Εικόνες σελίδας
PDF
Ηλεκτρ. έκδοση

in said deed described, shall be erected nearer than five feet from the westerly line of said described lot, and that said restriction shall attach to and run with the land, and bind all future owners of the lot immediately adjoining on the west to lands so as aforesaid conveyed; and the said Alfred C. McClellan, for himself and his heirs and assigns, covenants and agrees to and with the said Martha F. Wahl, her heirs and assigns, that he and they shall in every deed of conveyance of said adjoining lot hereafter to be made by him, them, or any of them, insert and include a covenant, condition, agreement, and restriction in all respects the same as the above." The reasonable interpretation of the agreement is that it was intended by the parties that the owner of the adjoining lot, the title to which was vested in the wife, should be bound as stipulated therein, and it is the duty of this court to give effect to that intention. The words "himself, his heirs and assigns," cannot be permitted to overcome the intention of the parties, to be fairly gathered from the agreement, that the wife should be bound by its covenants, for if the contract admits of two inferences, it is to be interpreted in the sense in which the promisor had reason to suppose it was understood by the promisee. Potter v. Berthelet (C. C.) 20 Fed. 240.

Certainly the complainant understood that the wife as owner was binding herself according to the terms of the agreement, and that it was the intention of the wife, as one of the parties to the agreement, to contract with reference to the land which she owned, is strengthened by the fact that otherwise no reason is apparent why she should be a party to a contract which had no purpose other than the placing of a restriction on her land for the benefit of the adjoining landowner in part consideration of the purchase price for the land sold by the husband and wife to complainant. The construction of an agreement should "be favorable, and as near the minds and apparent intents of the parties as it possibly may be, and the law will permit." Shep. Touch. c. 5, p. 85; Sisson v. Donnelly, 36 N. J. Law, 432; Rue v. Meirs, 43 N. J. Eq. 377-383, 12 Atl. 369, 372. I am satisfied that this written agreement is the contract of the wife, according to which there was not to be erected on her land any building within five feet of the westerly line of the lot conveyed by her and her husband to the complainant; a stipulation which the defendant has disregarded.

The next objection is that the contract is not binding on the wife because she was not the owner of the land, for the benefit of which the agreement was made, and also that it was without consideration. I take it to be well settled that equity will compel the observance of a covenant, founded upon a valuable consideration, by which the owner of land imposes upon it limitations as to its use which are reasonable in character, and shall hold

that the wife, having an interest in both parcels, could legally impose upon her land for the benefit of the land sold, the restriction contained in her agreement, if there was a valuable consideration to sustain it. It appears by the testimony and the recitals in the agreement that the husband, by a deed in which the wife joined, had conveyed to the complainant a lot of land on which there was then erected a dwelling, the westerly side line of which, including the eaves of the building, extended to the boundary line between the lot conveyed and that owned by the wife, and, for a part of the consideration paid, the wife and her husband agreed in a writing separate from the deed, executed at the same time, and as a part of the transaction, that no building should be erected on the wife's lot within five feet of the westerly line of the lot conveyed to the complainant. The interest of the wife in the lands conveyed to the complainant was an inchoate dower which our courts have recognized to be a valuable interest. Wheeler v. Kirtland, 27 N. J. Eq. 534. It follows therefore that, if the covenant which she entered into with the complainant tended to enhance the purchase price, and the presumption is that it did, her inchoate dower was increased in value thereby, and such increase undoubtedly is a sufficient consideration for the agreement sought to be enforced, and, in my judgment, if the wife was erecting the building complained of, it would be the duty of this court to require her to stand by her bargain. If this agreement binds the wife, it will be enforced against any other person into whose hands the land passes, with notice of the covenants, although not recorded. The complainant insists that the defendant before taking title to the land had notice of the covenant, or sufficient notice thereof to put him on inquiry. The defendant testifies that on the day he agreed to purchase the lot he had an understanding with Mr. McClellan, who was acting for his wife in the negotiations of sale, that there was a restriction on five feet of the land, but was not told about it until he had paid $100 on account of his contract of purchase. The pertinent evidence on this point is as follows: Q. You had an understanding about a restriction on the five feet? A. Yes. Q. When did you have that? A. On the day I purchased the lot; let me see, it was after I had paid my first money. Q. After you paid your first money? A. Yes. Q. Then he told you that there would have to be a restriction? A. Mr. McClellan, after receiving my money and writing me a receipt, which I have brought here, came back to me and said: "By the way, there is some little restriction on this lot; it is about five feet." And he said: "Of course I don't suppose that you want to build closer than five feet." I said to him: "Mr. McClellan, I am a little surprised at this; if you had told me that before I paid you, we might have considered the matter a little differently." But I said:

"However, I would like to know what these restrictions are, and whether they prevent me from building a bay window." He said: "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."

