author: Emern, V. C.

text:
    George F. Tuttle, surviving executor, &c., of Charles S. Macknet, deceased, v. Caroline A. Woolworth et al.
    [Filed November 13th, 1901.]
    1. Where a will directs that, in the event of a certain devisee’s death, without surviving issue, testator’s house and lot shall be sold and the proceeds divided among his heirs, the executor, as trustee, is not entitled to direction of the court as to the disposition of the proceeds of sale until the sale has been made and the proceeds are on hand.
    2. A testator bequeathed personalty to his executors in trust to collect the interest and pay the expenses of a house given to the use of his wife, and, on her decease or marriage, to his daughter, and to pay the balance of the interest to his wife during her natural life, and, after her death, to set off the said personalty to his daughter or her heirs. If the said daughter should die without issue surviving, or children of such issue, then the personalty was to revert to testator’s estate, to be distributed as though he had died intestate. Subsequent to testator’s death, and prior to the death of her mother, the daughter died, unmarried and without issue, having devised her interest under the will to her mother.—Reid, that the persons who were to take as “heirs” of the testator, under the limitation over on the daughter’s death without issue, were those who answered the description of testator’s heirs at the time of his death, and the legatees of the mother would take her interest derived through the daughter’s will.
    I-Iearcl oil bill and answers.

      Mr. Joseph N. Tuttle, for the complainant.

      Mr. Henry II. Dawson, and Mr. Dorsett (of the New York bar), for the defendants Woolworth and Dorsett.

      Mr. Charles G. Titsworth, for the defendants Mary T. Taylor et al.
   Emern, V. C.

Under the will of Charles S. Macknet, who died in 1872, his executors held in trust for testator’s widow, during her life, a house and lot, No. 38 East Kinney street, Newark, and certain specified bonds and stocks, amounting, at par value, to about ten thousand dollars. The widow died on February 27th, 1900, and questions are now raised as to the parties entitled to this real and personal estate after her death. As to the real estate, the third, item of the will devises and bequeaths this house and lot to his executors in trust, substantially as follows—first, for the use of his wife during her natural life, or her widowhood, and, after his wife’s decease or marriage, to his daughter Hattie for life, and, at her death, to convey to her children, or, if desirable for their interest, to sell and divide the proceeds of sale. This item of the will then directs: '

“But if the said Hattie shall die without issue her surviving, then I direct my executors to sell the said house and lot and distribute the proceeds thereof among my heirs, according to the laws of the State of New Jersey.”

The daughter Hattie died, unmarried and without issue, in 1887, and previous to the death of her mother. By her will she devised all her estate, derived under her father’s will, to her mother. The mother, by her will, devised and bequeathed her residuary estate to her two nieces, the defendants Mrs. Taylor and Mrs. Dusenberry.

The heirs-at-law of the testator, at the time of his death, were his son, Theodore, and his daughters, Caroline and Hattie. Caroline (now Mrs. Woolworth) is one of the defendants, but Theodore died during the lifetime of his mother, and his daughter, Eliza (now Mrs. Dorsett), one of the defendants, is the sole survivor of his stock. Mrs. Woolworth and Mrs. Dorsett claim that the “heirs” of the testator who are to take the proceeds of -the sale of the lands directed to be made at the widow’s death are the heirs of the testator who were living at the time of the widow’s death, and that, as the two heirs living at this period, they are entitled to the whole proceeds of sale. The administrator cum testamento annexo of the widow, on behalf of her residuary devisees and legatees, claims, on the other hand, that the heirs of the testator are to be determined at the death of the testator, and that Hattie was entitled, under the will, to one-third, as one of these heirs, and her assigns are entitled to one-third of the proceeds of the sale, when made. As the surviving executor has not yet sold the house and lot, it would be premature to decide upon the disposition of the proceeds of sale, and the executor is not entitled to the direction of the court upon this disposition until the proceeds of sale are on hand ready to distribute, and the persons then entitled to, or claiming, the fund are in court.

The personal estate involved is ready for distribution, and as to this the executor is entitled to directions. As to the personal estate the question arises under the fifth item of the will, in which the primary bequests and the limitation over are made in a somewhat different form. This fifth item bequeaths to the executors certain bonds and stocks, specified (about ten thousand dollars par value), in trust—first, to collect the interests, &c., and therefrom pay expenses of maintenances, taxes, &e., of the house of which the use was given to his wife and daughter Hattie (being the house mentioned in the third item), and second, to pay the balance of the interest, &c., to his wife during her natural life,

“and after her death to set off the said bonds and stocks to my daughter Hattie, or her heirs. If the said Hattie shall die without issue her surviving, or children of such issue, then said bonds and stocks shall revert to my estate and be distributed among my heirs, in the manner provided by the laws of New Jersey respecting intestate estates.”

As to these stocks and bonds the now living heirs of the testator, Mrs. Woolworth and Mrs. Dorset!, claim the entire amount, upon the same grounds as their claim to the entire proceeds of sale under the third item is based.

It is claimed, on the other hand, by the assignees of Hattie’s interest, that the daughter Hattie, under this bequest, upon the death of the testator, became entitled to an absolute vested estate in the fund, subject only to the life interest of her mother, and that the clause directing payment over on her death without issue surviving, referred only to her death in the lifetime of the testator. Having survived the testator, it is claimed that she was entitled to the absolute estate, and that the bequest to testator’s heirs, being substitutionary only, cannot take effect. It is, moreover, insisted that this construction of the character of the bequest was settled by a decree made on a bill filed by the executors during Hattie’s lifetime, and to which she was a party. Macknet v. Macknet's Heirs, 9 C. E. Gr. 277 (Chancellor Runyon, 1873). In this case the question was as to the effect of the widow’s refusal to accept the provisions of the will, in lieu of dower, on the different bequests and devises of the will. But the question now raised as to the nature and effect of the bequest made on the death of Hattie without issue, during the lifetime of the mother, was not directly involved or expressly considered in the case, neither could it have been conclusively determined in advance and in the absence of the parties or claimants necessary to determine the question. Ashhurst v. Lippincolt, 11 Dick. Ch. Rep. 840, 842 (Errors and Appeals, 1898). Nor, on examining the decree made in reference to her interest in the bonds and stocks, does it appear to determine the point now involved. By the decree the executors were not directed to pay over the bonds and stocks to Hattie, as if, on the failure of the wife’s interest, by her refusal to accept the legacy, the principal had become payable to Hattie at once, but they were directed to hold and accumulate the balance of the income of the fund, after paying expenses on the house, in trust for Hattie, and no express direction was made as to paying her any portion of the principal. The widow, subsequent to this decree, accepted the provisions of the will (Macknet v. Macknet, 2 Stew. Eq. 54 (1878), and the executors, having therefore held the fund, as expressly directed by the will, until after the death of the widow, the question as to the distribution of the fund after her death now comes directly before the court. All the claimants to the fund have now, for the first time,' their day in court as to its disposition, and are entitled to have the question considered as res nova, and not ms adjudícala. The claim that Hattie, on surviving the testator, had a vested interest in the fund, indefeasible by her subsequent death without issue, is based on the contention that the direction that “if the said Hattie shall die without issue her surviving, or children of such issue,” referred only to her death in the lifetime of the testator, and not to her death before the period of payment or transfer—the death of her mother. This construction cannot be adopted. The words “die without issue her surviving,” taken in the natural and ordinary sense, refer to death at any time without issue surviving, either prior to the testator’s death or subsequent. Unless there is something in the will which, would indicate that death before the testator was intended, the natural scope of the words cannot be restricted to death before that period. In all of the New Jersey cases to which I have been referred by counsel on this point there have been expressions or provisions indicating that the túne of death without issue surviving was restricted either to a death before testator or some other special time. The leading cases, Pennington v. Van Houten, 4 Halst. Ch. 272, 745; Baldwin v. Taylor, 10 Stew. Eq. 78; affirmed, 11 Stew. Eq. 637, are instances where, by reason of the context and the general provisions of the will, the death referred to was so restricted. In the present will, not only are these special features absent, but the other directions of the will, in reference to Hattie’s interest, show that no such restriction was intended, and that death without issue, either after or before the testator, and at any time before the payment over of the bonds, was intended. In the first place, the bequest of the'fund is to the executors, and the transfer to Hattie, which is primarily to take place, is directed to be made after the death of the widow, and the testator, as his will shows, contemplated that his widow would survive him. In the next place, the second disposition of the fund, which is to be made if the primary disposition to Hattie fails, is made by the direction that, after the death of the widow, it is to be set off “to Hattie or her heirs.” This gift to the heirs of Hattie is clearly a substitutionary gift, in ease the primary gift to Hattie fails, and as to such substitutional bequests, made after a life interest, the general rule is that, in the absence of an intention shown to the contrary, they take effect whether the primary legatee dies in the lifetime of the testator or of the tenant for life. Theob: Wills (4th ed.). 541.

