(108 A.) finding are overruled. For the purposes of this opinion substantially all of the other findings asked for have been assumed to be true. There is no error. The other Judges concurred. (91 N. J. Eq. 42) DODGE et al. v. JORDAN et al. (No. 45/306.) (Court of Chancery of New Jersey. Nov. 28, 1919.) from separate ancestors, who acquired title by descent from a common ancestor, and allege that they have been paying the taxes for more than five years. The usual charge is made against the defendant Mary A. Jordan, administratrix of the estate of Cornelius Poillon, and individually, that she denies the complainants' title and claims some adverse right, title, or interest. Mrs. Jordan answers, admitting the title to have been in the ancestors of the complainants, but sets up that they were indebted to her intestate, and that she, as administratrix, in 1879 recovered a judgment REFUSAL OF COURT TO against them in the Supreme Court of the state of New York for $8,979.72; that she released the judgment upon the payment by the said ancestors of $2,000 in cash, the assignment of an interest in an estate of the value of $1,500, and by a conveyance of the land in question, the agreement being: 1. EQUITY 263 Where answer to bill to quiet title, under 4 Comp. St. 1910, p. 5399, alleged conveyance of land in question to defendant in consideration for release of judgment under defendant's agreement to pay over to plaintiff's ancestor, upon sale of the land, any surplus remaining after payment of judgment with interest and expenses, court properly refused to strike out replication admitting the conveyance and the agreement, and charging that it was in the nature of a mortgage, that debt to be secured thereby was paid in full, that in acknowledgment thereof land had been reconveyed by deed which had become lost, and offering to pay any balance found to be due, upon ground that complainants had a direct remedy in equity by bill to redeem the lands, such allegations in replication being in avoidance of the defense of title set up by answer and in amplification of allegations in answer tending to show deed to be a mortgage, and in denial of allegation that mortgage debt is unpaid, and a question of whether complainants had misconceived their form of action not being for court on motion to strike out replication. 2. QUIETING TITLE 51 COURT WILL AS- On bill to quiet title, under 4 Comp. St. 1910, p. 5399, § 1, where it appears that conveyance under which defendant claimed was in effect a mortgage, and that there is a balance of the mortgage debt due, the court will ascertain the amount of such balance and permit complainants to redeem. Bill by Josephine Kern Dodge and others against Mary A. Jordan, administratrix, etc., and others. On motion to strike out replica tion. Motion denied. "That this defendant [Mrs. Jordan], as such administratrix, should, upon sale and conveyance of the same, after the payment of said judgment and expenses, account and pay over to the said Dodge and Mapes [complainants' ancestors] any surplus after such payment thereof, with interest and expenses." She further alleges that she has not received sufficient moneys to pay off the judg ment, and that the title to the one-half interest is in her in fee. The complainants in reply join issue upon, or admit or deny severally, the first 13 paraIn the remaining graphs of the answer. paragraphs, 14 to 21 inclusive, they admit the indebtedness of their ancestors to Poillon, the intestate, but say the debt initially was $3,800, evidenced by a bond in the penal sum of $7,600, and that the judgment recovered in New York was for the penalty, interest, and costs. They further admit the liquidation of the judgment by the payment of the $2,000 in cash, the assignment of the estate of $1,500, and the conveyance of the land in question upon the agreement just related, and as to this conveyance they charge that it was in the nature of a mortgage to secure the balance of the debt, that and that in acknowledgment Mrs. Jordan, the debt was paid in full by their ancestors, as administratrix, reconveyed the lands by a deed which has become lost. The complainants offer to pay, if the debt has not Pierson & Schroeder, of Hoboken, for the already been paid, the balance that may be motion. James R. Nugent, of Newark, opposed. BACKES, V. C. This bill is to quiet the title to an undivided half interest in waste lands in Newark, and is drawn strictly in accordance with the Act to Quiet Titles (4 Comp. Stat. p. 5399). due, and to that end ask that the administratrix account, so that it may be ascertained whether the debt has been satisfied. The defendant moves to strike out paragraphs 14 to 21, or the material parts thereof, and the outstanding ground, running through the multitude of reasons assigned, is that it discloses that the complainants The complainants claim by inheritance have a direct