by complainant, answer and affidavits by defendant, and affidavits in reply, application is now made for a preliminary injunction.

The affidavits filed in support of defendant’s answer show a fairly disputed question of'fact as to the existence, at the time of the filing of the bill, of a nuisance hazardous to the public health, and the question of nuisance or no nuisance, should not be determined upon ex parte affidavits, and pending the hearing, even if the case in this respect was one to be governed by the usual practice of the court in reference to the granting of preliminary injunctions in cases of nuisance to individuals.

Preliminary injunctions are ordinarily granted for tire necessary protection of property and rights to or connected with property, pending the final hearing, and for the purpose of preserving the status quo, in order that a decree on final hearing may be effective. Kerr Inj. *338, *340. In Attorney-General v. United, &c., Telegraph Co. (1862), 31 L. J. Ch. 329, which was an information and bill to enjoin a public nuisance, Romilly, M. R., said (at p. 331) that whatever the court might do on final hearing, it interfered by interlocutory injunction only to protect property. Where, on the application for preliminary injunction, the property right sought to be protected is not subject to dispute, and satisfactory proofs of specific instances of violation are made by the affidavits, a preliminary injunction restraining defendant from committing the alleged nuisance, pending the hearing, is sometimes granted, for the purpose of protecting complainant’s enjoyment of his property pending suit, and this is granted even .though the defendant’s answer and affidavits question or deny the commission of the nuisance. But, unless the case of nuisance to individuals is one which comes within the rule of protection against what is considered irreparable injury, the restraint of the private nuisance by injunction, where the fact of nuisance is fairly disputed, is generally withheld until final hearing, and sometimes until after settlement of the question at law. The present bill, however, is not based on the general equity jurisdiction of the court for the protection of any property or property rights, either of the state or of the relators, and the sole basis for the present application to the court is the statutory right given to the relators by the Health act. The local boards of health (Gen. Stat. p. 1687 § 13) are to examine into all nuisances, foul or noxious odors, gases or vapors, and all causes of disease which may be known to them or brought to •their attention, which, in their opinion, are injurious to the health of the ¿¿habitants within their respective jurisdictions, and to cause them to be removed and abated. By section 14 of the act, the local board, if it finds such nuisance to exist, may order the owner to remove or abate them, and on his failure to comply with the order, the board is directed “to proceed to abate such nuisance and remove the cause of such foul and noxious odors, gases or vapors, or other thing detrimental to the public health.” This abatement by the board (section 27) may be in a summary way by written directions to its inspector who is to proceed according to the direction.

Such summary abatement by the board, .however, leaves the board and its officers subject to an action, if it is shown that the nuisance did not exist and Avas not hazardous to public health, and that the board acted Avithout reasonable and probable cause to believe that the nuisance did exist.

Section 28 provides that

“any such local board of health instead of proceeding in a summary way to abate a nuisance hazardoris to the public health, may file a bill in the court of chancery, in the name of the state, on the relation of such board of health, for an injunction to prohibit the continuance of such nuisance, and such actions shall proceed in the court of chancery according to the rules and practice in such cases on the relation of individuals, and cases of emergency shall have precedence over other litigation pending at the time in the court of chancery and may be heard on final hearing within such time and on such notice as the chancellor shall direct.”

This section of the act of 1887 is the tenth section of the act of March 22d, 1883. P. L. 1883 p. 119, &c. The board of health has declared the fulminate of mercury plant as operated by the defendant to be a nuisance, but has not taken summary proceedings to abate it, and has directed the filing of the bill to abate it.

Before the passage of these acts, the jurisdiction of the court of chancery of New Jersey over nuisances of this character was exercised for the protection of the- enjoyment of property. The usual remedy for a public nuisance was by indictment, where the fact of nuisance, when disputed, was established by a jury and there was a judgment before the abatement of the nuisance. The attorney-general, as representing the public, may have the right to file a bill or information to enjoin a public nuisance of the character alleged—Hutchinson v. Board of Health (Court of Errors and Appeals, 1885), 39 N. J. Eq. (12 Stew.) 569, 573 (Mr. Justice Magie)—and such proceeding for injunction might better work out the public right in cases where, as in the present ease, the nuisance alleged, if it exists, arises from the method of use of defendant’s property, and control of the method of use, rather than the destruction or removal of the property used, is the object finally sought. We have, however, in New Jersey, so far as I have been able to find, no precedents for such bill or information by the attorney-general to enjoin nuisances of this character alleged to be public nuisances, and independent of special statutory jurisdiction, the general rule is settled that where the grievance is subject to indictment equity interferes with great reluctance, even though its intervention be sought by the attorney-general. Township of Rarilan v. Port Reading Railroad Co. (Chancellor McGill, 1891), 49 N. J. Eq. (4 Dick.) 11, and cases cited (at p. 16). The Health acts expressly confer the jurisdiction for injunction and provide for expediting the final hearing where the emergency demands it. But under these acts, the nuisance must be a nuisance hazardous to the public health, and a nuisance such as would subject the defendant to indictment. State, ex rel. Board of Hackensack, v. Chosen Freeholders of Bergen County (Vice-Chancellor Pitney, 1889), 46 N. J. Eq. (1 Dick.) 173, 177; affirmed on appeal for reasons stated, 48 N. J. Eq. (3 Dick.) 294.

