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in said deed described, shall be erected nearer that the wife, having an interest in both parthan five feet from the westerly line of said cels, could legally impose upon her land for described lot, and that said restriction shall the benefit of the land sold, the restriction attach to and run with the land, and bind contained in her agreement, if there was all future owners of the lot immediately ad a valuable consideration to sustain it. It joining on the west to lands so as afore appears by the testimony and the recitals said conveyed; and the said Alfred C. Mc in the agreement that the husband, by a Clellan, for himself and his heirs and as deed in which the wife joined, had conveyed signs, covenants and agrees to and with the to the complainant a lot of land on which said Martha F. Wahl, her heirs and assigns, there was then erected a dwelling, the westerthat he and they shall in every deed of con ly side line of which, including the eaves of veyance of said adjoining lot hereafter to the building, extended to the boundary line be made by him, them, or any of them, in between the lot conveyed and that owned by sert and include a covenant, condition, agree the wife, and, for a part of the consideration ment, and restriction in all respects the same paid, the wife and her husband agreed in a as the above." The reasonable interpretation writing separate from the deed, executed at of the agreement is that it was intended by the same time, and as a part of the transacthe parties that the owner of the adjoining tion, that no building should be erected on lot, the title to which was vested in the wife, the wife's lot within five feet of the westerly should be bound as stipulated therein, and line of the lot conveyed to the complainant. it is the duty of this court to give effect The interest of the wife in the lands conto that intention. The words "himself, his veyed to the complainant was an inchoate heirs and assigns,” cannot be permitted to dower which our courts have recognized to overcome the intention of the parties, to be be a valuable interest. Wheeler v. Kirtland, fairly gathered from the agreement, that the 27 N. J. Eq. 534. It follows therefore that, if wife should be bound by its covenants, for the covenant which she entered into with the if the contract admits of two inferences, it is complainant tended to enhance the purchase to be interpreted in the sense in which the price, and the presumption is that it did, her promisor had reason to suppose it was under inchoate dower was increased in value there stood by the promisee. Potter v. Berthelet by, and such increase undoubtedly is a suf(C. C.) 20 Fed. 240.
ficient consideration for the agreement sought Certainly the complainant understood that to be enforced, and, in my judgment, if the the wife as owner was binding herself ac wife was erecting the building complained of, cording to the terms of the agreement, and it would be the duty of this court to require that it was the intention of the wife, as one her to stand by her bargain. If this agreeof the parties to the agreement, to contract ment binds the wife, it will be enforced with reference to the land which she owned, against any other person into whose hands is strengthened by the fact that otherwise no the land passes, with notice of the covenants, reason is apparent why she should be a although not recorded. The complainant inparty to a contract which had no purpose sists that the defendant before taking title other than the placing of a restriction on to the land had notice of the covenant, or her land for the benefit of the adjoining land. sufficient notice thereof to put him on inquiry. owner in part consideration of the purchase The defendant testifies that on the day he price for the land sold by the husband and agreed to purchase the lot he had an underwife to complainant. The construction of an standing with Mr. McClellan, who was actagreement should "be favorable, and as near ing for his wife in the negotiations of sale, the minds and apparent intents of the par that there was a restriction on five feet of ties as it possibly may be, and the law will the land, but was not told about it until he permit.” Shep. Touch. c. 5, p. 85; Sisson v. had paid $100 on account of his contract of Donnelly, 36 N. J. Law, 432; Rue v. Meirs, purchase. The pertinent evidence on this 43 N. J. Eq. 377–383, 12 Atl. 369, 372. I point is as follows: Q. You had an underam satisfied that this written agreement is standing about a restriction on the five feet? the contract of the wife, according to which A. Yes. Q. When did you have that? A. On there was not to be erected on her land any the day I purchased the lot; let me see, it building within five feet of the westerly line was after I had paid my first money. Q. of the lot conveyed by her and her husband After you 'paid your first money? A. Yes. to the complainant; a stipulation which the Q. Then he told you that there would have defendant has disregarded.
to be a restriction? A. Mr. McClellan, after The next objection is that the contract is receiving my money and writing me a receipt, not binding on the wife because she was not which I have brought here, came back to me the owner of the land, for the benefit of which and said: "By the way, there is some little the agreement was made, and also that it was restriction on this lot; it is about five feet." without consideration. I take it to be well And he said: "Of course I don't suppose that settled that equity will compel the observance you want to build closer than five feet." I of a covenant, founded upon a valuable con said to him: “Mr. McClellan, I am a little sideration, by which the owner of land im surprised at this; if you had told me that beposes upon it limitations as to its use which fore I paid you, we might have considered are reasonable in character, and shall hold ! the matter a little differently.” But I said:
“However, I would like to know what these stitutes actual notice. This inference is not restrictions are, and whether they prevent a conclusive presumption of law; it may be me from building a bay window.” He said: defeated by proper evidence. Yet, if it ap"They do not. It is simply the five feet from pears that me party obtains knowledge or inMr. Wahl's line, to your house; that is, the formation of such facts, which are sufficient body of your house or wall."