remedy in equity by bill to re For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes deem the lands, and that consequently relief | and had been paid, the cloud of the defunct cannot be had by means of a bill to quiet the document would doubtless be removable on title, and her counsel cites in support of this this bill. And I am also of the opinion that, position Jersey City v. Lembeck, 31 N. J. Eq. if it were to appear that there was a bal255; Van Houten v. Van Houten, 68 N. J. ance due, the court would ascertain the Eq. 358, 59 Atl. 555; Fittichauer v. Metro- amount and permit the complainants to repolitan Fire Proofing Co., 70 N. J. Eq. 429, deem. Devine v. Franks, 47 Atl. 228, is au61 Atl. 746; McClave v. McGregor, 72 N. J. thority. There Vice Chancellor Emery held Eq. 218, 64 Atl. 1066. that: to what extent, and whether complainant had the right to redeem. Baldwin v. City of Elizabeth (Runyon, Ch., 1886) 42 N. J. Eq. 11, 6 Atl. 275, approved on this point. In re Commissioners of the City of Elizabeth, 49 N. J. Law, 448, 507, 10 Atl. 363, is an authority for the jurisdiction. The Lembeck Case, 31 N. J. Eq. 255, does not apply to the case." The motion will be denied, with costs. [1] In defining the scope of the act and "The court has jurisdiction; the defendant's its place and function in our jurisprudence, claim being that of a lien upon complainant's Chief Justice Beasley, in the Lembeck Case, land under a sale for taxes, as to which lien, held that it did not supplant prevailing rem- if it exists, the complainant has a right of reedies at law and in equity for the purging demption. By the act quieting titles, under of titles to land, and that, as these inherent which the bill is filed, the court is required by remedial methods were constitutionally vest- the parties in the lands. Equity has jurisdicthe final decree to fix and settle the rights of ed in the courts, and consequently unalter- tion for the purpose of redeeming lands from able by the Legislature, the provisions of taxes (Culver v. Watson, 28 N. J. Eq. 548), and the act were exclusive of causes where com- therefore, in fixing the rights of the parties mon-law and equity procedure were avail- in the land, would clearly have the right to deable and adequate. These principles were termine whether defendant's lien existed, and applied by this court in the opinions in the cases just cited. They are not, however, relevant on this motion. The replication quite properly pleads the deed to be a mortgage, that it has been paid, or, if not paid in full, is subject to redemption by the complainants, which right they seek to exercise upon ascertainment of the amount due. (The allegation of a lost reconveyance is parenthetic, and not for special relief.) This goes in avoidance of the defense of title in fee in the defendant set up by the answer, is in amplification of the allegations therein contained tending to show the deed to be a mortgage, and is in denial of the allegation that the mortgage debt is unpaid. The fact that these things, alleged in avoidance, make it appear, in view of the doctrine above ex-(Supreme Court of New Jersey. Jan. 19, 1920.) pressed, that the complainants have miscon-1. NEGLIGENCE 2-AUTOMOBILE OWNER'S ceived their form of action, cannot be seized upon at this time to strike out the reply. They may furnish grounds for dismissing the bill on final hearing, because the appropriate action is by bill to redeem, which question is not now before me, but, if ultimately it should be decided, upon such a contention, that the bill is maintainable in its present form, the matters set up by the replication would undoubtedly be pertinent. It will be found, upon examination of the cases above cited, that the rights of the complainants therein to maintain their actions were contested on final hearing, on issue joined or upon demurrer. (94 N. J. Law, 64) LUTVIN v. DOPKUS. DUTY TO LICENSEE RIDING DEFINED. Persons soliciting one for the use of his automobile to take them to picnic grounds and return are mere licensees, to whom he owes only the duty of refraining from wantonly or willfully injuring them. 2. NEW TRIAL 168-CORRECT VERDICT WILL it NOT BE DISTURBED ON RULE TO SHOW CAUSE Where the verdict of the jury was correct, will not be disturbed on rule to show cause, although contrary to the charge of the court. Actions by Gustav Lutvin against John Dopkus, and by Anthony Martin against the same defendant, in which there were verdicts for defendant. On rule to show cause. Rule to show cause dismissed. [2] A further reason for denying the motion is that the so-called new matters introduced by the replication are simply in explanation and clarification of the allegations of the answer that the deed is, in effect, a mortgage. Pleading them was unnecessary. The issues thus more plainly put, would have been triable upon the filing of the common