The injunction contemplated by the twenty-eighth section was, in my judgment, the injunction to be granted on the final hearing, and it may fairly be questioned whether on a bill of this kind there is any right to grant a preliminary injunction, if the existence of the public nuisance is fairly disputed. In every case to which I have been referred, the jurisdiction for injunction under these acts was exercised only after final hearing. Butterfoss v. State (Court of Errors and Appeals, 1885), 40 N. J. Eq. (13 Stew.) 325; State, ex rel. Board of Health, v. Niedt, 19 Atl. Rep. 318; State, ex rel. Board of Health, v. Lederer (Vice-Chancellor Bird, 1894), 52 N. J. Eq. (7 Dick.) 675; Hutchinson v. Board of Health (Vice-Chancellor Bird, 1885), 39 N. J. Eq. (12 Stew.) 218; affirmed on appeal, Ibid. 569.

In a somewhat similar proceeding under another statute providing for bills on the relation of a local board of health to prevent the pollution of streams by the use of structures discharging sewage, I concluded that there was no such right on preliminary injunction to remove the structure, and denied the application. Board of Health v. Summit (1903), 56 Atl. Rep. 125.

In the present case, the affidavits presented by the defendants show such a substantial question as to the existence of a nuisance dangerous to the public health, at the time of the filing of the bill, and at the time of hearing on the motion, that even if the right exists under the statute, it should not be exercised. The application will therefore be denied, the costs to abide the event of the suit.


author: Emery, V. 0.

text:
    Mary A. Gilligan et al. v. John K. Daly et al.
    [Decided August 4th, 1911.]
    1. While a guardian’s neglect to file accounts will be given due weight in determining whether he should be allowed compensation, there is no absolute rule in the matter, and, where a guardian of minors was appointed on February 1st, 1899, kept regular accounts with vouchers for disbursements, and was always willing to submit them to inspection, his delay in filing formal accounts until 1911, when he annexed his account to his answer in an action for an accounting, was not so unreasonable as to deprive him of the statutory compensation.
    2. In continuing decedent’s business without authority, an executor assumes the risk of loss therein from any cause, including payment for his services or additional expense in settling his accounts.
    3. As a rule, the beneficiaries may either charge an executor continuing decedent’s business without authority with the value of the estate and interest, or, at their option, with the net profit realized they being entitled to an accounting of profits to determine which they shall do.
    4. -In estimating the net profits of a business continued by an executor without authority, in order to charge him therewith, only profits resulting from the employment of testator’s estate should be considered, making allowance for the business skill and credit of the executor in conducting the business.
    5. In ascertaining the net profits of a business conducted by an executor without authority after decedent’s death, compensation for his services in conducting the business may be allowed as expenses and deducted from the profits of the business, if the business is not conducted at a loss.
    6. Where an executor continues decedent’s business without authority, the legatees cannot be required to pay him compensation for services in conducting the business, or expenses in settling its accounts, including counsel fees incurred by litigation necessary in settling the accounts, from property other than that coming into his hands.
    7. The settling of the accounts of a business continued by an executor without authority after testator’s death is properly made in the chancery court rather than in the orphans court, especially where ihe executor claims payment for his services in conducting the business, and asks a personal decree against the legatees for payment of any deficiency.

      K. Where a business continued without authority by an executor after testator’s death, though mortgaged, had a substantial value when taken over by him, but was afterwards sold by him for a nominal price, the executor would be chargeable for any future claim on the mortgage debt if the purchaser did not assume it.
    9. Beneficiaries under the will are entitled to offset their claim to a fair rental value of premises connected with a business continued by the executor without authority against payments made by him for the benefit of the estate by continuing the business.
    On bill for accounting. On exceptions to master’s report.

      Mr. John J. Mulvwmy, for the exceptants.

      Messrs. Collins. & Corbin, for the defendant Gallagher.

      Mr. Charles M. Egan, for the defendant Daly.
   Emery, V. 0.