This is, -in my judgment, the plain and natural construction of the effect of this bequest to Hattie or her heirs of the principal of the fund after the death of her mother. If this be the true construction of this bequest to the heirs of Hattie, which is clearly substitutionary, there would seem to be no basis for the claim that the bequest made by the subsequent independent clause, “on the death of Hattie without issue her surviving,” is a second substitutionary clause, following a primary gift to both Hattie and her heirs, in which the period for the substitution to take effect was limited to the death of the testator. The bequest on failure'of issue was not a substitution, but was rather a limitation over, which took effect on the death of Hattie without issue surviving. Such limitation over was valid, and took effect whether Hattie’s interest was vested on testator’s death or contingent on her surviving her mother, for, if vested, it was subject to be divested by a valid limitation over on a definite failure of issue. Rowe v. White, 1 C. E. Gr. 411 (Chancellor Green, 1863); Neilson v. Bishop, 18 Stew. Eq. 473, 476 (Vice-Chancellor Van Fleet, 1889). A conclusion that Hattie’s estate was vested on her father’s death does not therefore determine the question now at issue, which relates to the persons taking under the limitation over. Hattie not being, in my judgment, entitled, as surviving her father, to the absolute, indefeasible interest in the fund, the real question in the case is whether, as one of the heirs of the testator, she, or those claiming under her, are entitled to one-third of the fund, or whether the two heirs of the testator who were living at Mrs. Macknet’s death, are together entitled to the whole fund. The word “heirs” in the direction in this limitation over, to distribute personal estate among testator’s “heirs,” means next of kin, and this would be the construction even without the additional direction that the manner of distribution is to be that provided by the laws respecting intestates’ estates. Welsh v. Crater, 5 Stew. Eq. 177; affirmed on appeal, 6 Stew. Eq. 362 (1880); Reen v. Wagner, 6 Dick. Ch. Rep. 1 (Chancellor McGill, 1893); Leavitt v. Dunn, 27 Vr. 309, 311 (Errors and Appeals, 1893). The bequest to “heirs” of the testator is a gift of the kind designated as a gift to a class, and the question to be solved is at what period of time is the class of testator’s “heirs” fixed by the will— at the testator’s death or at the time of his widow’s death. The words “heirs or next of kin” are technical legal words, and in their legal sense bear within themselves an indication as to the time intended for fixing the class, which cannot be overlooked. The legal relation or status of “heir” or “next of kin” arises only upon the death of the ancestor, and it arises immediately. In a legal sense, therefore, “heirs” implies a reference to the time of the ancestor’s death, and if a testator makes a devise or gift to his “heirs” or “next of kin,” those standing in that relation at the time of his death would seem to be the persons intended, unless there is something in the will itself to show that the testator had another period in his mind, and that the legal sense of the words is to be restricted by indications that some other time is fixed. If the gift to testator’s “heirs” or “next of kin” follows a previous gift to a person, not one of the heirs or next of kin of the testator, there could generally be no question that the class was fixed at testator’s death. Welsh v. Crater, supra; Hayes v. King, 10 Stew. Eq. 2 (Chancellor Runyon, 1883); 2 Wms. Ex. *986 (R. & T. ed. 402, 403). A supposed difficulty arises when the previous gift is to a person who is one of the heirs or the sole heir or next of kin of the testator, and the question is whether this next of kin should not be excluded from the class, because it could not, it is urged, be considered that the testator intended giving this heir or next of kin anything in addition to the expressed gift, which had lapsed or failed. This was the view adopted in some of the earlier English cases, and it is one of the considerations which controlled the court of appeals of New York in confining the class “next of kin” to those living at the time of distribution. Delaney v. McCormack, 88 N. Y. 174, 183 (1882). But the later English cases have held that this objection against allowing the representatives of the previous legatee, whose estate has terminated, to take under him as one of the testator’s next of kin, is not sufficient to control the legal and fixed meaning of the words “heirs” or “next of kin,”.as necessarily referring to the testator’s death, in the absence of directions in the will fixing 'some other time. 2 Jarm. Wills *129 (R. & T. ed. 670-680), collecting all eases; Theob. Wills (4th ed.) 286, 287; 2 Wms. Ex. *986, 987 (R. & T. ed. 402); Urquhart v. Urquhart, 13 Sim. 613, 629 (1843), approved in Welsh v. Crater, 5 Stew. Eq. 181. The objection from incongruity supposed to arise against holding that the previous tenant is entitled to any interest in an estate as next of kin, after the estate specially given to him by the will has terminated, is, as it seems to me, met and answered by the consideration that when the testator limits an estate to one of his next of kin and his children or issue, and then directs that, on failure of this limitation, his heirs or next of kin shall take according to law, he discloses clearly that,- if the special and immediate limitation fail, as it may, then he had no intentions or wishes.to change the disposition which the law itself would have made for him in regard to this part of his estate, and that, on the failure of his special purpose, he desires that he should be considered as making no provisions of his own about the disposition of his estate, but as expressly leaving that disposition to be made by the laws as if he had died intestate.. When there is the further express direction in the will, as there is in this case, that the estate shall be distributed among testator’s heirs (or next of kin), in the manner provided by law respecting intestates’ estates, the conclusion seems unavoidable that the testator, as to the estate limited over, intended the same persons to receive the estate as would have received it at his death, by law, had he died intestate as to its future disposition after the failure of the particular estate. If this be the correct view, the previous gift to one of the' next of kin cannot, of itself, be sufficient to exclude him from the portion which, as next of kin/ would have come to him by law, or show that the testator intended to restrict the operation of the laws relating to distribution of intestates’ estates, by referring them to a time subsequent to his death. The precise question now involved does not seem to have been decided in this state, and, in my opinion, the principle of the later English cases, in reference to the time of fixing the class, is to be adopted in this case, as most effectually carrying out the intention of the testator shown by the natural and legal sense of the words of the will, in the absence of any indication that they are not to be used in this sense.

Another argument strenuously urged for the restriction of the class of heirs to those of testator’s heirs living at the widow’s death, or time of distribution, is that the gift over to the heirs was contingent and not vested, and that, until the widow’s death, there was a contingency as to the heirs who were to take^ and therefore only the heirs who were then living could take under the limitation. The opinions of the New York court of appeals in several cases are cited as supporting this claim. Delaney v. McCormack, supra; Matter of Crane, 164 N. Y. 71, 74 (1900). But, in my judgment, the assumption that there is, in such cases, a contingency as to the persons who are to take, begs the very question to be solved. The contingency, as fixed in express words by the will in this case, was a contingency dependent only upon an event, viz., the death of Hattie without issue. The question as to the persons to whom the limitation over of the principal was made by the testator, on the happening of that contingent event, and whether there was any contingency or uncertainty as to these persons, or any of them, depends upon the manner in which the testator had described or designated the persons who are to take upon the contingency happening. If this designation of the persons to take under the limitation is made nominatim, then there is no contingency as to the persons to take, and the contingency being only as to the event or time of enjoyment, the interest under the limitation over is vested from the testator’s death. Van Dyke v. Vanderpool, 1 McCart. 198, 206 (Chancellor Green, 1862). The precise question now is whether the persons to take under the limitation, being called the “heirs” or “next of kin” of the testator, are not necessarily, in the absence of a contrary intention appearing, the persons who, at the testator’s death, answer the description, and whether they are not persons designated as effectually as if they were all specially named. If therefore “heirs” refers to heirs at the time of the testator’s death, there is no contingency as to the persons to take, and the contingency of the gift, upon an event which might not happen, does not affect the description of the persons who were to take on the happening of the contingency. This was the view of Vice-Chancellor Wigram, in Bird v. Luckie, 8 Hare 301 (1850). In this ease there was a gift or direction to distribute to the next of kin, in case of the death of the person entitled for life (a grandson) without issue. Vice-Chaneellor Wigram says on this point (at p. 304): “The next of kin must be held to be the person or persons answering the description of the testator’s next of kin at the time of the testator’s death. So much is clear. The mere circumstance that the gift to the next of kin was not immediate, but was contingent upon a future event, which might or might not happen, is insufficient to render the description applicable only to such person or persons who should happen to form the class at the time of the occurrence of the event, the context having nothing to make it so applicable.” The contingency as to the gift taking effect, therefore, does not, in the present ease, affect the question of who compose the class to take, and does not, of itself, afford a reason for restricting its application so as to exclude any person who was an heir of the testator at the time of his death.