It further appears that at that time defendant knew that the complainant was in possession of the adjoining property, but did not go and see her with reference to this restriction. The defendant paid the consideration for his lot to a title company in Atlantic City, with the expectation that the company would get the deed and put it on record, which it did. This deed contained a restrictive covenant in the precise words of the agreement between Mrs. McClellan and the complainant, and is dated the 1st day of September, 1904. On the 13th day of June, 1905, Mary A. McClellan and her husband executed a new deed to the defendant, reciting that the restrictive covenant was inserted in the original deed by "inadvertence and mistake," and contained a modification of the restriction in the words hereinbefore set out, but the later deed can have no effect upon this controversy if, as a matter of fact, the defendant, wefore he completed his purchase, knew, or was chargeable with notice, of the character of the contract between his vendor and the complainant. The recital in the second deed does not conform to the truth, because the vendor knew the character and nature of her covenant, and was careful to have it inserted in the earlier deed, and it is incredible that by "inadvertence and mistake" she inserted in her deed a covenant which she had so solemnly agreed to insert. Nor am I disposed to accept the statement of the defendant that the first deed, as drawn and recorded, did not conform to his understanding; for, a long time after the deed came to his possession, and after he was aware of the nature of the restriction, he went to the husband of the complainant and stated that he had gone to considerable expense preparing his plans and specifications, and found that there were restrictions covering five feet, which would require him to build nearer Pacific avenue than he wished to, and desired that the complainant should by deed relieve three feet of the five of the restriction, which he would hardly have done if he thought the restriction claimed to have been improperly inserted could be removed by the explanatory deed of his vendor which he afterwards procured.

As to actual notice not proved by direct evidence, but to be inferred in part from circumstances, the rule is laid down in Pom. Eq. Jur. 597, that if the party obtains knowledge or information of facts tending to show the existence of a prior right in conflict with the interest which he is seeking to obtain, and which are sufficient to put a reasonably prudent man upon inquiry, then it may be a legitimate inference that he ac quired the further information which con

stitutes actual notice. This inference is not a conclusive presumption of law; it may be defeated by proper evidence. Yet, if it appears that the party obtains knowledge or information of such facts, which are sufficient to put a prudent man upon inquiry, and which are of such a nature that the inquiry, if prosecuted with reasonable diligence, would certainly lead to a discovery of the conflicting claim, then the inference that he acquired the information constituting actual notice is necessary and absolute; for this is only another mode of stating that the party was put upon inquiry, that he made the inquiry, and arrived at the truth. And the same result follows if the party has sufficient knowledge to require him to make the inquiry, if he neglects to do it, or, having begun it, fails to prosecute it in a reasonable manner. The information need not be so. full and detailed as to communicate a complete description of the opposing interest. It is sufficient if it asserts the existence of a right or interest as a fact. If a vendor informs the vendee that the subject-matter is subject to an outstanding lien or equitable claim, such information is sufficient. It need not state all the particulars or impart complete knowledge. It is enough if he has reasonable ground to believe that a conflicting right exists as a fact. Whenever the information given by the grantor would constitute notice, the same information communicated by the representative of the vendor will operate with equal force, provided the party represented was prevented by absence or disability from making the communication on his own behalf. To what extent the purchaser is charged with notice of the incumbrance and its character, is regulated by the interest of the person making the communication. Information given by a third person having no interest in the matter, who, after stating the charge upon the subjectmatter, also declares that it has been abandoned or no longer exists, the purchaser may generally rely upon the whole communication, and unless there is some special reason for believing the statement regarding the incumbrance, and rejecting that which relates to its discharge, the purchaser may rely upon the whole statement; but a different rule prevails where the representation is made by the vendor or person parting with an interest in the subject-matter, and where such person admits some outstanding claim upon, or equity in the property, his further declaration that the defect has been cured or the equity destroyed, will not warrant the purchaser in relying upon this explanation or contradiction, for the informant is under a strong personal interest to misrepresent or conceal the real facts.

The testimony in this case shows that, at the conclusion of the negotiations between the McClellans and the defendant, he was informed by the vendor that there was some little restriction on the lot covering about

[ocr errors]

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 within 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 no

[blocks in formation]

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, §§ 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. It appears 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 subject to the condition that he would not put on that lot a building nearer the street in front of the lots than 20 feet. It is admitted that he has violated that restriction; that he at first contemplated building a structure to be used as a bath house, in connection with a sun parlor, to be built flush with the street; that, after the proceedings in this cause were instituted, he determined to, and did, build the front of the building further back from the street, although it yet is beyond the restricted line.

"His defense is that, while his deed contained this restriction, the same restriction was incorporated in the deeds of other purchasers to the number of 150. Of that number 99 or 100 have violated the restriction contained in their deeds, and that this complainant, who is occupying substantially the position of the original company (having taken over all the property and undertaken to dispose of it subject to the same conditions), has stood by and permitted all these violations without complaint. Some of them were trivial, but others were important. Certainly the violation as to the Chelsea Hotel property is an important one, and I think there are two other dwellings of considerable importance and value, whose owners have been permitted to violate this agreement, and the defendant insists that, having abandoned the general scheme, the complainant now has undertaken to enforce the restriction against this defendant, without taking any steps to compel other people to observe their covenants, except in the single instance where a bill was filed in 1898, which suit it appears has not been prosecuted, and that such conduct is inequitable. While the president of the corporation testified that he had recently seen counsel and urged him to proceed with the case, I do not feel justified in saying that the filing of a bill in 1898, without further proceedings, was an indication that it has been the intention to preserve the plan. The suit has not been diligently pursued. No result has been reached, and no steps taken between 1898 and 1905. The ordinary litigant, determined to assert its right, would probably have employed other counsel, if he could not get his case to a hearing through the efforts of the one employed. Upon the case as presented, I feel that I would not be justified in enforcing this restriction against this defendant. There have been a great many violations of these restrictions. They have been violated by two-thirds of the people who bought land from this company. Large hotel properties, and wealthy people have built, some on the very street where defendants' property is located, and their buildings have been so erected that their foundations are beyond the restricted line, and yet not a word has been said by this complainant. It may be that, in the judgment of the officers of this company, they thought it prudent to allow these people to

violate these restrictions, because they were putting in this locality large and valuable buildings, which enhanced the value of the land remaining in the hands of the company. That may be a wise thing to do. I am not criticising them. But I think that all the persons occupying these lands are entitled to be treated alike, and this complainant company cannot undertake to waive violations of these restrictions in so universal a manner, as it is proved, has been done here, and then undertake to enforce it against one other of their purchasers. Such a general consent to the nonobservance of restrictive covenants amounts to an abandonment of the original intention and design with regard to restrictions. If the original grantor of 150 lots by deeds, with a restriction as to building lines, allows two-thirds of the grantees to violate it without protest, it cannot enforce it against a single grantee, for the purpose of benefiting its remaining lands, for the grantee thus assailed is entitled to the common privileges accorded to other purchasers who are subject to like restrictions. It appears in this cause that the complainant obtained from certain of the purchasers of a part of the tract a release as to the restrictions, so far as a portion of the whole was affected, and thereafter, as to that part, changed the character of the restriction, and materially altered the scheme of the original plan, not only as to size of the lots, but as to the building lines. This change affected all the lot owners, and cannot be confined by the original holders to a portion of the property, especially as, in this case, the changes relate to a part of the street upon which defendant's lands are located. This bill is not filed by individual lot owners, but on behalf of the holding company, owners of unsold portions, and because of its laches in so many instances is presumed to have abandoned the original plan as to restrictions. "A decree will be advised dismissing the bill of complaint."

William M. Clevinger, for appellant. George A. Bourgeois and J. Morten Adams, for respondent.

PER CURIAM. The decree appealed from will be affirmed, for the reasons stated in the opinion delivered in the Court of Chancery by Vice Chancellor BERGEN.

SWAYZE, REED, and TRENCHARD, JJ., dissent.

(72 N. J. Eq. 437) BROWN v. CITIZENS' ICE & COLD STORAGE CO. et al.