This is a bill for accounting filed by Mrs. Gilligan and Thomas Boylan, two of the children and legatees of Mary E. Boylan, against defendants Daly and Boylan, executors of testatrix, and also against the defendant Dennis Gallagher, guardian of all the children. Matthew and Irene Boylan, the two other children, and legatees, are also parties defendant. At the time of her death the testatrix was carrying on the undertaking business in Jersey City on property on Pavonia avenue belonging to her and she lived in another of her houses on Ninth street. Testatrix owned another lot on Henderson street with a stable thereon. All four children were minors at testatrix’s death February 1st, 1899, the ages of the children being then, respectively, about twenty, seventeen, fifteen and twelve years. Complainant Mrs. Gilligan had been recently married. The defendant Daly, the brother of testator, assumed sole charge of the administration of the estate, as acting executor, and continued the business. This was done, as he says, at the verbal request of his sister just before her death, and for the purpose of keeping the young family together and aiding in their support. The will did not authorize or request the continuance of the business. The business was carried on by the executor in the name of M. J. Boylan, the husband of the testatrix, who had originally established it, and in the name under which testatrix had carried it on since her husband’s death in 1891. The business continued until June, 1907, when it was sold by the executors and purchased by or for the benefit of defendant Matthew, who had been employed for some years by the executor in carrying it on. The value of the goods and chattels used in connection with the business received by the executors was about $1,838, as valued in the inventory, the same being subject, however, to a chattel mortgage held by the National Casket Company for about $1,800. At the time of the sale in 1907 the mortgage had been reduced by payments made from the business to about $1,000, and the entire property, subject to the mortgage, was sold to the purchaser for one dollar, the mortgage so far as appears not being assumed by him. The residue of the chattels realized $139 at the sale, being purchased by the solicitor of the executor and Matthew. The depreciation in value of the stock (assuming that the purchaser is to pay the balance due on the mortgage) by reason of its continued use in the business, is thus an amount about equal to the payment on the mortgage. The business was continued by the executor, not for his own personal benefit, but with the object of benefiting the family. The executor himself, for the purpose of keeping the family together, and at. the request of the older children, removed to the homestead house and occupied a portion of it, paying to the guardian what seems to have been a fair rent for the portion occupied by himself and his family. For some years after the mother’s death the younger children, except Thomas, lived with the oldest, Mrs. Gilligan. Thomas was employed in the business, but for a short time only. The daughter Irene also assisted, and Matthew, the younger son, was employed from his sixteenth year, became the manager of the business, and finally became the owner of it. No account had ever been filed by the executor, and in connection with a bill filed by the complainants for partition of the real estate, after the sale of the business, this bill for accounting by the executor is filed. The executor Daly had kept books of account in the course of the business, showing its receipts and disbursements, and in the fall of 1906, on complainants’ demand for an accounting, a general statement taken from these books was made, and some examination of the books was made by or under the direction of complainants. This examination apparently was at the complainants’ own expense. On the present bill for accounting the executor did not submit any account with his answer. The defendant guardian annexed his account to his answer. Eeference to a master was ordered both in the partition and accounting suit, to state the executors’ and guardian’s accounts, and also accounts as between the children. The statement of the executors’ accounts involved the production and examination of the books of accounts of the business, and testimony in reference to the conditions of carrying it on. The master reported that the business was carried on without authority, but that it was not carried on by the executor for his personal benefit or profit, but with the intention of benefiting the estate in the general interest of the family. He reported further that the carrying on of the business had not resulted in any loss to the estate, but, on the contrary, had been for the benefit of the estate to the extejnt of about $2,250 by payments made for the benefit of the estate, viz., $942.08 on account of the chattel mortgage, $600 on account of a real estate mortgage on the Ninth street and Henderson street properties, and $800 paid to or for the benefit of the children— $200 each. He also finds that in carrying on the business the executor himself advanced money necessary to pay current bills and himself supervised the business. In keeping the accounts the executor had made no charge for his services, but in stating and reporting the accounts the master while allowing to the guardian commissions according to the statutory rate, reports as to the executor, that after due consideration he fixes his commission at $600. He further allows to the counsel of the executor and of the guardian $250 each. The counsel for the executor is also the counsel for the defendant Matthew Boylan and for the guardian ad litem of the infant defendant Irene Boylan, who now lives with her uncle, the executor. No counsel fee was allowed to the complainants. Several exceptions were filed to the master’s report, but complainants have formally waived all the exceptions bnt those relating to the commissions and counsel fees.

As to the guardian’s account, the objection is that not having regularly made and filed his accounts, he is not entitled to any commissions or allowances. While the neglect or omission to file accounts will always be given due weight in considering all the circumstances, there is no hard and fast rule that the mere omission to file them disentitles the guardian to compensation. Wilson v. Staats, 33 N. J. Eq. (6 Stew.) 524; In re Barcalow (Chancellor Runyon, 1877), 29 N. J. Eq. (2 Stew.) 282, 285; Burkholm v. Wardell (Chancellor Runyon, 1886), 12 N. J. Eq. (15 Stew.) 237; 11 Am. & Eng. Encycl. L. (2d ed.) 1284. In this case the guardian seems to have kept regular accounts with vouchers for disbursements, and to have been ready to submit them for inspection, and the delay in the general settlement of the accounts, while not regular, was not so unreasonable as to deprive the guardian of his statutory compensation. The allowance did not exceed the statutory fees and the exceptions to such allowance as well as to the counsel fees allowed to the guardian, which appear to be reasonable, are overruled.

The commissions allowed to the executor stand on a different basis. The statute, Orphans Court act (Rev., P. L. 1898 p. 762 § 129), provides that the commissions' of executors, &c., shall not exceed the following rates: “On all sums that come into their hands not exceeding $1,000, seven per centum; if over $1,000, and not exceeding $5,000, four per cefitum, on such excess,” &c. The entire amount of the personal property which came to the executor and as inventoried was less than $3,000, and had this entire amount passed through the executor’s hands, the commissions to which the estate of deceased as it was at her death would have been subject, was not over $150.- In carrying on the business, the executor clearly acted without authority, not only because of the general rule relating to the administration of estates, but also because all of the legatees were infants, incapable of consenting to the continuance, and one of them is still an infant. One risk which an executor takes in such continuance of business is that the estate shall suffer no loss therefrom, and this indemnity against loss extends to loss by reason of running the business as well from payments fox service of the executor in carrying it on, or additional expenses in settling his accounts, as from any other cause.

Where an executor continues the business of testator under authority of the will, or merely for the purpose of winding up the business, his compensation for this service is included in his commissions as executor, and the basis for fixing commissions is not the gross receipts or expenses of the business, but the net income and the amount by which this increases the corpus of the fund, and cannot include a charge for services in continuing the business. In re Merchants Case (Chancellor Runyon, 1885), 39 N. J. Eq. (12 Stew.) 506, 509; affirmed on appeal, 41 N. J. Eq. (14 Stew.) 349; Beard v. Beard (1893), 140 N. Y. 260, 264; 18 Cyc. 1150. In the present ca.se, the entire gross receipts of the business up to December 31st, 1907, according to the executor's accounts as presented to the muster, were $69,152.64, and the entire disbursements were $68,574.36 (not including the executor’s allowance or counsel fee), and if the executors’ commissions be considered to stand on the same basis as if the business were authorized, there has been no increase of the corpus, but rather a diminution, unless the payments of $2,250, above referred to, be considered as additions.