I conclude that the persons who were to take this personal estate as “heirs” of the testator were those who answered the description of his next of kin at his death, being his son, Theodore, and his daughters, Caroline and Hattie, and that the fund is to be distributed equally in three shares among these persons, or those who have succeeded to their respective rights in personal estate.


source: Caselaw Access Project

author: Embry, Y. C.

license: Public Domain

text:
    The Corporation for the Relief of Poor Children of the City of New Brunswick, New Jersey, v. John L. Eden, executor, &c., et al.
    [Filed November 29th, 1901.]
    1. In an action submitted on bill, answer and replication, the bill alleged that complainant, as mortgagee, foreclosed its mortgage executed by defendant’s testatrix, and sold the premises, leaving a deficiency of $1,100; that the premises were depreciated in value by reason of a fire which occurred while the mortgage was in force, and for which the mortgagor recovered and collected $482 damages from.the railroad company which negligently caused the fire; that a part of the sum so collected was deposited in defendant’s savings bank, where it still remains, and part delivered to the defendant’s (testatrix’s ) husband. The answer admitted all the allegations, except that the premises were depreciated in value by the fire.—Held, that the allegations of the bill so admitted by the answer showed prima facie the depreciation of the land to the extent of the damages recovered by the mortgagor from the railroad company.
    2. In an action, submitted on bill, answer and replication to recover money collected by the mortgagor for damage to mortgaged property by a fire negligently started by another, on the ground that the mortgaged property, which had been sold, leaving a deficiency, was depreciated by such fire, the verified answer denied that the property was depreciated in value by the fire, and - alleged that the depreciation was owing to the fall in value of such and all similar property.—Held, that a replication being filed, such answer, though responsive, had the effect of evidence only in relation to facts which were within the personal knowledge of the defendants, and hence such denial and allegations did not overcome the prima facie case of depreciation, to the extent of the damages recovered, made by complainant’s bill.
    Heard on bill, answer and replication.

      Mr. John F. Yoorhees, for the complainant.

      Mr. Freeman Woodbridge, for the defendants.
   Embry, Y. C.

The right of complainant to recover on the facts stated in its bill was considered and determined on the demurrer, which was overruled. 46 Atl. Rep. 717. The case now comes on to be heard on bill, answer and replication without proofs. The answer admits all the material facts stated in the bill, except the allegation that the destruction by fire of the timber upon the mortgaged premises greatly depreciated and injured the mortgaged security of complainant. As to this, the answer denies “that by reason of the said fire the mortgage security was greatly depreciated and injured,” and also denies “that the complainant or the mortgage security Buffered any damage by reason of said fire,” and further alleges that between the year 1892, when the fire took place, and the year 1899, when the foreclosure sale on the mortgage occurred, leaving a deficiency of over one thousand one hundred dollars, the mortgaged premises became greatly reduced in value, not by reason of the fire, for which damages ($482.96) were recovered, but by reason of the depreciation of land of that character in the vicinity; and that the deficiency arose, not by reason of the fire or damage therefrom, but by the depreciation in the value of the land. No proofs upon the issue made by the bill, answer and replication, as to the depreciation of the mortgaged premises, have been produced on either side, and the sole question to be determined is whether the facts set forth in the bill and admitted in the answer are sufficient prima facie proof of depreciation of the security by reason of the fire, to put upon defendant the burden of overcoming their effect. The facts relied on and admitted are that the mortgaged premises, at foreclosure sale, in January, 1900, were sold for $1,200, leaving a deficiency of over one thousand one hundred dollars. The price brought at foreclosure sale of mortgaged premises may be some evidence as to the value at the time of sale, and this has been held to be its effect in a case where the question was raised, in reference to a sale occurring within a month of the fire. Schalk v. Kingsley, 13 Vr. 32, 37 (1880). The price brought at "foreclosure sale in 1900 must either be held to furnish no legal evidence whatever as to the value in 1892, and not to be admissible for that purpose, or it must be held as furnishing some evidence, subject to the effect of evidence of value at times near the date in question. The scope, in time, of the evidence as to value of lands, rests largely on the discretion of the trial court, and unless the evidence of value offered is so remote from the period of injury as to be altogether inadmissible upon the question of value, it should be received and be considered for what it is worth. My opinion is, that in this case, the price brought at foreclosure is entitled to consideration, as having some bearing or weight as evidence on the question of the value of the premises, after the timber was destroyed by fire, and as the loss to the property by the fire was fixed by the judgment at $842.96, these facts are evidence to some extent that the security was depreciated by the fire. And in the absence of any evidence by the defendant to countervail its effect, the court would be entitled to find that the security was depreciated to the whole extent of the loss found to have been caused by the fire.

It is insisted by defendant’s counsel that the answer alleging that the mortgage seeuritjr of complainant was not impaired by the destruction of the timber, but was depreciated by the fall in value of the property, is responsive to complainant’s allegation that a depreciation was caused by the. fire, and the responsive answer must therefore, in a hearing on bill, answer and replication, be taken as true where the answer is called for under oath.

But an answer, although responsive, is not necessarily on that account evidence for the defendant, and where a replication has been filed the responsive answer only has this effect in relation to facts which are within the personal knowledge of the defendant. Lawrence v. Lawrence, 6 C. E. Gr. 317, 319 (Chancellor Zabriskie, 1871). And where defendant’s responsive answer is founded on hearsajq his answer is not evidence for him. Stevens v. Post, 1 Beas. 408, 414; affirmed on appeal, 1 Beas. 422 (Errors and Appeals, 1858). The whole effect of the denial was therefore to require complainant to sustain the issue on his part by the facts alleged in the bill and admitted in the answer to be supplemented if necessary by the proofs. The facts alleged above are, as I find, prima facie evidence to support the allegation, and the case having been upon both sides submitted, without further evidence on the point, I find that it is sufficient to entitle complainant to a decree, that the mortgaged security was depreciated by the fire to the extent of the amount recovered, and that the complainant is therefore, for the reasons given in the opinion filed on overruling the demurrer, entitled to the relief prayed, and a decree to that effect will be advised.


author: Emery, Y. C.

text:
    Frances A. Melick v. Abram C. Cross.
    [Filed January 11th, 1902.]
    1. Where a contract for the sale of land with warranty deed made no reference to certain springs thereon, and it afterwards developed that the water from springs was owned by third parties, under reservations unknown to both parties at time of the sale, superior to the vendor’s title; that the land was subject to an easement right to pipe away the water from the springs, and that the water right and easement lessened the vendee’s enjoyment of the property in the manner contemplated by the contract—semble, they constituted a substantial defect in the title, giving the vendee the right to abandon the contract.
    2. Under a contract for the sale and conveyance of land with warranty deed, a substantial defect in the title to the land, affecting only a small portion thereof, and not depriving the vendee of the enjoyment of the residue in the manner contemplated by the contract, may be waived by the vendee as an objection to the title or to carrying out the contract.
    3. Where a, defect in the title to land contracted to be sold and conveyed with warranty deed is subject to a waiver by the vendee, and is in fact waived, the contract continues in force, subject to compensation for the defect.
    4. In a suit by a vendee for specific performance of a contract for sale of land, the vendee testified that he remained in possession after the time limit of the contract had expired under a promise by the vendor to obtain the release of certain water reservations on the land. The vendor testified that he made no such promise, and that he insisted that the contract was forfeited by expiration of the time limit. The evidence showed a waiver by the vendee of the defect. The vendor’s testimony was corroborated by all the facts in the case, while the vendee’s was inconsistent with the facts, and had been shaken as to other matters relating to the water rights.—Held, that the vendee was not entitled to a conveyance free of the easement, or a return of the purchase-money, but was entitled to specific performance, with compensation.
    5. The vendee insisted that the vendor should obtain a release of the water reservations, but made no tender of the balance due and no demand for rescission, while the vendor, although insisting on the forfeiture, told the vendee that he could have the land if he would buy it before someone else did, and made no demand for possession for four months after expiration of the time limit.—Held, that the vendor was entitled to specific performance, under a cross-bill, with compensation to the vendee for the defect.
    6. The court, having obtained jurisdiction of the cause, will settle the whole controversy and ascertain what compensation was proper for the defect in the title.
    On bill for specific performance. Heard on bill, answer and cross-bill, replication and proofs.

      Mr. Willard W. Gutter, for the complainant.

      Mr. Mdhlon Pitney and Mr. Edward M. Colie, for the defendant.
   Emery, Y. C.

This case presents for decision several questions arising under the jurisdiction for the specific performance of contracts, which is invoked on behalf of both vendor and vendee, some of the questions being new in our courts. And as one of the questions in the case relates to the effect of the bill and cross-bill filed by the parties upon their respective status and claims prior to the suit, the material facts as they existed prior to the filing of the bill should be first stated. On June 30th, 1897, a writteñ agreement was executed between the defendant, Cross, and John E. Melick, the complainant’s husband, for the sale by Cross to Melick of á tract of land containing about thirteen acres on Speedwell lake, near Morristown, for the sum of $15,000. The tract adjoins lands belonging to the estate of A. W. Cutler. Two of Meliek’s notes, one for $500, paj^able August 1st, 1897, and one for $1,500, payable September 13th, 1897, were delivered on account of the purchase-money. These notes were secured by collaterals in railroad bonds and notes of third parties for $2,000 and they were paid at maturity. The contract provided that on the payment of the notes the vendee might enter into possession for the purpose of opening and grading streets, building railroad and otherwise developing the property, as in the judgment of Cross and Melick would best open up the property, and that then lots and plots of- land should be offered for sale. The proceeds of these sales were to be paid to Cross until $6,000 should have been paid on account of the purchase, and then Cross and wife were to execute a warranty deed for the property to Melick, -or his nominee, who should give a purchase-money bond and mortgage for $9,000, payable in three years from the date of. the deed, with interest at five per cent. As to the interest and charges, it was provided that interest should be paid from September 15th, 1897, on so much of the $13,000 as remained unpaid, until it was reduced to $9,000, and that the vendee should pay the taxes for the year 1897 and the following years. The contract also contained the following provisions, relating to the failure of the vendee to perform the agreement:

“In case any default in the payment of either of the notes, the collateral security held with them shall be forever forfeited and become the property of A. L. Gross, his heirs or assigns, absolutely. * * * It is also hereby further agreed that in case there shall not be a sufficient number of lots or plots sold to reduce the said balance to $9,000 within two years from the date hereof, then and in that event said Melick shall procure said needed funds elsewhere, as that shall be the limit of time for closing up said sale and purchase. * * * Upon the failure to perform this agreement the said J. E. Melick shall forfeit all payments he may have made prior to the delivery of the deed and the -property shall belong to said A. L. Gross, his heirs and assigns, as fully as if this agreement had never been made. And said Melick shall remove any and all improvements he may have made for railroad purposes thereon.”

The agreement contained no other provision by way of penalty or liquidated damages for the breach of the contract by either part}', and it was declared by them to he binding on their respective heirs or assigns. The securities deposited as collateral for the notes belonged to complainant, for whom, as is admitted by the bill and answer, and as is proved by complainant and her husband, the latter was acting in making the contract as well as in his subsequent action under it. The notes were paid by Melick when they came due, with money advanced by a Mr. Pideock, upon the securities, and on August 2d, 1897, Melick executed an assignment, in writing, to Pideock of the written contract of sale with Cross and designated Pideock as the person to whom the deed should be executed. On November 24th, 1897, and after payment of the second note, Pideock executed an assignment of the contract of sale to complainant and designated her as the person to whom the deed should be executed. Neither of the assignments contained any express assumption by the assignees of any obligation under the contract of the original vendees for payment of the balance of the purchase-money. Upon the payment of the two notes, Melick entered into possession of the tract of land, and during the winter of 1897-1898 conducted negotiations for the sale of a portion of the tract to 'the Speedwell Lake Railroad Company, which had laid out its route across .¡the land. Subsequently, and in the spring of 1898, condemnation proceedings were taken which resulted in 'the award of about one thousand four hundred dollars for land and damages. Cross, Mrs. Melick and her husband were parties to these proceedings, and Cross says this was his first information that complainant had any interest in the contract. The award was paid to Cross, he realizing about one thousand and fifty dollars, after payment of expenses of the condemnation. In the spring of 1898 the tract was laid out in streets and building lots by Melick, and attempts to sell the lots by public auction and private sale were made, but without success. Previous to the limit of time fixed for closing up the contract (June 30th, 1S99) only one lot had been sold, and the deed for this had not been delivered, nor the purchase-money paid. Melick had not paid all of the taxes on the lands after entering into possession, and Cross had been obliged to pay taxes in order to prevent a sale of the lands. Melick had also defaulted in the payment of interest as agreed, having paid only $25 on that account from the time of entering into possession, and that was for interest on notes given in extension of time for interest payments. During the summer of 1898, Melick used part of the premises as a summer picnic resort, and up to the spring of 1899 also made efforts to sell the property in bulk for a residence tract. In January, 1899, he wrote'Cross that the lot sales, either auction or private, or sale for gentleman’s place, would not work, and suggested a sale of a portion of the tract to another railroad company, in which he (Melick) seems to have been interested. On February 13th, 1899, he wrote Cross that all the money he could get for Cross must come from the lot, and that he would try to get a new railroad company to take part of the land, and that a pleasure resort company would be formed to take the balance of the propertjr, if the new railroad should go .through. This letter enclosed a new note to renew a previous note given for interest. No other communication seems to have taken place between Cross and Melick until June 22d, 1899, eight days previous to the time limited for closing the contract, when Melick wrote the following letter:

“6-22-99.
“Mr. A. L. Gross:
“Dear Sir—I am just advised that the people I have been working with all winter to get the railroad built from end of Bockaway through Morristown to Little Falls on the Erie have just sold one B. B. that recently finished and expect to close out another property this week and that my project is the next will take up as is best railroad project for distance is on foot now that they know of so hope soon to be in shape to close out the rest of the 13 ac. lot. ’ I have advertised a sale for July 4th and hope to make sale of several lots. Mrs. Evans is ready to pay her $385 for the 50 x 100 in hollow at corner of Burnham rest she worked out with team making streets, also another lot 35 x 90 about behind it for $175, so if you can sell few more can raise up a payment. I had about sold the site on the back low lots along Cutler’s for a woolen mill when in making search find Cutlers have reserved all the springs and water rights on the lot with right to come pipe it out. This knocked over the sale and lost a chance to get about $5,000, there besides believe would -been chance to sell lots to folks who would worked in mill, was to employ 200 hands and then the corner out by Lake road bridge had about sold to a Steam Laundry but that spring'is out too so I went to Mr. Pitney to get right to take water from lake and would not sell or give away a bit of water. And Cutlers ask $10,000 for the springs, so only thing I can see is to get B. B. to help out with it and sell if can in lots now as Cutler and Burnham are cutting a new street through and hold there lots high. I will see you soon as know when B. B. is ready to start.
“Tours truly,
“J. E. Melick.
“The lots will sell with promise that sell at least 10 at 400 or over.”

Previous to the receipt of this letter Cross had no knowledge or information as to MelicFs attempted sale of lots along the Cutler line, referred to in the letter, or of the failure of the sale by reason of a water reservation, nor did he, up to that time, have any knowledge of a water reservation .in favor of the Cutler estate. The letter, it will be observed, not only did not make airy suggestion that the reservation, or supposed reservation, would, or might, be considered a ground for abandoning the contract, delivering possession and a return of the deposit, but, on the contrary, notified the vendor of a sale proposed to be made on July 4th—after the time limit for closing the contract—proposed to carry out a sale previously agreed on, and also suggested a sale to the railroad company and a future sale of the property in lots as the only thing to do. Apparently, also, the time when the railroad company was to start would not arrive -until after the expiration of the contract. This letter requested no reply from the vendor as to any of the matters, nor did it refer to the approaching limit of the contract referred to. This latter omission was, I think, intentional, and, in connection with the previous letters and conduct of the vendee as to raising money to carry out the sale, the vendor was fairly entitled to consider the letter as a notification that the vendee would not be able to raise the money to carry out the contract by the limited time, and as a proposal to go on with the contract after that time. Cross made no reply to this letter from Melick, nor did either vendor or vendee tender themselves ready, on the day fixed, either for the delivery or receipt of the deed or the settlement of the balance of the purchase-money. At the expiration of the time fixed by the contract the vendee still continued in possession, without offering to surrender, and the vendor, on the other hand, did not then, or for several months, make any demand for possession. Cross says that after MeliclCs letter, on June 33d, 1899, no further communication of any kind took place between the parties until July 13th, 1899, when he sent Melick the following letter:

‘•July 12, 1899.
“I have been expecting to hear from you for some days, but no word has come. Our agreement has expired by its express terms, and as I am anxious to dispose of the property, shall now see what I can do elsewhere.”

Cross further says that about the 20th of July he met Melick, by accident, in Newark, and that

“Melick then asked me what I was going to do about the water right, to which I replied I was not going to do anything; that I did not consider he had any claim there whatever, and that his contract had expired by limitation.”

Melick says -the interview took place before the 1st of July, and gives an entirely different account of it. He says that, not receiving an answer to his letter of June 22d, he went to see Cross about a week before the expiration of the contract, and asked him what he was going to do about the reservation, and Cross gave him to understand that he would see about it, and they arranged to leave open the delivery of the deed until after the season was over, and that, during the season, Melick should continue to run the property as a pleasure-ground. The account given by these two witnesses as to the next and only other interview, which took place early in September, is of service, in connection with other circumstances, in deciding which one gives the true account of the time or substance of the first interview. At this second interview two other persons were present, Mr. Mills, Melick’s attorney,, and a Mrs. Evans (referred to in the letter of June 22d), who had bought one of the lots from Melick previous to July 1st, 1899, and desired to complete the purchase and get her deed. Mrs. Evans was not called as a witness. Cross’ statement is that Melick then called his attention to an outstanding encumbrance, by way of mortgage 'to Stephen IT. Condit, a former owner of the property, and to the water-right reservation, and asked what he proposed to do about it. Cross said that he had never heard of the mortgage, and that it seemed to have merged in the title which Condit afterwards took, and as to the water right, he did hot propose to do anything, as he did not consider that Melick had any rights in the property; that he had forfeited it by the terms of his agreement. As to a conveyance to Mrs. Evans, Cross, as he says, declined to do anything, so far as Melick was concerned, on account of the old contract, but, in order that Mrs. Evans might not lose her money, he would make an independent agreement with her and convey the two lots purchased by her, but Meliek would have no interest in the matter, and that he did make the convejrance and received $400 from her for the purchase-price of the lots. Cross further says:

“I told Meliek that if he could make any disposition of the property before I did, I was ready to carry out the contract, but X should not hold myself liable under it any longer. I told him I was going to sell it, but if he was ready to buy it before I sold others, I was willing to make the conveyance,”

and that Meliek, at that interview, said he was ready if the encumbrances, as he called them, were cleared up, but didn’t show any money. On cross-examination, Cross again reiterates that, at that interview, he refused to have anything to do under the old agreement, and that he considered that it had become null and void, by its express terms, and adds, “I intended it so when I drew it.”

Melick’s account of this interview in September is that he then proposed to Cross to give the deed to Mrs. Evans and that he (Meliek) would pay him the balance of the money if Cross would straighten this matter out, and that Cross absolutely refused to do anything—

“he said I had lost all my rights but he would fix Mrs. Evans up. I said I was ready to pay the balance the agreement called for, to which he said he would not entertain anything from me at all.”

Mr. Mills, a young man who was present with Meliek as his attorney, gives an indistinct account of the interview, but says in substance that Mrs. Evans wanted a deed for a lot which Mr. Cross would not give for awhile, and that finally the question arose as to the title to the property, Meliek contending that there was some encumbrance on the property, which he would like taken off, and Cross said there was none, that there was a merger, and witness thought there was not. Cross finally agreed to give Mrs. Evans a deed, and then there was more talk about the encumbrance on the whole lot, and Cross suggested that Meliek try to buy it himself from the Cutler estate; that he could get it cheaper than Cross, who didn’t want to have his name mentioned. He further says that Meliek was to have a clear deed and Cross was going to get it, if possible, and if it didn’t cost too much; if it did, he would fight it; that he didn’t want to spend too much to get the water right off. He also says that Melick told Cross he was ready to pay the money and Cross asked him to show the money, to which Melick said he didn’t carry the money around with him, and Cross replied that he (Melick) never did bring the money down. At the time of this interview the complainant was still in possession of the property, using it as a summer picnic ground and making some profit from its occupation. She continued in possession after the interview, without any further communication on either side until November 3d, 1899, when the defendant served on her and her husband a formal written demand for possession of the premises described in the agreement, and threatened legal proceedings on failure to deliver possession. Complainant thereupon filed her bill (November 27th), setting up the agreement to give a warranty deed free from encumbrances, her possession under it, payment of part of the purchase-money and disbursements she had made in reliance on the agreement. The bill then sets out the defect of title by reason of the reserved water rights, the materiality of the reservation, the desirability of the property for manufacturing purposes, its practical uselessness for that purpose, by reason of the reservation, defendant’s knowledge of the reservation several months before the expiration of the agreement, and his promise to obtain a surrender and complainant’s continuance in possession in reliance on Cross’ promise to procure the surrender. She further alleges that she had made a demand on Cross in September, 1899, and before filing the bill, that he give her a deed for the property or repay'the purchase-money and disbursements and Cross’ refusal and subsequent demand of possession. The special prayer of the bill is for a return of the purchase-money and disbursements with interest, or the delivery of a deed free from all reservation and encumbrances, upon payment of the amount still due under the contract, and in the meantime an injunction against the defendant’s removal from the premises. By the bill the vendee thus asks either the return of the purchase-money and expenses, or the specific performance of the contract according to its terms. She does not, either by the bill or at the hearing, ask or consent to specific performance with compensation for the defective title. The defendant, denying the materiality of the reservations of water rights or their essential bearing on the contract, now asks, by cross-bill, the specific performance of the contract, offering to give a warranty deed, if the court so direct, but insisting that the defect is not material to the contract, and that it is a case for specific performance, with compensation, for the reservation of water rights, to be deducted from the purchase-price. As will be observed, both parties have, by their pleadings and prayers for relief, now to some extent shifted the grounds which they respectively took while the transactions were in progress, according to the statement of their evidence above given upon this question. Complainant now seeks by her bill a rescission of the contract of sale and a return of the purchase-money paid, on account of an alleged defective title, while at the time of informing defendant of the defect, she requested indulgence for the further carrying out of the contract beyond the term fixed by the contract, without any intimation that the defect, even if it were not removed, would be insisted on as a reason for entirely abandoning the contract, nor does she oiler any proof that any such intimation was given before the filing of the bill, or that any demand was made for the return of the purchase-money. The defendant, on the other hand, having, according to his own account, expressly and consistently insisted on an absolute termination of the contract from the date of its expiration up to the time of filing his answer, now seeks its enforcement as an existing contract, being willing, if it be adjudged equitable, to make compensation.

As to the reservation of water 'rights, it appears that on the property, near the Cutler line and about fifty feet distant therefrom, is located a spring, the rights to the waters of which are reserved to the owner of the Cutler property, with a right of entry to keep open the drains and pipes conveying the waters of this spring to ponds located on the adjoining property. The reservation was made in a deed from Mr. A. W. Cutler in 1866, when he conveyed the thirteen-acre tract to defendant’s predecessor in title, and, until Melick’s letter of June 22d, was'never known to defendant, who had received a warranty deed from his grantor. The easement reserved, being under the control of strangers, it is admitted that the property, if conveyed, must be subject to the easement, but it is contended (1) that the reservation is not material, and (2) that if so, it should be a subject for compensation, and is not a reason for rescinding the contract and returning the deposit. It is also claimed that there is a like reservation, in favor of the same owner, as to another spring supplying waters to the same ponds, but the location of this spring on defendant’s property is disputed, and this objection to the title should not be sustained without further inquiry. The spring whose waters are admittedly reserved, and the lands covered by its connecting drains, include about two of the eighty-three lots into which the portion of the tract laid out in building lots is divided. This portion so laid out is between one-half and two-thirds of the whole tract, of which the two lots in question constitute a very small portion. The evidence does not establish, I think, that, on the part of either the vendee or vendor, the use by the vendee of the reserved waters was specially considered, on either side, as an inducement to the contract, nor was the reservation known to either party at the time of making the contract or the vendee’s taking possession. The reservation, however, is of such a character that I am inclined to think that it created a substantial defect in the title, which gave the vendee, on its discovery, the option of abandoning the contract for that reason. But I think it is clear that the small part of the property'affected by the easement does not prevent the enjoyment of the rest of its disposal in the manner contemplated by the parties at the making of the contract, and the defect is therefore one which may be waived as an objection to the title or to continuing the contract. If thus waived, the contract is not to be considered abandoned or put an end to, and the defect is a subject of compensation, as to which justice can be done by the court, if the parties fail to agree. Assuming that the objection is one'which could have been equitably relied on by the vendee for abandoning the contract, had it been promptly made on its discovery, the question which arises on the proofs, under her present bill, is whether the objection to the title has not been waived by her continuance in possession and by her conduc^ and treatment of the contract as existing since notice of the defect, which she received at least as early as the spring of 1899, and whether, in view of her possession and conduct, her relief in equity is not limited to specific performance, with compensation for the defect.

The principal disputed matter of fact, as to the conduct of the parties in reference to the contract previous to the filing of the bill, is as to the time and character of the first interview between Melick and Cross after Melick’s letter of June 22d. Melick’s present statement is that he sought the interview, because Crosi did not answer his letter bringing the reservation to his attention, and that he went down to ask him what he was going to do about it. Cross, on the other hand, says that the meeting was accidental—at a public office—and that it was after his letter of July 12th declaring the contract terminated. They agree in the statement that the interview, whenever it occurred and however it occurred, was the first interview after Melick’s letter of June 22d, and inasmuch as Melick, so far as can be judged from that letter, evidently did not then have in mind that the reservation was any basis of inquiry or demand upon Cross or that it created any obstacle to proceeding with the contract, I think that the importance he attached to it, in the first interview, did not result from changing his own view of it, after he wrote the letter, but that it was the probable, and, in his case, the natural, result of a notification, by Cross’ letter of Juty 12th, that the contract was terminated. This notification, not being accompanied with an offer -to return the deposit, necessarily implied a claim on Cross’ part to retain the deposit forfeited, and such notice on Cross’ part would naturally and probably have resulted in the counter-claim of defective title made by Melick. As to the time of the interview my conclusion is that Cross’ statement is the moré reliable. I reach the conclusion also that, as to the substance of the interview, Cross’ statement is to be taken in preference to Melick’s. The substantial point of difference as to the first interview is whether Cross then promised to get rid of the water right, and requested Melick to continue possession, or whether he refused to do anything about it, and denied Melick any rights under the agreement. Cross’ present statement, that he took the latter ground, is consistent with his letter of July 12th, and with the position which Meliek and he both agree that he (Cross) took at the second-and only other interview. Melick’s account depends alone upon his own present evidence, and in view of the fact that his credibility on matters connected with the water rights has been shaken by the evidence in this ease, I am not willing to rely on his uncorroborated statement in preference to that of Mr. Cross.

Upon the whole case I conclude therefore, as to this disputed matter of fact, that Meliek did not continue in possession on Cross’ promise to remedy the defect in the title; that, as early as the latter part of July, Meliek hád notice that Cross claimed that the contract was terminated by limitation of time. It is admitted by Meliek that he had this notice at the second interview early in September. There had not been, up to this latter date, nor was there then, any demand of possession by Cross, neither on Melick’s part had there been any demand for a return of the deposit or any offer to deliver possession on repayment. Melick’s continuance in possession, without srich demand or offer, taking the view most favorable to the vendee, indicates that the vendee, on his part, was still continuing in possession, for the purpose of carrying out the contract and not of abandoning it, and with full notice that Cross, in carrying out the contract, did not expect or intend to free the property from the water reservation. Meliek had notice also that subject to Cross’ sale of the property to others, he (Meliek) might, at any time, have the property under the terms of the contract. The fact that nothing was said at the second interview, upon either side, in reference to the delivery of possession, and that Melick’s possession then continued for more than two months, indicates, I think, that Cross, on his part, permitted the continuance in possession in order that Meliek might, if able to do so, carry out the contract, without regard to the water right, pending his own efforts to sell to other parties. Cross’ notice to Meliek in July, or at least in September, that the reservation would not be removed, also put Meliek to his election either to treat the contract as abandoned, because of the defective title, and to offer to rettirn posr session, on payment of the deposit, or to continue in possession, for the purpose of carrying out the contract, treating the defect as a matter for compensation, instead of abandonment. The continuance of possession, after the September interview, without any express notice to, or demand on, the vendor, changing the character of his possession from one affirming the contract to one abandoning it, left the possession, on his part, also a continuance of possession for the purpose of carrying out the contract. But although Melick, by this continuance in possession, for the purpose of carrying out the contract, asserted on his part, and permitted by Cross, may have waived the defect as an objection to carrying out the contract, there is nothing in the case to justify the conclusion that his continuance in possession after vendor declared the contract terminated waived his right to compensation for the defect in carrying out the contract.

As to a purchaser’s waiver of the defect in title, the authorities settle the rule that a vendee may, on being informed of a defect in title, and either expressly or by his acts, waive the defect as a reason for abandoning the contract without, however, giving up his right to abatement or compensation for the defect, or he may, in like manner, waive the defect, both as an objection to the contract and as a matter of compensation. Taking possession after a notice of defect has been considered a waiver, both of the defect and of the right to compensation. 1 Sugd. Vend. & P. *398, *402; Burrell v. Brown, 1 Jac. & W. *169 (1820). Where the vendee takes possession under the contract, he may object to the title for a defect subsequently ascertained, provided he abandons, or offers to abandon, possession, on account of the de-' feet, as soon as he learned of it. 22 Am. & Eng. Encycl. L. 961. But a continuance in possession, after such notice, for the purpose of completing the contract, may waive the right to object to the defect, although it may not destroy the right to compensation (Calcraft v. Roebuck, 1 Ves. *226; Hughes v. Jones, 3 De G. F. & J. *307, *317 (1861); 1 Sugd. Vend. & P. *405, 406; 1 Dart Vend. (2d ed.) 402); and going on with the negotiation and dealing after discovery of the true nature of the vendor’s interest, is conduct inconsistent with an intention of abandoning the contract, and waives the defect as ground of abandonment, although not of compensation. Pom. Spec. Perf. (2d ed.) 451, and eases cited, note (8).

Melick’s conduct after discovery of the defect, in relation to the contract and the continuance of his rights under it, including the right to possession, must, as it seems to me, be taken to have dearly waived the objection to the vendor’s title as a ground for abandoning the contract. But it cannot be considered as waiving his right to compensation. As to compensation, the evidence of waiver should be entirely clear, for this is a right which the court can adjust if the parties disagreé, while it is otherwise as to the defective title. Melick’s request, admittedly made in both interviews, for information as to Cross’ intention in regard to the reservation was an insistment on the. objection, and while his continued possession, pending adjustment of the matter, may, with the circumstances of the case, be taken to waive the defect as ground of abandonment, it did not destroy the effect which the objection was entitled to have on his equities in finally carrying out the contract. As to the vendee’s rights on his bill, I conclude therefore that she is not entitled in equity either to a conveyance free of the easement or to a return of the purchase-money, but that she is entitled to a decree for. specific performance, with compensation. If the vendee declines to complete, with compensation, her bill must be dismissed. This brings me to the second question, which is as to the vendor’s rights, on his cross-bill, to affirmative relief by decree against the vendee for specific performance, with compensation.

If the vendor’s standing in this case as an applicant for the special equitable relief of a specific performance were to be determined solely by his verbal and written claims and notices in reference to the contract, he could not be considered as entitled to the relief, because, on Iris part, he did not, before the filing of his answer and cross-bill, show himself ready, on his part, to perform the contract, as far as he could, or to do equity. On the contrary, by his written notices and verbal declarations, he insisted on the termination of the agreement by the time limit, which carried with it a forfeiture of the deposit, and he made no offer either to return the deposit or to make compensation for the defective title. But it appears that these notices and declarations of the vendor were not, for several months, accompanied with any demand for a possession of the premises, and that meanwhile the vendor gave the vendee, while remaining in possession, the option of carrying out the contract if he desired to do so; and that the notice to deliver possession was not given until over four months from the expiration of the contract, and the vendee had failed, up to that time, to indicate any intention either to make any further payments on the contract or to abandon it. These facts as to Cross’ conduct, taken in connection with 'Melick’s default in the payment of interest and taxes, and (judging from his letter to Cross) his inability to raise money for the payments, except by the sale of lots, leads me to the conclusion that Cross was ready and willing at any time after the termination of the contract to carry out the sale, subject to the easement. I think also that Melick, on his part, and notwithstanding the notice, understood that the sale, subject to the easement, would be carried out whenever he was ready on his part. Cross’ declaration of his right to sell to another person, pending Melick’s possession, for the purpose of carrying out the contract, did not, under these circumstances, have the effect, either upon his part or that of Melick’s, of changing what was in equity the real character of Melick’s continued possession, after notice of the defect in title, and after the expiration of the time fixed by the contract. This possession was, on Melick’s ¡Dart, a continuance in possession solely for the purpose of carrying out the contract, and, on Cross’ part, a permission of such continuance for this sole purpose. Both vendor and vendee are, in my judgment, now obliged to carry out, and entitled to insist upon, the equitable status which has arisen from the possession of the premises, and their conduct in connection with it, since the discovery of the defect in title and up to the time of filing the bill. The notice of the vendor to deliver possession was not made for over four months, and in view of the failure of the vendee to make any further pajrments, or substantial offers of payments, was probably the only method of bringing about a decision, by appeal to the' courts or otherwise, as to Melick’s rights, either at law or in equity, to continue possession. It was apparently accepted as so designed, for the vendee, not acquiescing in the abandonment of the contract, at once filed his bill to protect his continued possession, and for strict specific performance, by conveyance of. a clear title, or a return of his deposit, the latter being a demand which had not been made before filing the bill. ' Inasmuch, therefore, as it fairly appears,, on the whole case, that as the vendor, on his part, although claiming that the contract had expired, was willing to waive any claim of expiration or forfeiture, and to carry'out the sale, subject to the easement, and inasmuch as the conduct of the vendee in possession has made the easement a matter for compensation, rather than abandonment of the contract, I conclude that, on the vendor’s cross-bill, specific performance, with compensation, should be decreed. Upon the question of the right of either party to treat the contract as rescinded or at an end, it should also be observed that in this contract the provisions as to the final payment and the delivery of the deed and securities for purchase-money were mutual and dependent stipulations, and therefore an actual tender and demand by either party was strictly necessary, in order to put the other in a default which would cut off his right to treat the agreement as still subsisting. Pom. Spec. Perf. (2d ed.) § 361. In the absence of such tender on either side, and both parties being strictly in default, the contract remains in force, and either party may afterwards make a proper offer or tender and sue on the contract as a subsisting contract. Ibid. And while a vendee may undoubtedly rescind a contract without tender of performance on his part, where there is a total failure of the vendor’s title, he cannot, in my judgment, ordinarily rescind without tender where the defect is partial and may be made the subject of compensation. In the present case neither party tendered himself ready to perform the contract according.to its terms at the time fixed, and neither party has the right to proceed in equity on the basis of rescission. The contract must be considered as still subsisting, and the right of either party to a specific performance of the contract will not be affected merely by the failure to make the tender at the time fixed before the suit was commenced. Ibid.; Freeman v. Bissell, 63 N. Y. 168 (1875).

At the-hearing I was inclined to the view that the matter of compensation would better be adjusted by directing a warranty deed to be delivered and leaving the compensation to be determined by a jury, if the vendee chose, in an action for breach of warranty. But I find on examination no precedents for this method, and it is contrary to the usual practice in equity, of finally settling all the questions in the suit; and as the question of compensation in equity may, perhaps, embrace other matters than those which would be in an action at law, the compensation should be settled here. The amount of compensation, when fixed in this court, is usually determined by an inquiry before a master, and as I am not now prepared to finally adjust the compensation upon the evidence taken at the hearing, I will hear counsel upon the question of ordering a reference, and at the same time hear them also upon the direction to be given to the master, if a reference is ordered. Counsel may also then give their views upon a question of the right to make a personal decree against the complainant for the payment of any balance of the purchase-money due on the contract. In the assignment of the contract to complainant she did not assume this obligation, but the cross-bill prays decree against Mrs. Meliek for payment of the balance of the purchase-money. Her husband, the original purchaser, is not a party to the bill or cross-bill, and although the equitable jurisdiction to make decree against the purchaser for payment of the purchase-money is well settled (Moore v. Baker, 419 Atl. Rep. 836 (Vice-Chancellor Stevens, 1901), and cases cited), the authorities, so far as I have examined them, seem to deny the right to a personal decree against the assignee of the purchaser who has not assumed the payment of the unpaid purchase-money.

The question was not argued at the hearing.


author: Emery, V. C.

text:
    Mary S. Williams v. William A. Baker et al.
    [Filed February 1st, 1902.]

      Gen. Stat. p. $980 ¶ 7, providing that on a sale on execution of any Interest in lands the purchaser shall take such estate and interests as the debtor had, refers only to legal estates, and the estate remaining in a grantor after a deed absolute intended as a mortgage, being equitable, a purchaser at execution sale of such estate takes no title, either legal or equitable.
    On bill for injunction.

      Mr. William B. Guild, for the complainant.

      Mr. John J. Hubbell, for the defendants.
   Emery, V. C.

The general equitable rule upon which jurisdiction in this case is invoked is that of declaring a deed, which was, on its face, an .absolute conveyance, to have been merely a mortgage to indemnify the grantee against liabilities assumed by him and another for one of the grantors, and to have the mortgage canceled, because the grantees have been relieved from the liability against .which they were secured. At the hearing I decided that the proofs sustained this claim as to the character of the transaction and as to the discharge of the grantees from liability. The parties complainant and defendants are not, however, the original parties to the transaction, but are, or claim to be, purchasers under judgments at law against the respective parties to the deed, the complainant claiming title to the lands in question through a purchaser at execution sale, made on a judgment at law recovered against the grantors, and the defendants being judgment

creditors and purchasers of the land at execution sale, on a judgment recovered by them against the grantee, subsequent to the execution sale on the judgment against the grantors. The purchaser at the execution sale under the judgment against the grantors has conveyed her interest in the land to the complainant, by a deed subsequent to the sheriff’s deed made to defendants. The question reserved at the hearing was whether the complainant, by the execution sale under the judgment against the grantee and the conveyance from the purchaser at this sale, acquired any title, -legal or equitable, to the grantor’s interest in the lands. Under the acts relating to the sale of lands only legal estates or interests in lands can be sold, and equitable estates cannot be levied on or sold under judgment and execution. Gen. Stat. p. 2980 7; Den v. Steelman, 5 Halst. 229 (1828); Disborough v. Outcalt, Sax. 298, 304 (1831); Van Cleve v. Groves, 3 Gr. Ch. 330 (1843); Belford v. Crane, 1 C. E. Gr. 265, 268 (Chancellor Green, 1863). And while it is settled that the equity of redemption in lands is a legal estate in the mortgagor, where the estate conveyed to the mortgagee is, upon the face of the conveyance, a mortgage only, and this estate or equity of the mortgagor is recognized as a legal estate, subject to sale on execution at law, yet it has also been expressly decided by this court that where an absolute deed has been given, a court of law cannot inquire or determine whether the deed was intended to be a mortgage, and that this is a question over which the equity tribunals have exclusive jurisdiction. Foley v. Kirk, 6 Stew. Eq. 170, 176 (Vice-Chancellor Van Fleet, 1880). In this case the complainants, who claimed under the grantor in the absolute deeds, had brought an action of ejectment, and the equitable jurisdiction to compel the surrender of the deeds, as mortgages which had been satisfied, was sustained on the ground that the question could not be tried at law. In Abbott v. Hanson, 4 Zab. 493, 497 (1854), the supreme court held that evidence could not be permitted in a court of law, in an action of ejectment, to show that an absolute assignment of a lease by a lessor was, in fact, a mortgage. No cases at law in this state admitting such evidence have been referred to or found. The estate in the lands) therefore, which remains in the grantor after an absolute conveyance intended as a mortgage, must be held to be an equitable estate only. As such it could not be subject to execution and sale, and the purchaser at the sale took no title by the sale and could convey none to the complainant. This purchaser was not the judgment creditor, but was Ellen H. Stiger, a daughter of Jacob W. Stiger, one of the judgment debtors, the other judgment debtor being Elizabeth W. Stiger, who was alleged to fee the owner of the lands conveyed. Elizabeth W. Stiger has since died, and who were her heirs or devisees has not been alleged or proved. The equitable interest and estate in the lands and the right of cancellation passed to them. Complainant, shortly before filing the bill, jorocured a conveyance from Ellen H. Stiger of her interest in the lands in question, and claims title by reason of this conveyance, but, in the absence of proof that Ellen H. Stiger was the heir or devisee of Elizabeth W. Stiger, no decree can be based on the existence of her estate or interest as heir or devisee. And, as the case now stands upon the proofs, her only interest was that of purchaser under a sale at execution, which conveyed no title, either legal or equitable. If she was, in fact, the heir-at-law or devisee of Elizabeth W. Stiger, I will hear an application to open the proofs to allow the bill to be amended and this fact to be proved.


author: Reed, V. C.

text:
    Radient Temple, No. 2, Order United Americans, v. William R. Piper, executor, et al.
    [Filed October 24th, 1901.]
    A beneficial association’s constitution provided that on the death of a member in good standing a funeral benefit of not less than $30 should be paid as specified in the by-laws, and, should the member leave no relative, an officer of the association should receive the funeral benefit and attend to the decent burial. The by-laws prescribed that a death benefit of $150 should be paid on the death of a member in good standing, and authorized an officer of the association, on the death of a member, to immediately pay $25 to the family or person bearing the expense of the burial.—Held,
      that a husband of a deceased member of the society, who was the sole survivor of deceased, and who had paid the funeral expenses, was entitled to the death benefit fund, and not the executor of deceased’s estate.

      Mr. Bcoit Scammell, for William R. Piper.

      Mr. John Sylces, for Joseph Conrad.
   Reed, V. C.

The complainant filed a bill of interpleader and tendered itself ready to pay $150 as death or funeral benefits to the person entitled. This benefit became due upon the death of Rebecca Conrad, a deceased member of the order, who left a husband, Joseph Conrad, and a will, in which William R. Piper is named as executor, by which will all her property is left to the brothers and sisters of the testatrix. The funeral expenses of the deceased member have been paid or incurred by the husband. Testatrix died without children, and the only remaining member of her immediate family is her husband. The only pertinent provisions respecting the payment of this fund are to be found in article 7, paragraph 7 of the constitution of the subordinate lodges of the order, and in article 6, paragraphs 7 and 8 of the by-laws of such subordinate lodges.

The provision in the constitution reads as follows:

“In case of the death of a member in good standing, and entitled to weekly benefit, a funeral benefit of not less than $30, as the by-laws shall specify, shall be paid. Should the member leave no relative, it shall be the duty of the Grand Instructor to receive the funeral benefit and attend to the decent interment of the deceased.”

Section 7 of the by-laws reads as follows: “In case of death of a member in good standing, $150, more or less, and less his or her unpaid dues, shall be paid as death benefit;” and section 8 reads as follows:

“In case of death of a member, the Grand Instructor shall immediately on notification have an order drawn for $25, attested by the Grand Secretary and the Seal of Temple attached, to be paid to the family, or the person bearing the expenses of the burial. And in consideration of this Temple being connected with the Funeral Benefit Association, will pay an additional sum of $125, more or less, as funeral benefits.”

The constitution and by-laws constitute the contract entered into between the member and the order. The certificate only certifies that the deceased was a member. No beneficiary is named in the certificate, therefore there is no appointment by the member, and necessarily no power in the member to change an appointment. The scheme is a purely beneficial one, and has none of the elements of a life insurance policy. There is nothing to fall into the estate of a deceased member, and nothing upon which the will of a testator can operate. The purpose of the beneficial scheme is to provide for the obsequies and interment of the deceased member. The only indication of the party to whom the money shall be paid is to be found in the paragraphs already set out. By the constitution the benefit is to be paid to the head officer of the subordinate temple, if there is no relative, which raises the implication that it is to be paid to a relative, if there is one. The by-law is more specific, by directing that the first $25 shall be paid to the family, or to the person bearing the expenses of the burial. The remaining $125; more or less, whatever the last words may mean, is presumably to be paid to the same person. In this case the husband comes within both descriptions—he 'constitutes the family, and he also has borne the expenses of the burial—to whom therefore, in my judgment, the fund in question should be paid. . .


author: Reed, Y. C.

text:
    Anna Merriam v. George W. Dunham et al.
    [Filed October 24th, 1901.]
    1. Where land is sold under an order of the court under the statute authorizing the sale of land limited over to infants, the fund arising from such a sale is to be regarded as real estate.

      2. Where a testator clevises all his real estate to two children during their natural lives and after their decease to their lawful issue in fee-simple, the children of each to take their parent’s share, and, if one die without issue and the other leave issue, then all the estate to go to such issue after the death of the survivor by force of the statute, the devise creates a tenancy in common with a limitation over to the issue of each of an undivided one-half.
    3. Testator gave his real estate for life to his two children, and after their decease to their lawful issue, the children of each to take their parent's share; and provided that his wife and two children should ocóupy his farm, and share equally in its profits, one-third each. On the death of the widow and one of the children, the surviving child of the deceased child petitioned to have paid to him one-half of the fund arising from a sale of all the testator’s real estate, the sale having been made under the statute authorizing the sale of lands limited over to infants.—Reid, that a contention by the surviving sister that the property should be kept in bulk until her death because of the provision as to the farm was'without merit, the widow being dead, and the property having been sold and transmuted into money.
    4. On the death of one of the daughters leaving issue, the fact that the remaining daughter might die without issue was no obstacle to a distribution to the issue of the deceased daughter of one-half of the fund arising from a sale of the real estate, since the right of the issue of the deceased daughter was fixed by her death.

      Mr. Jolm Rellsiab, for the petitioner.

      Mr. Richard 8. Kulil, for the defendants.
   Reed, Y. C.

Leonard C. Cool left a will, giving to his two daughters, Anna Cool and Mary S. Cool, all his personal property and real estate, subject to certain charges and restrictions,

“to have and to hold to them during their'and each of their natural lives, and after their decease to their lawful issue in fee-simple; the children of each taking their parents’ share, and if one should die without issue and the other leave lawful issue, then all his estate to go to such issue after the death of the survivor.”

The testator then directed as follows:

“It is my will that my wife, Catharine, and my two children, Anna Cool and Mary S. Cool, should occupy my farm, and to share equally out of the produce and proceeds thereof, each to them an equal undivided one-third part of all the surplus earnings and proceeds of said farm, during each of their natural lives.”

The widow is dead and the estate is freed from all the charges and restrictions mentioned in the will. The real estate has been sold, by an order of the court of chancery, under the “Act to authorize the sale of lands limited over to infants,” and the sum of $12,810.58, the fruits of such sale, has been invested by this court.

Anna Johnston (nee Cool), one of the devisees, is dead, leaving John K. Johnston, Jr., her only surviving child. John K. Johnston, Jr., now petitions to have the one-half of this fund paid to him. There is no doubt at all that the gift or devise to the two daughters was to them as tenants in common for life, and after the death of each leaving issue, a moiety went to such issue. The fund in question is the product of the sale of the real estate, not made by the order of the testator, but by judicial proceedings, and so the fund is to be still regarded as realty. There is nothing in the devise to show an intention to- create a joint tenancy; therefore, by force of our statute, the devise created a tenancy in common, with a limitation over to the issue of each of an undivided one-half. This result is directly within the ruling in Stoutenburgh v. Moore, 10 Stew. Eq. 63.

But it is insisted by the solicitor for the other sister that the property is to be kept in bulk until the death of both, because the will directed that the farm, from the sale of which this fund arose, was to be occupied by the widow and the two daughters, and also the surplus earnings and proceeds of it should be shared equally by them during each of their natural lives.

The literal performance of this direction would be impossible if the farm was still unsold, for the widow is dead, and it is therefore impossible for the three to occupy. It is equally aside from the intention of the testator that after her death one-third of the surplus earnings only should be paid to the surviving children.

But, apart from this, the property has been sold, by a regular proceeding, taken under a statute of this state, and been transmuted into money. The surviving sister can receive no more than her share of the product of this fund. The intention of the testator that the farm should exist as a home until the death of the last of the three devisees mentioned, if it existed, has become impossible of execution, and this intention is the only argument that can be raised against the right of the issue of the deceased daughter to a division of the fund.

The fact that the remaining daughter may die without issue interposes no obstacle to this action, for the right of the issue of the deceased daughter was fixed by .her death leaving issue. The direction to be taken by the other half will depend upon her death with or without issue.

I think the prayer of the petition should be granted.


text:
    Myra A. Mockridge v. William P. Mockridge.
    [Filed October 24th, 1901.]
    Where, by articles of, separation, a husband covenants to pay to his wife a certain sum per month for her support and she agrees to accept such payments in satisfaction of alimony, she may maintain an action in her own name to recover past-due sums.

      Mr. Samuel G. Mount, for the complainant.

      Mr. Louis II. Schenclc, for the defendant.
   Reed, Y. C.

This bill is filed to compel the defendant to pay to the complainant the amounts already due to his wife by the husband, while living apart from her under articles of separation. The demurrer sets up that she has no right to sue in her own name, and that, if a right exists at all, it belongs to the trustee named in the articles of separation, or his successor, who would have an adequate remed3r in a court of law. The articles of separation, so far as they are set up in the bill, were executed by these parties and a trustee. The husband covenanted to pay, or cause to be paid, for the support of his wife, $35 a month'; and the wife agreed to accept this sum in satisfaction of alimony. While living separate from his wife he would have been compellable to maintain her, and they were competent to liquidate the amount to be paid for such maintenance. While a court of equity will not compel the parties to specifically perform the articles of separation in respect to their future lives, or future maintenance, it will compel the husband to pay that which he has promised to pay, and which has already accrued under the articles. This was the rule established in Aspinwall v. Aspinwall, 4 Dick. Ch. Rep. 302, and in Head v. Head, 3 Atk. 295, a husband, living separate from his wife, was compelled, by Lord-Chancellor Hardwick, to pay the arrears of amounts promised by him, in a letter to her, for her support. Nor does the fact that a trustee is also a party to the articles of separation strip a court of equity of its jurisdiction. A trustee was a party to the articles under consideration in Aspinwall v. Aspinwall, supra. In the present articles there is no covenant to pay the sum named for the support of the wife to the trustee. The wife is the beneficiary, and her right to sue in equity is complete.

The demurrer is overruled.