to put a prudent man upon inquiry, and It further appears that at that time de which are of such a nature that the in. fendant knew that the complainant was in quiry, it prosecuted with reasonable diligence, possession of the adjoining property, but did would certainly lead to a discovery of the not go and see her with reference to this re conflicting claim, then the inference that he striction. The defendant paid the considera- acquired the information constituting actual tion for his lot to a title company in At notice is necessary and absolute; for this is lantic City, with the expectation that the only another mode of stating that the party company would get the deed and put it on was put upon inquiry, that he made the inrecord, which it did. This deed contained a quiry, and arrived at the truth. And the restrictive covenant in the precise words of same result follows if the party has suffthe agreement between Mrs. McClellan and cient knowledge to require him to make the the complainant, and is dated the 1st day of inquiry, if he neglects to do it, or, having September, 1904. On the 13th day of June, begun it, fails to prosecute it in a reasonable 1905, Mary A. McClellan and her husband manner. The information need not be so . executed a new deed to the defendant, recit full and detailed as to communicate a coming that the restrictive covenant was inserted plete description of the opposing interest. It in the original deed by "inadvertence and is sufficient if it asserts the existence of a mistake," and contained a modification of the right or interest as a fact. If a vendor inrestriction in the words hereinbefore set out,
forms the vendee that the subject matter is but the later deed can have no effect upon this subject to an outstanding lien or equitable controversy if, as a matter of fact, the de claim, such information is sufficient. It need fendant, wefore he completed his purchase, not state all the particulars or impart comknew, or was chargeable with notice, of the plete knowledge. It is enough if he has reacharacter of the contract between his vendor sonable ground to believe that a conflicting and the complainant. The recital in the sec right exists as a fact. Whenever the inforond deed does not conform to the truth, be
mation given by the grantor would constitute cause the vendor knew the character and notice, the same information communicated nature of her covenant, and was careful to by the representative of the vendor will have it inserted in the earlier deed, and it operate with equal force, provided the party is incredible that by “inadvertence and mis represented was prevented by absence or distake" she inserted in her deed a covenant ability from making the communication on which she had so solemnly agreed to insert. bis own behalf. To what extent the pur. Nor am I disposed to accept the statement of chaser is charged with notice of the incumthe defendant that the first deed, as drawn brance and its character, is regulated by the and recorded, did not conform to his under
interest of the person making the communi. standing; for, a long time after the deed came cation. Information given by a third perto his possession, and after he was aware son baving no interest in the matter, who, of the nature of the restriction, he went to
after stating the charge upon the subjectthe husband of the complainant and stated matter, also declares that it has been aban. that he had gone to considerable expense pre
doned or no longer exists, the purchaser may paring his plans and specifications, and found generally rely upon the whole communica. that there were restrictions covering five feet,
tion, and unless there is some special reason which would require him to build nearer Pa for believing the statement regarding the cific avenue than he wished to, and desired incumbrance, and rejecting that which re that the complainant should by deed relieve lates to its discharge, the purchaser may rely three feet of the five of the restriction, which upon the whole statement; but a different he would hardly have done if he thought the rule prevails where the representation is restriction claimed to have been improperly
made by the vendor or person parting with Inserted could be removed by the explanatory
an interest in the subject-matter, and where deed of his vendor which he afterwards pro such person admits some outstanding claim cured.
upon, or equity in the property, bis further As to actual notice not proved by direct declaration that the defect has been cured or eridence, but to be inferred in part from the equity destroyed, will not warrant the circumstances, the rule is laid down in Pom. purchaser in relying upon this explanation Eq. Jur. $ 597, that if the party obtains or contradiction, for the informant is under knowledge or information of facts tending a strong personal interest to misrepresent or to show the existence of a prior right in con conceal the real facts. flict with tbe interest which he is seeking to The testimony in this case shows that, at obtain, and which are sufficient to put a rea the conclusion of the negotiations between sonably prudent man upon inquiry, then it the McClellans and the defendant, he was inmay be a legitimate Inference that he ac formed by the vendor that there was some quired the further information which con little restriction on the lot covering about
tice. See, also, Hoy v. Bramhall, 19 N. J. Eq. 563, 97 Am. Dec. 687.