But the right of the executor to compensation (beyond his statutory commissions on the amount of the estate coming to his hands) is based on other principles where the carrying on of the business is unauthorized. In such case the general rule is that the beneficiaries have the option to charge the executor either with the value of the estate and interest or with the amount of the net profits realized from the business. 3 Wms. Ex. *1793; 1 Perry Trusts 430; 11 Am. & Eng. Encycl. L. (2d ed.) 975. And the beneficiaries have the right to an account of the profits for the purpose of determining this option.

In estimating the profits, the general basis for charging trustees is, that, so far as ascertainable, they should include only the profits resulting from the employment of the testator’s estate as capital, and due allowance should b'e made for other elements creating the profits, such as the business skill and credit of the executor carrying it on. Willett v. Blanford (Vice-Chancellor Wigram, 1842), 1 Hare 253; 11 L. J. Ch. 182; Vyse v. Foster (C. A., 1873), L. R. 8 Ch. 309; 42 L. J. Ch. 245, 250; S. C., on appeal to house of lords, 44 L. J. Ch. 37, 47; 7 H. L. 318. Compensation for executor’s services may be allowed as part of the expenses of the business and be deducted in ascertaining the net profits with which he is chargeable, but in carrying on the business without authority, the executor is at the absolute risk that the estate which comes to his hands suffer no loss or diminution by reason of carrying on the business. If the executor can show that there has been no loss, but rather a benefit to the estate, then no liability to the estate results from his illegal action other than that of accounting for the profits or benefits received, and in so accounting for the profits or benefits received, he may be allowed proper compensation for his services in carrying on the business, and such allowance will be deducted from the profits for which he is to account. These seem to be the general principles on which allowances in these cases are based. It might happen, therefore, that the actual compensation to the executor in cases where the business was continued without authority, would sometimes be larger than where authorized, and therefore fixed by the statute, but it is to be considered—first, that in the former case the continuance of the business is at the personal risk of the executor’s indemnifying the estate against loss, and also of being personally liable for debts, and secondly, that this court in enforcing the liability of trustees does not act as a court of penal jurisdiction or for the purpose of punishment, but only for the purpose of compelling restitution, or granting compensation for losses actually sustained. Lord James in Vyse v. Foster, supra; 42 L. J. Ch. 251. The indemnity to the estate against loss includes, in my judgment, protection of the legatees against being called on by the executor for payment from property other than that which came to the executor’s hands, of any portion either of his compensation for services in carrying on the business or expenses of settling its accounts, including counsel fees incurred by reason of litigation necessary for the settlement of the accounts. The examination and settlement of the accounts of the business in this court rather than in the orphans court was proper, especially in view of the fact that the executor on the settlement claims payment for his services rendered in carrying on the business, and should the amount claimed be allowed, he now asks a personal decree against the legatees for payment of the deficiency. In considering therefore whether the carrying on of the business has been a benefit to the estate, the additional expense of the litigation reasonably necessary in this court over the account must be charged as an expense of the business. The payments made for the benefit of the estate from carrying on the business must be examined from this point of view, and will be considered in their order as given in the master’s report—first, the payment of $943.08 on account of the chattel mortgage. This payment is offset by the depreciation in value of the property covered by the mortgage. When taken by the executor it was valued at $1,740 (as appears by the executor’s answer), and was sold in June, 1907, for one dollar, subject to the mortgage. Unless the purchaser assumed the mortgage, the executor still remains chargeable for the future claim on the debt secured by the mortgage. Second, the sum of $600 applied on the Daumont mortgage on the Ninth street and Henderson street properties, and third, the sum of $300 paid to each of the four children—$800 in all. These last payments to the children seem to have been made, not out of the business, but out of rents received after the business had ceased. As against the $600 and any other payments claimed to have been made for the benefit of the estate by carrying on the business, the children are clearly entitled to offset their claim to a fair rental for the premises. Rental is an expense of the business and should not be contributed by the beneficiaries. The guardian of the infants shortty after the death of the testatrix paid off with money received for the children from life insurance moneys, a mortgage of $3,500 which he himself had been carrying on the property, and from that time the property was unencumbered. The building on it was a frame building, built for a stable, but fronting on Pavonia avenue, a business street, and the front part of the building was fitted up for and used as -an office in connection with the undertaking business. It had considerable rental value, one witness (the only one on this point) estimating it at $50 per month. After the sale of the business in 1907, the executor Daly seems to have received as rentals from Matthew $30 per month'for the property. During the time the executor carried on the business and up to July, 1907, no rent whatever was paid for the Pavonia avenue property, but from the business there was paid the taxes on the property, and water rents from 1902, amounting to $1,269.43. In the years 1899, 1900, 1901 and 1903, the guardian of the infants, according to his accounts, paid. $198.10 for taxes, $52.50 for insurance, and about $60 for water rents, in all over three hundred dollars charges on the Pavonia avenue property. If these amounts be deducted from the amount stated to have been paid from the business for the benefit of the infants, it leaves the sum of $909.43, and $600 for the eighit years the business was carried on to be offset against rents for the property. From June 26th, 1907, Matthew has been paying $30 per month for this property, a total of $840 up to the stating of the account (October 15th, 1909), and from this rent and rents received by the executor from other properties during the same interval, to the extent of $890, the executor, after closing out the business, has paid taxes and other charges and also the $800 to the devisees. These payments do not seem to have been made out of the business. That a rental of $200 per year above the taxes and water rents and insurance could have been received is so probable, that in the absence of clear evidence to the contrary, I am not willing to adjust the executor’s account of the business as -if he had proved satisfactorily that the carrying on of the business was a benefit to the estate pecuniarily. If the. allowance of $600 as his compensation for carrying on the business be sustained, there is no benefit whatever to the estate, but, on the contrary, a loss, inasmuch as his compensation for carrying on the business and counsel fees rendered necessary in settling the business accounts must be paid by the children out of the proceeds of the sale of the lauds devised to them by the testatrix, and which never passed through the executor’s hands at all. Payment from this source would manifestly be a return or repayment by the devisees of any moneys received by them from the business, and if allowed, charges them instead of the executor with a portion of the expenses for carrying it on. As the executor’s account appears to stand, and on the evidence, it is not satisfactorily proved that the estate, up to this date at least, has benefited by the carrying on of the business, and inasmuch as the executor in taking this risk is bound to indemnify the estate against loss, I am not willing in this case to allow him compensation for his services in carrying on the business on the basis of proof of benefit. If the estate is relieved from the obligation of the chattel mortgage, he is entitled now, I think, to commissions on the value as fixed by the inventory, but inasmuch as the sale of the mortgaged chattels produced only one dollar, it is clear that nothing has passed through his hands on this account, unless by his sale he has procured the payment of the mortgage. The exception to the allowance of $600 compensation and to $250 counsel fee is therefore sustained.