replication; for, upon a showing at the hearing that the defendant's deed was a mortgage ant. Argued June term, 1919, before the CHIEF JUSTICE, and MINTURN and BLACK, JJ. Stamler & Stamler, of Elizabeth, for plaintiffs. Kalisch & Kalisch, of Newark, for defend (108 A.) The rule to show cause will therefore be discharged. STOKES (91 N. J. Eq. 39) V. BURLINGTON COUNTY TRUST CO. et al. (No. 45/712.) MINTURN, J. The parties to these con- therefore will not be disturbed, although troversies were members of a social organ- contrary to the charge of the court, which ization, which held a celebration at Staten was based upon a misconception of the regal Island, on July 7, 1918. The defendant who status of the parties, under the rule of law was the owner of an automobile, and who to which we have adverted. resided on Staten Island, was requested by the plaintiffs to convey them in his machine to the celebration, which he did, and while returning in the night, and as plaintiffs allege, while proceeding at a high rate of speed, the car driven by defendant overturned, and the plaintiffs were thereby injured, and these suits were instituted to recover damages for the resulting injuries. A (Court of Chancery of New Jersey. Nov. 20, jury in the district court rendered a verdict in favor of the defendant, in the face of a charge which imposed liability in the ab-1. PRINCIPAL AND SURETY 186-SURETY OF sence of due care. From that determination this rule was taken by the plaintiffs who seek to vacate the verdict. The legal question presented, as well on the motion to direct a verdict as upon a motion to nonsuit, raises the question of defendant's liability, under the conceded circumstances of the case; the insistence being that the plaintiffs were mere licensees to whom the defendant 2. TRUSTS 349 BENEFICIARY MAY TRACE owed only the duty of refraining from the perpetration of an act willfully injurious. The court charged the jury favorably to the plaintiffs' contention, viz., that the duty imposed by law upon the defendant was that resulting from the status of invitees to whom the duty of due care was owing. We think that conception of the situation was errone ous. [1] The conceded fact is that they solicited the defendant, as brother members of the organization, for the use of his automobile to take them to the picnic grounds and return. The act of the defendant in acceding to their request possessed none of the elements of a contract, and involved no element of invitation which can bring it within the rule of law applicable to a passenger upon a railway train or a hired bus or to those cases of express or implied invitation upon which reliance is placed in the appellant's brief, and which involve, as a consequence of the legal relationship thus established, the application of the rule of due care. 1919.) DEFAULTING TRUSTEE MAY TRACE PROCEEDS The surety of a defaulting trustee may, as against creditors of the trustee, recover the proceeds of property purchased by the trustee with trust funds, on the principle that a surety is entitled to be relieved from the dishonesty of his principal by compelling him to return the loot. AND RECOVER TRUST FUNDS UNLAWFULLY DI- A cestui que trust may trace and recover trust funds unlawfully diverted by his trustee. 4. TRUSTS 350-PRESENTATION OF CLAIM TO ESTATE OF DECEASED TRUSTEE HELD NOT WAIVER OF RIGHT TO TRACE TRUST FUNDS. Though Orphans' Court Act, § 99, provides that a decedent's estate, if insufficient to pay debts, shall be distributed equally among the creditors, a substituted trustee, who in ignorance of the fact that the deceased trustee, who had misappropriated trust funds, had used the same to purchase land, taking title in his own name, filed a claim as a creditor in the orphans' court, did not thereby waive the right to trace the funds into the land. PUR The legal status of the plaintiffs here ex- CHASED BY TRUSTEE AND GUARDIAN BELONGS funds of the two estates purchased land, taking Suit by Edward D. Stokes against the Bur[2] The verdict being for the defendant, lington County Trust Company and others, the result attained was in conformity with in which the Mount Holly Trust Company the legal rule applicable to the situation, and as substituted trustee and guardian filed a For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes ་ counterclaim. Decree for complainant and Wills, are technical. It sets up that the counter claimant. V. Claude Palmer, of Mt. Holly, for com fainant. Samuel A. Atkinson, of Mt. Holly, for defendant Mt. Holly Safe Deposit & Trust Co. George B. Evans, of Camden, for defendant Burlington County Trust Co. BACKES, V. C. This suit is to recover trust funds fraudulently misappropriated. The facts are few and undisputed. complainant, as surety, has no standing to bring this suit; that he is not entitled to protection against ultimate loss by a restora I It tion of the