The conclusion which I have reached ig that the complainant is entitled to the relief prayed for in her bill of complaint, with costs, and I will so advise.
five feet, and the defendant testified that the vendor said, “Of course, I don't suppose that you want to build closer than five feet," to which the defendant replied that he would like to know what the restrictions were, and whether they prevented him from building a bay window, and was informed: “They do not. It is simply the five feet from Mr. Wahl's line to your house; that is, the body of your house or wall.” In my judgment, it then became the duty of the defendant to inquire from the person, in whose favor the restriction was made, regarding its character and extent, and is chargeable with notice of all the facts which an inquiry properly pursued would have revealed. The defendant knew that the complainant was in possession of the adjoining lot; that there was a building standing on that lot substantially on the .boundary line between complainant's lot and the lot which the defendant was purchasing, and he knew that the restriction related to his right to build some part of his dwelling within five feet of complainant's line. This was sufficient information regarding a restriction, or an equity, in favor of the complainant, attached to the vendor's title, to charge him with the duty of inquiring regarding it from the person for whose benefit It had been created. In addition to this, I am not disposed to credit the testimony of the defendant that the vendor made the statement in the language used by defendant; for it is entirely at variance with the agreement imposing the restriction, and as set out in the deed which was afterwards executed and delivered to the defendant.
I am satisfied from the evidence in this case that when the defendant purchased this lot he was informed by the vendor that the deed to him would contain a covenant preventing him from building upon his lot with. in five feet of the complainant's line, and that the deed to him originally made by the ,vendor contained the restrictive covenant precisely as he had understood it should; but, if I am wrong about this, I am very clear that he had sufficient notice to put him upon inquiry, and that he is chargeable with the knowledge which he would have obtained if he had applied to the person in whose favor the restrictive contract was made, and that upon inquiry of the complainant, an inquiry, in my judgment, he was bound to make, the contents of the written agreement would have been disclosed to him. This case falls within the first rule laid down by Vice Chancellor Wigram, in Jones v. Smith, 1 Hare, 43, which is that, where the party charged has had actual notice that the property in dispute was in fact charged, incumbered, or in some way effected, the court binds him with constructive notice of facts and instruments, to the knowledge of which he would have been led by an inquiry relating to the charge, incumbrance, or other circumstances affecting the property, of which he has had nu
(71 N. J. B. 1) CHELSEA LAND & IMP. CO. V. ADAMS. (Court of Errors and Appeals of New Jersey.
Feb. 2, 1907.) DEEDS-BUILDING RESTRICTIONS-ABANDONMENT.
Complainant and his predecessor owned certain city property, subject to a restriction that no building should be constructed nearer than 20 feet from the street line. This restriction was incorporated in the deeds of over 150 purchasers; but, though 99 or 100 had violated the restriction, no steps had been taken to enforce the same, except in one case, in which a bill was filed in 1898, which was permitted to rest without trial until 1905, when suit was brought to enforce the restriction against defendant. Held, that such facts were sufficient to show an abandonment of the original plan with reference to restrictions, and estopped complainant from enforcing the same against defendant.
(Ed. Note.-For cases in point, see Cent. Dig. vol. 16, Deeds, 88 542, 545.) Swayze, Reed, and Trenchard, JJ., dissenting. Appeal from Court of Chancery.
Bill by the Chelsea Land & Improvement Company against Charles R. Adams. From a decree in favor of defendant, complainant appeals. Affirmed on the opinion of the Chancery Court.
The opinion of BERGEN, V. C., is as follows:
“I will dispose of this case now. pears that the Chelsea Beach Company purchased a large tract of land near Atlantic City, for the purposes of development, and caused it to be surveyed and divided into streets, avenues, lots, and blocks, and then began, the sale of the property under certain restrictions. The important restriction to be considered here is that, in building on these lots, no building should be placed nearer the street in front than 20 feet, or nearer the side line of the lots than 5 feet. This court has, in an opinion by Vice Chancellor Reed, which has been read here, although it does not appear to have been reported, determined that the restriction as to 20 feet applied to the sides of a corner lot, as well as the front, so that a building on the corner of a lot must be placed not only 20 feet from the front, but also 20 feet from the side street. In that situation, the property remaining in the Chelsea Beach Company has been transferred to the present complainant, the Chelsea Land & Improvement Company. The defendant here obtained his title through mesne conveyances from the complainant. The deeds in that chain of title contained the restriction with the exception of one deed, but even that deed made a reference to the restriction sufficient to put the purchaser on notice. So that, when the de
fendant bought this property, he bought it violate these restrictions, because they were subject to the condition that he would not putting in this locality large and valuable put on that lot a building nearer the street buildings, which enhanced the value of the in front of the lots than 20 feet. It is ad. land remaining in the hands of the company. mitted that he has violated that restriction; That may be a wise thing to do. I am not that he at first contemplated building a criticising them. But I think that all the structure to be used as a bath house, in con persons occupying these lands are entitled nection with a sun parlor, to be built flush to be treated alike, and this complainant comwith the street; that, after the proceedings pany cannot undertake to waive violations of in this cause were instituted, he determined these restrictions in so universal a manner, to, and did, build the front of the building as it is proved, has been done here, and further back from the street, although it then undertake to enforce it against one yet is beyond the restricted line.
