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Certiorari by W. A. Manda against the city of Orange and Arthur Horton, clerk of Essex county, to review an order authorizing condemnation proceedings.

Argued February term, 1907, before HARRISON, SWAYZE, and TRENCHARD, JJ. William Cowles & Carey, for prosecutor.

A. Lord, for defendants.

TRENCHARD, J. This writ of certiorarl brings up for review an order made December 8, 1906, on the application of the city of Orange, appointing commissioners in condemnation proceedings to appraise certain rights in lands of the prosecutor located at South Orange, N. J., and the petition and all other proceedings therein.

The prosecutor insists that the order and proceedings are illegal and void, because, among other reasons, the petition upon which the order appointing commissioners was made was insufficient to warrant the appointment of commissioners. In its petition the city alleges that under and by virtue of the provisions of an act entitled "An act to enable cities to supply the inhabitants thereof with pure and wholesome water," approved April 21, 1876 (P. L. p. 366; Gen. St. p. 646, § 902), and of a supplement thereto entitled "A further supplement to the act entitled 'An act to enable cities to supply the inhabitants thereof with pure and wholesome water,' approved April twenty-first, anno domini, one thousand eight hundred and seventysix," approved March 13, 1883 (P. L. p. 98; Gen. St. p. 652, § 925), and of an act entitled "An act to regulate the ascertainment and payment of compensation for property condemned or taken for public use," approved March 20, 1900 (P. L. p. 79), the city of Orange has "determined to acquire the right and privilege to lay down, repair, replace and forever maintain water pipe or pipes in, over, through and across land" of the prosecutor. The act of April 21, 1876, authorizes cities of this state to provide their inhabitants with water by the methods therein prescribed, but expressly provides, in section 16 thereof, that "its provisions shall remain inoperative in any city in this state until assented to by a majority of the legal electors thereof" voting upon the question at an election held and conducted in the method prescribed by the act. The supplement of March 13, 1883, is the statutory provision which authorizes the acquisition by condemnation of the right to lay down water pipes; but its operation is likewise limited to those cities "which may have adopted or shall adopt the provisions of said act [of April 21, 1876] by the assent of a majority of the legal voters thereof voting at an election held or to be held in said city." Under these statutory provisions it is essential to the validity of the proceedings under review that the act of April 21, 1876, by virtue of which the city claims the right to condemn, should have been adopted by the city.

The petition in question fails to allege the adoption of the act, and there remains only to be considered the consequence of that failure. The city, by authority purely statutory, seeks to take the property of the prosecutor against his will, and at a price to be determined by others. The state has granted this right to certain municipalities only, and that upon the express condition of the adoption of the provisions of the act by which the authority is granted. The municipality seeking to avail itself of this statutory right must present its petition to a justice of the Supreme Court, and in its petition the ground of its right to have commissioners appointed must appear. This is the object of the petition. It is the basis of the jurisdiction of the justice to act, and being jurisdictional in character, and in a statutory proceeding, everything essential to the right sought to be exercised must affirmatively appear. The court will not indulge in any presumption in aid of jurisdiction.

In Vreeland v. Jersey City, 54 N. J. Law. 49, 22 Atl. 1052, this court said: "Statutes conferring the power of condemnation under the right of eminent domain are strictly construed. Every condition prescribed by the Legislature in the grant must be complied with, and the proceedings to condemn must be conducted in the manner and with the formalities prescribed in the grant of power. Formalities and modes of procedure prescribed are the essence of the grant, which the courts cannot disregard on a conception that they are not essential."

In Hampton v. Clinton, 65 N. J. Law, 158, 46 Atl. 650, the above rule was cited and applied, and the defendant having failed, until after condemnation proceedings were instituted, to annex to and file with its certificate of incorporation a consent prescribed by statute, it was held that the appointment of commissioners was illegal, although such consent was filed after the proceedings were commenced.

In Loucheim v. Hemsley, 59 N. J. Law, 149, 35 Atl. 795, commissioners had been appointed by the mayor of Atlantic City to construct a city hall. These commissioners sought to condemn lands of the prosecutor, who brought to this court for review by certiorari the appointment of the commissioners and their proceedings in condemnation. The statute under which the commissioners were appointed required that they should be residents of the city and of different political parties. Neither their appointment nor the proceedings under review disclosed these facts affirmatively, and the omission was held fatal. The court said: "A special authority delegated by statute to particular persons to take away a man's property and estate against his will must be strictly pursued, and must appear to have been so pursued on the face of the proceedings in which the authority is exercised."

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In the case at bar, it is contended that the adoption of the act is sufficiently made to appear in the petition by citing the title of the act and the allegation that, "under and by virtue of the provisions of the act, the city of Orange has determined to acquire the right and privilege," etc.; but this contention cannot prevail. That language falls far short of alleging the adoption of the act in the manner prescribed in the act itself. The most favorable deduction to be drawn from it in favor of the defendants is the possible inference that the city may have adopted the act, as otherwise it would not be likely to attempt to proceed under it; but in a case of this kind jurisdiction is not to be based on inference, but the facts must be alleged. Every allegation in the petition may be absolutely true, and yet the act may never have been adopted, and the city may be utterly without authority to condemn. The prosecutor questions, not that the city has determined to do something, but its right to reach that determination and put it into effect. The case of In re Montgomery et al. (D. C.) 48 Fed. 896, is in point. That was a proceeding brought on behalf of the United States government in the United States District Court for the District of New Jersey to condemn lands. The proceeding was based upon a statute of the United States, which provided that any officer of the government authorized to procure real estate for public uses was "authorized to acquire the same for the United States by condemnation under judicial process, whenever in his opinion it is necessary or advantageous to the government to do so." The petition alleged that "the Secretary of War had requested the Attorney General of the United States to commence these proceedings in condemnation according to the acts in such case made and provided." The sufficiency of the petition was challenged on the ground, among others, that it "fails to show that, in the opinion of the Secretary of War, it is necessary or advantageous to the United States that the land in question should be acquired under judicial process." In support of the petition, it was argued that the allegation that the Secretary of War had requested the Attorney General to commence the proceedings would carry with it the presumption that he was of the opinion that it was both necessary and advantageous to the United States to acquire the lands. The court said: "This argument is plausible, but unsound. It is a well-settled principle that when the exercise of a special authority, delegated by statute to a particular person or to a special tribunal, is dependent upon conditions precedent, all preliminaries which show fulfillment of such conditions, and which confers upon such person or tribunal power to act, must clearly appear upon the face of the proceedings. The proper practice is to state affirmatively and with certainty

all facts upon which, in such case, jurisdiction depends. Intendment and presumption should not be resorted to for the justification of any judicial proceedings, in derogation of private rights."

The case of In re City of Buffalo, 78 N. Y. 362, is one in which the city voted to acquire certain property by condemnation proceedings. The act under which the proceedings were taken provided that the right of condemnation should be exercised only upon certain conditions, among which were the passage of a resolution by a two-thirds vote, showing the determination to take the land. The court said: "Before the city can take lands for a street, these resolutions must have been passed, and the last one with the prescribed vote, for it is a familiar principle that, when the sovereign delegates the power to take the property of the citizens, all the prerequisites to the exercise of that power that have been prescribed must be strictly observed and conformed to. The need is upon the city, before it can take the lands, to be able to show that these requirements have been met. For the basis of the power of the city to act is the concurring judgment of two-thirds of the members of the common council that there is a necessity for the taking, without which, action of the city to take lands is wholly unauthorized and illegal. Nor may it be presumed, as the appellants claim. In such case as this, the presumption that official duty has been done cannot be made."

In the present case the city contends that It is relieved of the necessity of showing the adoption of the act conferring power by section 2 of the act of March 20, 1900; but an examination of that section plainly shows that such contention cannot prevail. That section does not purport to provide what shall be a sufficient petition. It merely provides that it shall contain certain matters. There certainly is no reason to suppose that by its enactment the Legislature intended to thereby relieve the petitioner from presenting to the justice of the Supreme Court who is asked to make the order the jurisdictional facts in a petition under oath.

We conclude, therefore, that the rule of law is well settled that statutes conferring the power of condemnation under the right of eminent domain are strictly construed. Every provision of the statute must be strictly complied with, and such compliance must affirmatively appear on the face of the proceedings. When tested by that rule, the proceedings under review are fatally defective.

Our conclusion on the point considered renders it unnecessary to consider the other reasons alleged for reversal.

The order of appointment and all subsequent proceedings will be set aside, with costs.

(73 N. J. E. 242)

FERRELL v. STRONG.

manner of their selection is also criticised. These suggestions carry the implication that

(Court of Chancery of New Jersey. May 29, irregularities may exist which the trustees

1907.)

INJUNCTION-STAYING PROCEEDINGS IN LAW COURT-EQUITABLE RELIEF.

Where the facts set forth in a bill show that complainant has an estate in lands which cannot be ascertained in a pending action at law against her, but can only be asserted in a court of equity, further proceedings in the law court will be suspended until a decree may be had in equity.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 27, Injunction, §§ 15-17, 306.]

Bill for an injunction by Mary Young Ferrell against Robert A. Strong. Decree for complainant.

John Boyd Avis, for complainant. G. Dore Cogswell, for defendant.

LEAMING, V. C. A more careful consideration of this case confirms the views expressed by me at the hearing.

The facts set forth in the bill disclose an estate in the lands in question which can only be ascertained and asserted in a court of equity. In the pending action at law against complainant these rights cannot be asserted, and she is in consequence entitled to have further proceedings in the law court suspended until a decree may be had under the present bill in equity. Atlantic City Ry. . Co. v. Johanson (N. J. Ch.) 65 Atl. 719. I will advise a decree accordingly.

(72 N. J. E. 829)

WATKINS v. STATE MUT. BUILDING & LOAN ASS'N.

FITZGERALD v. SAME. (Court of Chancery of New Jersey. May 2, 1907.)

BUILDING AND LOAN ASSOCIATIONS-RECEIVERS.

A receiver will not be appointed for a building and loan association in process of liquidation under the act of 1904 (P. L. 1904, p. 44) on mere suggestion that the trustees appointed under the act named were men who were too closely connected with the former management of the association, together with criticism as to the manner of their selection, without substantial evidence of wrongdoing.

Bills by David O. Watkins, as commissioner of banking and insurance, and by Patrick Fitzgerald, against the State Mutual Building & Loan Association for a receiver. Denied.

Nelson Burr Gaskill, Asst. Atty. Gen., for Commissioner. Joseph Kaighn, J. J. Sumerill, and R. E. Lum, for Fitzgerald. E. A. Armstrong, for defendant.

LEAMING, V. C. I have determined not to appoint a receiver at this time. There is no evidence before me from which I can properly conclude that the interests of credItors or stockholders require it. Suggestions have been made that the trustees are men who are too closely connected with the former management of the association, and the

will not be free to expose. It is manifestly improper for me to base my action upon such suggestions in the absence of some substantial evidence or positive assertion of facts. I shall assume that the trustees named will do their whole duty til I am judicially informed of matters which justify a different assumption.

The bills will be retained, and a receiver may be applied for at any time the necessity can be made apparent.

Creditors and stockholders will be privileged to examine the books of account and papers of the association, and may employ accountants for that purpose if it is thought desirable.

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STRUCTION.

An agreement to convey land free from incumbrances calls for a marketable title.

[Ed. Note.--For cases in point, see Cent. Dig. vol. 48, Vendor and Purchaser, §§ 234–238.] 3. SPECIFIC PERFORMANCE-ISSUES.

In a suit by a vendee for specific performance, the bill alleged that defendant had contracted to convey the same land to a third person, which contract was of record prior to the contract with complainant. Held, that the bill was demurrable as a determination of the validity of the prior contract at the time of the contract with complainant could not be determined in a suit to which the third party was not a party.

4. SAME REMEDY AT LAW.

Though the bill prayed for compensation in case defendant could not give a marketable title, it could not be entertained as a bill to recover damages, as such remedy must be at law.

[Ed. Note. For cases in point, see Cent. Dig. vol. 44, Specific Performance, § 412.]

Suit by Melvin R. Van Keuren against Charles Siedler for a specific performance of a contract for the sale of land. Demurrer to the bill sustained.

James Steen, for complainant. Condict, Condict & Boardman, for defendant.

LEAMING, V. C. Complainant's bill is for the specific performance of a contract wherein defendant agreed to convey to complainant certain land in Jersey City free and clear of incumbrances. The bill avers the existence of a mortgage and certain un

paid taxes on the land in question, and also avers that a certain contract of sale exists wherein defendant agreed to convey the same land to the Realty Development Company, which last-named contract was executed and recorded prior to the execution of the contract with complainant, and avers that time is not of the essence of the prior contract of sale. The bill prays for a decree to compel defendant to convey the land to complainant free from incumbrances and for compensation in case defendant is unable to comply with his contract in whole or in part.

So far as the taxes and the mortgage are concerned, there can be no difficulty. A decree can appropriately be made authorizing their payment from the money yet to be paid by complainant. In fact, the bill does not clearly disclose any unwillingness upon the part of defendant to have had that course heretofore adopted. Where there are outstanding undisputed liens against a property which is to be conveyed free from all incumbrances, it is, in ordinary business practice, the custom to discharge the liens out of the purchase money at the time the conveyance is delivered; and I doubt the right of a vendee to require such liens to be discharged by the vendor from his own funds prior to that time. In the absence of an unwillingness upon the part of vendor to have the purchase money so applied when it is ample in amount, I am of the opinion that this court should not entertain a bill on behalf of the vendee based upon the neglect or refusal of vendor to discharge the incumbrances in advance of the time for passing title. Worch v. Woodruff, 61 N. J. Eq. 78, 84, 47 Atl. 725. From the bill it is manifest that the real controversy arises from the existence of the prior recorded contract wherein defendant contracted to convey the same land to the Realty Development Company; and complainant charges that this contract is a cloud upon the title rendering it marketable, and alleges that defendant refuses to remove the cloud under a claim upon his part that it is not a defect in or cloud upon the title. The bill does not positively assert whether or not the prior contract of sale is at this time a live and enforceable contract, but proceeds upon the theory that it renders the title an unmarketable one, and that this court will by its decree compel defendant to deliver a marketable title.

The contract which complainant now seeks to enforce entitles him to demand a marketable title, and the title to the land in question is clearly unmarketable so long as the prior recorded contract of sale remains an apparent binding contract. But the difficulty at this time encountered is that complainant having entered into his contract with constructive notice of the existence of the prior contract is not entitled to a conveyance of the land if in fact the prior contract is still alive; and no judicial ascertainment of that fact can be had in this suit because the

Realty Development Company is not a party. A decree requiring defendant to convey the land to complainant would, in consequence, be necessarily based upon an assumed fact which cannot be inquired into in this suit. The same considerations manifestly render it impossible for this court to grant any relief under the present bill. The bill cannot be entertained as a bill to recover damages for the failure of defendant to deliver a marketable title. That remedy must, under the facts stated in the bill, be sought in a court of law. The demurrer must be sustained.

It may not be inappropriate to suggest, for the consideration of complainant, the possibility of relief through a bill against both defendant and the development company based upon a claim of the invalidity of the prior contract and seeking a cancellation of the record and specific performance. This suggestion is made wholly for complainant's consideration, and in no way as an expression of opinion on the subject.

(72 N. J. Eq. 577) SIVIN et al. v. MUTUAL MATCH CO. et al. (Court of Chancery of New Jersey. May 14, 1907.)

CORPORATIONS-STOCKHOLDERS' ACTION-UNPAID STOCK.

The stockholders of a going corporation who have not paid up their stock in full cannot maintain an action to compel other stockholders to pay up unpaid stock.

Bill by Samuel Sivin and another against the Mutual Match Company and others. Heard on bill, answer, replication, and proofs. Bills dismissed in part.

Merritt J. Lane and Mr. Kaplan, for complainants. Joseph Kahrs, Mr. Bilder, and Max D. Steuer, for defendants.

EMERY, V. C. The principal object of this bill, which is filed by several stockholders of the Mutual Match Company, is to compel the defendant stockholders to pay up in full and to par value the stock issued to them. The defendant stockholders control the management of the company, and the company is made defendant. The bill alleges that the complainants' stock was purchased or taken on the false representation by the defendant stockholders that the defendants' stock was fully paid up in cash or property to the full value thereof; but the proofs show that this charge was unfounded, and they also show, as I conclude, that none of the stock issued, either that to complainants or defendants, is full paid, but was issued mainly for property purchased on a basis of valuation of about $2.50 of stock to $1 of money invested, or value of property transferred. The complainants acquired their stock as full paid in connection with the conveyance of property to the Mutual Match Company by the Columbia Match Company,

in which complainants were stockholders, and it appears satisfactorily that they received this excessive amount of stock in order to put their relative interests in the Mutual Company on substantially the same basis as the stock of the Mutual Company already issued and proposed to be issued to the defendants, on completing the practical amalgamation or consolidation of the two companies, by a sale of the assets of the Columbia Company to the Mutual Company. As against creditors of the Mutual Company, or any person suing in the right of creditors, and for the payment of the company's debts, none of the stock would be considered as paid-up stock under the statute, and all of the stockholders, complainants as well as defendants, would be liable ratably for the payment of the debts. This liability of stockholders to creditors is, however, worked out by an accounting of the debts to be paid, and the proportionate liability of each stockholder. If the company is in insolvency, the ratable liability is determined by a judicial hearing, ascertaining the quota due from each stockholder for the payment of all the debts (Cumberland Lumber Co. v. Clinton Hill, etc., Co., 57 N. J. Eq. 627, 630, 42 Atl. 585 [Err. & App. 1898]); and, if no receiver has been appointed, then by a bill in equity for an accounting to which the creditors and stockholders are parties (Wetherbee v. Baker, 35 N. J. Eq. 501, 506 [Err. & App. 1882]).

In the present case the company is a going company, and the management of its affairs, including the right to call for payments on unpaid stock, is in the directors of the company. Corporation Act, Revision 1896,

22 (P. L. p. 284). According to some authorities, such assessment when made should be made ratably on all the stockholders liable. 3 Thompson, Corporations, § 3539, citing Great Western Tel. Co. v. Burnham, 79 Wis. 47, 47 N. W. 373, 24 Am. St. Rep. 698, where a bill showing an unequal assessment was held to be demurrable. Id. §§ 474, 3539. In this aspect of it, the object of the bill is not to require an assessment by the directors on all unpaid stock, but for a direct decree to compel defendants, and defendants alone, to pay up their unpaid stock, and, if such decree should be made without complainants also making any payments on their stock, it would result, of course, in giving complainants the substantial benefit of defendants' payments. So long as the company is a going concern, the court will not interfere on behalf of a stockholder who is in the same default, simply to compel another stockholder to pay up his unpaid stock.

There is no express statutory liability of one stockholder to another for the payment to the company of unpaid stock-as in the case of creditors (section 21, Corporation Act, Revision 1896)—and the stockholder suing in the right of the company must not only establish the company's right to compel payment, but his suit is also subject to the ap

plication of the maxim that he must come into equity with clean hands. The general rule is that a stockholder in the same default or participating in an alleged illegality or fraud is estopped even from obtaining a decree in the company's right. 4 Thomp. Corp. § 4457. And, as the complainants' default appears from the evidence necessarily taken as to the circumstances of the issue of their stock, the maxim withholding relief must be applied by the court in the exercise of equitable jurisdiction, whether the defense is specially pleaded or not.

If in the proper management of the company as a going concern, a resort to the liability of a stockholder for payments on his unpaid stock should be shown, and it should also be shown that the directors, in violation of their duties and trusts to the company, or even to the stockholders who had paid in their stock in full, neglect or refuse to make such call, a court of chancery might, through a receiver or otherwise, make the assessment and call on the unpaid stock. But ordinarily such call or assessment would be made ratably on all stockholders liable. Such case or contingency should not be prejudged or affected by any refusal to compel payment in this case. So far, therefore, as the bill seeks to compel this payment, I will advise a decree of dismissal; but, as the bill is filed in right of the company, the dismissal will be without prejudice to any bill or suit by the company, or on its behalf, after an assessment or call duly made on the defendants, or either of them, or to any bill or suit by or on behalf of the company, in the right of creditors of the company, or by or on behalf of the company by any stockholders other than the complainants.

The bill also sought to have a mortgage of $12,000, held by defendant Cassel Cohen upon lands of the company, declared to be without consideration. This allegation was not sustained by the proofs, and at the oral argument no special relief against the mortgage was claimed. In the briefs sent in, counsel for complainant, however, ask a reference to ascertain the amount due, and, before advising decree, I will hear counsel (orally or by brief) on the right to any decree in this suit for relief touching this mortgage.

SCHOETTLE v. HENGEN et al. (Court of Chancery of New Jersey. May 8, 1907.)

EQUITY-PLEADING-ADMISSION BY REPLICA

TION.

By joining issue on the plea, complainant admits the sufficiency of the facts stated as a defense, if they are proven to be true.

[Ed. Note. For cases in point, see Cent. Dig. vol. 19, Equity, § 664.]

Bill by Gustave A. Schoettle against Daniel F. Hengen and others, executors. Decree advised dismissing the bill.

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