misappropriated trust funds. am not referred to any authorities to support the proposition, and believe none can be found to even give color to its soundness. Common honesty and morality dictate that a surety be relieved from the consequences of the dishonesty of his principal by compelling him to return the loot. That is the complainant's effort, and his right to relief in Thomas Wood bequeathed to Israel H. equity is unquestionable. Irick v. Black, 17 Johnson $15,000 in trust for the benefit of N. J. Eq. 189; Philadelphia & Reading R. his demented son, Reading Wood. Upon R. Co. v. Little, 41 N. J. Eq. 519, 7 Atl. 356; Johnson's death William B. Wills was substi-Kidd v. Hurley, 54 N. J. Eq. 177, 33 Atl. tuted as trustee, and about the same time 1057; Beacon Lamp Co. v. Travelers' Insurhe was appointed guardian of the incompe-ance Co., 61 N. J. Eq. 59, 47 Atl. 579. But tent son by the orphans' court of Burlington the question is academic, in view of the county. Among other items, there came to counterclaim interposed by the Mt. Holly Wills' hands, as trustee, Lehigh Coal & Navi- Trust Company, representing the cestui que gation bonds of the par value of $11,000; trust, whose right to institute proceedings and as guardian, Lehigh Coal & Navigation to recover the trust funds is conceded. bonds of the par value of $2,500. Shortly is settled law that a cestui que trust may after his appointments, 1895, Wills sold these blocks of bonds for $11,893.75 and $2,703.13, respectively, and with the proceeds purchased the Indian Hill Farm, paying there for $13,411.19,. and took title in his own name. Wills continued as trustee and guardian until his death, 1915, when he was succeeded in both offices by the Mt. Holly Trust Company. Wills' estate has been declared insolvent. His executor, the Burlington County Trust Company, sold the Indian Hill Farm for $15,109.60, which now forms part of the liquid assets of the estate for pro rate distribution among the creditors. Pursuant to a rule to bar creditors, the Mt. Holly Trust Company, as trustee and guardian, presented its claims for $35,360.90 and $9,364.85, respectively, which were allowed. These claims represented the principal and accumulated interest on the sums turned over to Wills when he took office as trustee and guardian. When they were presented and approved, and up until shortly before the hearing of this case, the Mt. Holly Trust Company was unaware that Wills had used the funds of the two estates to purchase the Indian Hill Farm. The complainant, Stokes, is one of the sureties on Wills' bond of $24,000 given for the faithful performance of the trust. To indemnify himself he filed this bill against Wills' executor to recover for the Wood (trust) estate so much of the proceeds of the sale of the Indian Hill farm as represents the trust funds misappropriated by his principal in its purchase. The Mt. Holly Trust Company, as substituted trustee and substituted guardian, filed a counterclaim against Wills' executor to recover the entire proceeds. [1, 2] The defenses interposed by the Bur trace and recover trust funds unlawfully diverted by his trustee. Smith v. Combs, 49 N. J. Eq. 420, 24 Atl. 9; Babcock v. Standish, 53 N. J. Eq. 376, 33 Atl. 385, 30 L. R. A. 604, 51 Am. St. Rep. 633; Hunt v. Smith, 58 N. J. Eq. 25, 43 Atl. 428; Ellicott v. Kuhl, 60 N. J. Eq. 333, 46 Atl. 945. [3, 4] The objection to the relief prayed for by the Mt. Holly Trust Company, as substituted trustee and guardian, is that the orphans' court's decree of insolvency fastened the claims of creditors of Wills upon the estate in the hands of the executor equally, and that it has elected to become a common creditor by presenting its claim under the rule to bar creditors, and consequently has waived its right to trace the funds. The position is untenable. The Orphans' Court Act (Comp. St. 1910, p. 3848, § 99), providing that a decedent's estate, if insufficient to pay debts, shall be distributed equally among the creditors in proportion to their debts, applies only to the estate proper of a decedent, and does not include trust funds of which he dies possessed. As Vice Chancellor Howell remarked in Koch v. Feick, 81 N. J. Eq. 120, 86 Atl. 67: can fasten their debts only on those funds which "It is a decree in favor of creditors only, and are applicable to the payment of debts.” And there was manifestly no waiver be cause, as admitted by the pleadings, the Mt. Holly Trust Company did not know at the time it presented its claims that the trust funds were traceable into, and formed part of, the Wills estate. There can, obviously, be no waiver without knowledge of the facts upon which the alleged waiver is predicated. [5] As the farm was purchased by the trustee with the joint funds of the trust and by the executor from its sale inures to these estates (Shaler v. Trowbridge, 28 N. J. Eq. 595), and a decree will be