other of their purchasers. Such a general "His defense is that, while his deed con consent to the nonobservance of restrictive tained this restriction, the same restriction covenants amounts to an abandonment of the was incorporated in the deeds of other pur original intention and design with regard chasers to the number of 150. Of that num to restrictions. If the original grantor of ber 99 or 100 have violated the restriction 150 lots by deeds, with a restriction as to contained in their deeds, and that this com building lines, allows two-thirds of the granplainant, who is occupying substantially the tees to violate it without protest, it cannot position of the original company (having tak enforce it against a single grantee, for the en over all the property and undertaken purpose of benefiting its remaining lands, for to dispose of it subject to the same condi. the grantee thus assailed is entitled to the tions), has stood by and permitted all these common privileges accorded to other purviolations without complaint. Some of them chasers who are subject to like restrictions. were trivial, but others were important. Cer It appears in this cause that the complainant tainly the violation as to the Chelsea Hotel obtained from certain of the purchasers of property is an important one, and I think a part of the tract a release as to the re there are two other dwellings of considerable strictions, so far as a portion of the whole importance and value, whose owners have was affected, and thereafter, as to that been permitted to violate this agreement, and part, changed the character of the restricthe defendant insists that, having abandoned tion, and materially altered the scheme of the general scheme, the complainant now has the original plan, not only as to size of the undertaken to enforce the restriction against lots, but as to the building lines. This change this defendant, without taking any steps to affected all the lot owners, and cannot be compel other people to observe their cove confined by the original holders to a portion nants, except in the single instance where a of the property, especially as, in this case, bill was filed in 1898, which suit it appears the changes relate to a part of the street upon has not been prosecuted, and that such con which defendant's lands are located. This duct is inequitable. While the president of bill is not filed by individual lot owners, but the corporation testified that he had recently on behalf of the holding company, owners of seen counsel and urged him to proceed with unsold portions, and because of its lacbes the case, I do not feel justified in saying in so many instances is presumed to have that the filing of a bill in 1898, without fur abandoned the original plan as to restrictions. ther proceedings, was an indication that it “A decree will be advised dismissing the has been the intention to preserve the plan. bill of complaint.” The suit bas not been diligently pursued. No
William M. Clevinger,
Clevinger, for appellant. result has been reached, and no steps taken
George A. Bourgeois and J. Morten Adams, between 1898 and 1905. The ordinary liti
for respondent. gant, determined to assert its right, would probably have employed other counsel, if he
PER CURIAM. The decree appealed from could not get his case to a hearing through
will be affirmed, for the reasons stated in the efforts of the one employed. Upon the
the opinion delivered in the Court of Chancase as presented, I feel that I would not
cery by Vice Chancellor BERGEN. be justified in enforcing this restriction against this defendant. There have been a great many violations of these restrictions.
SWAYZE, REED, and TRENCHARD, JJ.,
dissent. They have been violated by two-thirds of the people who bought land from this company. Large hotel properties, and wealthy people
(72 N. J. Eq. 437) have built, some on the very street where
BROWN v. CITIZENS' ICE & COLD defendants' property is located, and their
STORAGE CO. et al. buildings have been so erected that their foundations are beyond the restricted line, (Court of Errors and Appeals of New Jersey.
Feb. 2, 1907.) and yet not a word has been said by this complainant. It may be that, in the judg
CORPORATIONS — POWERS — RIGHT TO BORROW
MONEY. ment of the officers of this company, they
A corporation, empowered by its charter to thought it prudent to allow these people to do any act in connection with its business, and
to issue bonds secured by mortgage, and to sell
(72 N. J. Eq. 797) the same to raise money with which to erect
MARR V. MARR et al. machinery, etc., has authority to borrow money and execute a mortgage to secure the same;
(Court of Chancery of New Jersey. March 23, the clause having reference to the issuing of
1907.) bonds not preventing the corporation from bor 1. CORPORATIONS OFFICERS-DEALING WITH rowing money and securing it by mortgage.