This is without prejudice, however, to any application which may be made hereafter for an allowance to the executor out of the net profits resulting from the business. It appears by the executor’s evidence that several thousand dollars of debts are uncollected, and he estimated (then) that $1,000 might be collected. For such collections he must hereafter account, and when the entire accounts of the business are closed, he may apply for compensation out of any profits appearing1 to have arisen. His compensation on this accounting must be limited to his statutory fees based on the inventory values, and be conditional on the estate being relieved from obligation under the chattel mortgage.


author: Stevens, Y. C.

text:
    First Italian Building and Loan Association v. Rosina M. DiNiscia et al.
    [Decided November 26th, 1910.]
    1. A building and loan association agreed to lend $6,000 to one of its stockholders and took from the stockholder and her husband, as security, their bond conditioned to pay one dollar monthly on each of the thirty shares of stock owned by her, and to pay interest monthly, until the shares should attain the par value of $200 each; and also took a mortgage, the purpose of which, as expressed in the condition, was to secure the payment of the sum of money mentioned in the condition of the bond “at the time and times and in the manner mentioned in the said condition.”—Held, in a suit to foreclose such mortgage, that the defendant could not set up a partial non-performance by the association of its agreement to lend the full sum of $6,000 as a bar to the recovery of the money actually advanced, and that if the association could recover at all, it would necessarily be on the footing of its contract which was not to pay $6,000 at the time the mortgage was executed, but, in the language of the association’s minutes, “gradually, according to the progress of the work.”
    2. It does not follow that because of a default of the association in making particular payments the defendant can rescind in loto, and refuse to repay anything.
    3. The defence that the association having refused to pay over a part of what it had agreed to lend, should have applied the money retained to the payment of the unpaid dues and interest, is not available to the mortgagors, inasmuch as this duty, if it existed, must have sprung out of a custom of the association known to its customers or out of an express contract, and the defendants have not proved either.
    4. The claim that the association actually applied the money retained to the payment of dues and interest, is not sustained by proof that the association gave the stockholder a pass-book in which the secretary entered certain credits; it appearing that, by the by-laws, (1) the treasurer is the person authorized to receipt for dues and not the secretary, and (2) that the monthly payments were to be made at monthly meetings, and the entries actually made were not made at such meetings, and that as the contract was to advance money for the purpose of completing the building, it was incumbent on the defendants to show that the same was-changed by the mutual agreement of the parties.

      Mr. Cecil M. McMahon, for the complainant.

      Mr. William A. Lord, for the defendant.
   Stevens, Y. C.

This is a suit to foreclose a building and loan mortgage. The owner of the property is Eosina DiNiscia. Her husband is a builder, and, as is admitted, acted as her agent in procuring the loan. He was engaged in erecting a building upon the property, and applied to the defendant association for money to be used in its construction. The association agreed to lend him $6,000. His wife took thirty shares of stock of the association, and he and his wife on April 16th, 1907, executed a bond and mortgage to secure the sum to be borrowed. The mortgage stipulated as follows:

“Now this indenture witnesseth that the said parties of the first part for the better securing the payment of the said sum of money mentioned in the condition of the said bond or obligation with interest thereon * * * grant the property in question * * * provided always and these presents are upon this express condition that if the parties of the first part shall well and truly pay unto the party of the second part its successors or assigns, the said sum of money mentioned in the condition of the said bond or obligation and the interest thereon at the time and times and in the manner mentioned in the said condition according to the true intent and meaning thereof, that then these presents and the estate hereby granted shall cease, determine and be void.”

The condition of the bond reads as follows:

“The condition of the above obligation is such that if the above bounden Rosina M. DiNiscia and Angelo M. DiNiscia * * * shall well and truly pay or cause to be paid unto the above-named association its successors or assigns the just and full sum of $6,000 in manner following, viz., by the payment of one dollar on each of the thirty shares of the capital stock of said association owned by the said Rosina M. DiNiscia and standing in her name on the books of the association and assigned to it as collateral security for the payment hereof and on which this loan is based on the third Tuesday of each and every month hereafter or such other time as may hereafter be appointed for that purpose until the said shares shall attain the par value of two hundred dollars each, together with interest on said sum and to be computed at the rate of six per cent. per annum and payable monthly at the same time and in the same manner as the stock payments aforesaid and also all fines * * * then the above obligation to be void,” &c.

It -will thus be seen that the obligation is not to repay $6,000 with interest at a specified time, but to pay one dollar monthly on each share of stock and to pay interest, monthly, until the shares attain the par value of $200 per share. It is conceded that the mortgagors did not do this. They paid neither dues nor interest. The bond provides that if the dues and interest remain in arrears for' three months, the principal or the unpaid residue thereof shall become due.

The defence appears to be threefold-—first, that complainant is not in a position to foreclose because it did not itself perform its contract; second, that having refused to pay over a part of the $6,000, which it had agreed to lend, it should have applied the money retained to the payment of the dues and interest; third, that it actually so applied them.

First. The association, in April, agreed, not to pay over $6,-000 at the time the mortgage was executed, but to pay that sum, in the language of the minutes of the association, “gradually, according to the progress of the work.” In July following, at a meeting of the board of directors, it was agreed to lend $1,000 more. DiNiscia admits that he was present at this July meeting. The minutes of it contain the following paragraph:

“The president has declared to the board that in consequence of the misunderstanding between Mrs. Bosina DiNiscia, James M. Trimble and the board of directors regarding the use of the money loaned to Bosina DiNiscia, part of it has been used to pay debts existing on the property mortgaged to the association and that in consequence the rest of the money loaned is not sufficient to complete the building for the purpose loaned and says that the money needed is about $1,000, and that a way should be found to solve this advertence.”

The minutes then go on to state that Mrs. DiNiscia should find four competent persons, a mason, a carpenter, a plumber and a painter to finish the house, “the total estimated amounts not to go above the amount left from the first loan, plus a $1,000 additional loan.” The persons selected were not to demand any money for work or material furnished until the work was completed and approved. The minute ends as follows:

“But said contractors may by guaranteeing to Mrs. Kosina DiNiscia and the association, draw fifty per cent, of the value of the work done, leaving the balance of the payment when the property is conveyed (completely?) finished.”

' A second mortgage was executed to secure the additional $1,-000, but no money was advanced upon it. The association paid in all, between April 23d and December 20th, 1907, about $4,-900; perhaps a little more. It refused to make further payments because, as it claimed, DiNiscia could not complete the work for the sum agreed to be lent and could not obtain money from other sources sufficient to enable him to finish the building in such a way that it would be free from liens having priority over the mortgages of the association.

The question first presented is whether the association violated its agreement. Unfortunately, the evidence of the two witnesses who could have testified most understandingly on the subject is lacking. Mr. Trimble, the counsel of the association, is dead. Its secretary, a lawyer of Italian birth, is at present mentally disabled. The evidence is vague, but the weight of it seems to be against defendant’s contention, that the building could have been finished and left free from lien, for the sum which the association agreed to lend. No reason is apparent why the association should not have performed its. part of the contract if DiNiscia had performed his.

But on the assumption that Mrs. DiNiscia is right in asserting that the company violated its agreement to lend her the money, she does not show that she has a defence to the foreclosure. The contract, as expressed in the minutes of April, 1907, was to pay gradually as the work progressed. It does not follow that because of a default by the association in making particular payments the defendants can rescind in to to and refuse to repay anything. The defendant might indeed recover damages for the breach of a contract to lend money (2 Sedgw. Dam. (8th ed.) § 622), but the recovery would be given on the normal principle of compensation, and the association would still be entitled to have the money aetually lent repaid to it in accordance with, the terms and conditions of its bond and mortgage. Blackburn v. Reilly, 47 N. J. Law (18 Vr.) 290. Whether under the rule laid down in Alpaugh v. Wood, 45 N. J. Eq. (18 Stew.) 153, this court could assess the damages, I need not consider, for no special damage is, up to this time, shown. It seems to me very plain that the defendant cannot set up a partial non-performance as a bar to the recovery of the money actually advanced, and if complainant can recover at all, it must necessarily be on the footing of its contract.

The second contention is that it was complainant’s duty to have applied the money retained to the payment of dues and interest. This duty, if it existed, must have sprung- out of a custom on the part of the company known to its customers or out of an express contract. The defendants have not proved either; all they proved was that the first month’s dues and interest were customarily credited.