advised, awarding it proportionately, with costs. (108 A.) (94 N. J. Law, 46) CITY OF NEW BRUNSWICK v. BOARD OF BERGEN, J. [1] The Elizabethtown Water Company, the Plainfield-Union Water Company, and the Middlesex Water Company, in conjunction with two other companies engaged in the same business, viz. furnishing the inhabitants of, primarily, the counties of Somerset, Middlesex, and Union with a supply of water for domestic and public uses, requiring an additional supply of water for that use, and proposing to obtain it by diverting water from the Raritan and Millstone rivers near their junction in the county of Somerset, filed a joint petition accompanied with maps and plans indicating the method of diversion, as required by the stat190-AP-ute, with the board of conservation and dePROVAL OF PLAN OF COMPANIES FOR OBTAIN-velopment, a state agency to which the LegING WATER SUPPLY IS WITHIN AUTHORITY MENT et al. (Supreme Court of New Jersey. 1920.) (Syllabus by the Court.) 1. WATERS AND WATER COURSES OF BOARD OF CONSERVATION. Jan. 16, Where three companies jointly petitioned the board of conservation and development for the approval of plans to divert water from streams to supply it, through a continuous pipe line for lateral distribution to numerous municipalities, one contributing to the other under lawful contracts, an order of the board approving the plans, and limiting the gross amount to be taken to serve the purposes of the three, each having a lawful right to take water from the same source, is within the authority of the board. 2. WATERS AND WATER COURSES 188(3)— UNLIMITED CHARTER RIGHT TO TAKE WATER WILL NOT BE MODIFIED BY SUPPLEMENT GRANT OF LIMITED RIGHT OF CONDEMNATION. An unlimited right to take water from any source granted by charter will not be modified by a supplement to that charter granting the right of condemnation limited to a specific locality. 3. WATERS AND WATER COURSES 188(2) BOARD OF CONSERVATION MAY SUBJECT islature has delegated the power to approve plans in such cases; the statute declaring: "The approval of the commission shall constitute the state's assent to the diversion of water." After notice to parties interested, and following a hearing, the state board approved the plans as to the three companies herein before specifically named, and denied it as to the two other companies, and made an order to that effect, which is the matter brought under review by this writ. The plan as approved contemplates the erection of works sufficient to divert from the two rivers a quantity of water not in excess of 20,000,000 gallons per diem. The order challenged recites that it was made subject to certain terms and conditions, those pertinent being: (a) That it shall constitute the assent of the state to the diversion of water from the rivers to the extent above stated, but shall not be construed to increase any rights of the petitioners which they had under any statute enacted prior to chapter 252 of Laws of 1907, nor should its acceptance be taken to be a waiver by the petitioners of SHARE OF COST OF IMPOUNDING STORM any such rights; (b) that the order should WATER. The state board has the right to subject the consent of the state to a diversion of water for public use to a condition that the petitioners pay an equitable share of the cost of impounding storm water along the streams from which the diversion is permitted, if that shall become necessary for the benefit of other applicants. not limit the right of the state to grant its consent to others to take water from either of the rivers or their tributaries; (c) that the order should not be taken to grant to either of the petitioners a right to supply water in any territory in which they had not then such right; (d) that the board reserved the right to provide for the storage in the future of the storm waters along the rivers or their tributaries, if that should become necessary to provide the amount required to supply water to those lawfully entitled to take it, and to apportion the expenses of providing the storage between the petitioners and other lawful applicants in such manner as may be equitable. This order, subject to such limitations and conditions, was properly accepted by the defendants. The junction Robert H. McCarter, of Newark, for prose- of the two rivers is in the county of Somercutor. set, and thereafter the water of the two Frank Bergen, of Newark, for defend- flows, under the name of the Raritan river, easterly and southerly between the counties Certiorari by the City of New Brunswick to review an order of the Board of Conservation and Development approving the plans of three water companies and refusing to approve plans of two water companies for obtaining a water supply. Order affirmed. Argued November term, 1919, 1919, before TRENCHARD and BERGEN, JJ. ants. For other cages see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes |