by them upon the streets. I understand the city claims the public use in Ferry street and Hudson Place by a dedication and acceptance; the dedication consisting of the throwing open of the strips of land to the public, and the acceptance consisting of longcontinued public use of those strips as public highways. The dedication is not admitted by the defendants, but, on the contrary, is strenuously denied. They claim that those strips of land belonged and now belong to the Hoboken Land & Improvement Company, as did the Hoboken ferry, and that the land was merely an entrance from admitted public streets to the ferry and was really a part of the ferry itself. This claim was made so late as May 29, 1896, when the Hoboken Land & Improvement Company granted to the Hoboken Ferry Company a right of way over Hudson Place. It appears that at one time the high-water mark of the Hudson river was inshore of these two triangular pieces of property; that the land was filled out by the Hoboken Land & Improvement Company, which claims as owner; and that in 1885 the Hoboken Land & Improvement Company obtained a grant from the riparian commissioners, representing the state, for all the land injury to which is now claimed. The present defendants obtained their rights under this grant, according to the bill, in 1887. The bill attacks this grant collaterally, and declares the whole scheme of conveyance by the riparian commissioners to the Hoboken Land & Improvement Company to be and to have been always void.

It further appears that the work which the bill complains of was begun many months ago, and has been pushed as rapidly as circumstances would permit, and that as to the portion of the land complained about which lies within the supposed boundaries of Ferry street the defendants have entirely finished their underground construction, and are actually in possession of the land both above and under the surface of the triangular strip at that point. As to the Hudson Place triangle it appears that the defendants found it necessary to excavate to a depth of 22 feet at that point, and in order to do so they took up the stone pavement and substituted a planking, which does not appear to interfere with the public travel. In fact, it is alleged on the part of the defendants that this Hudson Place strip is now and for many years has been entirely and completely occupied by the street railway company as a terminal, and that it is covered with the tracks of the company. Sufficient facts appear on the face of the papers to show that the situation there could not be restored without destroying the construction already made, and interfering for a considerable time with public travel, and subjecting the public to considerable danger of accidents. So far as the Ferry street end is concerned, it appears that so early as 1905 the work had begun there, and that the street commissioner of the complainant

forbade the further excavation at that point, and that shortly after this interdict the tunnel company brought suit in this court to restrain the city of Hoboken from interfering with their work. An injunction was granted by Vice Chancellor Pitney after a full consideration of the case, which is reported under the name of Hoboken & Manhattan Railroad v. City of Hoboken (N. J. Ch.) 64 Atl. 641. It appears, therefore, that the mischief which this bill is intended to reach has already been done, and that to undo it and restore the situation would require a mandatory injunction. It further appears that in the year 1900 the city of Hoboken brought an action of ejectment to recover possession of the Ferry street triangle, which action is pending in the Supreme Court of this state and has been continued from time to time by agreement of both parties.

But, if the court should find that the lands in question are public highways under the control of the city of Hoboken, the defendants claim that by virtue of the twenty-third section of the general railroad law (P. L. 1903, p. 645) they are authorized to make their underground construction under streets, and longitudinally under streets, without seeking or obtaining the permission of the municipality having control thereof, except when it is necessary to alter the position of a public sewer or water pipe. This proposition is denied by the complainant, which argues that it never could have been intended by the Legislature to authorize the longitudinal occupation of any portion of a public highway, even below the surface. It must be seen at a glance that to grant the writ prayed for at this stage of the proceedings would be to practically decide the whole case on preliminary affidavits. An injunction to stop the work at Ferry street, so called, would not stop it. It has already been accomplished. Besides, at that point the Supreme Court has taken jurisdiction of the real controversy, the title to the land or the right to possession thereof, and it would be impossible for this court to seize jurisdiction, or to attempt to deprive the Supreme Court of it, or in any way to interfere with the ordinary process of the common-law courts.

At Hudson Place the situation is much the same, excepting that no action of ejectment is pending in favor of the city against the defendants touching the title or possession of the strip which they are occupying at that point; and it may well be, as was suggested by the defendants' counsel on the argument, that the proper way to test the city's right there would be by a common-law action. In Hudson Place the excavation is already made. The underground walls and supports are being constructed. The street and the work are both protected by a planking at the street level, which does not appear to interfere with the free use of the street. In fact the public use of the street there is more or less subject to the right of the street railway to

and Chancellor Magie, in an opinion filed in this suit on the 19th of July, 1907, in overruling the demurrer, held that "the institution and continuance of that suit [the divorce suit] is not a bar to a bill to enforce the agreement for support." That this decision of the Chancellor is supported by authorities will appear from the following: 21 Cyc. 1598, par. 9; Buttlar v. Buttlar (N. J. Ch.) 65 Atl. 485, 487 (Garrison, V. C.; 1906). Engagements of this character between husband and wife must be enforced in a court of equity, because at law, the parties being incapable of contracting, a court of law does not recognize their engagements as legal, and they must therefore come into equity to enforce them. A court of equity enforces them when and to the extent that it finds that the engagement was equitable and just. The general principle and the authorities will be found cited in Buttlar v. Buttlar, supra.

I can see no reason why this agreement should not be enforced up to and including the date when the order in the divorce suit was obtained awarding the wife temporary alimony. I do not think it should be enforced against the husband during the time that the order for temporary alimony is operative. While the law does not favor separation between husband and wife, it does favor a settlement out of court and without resort to litigation of all matters in dispute. The attitude that the court takes towards agreements of this nature is well expressed in the case of Galusha v. Galusha, 116 N. Y. 635, 22 N. E. 1114, 6 L. R. A. 487, 15 Am. St. Rep. 453.

The parties to this suit, after they separated, entered into the agreements in question. One purpose of those agreements undoubtedly was to provide a proper sum for the wife's support, and oblige the husband to pay the same, and permit him to rest in security from other importunity or demand. She engages in the agreements that she will not ask or demand of or from him any payment or allowance other than the one provided therein. By applying for temporary alimony she departed from the letter and spirit of the written engagement between herself and her husband. Instead of relying upon the written engagement and the remedies available to her to enforce the same, she applied to a court to fix such sum as in its discretion was proper and enforce the same by different and other remedies. I do not think it equitable to permit her to have the benefits of this other demand, and, in addition, to retain in its virility the obligation of the defendant under the written engagements. Having, with respect to the very subject-matter, made an agreement, which, as I have pointed out heretofore, the law favors parties doing, she should either have abided by that agreement, or, if she departs from it, must suffer whatever the consequences of her departure are. That she did depart from it is unquestioned. The consequences are 70 A.-59

that during the time that she was receiving the results of her other demand she cannot enforce this agreement against her husband. Whether she can, or not, after the final decree in the divorce suit, if that either awards her alimony or she does not apply for or secure the same, I do not deterraine, because it is not before me. What I do determine here is that she is entitled to the full amount under this agreement up to the time that the order for temporary alimony became operative, but that after that time she may not enforce this agreement during the operation of the order for temporary alimony.

Since the complainant had not paid what I find he should have paid, I think it proper to award costs, if, in any event, the matter was debatable and rested in discretion.

I will advise a decree in accordance with these conclusions.

(74 N. J. E. 668) BASSETT v. UNITED STATES CAST IRON PIPE & FOUNDRY CO. (Court of Chancery of New Jersey. Sept. 11, 1908.)

1. CORPORATIONS-RESERVATION OF PROFITS AS

WORKING CAPITAL-STATUTES.

Under Corporation Act 1896 (P. L. p. 293) $47, giving the corporation capacity to confer on the directors the power to fix the amount to be reserved as working capital, and the amendatory act of 1901 (P. L. p. 246, § 2), conferring such power on the stockholders unless otherwise provided in the certificate of incorporation or in a by-law, it is primarily the function of the stockholders to fix the amount to be reserved, over the capital stock paid in, as working capital; and the incorporators in the certificate of incorporation and the stockholders in the bylaws may confer power on the directors to fix the amount of the working capital.

2. SAME-DIVIDENDS--PREFERRED STOCK.

The charter of a corporation provided that preferred stock should be entitled to an annual dividend in preference to the payment of dividends on the common stock, and authorized the directors to alter the by-laws and to fix the amount to be reserved as working capital. The directors reserved annually sums for additional working capital, which were not used as actual working capital, but were invested in securities. Held, that such sums did not become actual working capital, but remained under the control of the directors, who might use the same for the payment of a dividend on the preferred stock.

3. SAME.

Corporation Act 1896 (P. L. p. 293) § 47, as amended in 1901 (P. L. p. 246, § 2), authorizes the stockholders, unless otherwise provided in the certificate of incorporation or by-laws, to fix the amount to be reserved as working capital. The charter of a corporation provid ed that the preferred stock should be entitled to an annual dividend out of any surplus net profits, and authorized the directors to amend the by-laws and to fix the amount to be reserved as working capital. The directors annually reserved sums for additional working capital, which were invested in securities, and not used as actual working capital. Held that, though such sums be considered as actual working capital, the directors could appropriate a part thereof for a dividend on the preferred stock. 4. SAME.

Where the charter of a corporation provided that preferred stock should be entitled to an

annual dividend, and authorized the directors to fix the amount to be reserved as working capital, and where the by-laws authorized the directors to amend the by-laws and fix the amount of the working capital, an amended by-law, permitting them to fix and from time to time increase or diminish the amount of working capital, did not add to the powers of the directors to appropriate sums reserved as working capital for the payment of dividends on preferred stock.

5. SAME.

Corporation Act 1896 (P. L. p. 293) § 47, as amended in 1901 (P. L. p. 246, § 2), confers on stockholders the power, unless otherwise provided in the certificate of incorporation, to fix the amount to be reserved as a working capital. The charter of a corporation provided that preferred stock should be entitled to annual dividends out of any surplus net profits, when declared by the directors, in preference to any dividend on the common stock, and declared that the common stock should be subject to the rights of the preferred stockholders. The directors reserved annually sums for additional working capital, not used as actual working capital, but invested in securities. Subsequently the directors voted to use a part of such sums for the payment of dividends on the preferred stock. Held, that the reduction of the working capital did not belong to the common stockholders, but might be used for the payment of such dividends. 6. SAME.

The charter and stock certificates of a corporation, which provide that preferred stock "shall be entitled out of any and all surplus net profits," when declared by the directors, to dividends, authorize the directors to use any surplus profits arising from the operation of the corporation's business, whenever made, to pay dividends on preferred stock, no matter when they shall have been declared, and such dividends for any fiscal year need not be declared out of the profits of that year.

Suit by Frank Bassett against the United States Cast Iron Pipe & Foundry Company. Heard on motion for preliminary injunction, on bill and demurrer. Bill dismissed.

The bill in this case is filed to restrain the defendant corporation from paying a dividend which it has declared in favor of its preferred shareholders. The dividend is at the rate of 14 per cent., and is for the last quarter of the fiscal year ending May 31, 1908. It is payable on September 1, 1908. It requires in cash $218,750 to satisfy the dividend so declared. The balance sheet taken from the company's books as of May 31, 1908 (the last day of the last quarter of the fiscal year), showed to the credit of profit and loss applicable to dividends only $16,024.45. On July 2, 1908, the board of directors by a formal resolution transferred $209,896.64 from an account known as "Reserve for Additional Working Capital" to the credit of "Profit and Loss," increasing that credit to $225,921.09, out of which the dividend in question would be paid. The complainant, who is a large holder of the common stock, objects to this course of procedure, and seeks to enjoin the payment of the dividend, upon the ground that the directors are endeavoring to make the payment out of moneys which had been reserved by the company in preceding years for a working capital, and in which the common stockholders alone have a pro

prietary interest; in other words, that the directors are about to pay to the preferred stockholders a dividend out of moneys which belong to the common stockholders. The facts are these:

The defendant corporation was organized on March 3, 1899, under the general corporation law of 1896. It has an authorized capital of $30,000,000, divided equally between common and preferred shares. Only $25,000,000 of this stock has been issued, and this is equally divided between preferred and common shares. The fundamental agreement be tween the shareholders touching the relative rights and duties of the two classes of stock is found in the following extracts from the charter and by-laws.

Charter, par. 4: "The preferred stock shall be entitled, out of any and all surplus net profits, whenever declared by the board of directors, to noncumulative dividends at a rate not to exceed 7 per cent. per annum for the fiscal year beginning on the 1st day of June, 1899, and for each and every other fiscal year thereafter, payable in preference and priority to any payment of any dividend on the common stock for such fiscal year. In the event of the dissolution of the corporation the holders of the preferred stock shall be entitled to receive par value of their preferred shares out of the surplus funds of the corporation remaining after the payment of its debts, before any payment shall be made therefrom to the holders of the common stock. The common stock shall be subject to the prior rights of the holders of the preferred stock as herein declared. If, after providing for the payment of full dividends for any fiscal year on the preferred stock, there shall remain any surplus net profits for such year, any of such net profits of such year, and of any other fiscal year, after the full dividends shall have been paid on the preferred stock, shall be applicable to such dividends upon the common stock as from time to time shall be declared by the board of directors, and out of any such surplus net profits after the closing of any fiscal year the board of directors may pay dividends upon the common stock of the corporation for such fiscal year, but not until the dividends upon the preferred stock for such fiscal year shall have been actually paid or provided for and set apart."

Charter, par. 7: "The board of directors shall have the power, without the assent or vote of the stockholders, to make, alter. amend, and rescind the by-laws of the corporation; to fix the amount to be reserved as the working capital," etc.

The bill states that after the organization of the corporation by-laws were adopted by the stockholders, by which it was provided that the directors should have the power, without the assent or vote of the stockholders, to make, alter, amend, and rescind the by-laws of the corporation, and to fix the

amount of the working capital, and that in 1906 the by-laws in this last particular were amended by the directors, so as to permit them "to fix and from time to time increase, diminish, and vary the amount of working capital of the corporation in their absolute judgment and discretion," which amendment was never acted upon by the stockholders, excepting at the annual meeting of the stockholders in 1907 there was passed a general ratification of all of the acts of the directors during the preceding year.

By-laws, art. 12: "The directors of the corporation, after reserving over and above its capital stock paid in as a working capital such sum, if any, as shall have been fixed by the directors, shall, either annually, semiannually, or quarterly, as in the discretion of the directors may seem best, declare a dividend or dividends on the preferred stock of the corporation; provided, however, that the aggregate amount of dividends so declared in any fiscal year shall not exceed the sum of 7 per cent. on the preferred stock of the corporation."

When the company was organized there was provided, in addition to the capital invested, a working capital of $1,720,000. From time to time, as the operations of the company went on, dividends were declared to the preferred stockholders, and large sums were set apart to the credit of an account known as "Reserve for Additional Working Capital," until the amount to the credit of that account was the sum of $2,459,896.64. The following table shows the amount of dividends paid to the preferred stockholders and the amounts added to the reserve for working capital for each year since 1900:

$5,406,250 00 $2,459,896 64

The amount reserved for additional working capital is in cash and quickly convertible assets. On July 2, 1908, the board of directors passed a resolution, which, after reciting that the company had since its organization opened upon its books an account known as "Reserve for Additional Working Capital," and has set aside out of net earnings and placed to the credit of that account $2,459,896.64, and has used that fund as additional working capital in the business of the company, and that under the present conditions the company did not need, over and above its original working capital, an additional working capital in excess of $2,250,000, resolved that such additional working capital should be diminished by withdrawing therefrom the sum of $209,896.64, and that the same should be credited to the profit and loss

account, and that the treasurer should make such entries upon the books of the company as should carry out the purpose and intent of the resolution. In this way the fund was provided out of which the dividend declared to the preferred shareholders could be paid. John R. Hardin, for complainant. Richard V. Lindabury, for defendant.

HOWELL, V. C. (after stating the facts as above). The difficulties arising out of the above state of facts are principally those of interpretation. We must ascertain the nature and character of the fund known as "Reserve for Additional Working Capital," and we must understand the relation which the statutory provisions bear to the engagements that the shareholders have entered intc among themselves, in the company's charter and by-laws, in order to determine the character of this fund. Primarily it is a function of the stockholders to fix the amount to be reserved, 'over and above the capital stock paid in, as a working capital. Corporation Act 1896 (P. L. p. 293) § 47, as amended in 1901 (P. L. p. 246, § 2). The act of 1896 gave the corporation capacity to confer this power upon the directors. The act of 1901 confers the power on the stockholders, unless otherwise provided in the original or amended certificate of incorporation, or in a bylaw adopted by at least a majority of the stockholders. While there are some important differences between section 47 of the act of 1896 and section 2 of the act of 1901, above referred to (Stevens v. U. S. Steel Corp. 68 N. J. Eq. 373, 59 Atl. 905), yet for the purposes of the case in hand they are not of consequence, because in this case the incorporators in the original certificate of incorporation and the stockholders in the by-laws conferred the power to fix the amount of the working capital upon the directors. The directors as early as 1900 opened an account in the company's books of the character known among professional accountants as a representative account, which they denominated "Reserve for Additional Working Capital," to which they appropriated large sums of money in the years 1900, 1902, 1903, 1904, and 1906. These appropriations aggregated the sum of $2,459,896.64. This fund seems never to have been used as actual working capital; that is, it was never invested in book accounts, plant, machinery, fixtures, or materials. It was always invested in securities, which were quickly convertible into cash, and, as far as the case shows, bore no relation whatever to those activities in which the company was engaged and for the prosecution of which it was formed.

The complainant does not complain of this action on the part of the directors. I take it that he accords to the directors, under the charter and by-laws, the right to pile up this "reserve" in their discretion; but, having once appropriated the money to that account, he denies their right to reduce the amount of