The third contention is that the association has actually applied the money to the payment of dues and interest. The proof on this subject on the part of defendants was that the association gave to Mrs. DiNiscia a pass-book in which the secretary credited her with $60 per month up to and including October, 1907. The evidence of the existence of the book, which is said to have been lost, is more persuasive than the evidence of its contents. Unfortunately, the secretary is, as I have said, incapacitated from testifying; but assuming that the entries were such as Mr. DiNiscia sajáis they were, they were entered by the secretary without any payment of money. Such entries therefore, to bind the association, must have been expressly authorized. The defendants have failed to show that they were. In the first place, they do not appear to have been made by the proper officer. Under the by-laws, the treasurer is the person to receipt for dues. It is not pretended that he made the entries in question. In the second place, the monthly payments, according to the by-laws, were to be made at the monthly meetings. It is not pretended that the entries were made or the book written up at these meetings. Thirdly, as the -contract appearing from the minutes of July, 1907, was to advance money for the purpose of completing the building, it was incumbent on the defendants to show that such contract was changed by the mutual agreement of the respective parties. The secretary certainly had no implied authority to vary the terms of the contract, and no express authority authorizing him to do so is shown.

It would seem clear therefore that as no -actual payment of dues or interest was made for more than three months prior to the commencement of the suit the action is not premature.


author: Stevens, V. C.

text:
    Elwood Pearce v. Lodemia Stines et al.
    [Decided July 19th, 1911.]
    1. Where deceased executed deeds of gift to each of his children, deposited them with his agent, to be delivered only after his death, because he might need some of the property for his own use, and thereafter directed one of them to be delivered immediately, it cannot be avoided on the ground of mistake, though the undelivered deeds were invalid because of their testamentary character; it being- impossible to say that it was his intention, persisted in till the end, that no part of his original scheme should be carried out, unless it was all carried out.
    2. A gift of his homestead by one enfeebled by age and disease, without competent and independent advice, the deed therefor containing no power of revocation, and no provision for support, to a daughter in a position to exercise a dominating authority, is of practically all his property, and so invalid; what remained being- unimproved and at most barely enough to repay his son, who had made and was making advances for his support.
    On bill, &e.

      Mr. Charles IS. Cooh, for the complainant.

      Mr. Charles H. Ivins, for the defendants.
   Stevens, V. C.

William B. Pearce, a boat builder, residing at Point Pleasant, died intestate on November 28tli, 1909, at the advanced age of eighty-three. Prior to his death he had executed deeds for all his real estate (his personalty being of little value) to his five children. These deeds were acknowledged and placed in the hands of his agent, Allen, to be delivered after his death. The disposition was so plainly testamentary that it was conceded by counsel that it failed under the rule of Schlicher v. Keeler, 67 N. J. Eq. (1 Robb.) 635. One of the deeds prepared in January, 1909, was, however, through a change in the donor’s intention actually delivered to his daughter, Lodemia, on October 11th, 1909, or about seven weeks before his death. The debatable question is whether this conveyance is good. It is admitted to have been made without consideration, and to have been intended as a gift or advancement. The bill charges, that it, with the others, was the product of undue influence, and was obtained at a time, when by reason of his mental and physical infirmities, the donor did not possess Sufficient mind to understand in a reasonable manner the nature and effect of his act.

Although the evidence is conflicting, it seems probable that at the time this deed was executed and acknowledged in January, 1909, and at the time the donor directed its delivery, he thoroughly understood what he was doing. He was suffering from Bright’s disease, and from hardening of the arteries, and in October, 1909, he was, physically, very weak. No doubt his vigorous mind had then become somewhat impaired, but there is no evidence that at the time he wrote the note to Allen directing him to give Lodemia’s deed to his son Robert, he did not, in a reasonable manner, comprehend the nature and effect of the act he was doing. There is no proof that either at the time he executed it in January, or at the time it was delivered in thé following October, any undue influence was in fact exerted. So far as the delivery of the deeds was concerned; he had in January, 1909, intended to treat all his children alike. But his daughter, Lodemia, had late in the summer of that yesx been obliged to undergo an operation in the hospital. It left her very weak, and the donor appears to have been apprehensive that if she died from its effects, her children might not get that which he had intended that she, the favorite daughter, should have.

In this state of facts, complainant’s counsel argues—first, that the delivery of the deed was tainted with the mistake the donor was under that all the deeds would take effect, and that, in the case of Lodemia, he was simply anticipating; that as they did not take effect, the scheme, as a whole, failed, and that in equity, the conveyance to Lodemia should fall with it. Second, that inasmuch as he gave Lodemia the most valuable part of the property-—that on which he depended for shelter and support—the ease comes within the rule of Slack v. Rees, 66 N. J. Eq. (21 Dick.) 447.

It appears to me that the first insistment is untenable. As to Lodemia, there was no mistake; she got just what her father intended her to have. There is no evidence going to show that he made the delivery upon condition that the subsequent delivery to the others would be effectual, though no doubt he then thought it would be. Suppose that at the time he had given the deed to Lodemia he had executed a will disposing of his other property to his other children. If this will liad failed through lack of proper execution, would the deed have also failed P And yet the testator would then have supposed, as in the case in hand, that his disposition of his property was complete. Indeed, the evidence is, that the donor directed Allen to hold the deeds, undelivered, for the very reason that he might subsequently require more or less of the property, or its proceeds, for his own use. It seems, therefore, impossible to say on the evidence thát it was his intention, persevered in until the end, that no part of his original scheme should be carried out, unless it was all carried out.

The second insistment presents more difficulty. If the donor had conveyed all his property to his favorite daughter under the same circumstances that he conveyed a part, the case would have plainly fallen within the rule of Slack v. Rees. We would have had the case of a donor enfeebled by age and disease, and without competent advice; of a daughter in a position to exercise a dominating authority; of a deed containing no power of revocation, and no provision for support, and of an utterly improvident act. But the donor only gave a part, and the question is whether he gave enough to bring the case within the rule mentioned.