CORPORATION. [Ed. Note. For cases in point, see Cent. Dig. A director of a corporation may purchase vol. 12, Corporations, 88 1775–1777, 1813.) the corporation property sold under an execution
a judgment obtained by him against the Appeal from Court of Chancery.
corporation, and the sale will not be set aside Suit by James Brown against the Citi
because of his trust relationship, unless some
undue advantage has been secured by reason of zens' Ice & Cold Storage Company and anoth
that position. er to foreclose a mortgage. From a decree 2. SAME-EVIDENCE-SUFFICIENCY. for complainant, defendant the Pennsylva In an action by a stockholder of a corpora. nia Iron Works Company appeals. Affirmed.
tion to set aside a sale of the corporate prop
erty under an execution on a judgment obtained The opinion of Bergen, V. C., is as fol by a director against the corporation to the lows:
director, that notice of the sale, other tban the
statutory notice, was not given to all the stock“The defendant company gave two mort
holders, was insufficient to show that the directgages, one for $10,000 to the complainant, or had taken any undue advantage. another for $7,235 to Annie Lisle Ballingall,
Bill by Phineas B. Marr against William which she assigned to the complainant.
B. Marr and another. Decree advised disThere is no dispute about the amount of
missing the bill. the loans, nor that they represent debts due by the company, but the defendant insists The bill is filed by complainant, as a stockthat under the terms of defendant's charter,
holder of Beacon Land Company, in behalf
of himself and other stockholders, to set as expressed in the following words: 'And
aside a sale made by the sheriff of Ocean the doing of any other act or acts, thing or things, incidentally to grow out of, or connect.
county to defendant William A. Marr under ed with said business or any part or parts
an execution issued on a judgment held by thereof; to issue bonds secured by mortgage or
defendant Marr against the land company. mortgages upon the property, and franchises The land company having ceased the transof said corporation, and to sell the same for
action of business, and having no organized
board of directors, complainant seeks to enthe purpose of raising money, with which
force such rights as could have been apto erect machinery, and otherwise to improve said lands'—the corporation had no
propriately enforced at the instance of the authority to mortgage its property, other than
company in behalf of its stockholders. for the purposes above stated, and as the
In the year 1898 the Beacon Land Com
pany was indebted to defendant Marr for money, to secure which the two mortgages were given, was not applied to the payment
money which he had prior to that time
loaned to it. On failure of the company to of debts due for ‘machinery and otherwise to improve said lands,' the mortgages are ultra
make payment, defendant Marr brought suit vires, and cannot stand as incumbrances on
and recovered judgment. On an execution the land. In my opinion, the general power
issued on that judgment the sheriff of Ocean given a corporation, under our acť, to mort
county made sale of the hotel property now,
in question, known as “Beacon-by-the-Sea." gage its property, is not restricted by the terms of the charter invoked. That clause
The property consisted of the hotel lots, has reference alone to the issuing of bonds
buildings, and furniture, and comprised
all of the property of the land company. At in the usual commercial form, of a negoti
the sale the property was purchased by able character, to be sold and passed by
defendant Jarr as plaintiff in execution. At delivery, and was not intended to, and does
that time defendant Marr was president and not, prevent the corporation from securing
a director of the land company. The theory to a creditor its debt by way of mortgage, in common form; and the power to do so is
of complainant's suit is that by reason of fully conferred by the clause in the charter,
the trust relationship at that time existing
between the land company and defendant which authorizes the company ‘to do any act
Marr, as its president and one of its directors, or thing incidentally to grow out of or in
the title which he received by that purchase connection with said business,' implying the
will be decreed to be held by him in trust right to borrow money and pledge its prop
for the benefit of the stockholders of the erty as security. "The complainant is entitled to a decree.”
land company and an accounting ordered.
Final hearing has been bad on bill, answer Norman Grey, for appellant Pennsylvania of defendant Marr, replication, and proofs. Iron Works. E. A. Armstrong, for respond
Bleakly & Stockwell, for complainant. T. ent.
B. Hall, for defendant Marr.
PER CURIAM. The decree appealed from in this case is affirmed, for the reasons stated in the opinion filed in the Court of Chancery by Vice Chancellor BERGEN.
LEAMING, V. C. (after stating the facts). It is a general principle of equity, firmly established and frequently applied in this court, that, if a trustee becomes the pur.