In Post v. Hagan, 71 N. J. Eq. (1 Buch.) 242, Mr. Justice Garrison said that the essential difference between Haydock v. Haydock’s Executors, 34 N. J. Eq. (7 Stew.) 570, and Slack v. Rees, consisted in this: That Slack v. Rees had specific application to cases in which the gift, if valid, had the effect of stripping the donor of all, or practically all, of his property; whereas Haydock v. Haydock applied to gifts that bore no such relation to the donor’s entire estate. The eases of gifts, whose validity has been passed upon by our court of errors and appeals, may, perhaps, be thus classified:

First. Gifts made by a man who, in the full possession of his powers, still occupied the dominant position, and was besides in a position to support himself by 'his own exertions. Such a man might give his children all his property, whether his act were provident or improvident. James v. Aller, 68 N. J. Eq. (2 Robb.) 666.

Second. Gifts, reasonable in amount, of part of her property made by an aged parent to a child, who was in a position to exercise a dominating influence, but who, as the evidence showed, did not, in fact, exercise it. Such a gift is valid. LeGendre v. Goodridge, 46 N. J. Eq. (1 Dick.) 419; 48 N. J. Eq. (3 Dick.) 308.

Tkvrd. Gifts of a part of his property, made by a donor, enfeebled by age and disease, to one in a position to exercise a dominating influence, who has not been able to satisfy the court “that the donor understood the nature of the act, and that it was not done through the influence of the donee.” Haydock v. Haydock, 34 N. J. Eq. (7 Stew.) 570, 574.

Fourth. Gifts of all, or, as it is phrased in Post v. Hagan, “practically all,” of the donor’s property, made to a child, at a time when, by reason of the donor’s physical condition and his dependence on the donee for care and service, the relation ordinarily existing between them, had been reversed, and the child had come to occupy the dominant position. In this case, proof that no influence was in point of fact exercised will not suffice. There must be proof, in addition, that the donor had competent and independent advice as to the effect of his act. Coffee v. Sullivan, 63 N. J. Eq. (18 Dick.) 302; Slack v. Rees, supra; Post v. Hagan, supra; Albert v. Haeberly, 68 N. J. Eq. (2 Robb.) 664. Advice, as was said in this court, in Motz v. Motz (affirmed, 76 N. J. Eq. (6 Buch.) 609), actually given—not such as the legal adviser could or might have given, but did not give.

In none of the cases has it been necessary to pass upon the question of exactly how much a donor might give without bringing himself within the rule of Slack v. Bees. That the rule may apply, must he give at least nine-tenths or some other definite, fractional part of his whole estate? Or are we to look at the effect of the gift upon himself ? The question seems to me to be not so much one of definite fractions, as of practical results. The principle of decision, as pointed out by Judge Vredenburgh in Coffee v. Sullivan, supra, is that a man enfeebled by age and disease may not unadvisedly divest himself of his property, at a time when he can no longer work, and when by so doing, he becomes dependent upon the charity of others or of the public. I think the practical rule to be deduced from the cases is that a donor, having barely sufficient property to sustain himself for the rest of his life, shall not irrevocably, and without advice, give away so much of it as to leave himself an object of charity.

The law does not go to the length of saying that a donor, incapacitated by age or disease from earning his own living, may not, even improvidently, strip himself of all his property beyond recall, although there are cases which seem almost to go to that extent (Powell v. Powell (1900), 1 Ch. Div. 246); but it does say that his gift shall not stand, unless he have competent, independent advice, and refuse to act in accordance with it.

Tested by this rule, the gift in question must fail. The donor did not have competent, or any advice, when he decided to deliver the deed to Lodemia in his lifetime. The deed conveyed the homestead property—the house in which he had lived for many years and in which he expected to die. He had no other. A competent adviser would have told him that the very reason which prompted him to accelerate the delivery, viz., fear that Lodemia might succumb to an operation, and that her infant children would not then take under the deed, was a reason for not making the gift in that way; for these children, becoming the owners on Lodemia’s death, their guardian might consider it his duty either to dispossess him or to compel him to pay rent.

The property of the donor consisted exclusively of real estate. The house and lot given to Lodemia is valued at $3,020; and his other land, alL of which is unimproved, at $3,759. To this may be added the value of the household furniture—in the answer averred to be worth $300.

When the donor gave away his homestead, he had nothing of his own that he could sell but the vacant land. How salable this was does not appear. It is not likely that a purchaser could, at short notice, have been found, ready to pay its full value. It appears from the evidence that the donor was indebted to his son Elwood, the complainant, who was contributing a monthly sum to his support and who was relying upon his real estate as security for its repayment after his death. In his bill, Elwood charges that the indebtedness was upwards of three thousand dollars. It was probably, considerable, if less than the amount charged.

It seems to me that in this position of affairs the case is fairly brought within the principle of Slack v. Rees. The donor, by making an unconditional gift of his home, became largety, if not wholly, dependent upon the charity of others for his future support. His act was calculated to alienate the person apparently best able, pecuniarily, to assist him. Elwood was in a position to have subjected the unimproved real estate to the payment of what was due. Under* these circumstances, the donor can hardly be said to have reserved for himself anything that was of much value. What he retained, he would hold by the sufferance of an offended son.