(Court of Errors and Appeals of New Jersey. Feb. 2, 1907.)

CORPORATIONS - POWERS RIGHT TO BORROW MONEY.

A corporation, empowered by its charter to do any act in connection with its business, and

to issue bonds secured by mortgage, and to sell the same to raise money with which to erect machinery, etc., has authority to borrow money and execute a mortgage to secure the same; the clause having reference to the issuing of bonds not preventing the corporation from borrowing money and securing it by mortgage. [Ed. Note.-For cases in point, see Cent. Dig. vol. 12, Corporations, §§ 1775-1777, 1813.]

Appeal from Court of Chancery.

Suit by James Brown against the Citizens' Ice & Cold Storage Company and another to foreclose a mortgage. From a decree for complainant, defendant the Pennsylvania Iron Works Company appeals. Affirmed.

The opinion of Bergen, V. C., is as follows:

"The defendant company gave two mortgages, one for $10,000 to the complainant, another for $7,235 to Annie Lisle Ballingall, which she assigned to the complainant. There is no dispute about the amount of the loans, nor that they represent debts due by the company, but the defendant insists that under the terms of defendant's charter, as expressed in the following words: 'And the doing of any other act or acts, thing or things, incidentally to grow out of, or connected with said business or any part or parts thereof; to issue bonds secured by mortgage or mortgages upon the property, and franchises of said corporation, and to sell the same for the purpose of raising money, with which to erect machinery, and otherwise to improve said lands'-the corporation had no authority to mortgage its property, other than for the purposes above stated, and as the money, to secure which the two mortgages were given, was not applied to the payment of debts due for 'machinery and otherwise to improve said lands,' the mortgages are ultra vires, and cannot stand as incumbrances on the land. In my opinion, the general power given a corporation, under our act, to mortgage its property, is not restricted by the terms of the charter invoked. That clause has reference alone to the issuing of bonds in the usual commercial form, of a negotiable character, to be sold and passed by delivery, and was not intended to, and does not, prevent the corporation from securing to a creditor its debt by way of mortgage, in common form; and the power to do so is fully conferred by the clause in the charter, which authorizes the company 'to do any act or thing incidentally to grow out of or in connection with said business,' implying the right to borrow money and pledge its property as security.

"The complainant is entitled to a decree." Norman Grey, for appellant Pennsylvania Iron Works. E. A. Armstrong, for respondent.

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.

(72 N. J. Eq. 797)

MARR v. MARR et al. (Court of Chancery of New Jersey. March 23, 1907.)

1. CORPORATIONS OFFICERS-DEALING WITH CORPORATION.

A director of a corporation may purchase the corporation property sold under an execution on a judgment obtained by him against the corporation, and the sale will not be set aside because of his trust relationship, unless some undue advantage has been secured by reason of that position.

2. SAME EVIDENCE-SUFFICIENCY.

In an action by a stockholder of a corporation to set aside a sale of the corporate property under an execution on a judgment obtained by a director against the corporation to the director, that notice of the sale, other than the statutory notice, was not given to all the stockholders, was insufficient to show that the director had taken any undue advantage.

Bill by Phineas B. Marr against William B. Marr and another. Decree advised dismissing the bill.

The bill is filed by complainant, as a stockholder of Beacon Land Company, in behalf of himself and other stockholders, to set aside a sale made by the sheriff of Ocean county to defendant William A. Marr under an execution issued on a judgment held by defendant Marr against the land company. The land company having ceased the transaction of business, and having no organized board of directors, complainant seeks to enforce such rights as could have been appropriately enforced at the instance of the company in behalf of its stockholders.

In the year 1898 the Beacon Land Company was indebted to defendant Marr for money which he had prior to that time loaned to it. On failure of the company to make payment, defendant Marr brought suit and recovered judgment. On an execution issued on that judgment the sheriff of Ocean county made sale of the hotel property now in question, known as "Beacon-by-the-Sea." The property consisted of the hotel lots, buildings, and furniture, and comprised all of the property of the land company. At the sale the property was purchased by defendant Marr as plaintiff in execution. At that time defendant Marr was president and a director of the land company. The theory of complainant's suit is that by reason of the trust relationship at that time existing between the land company and defendant Marr, as its president and one of its directors, the title which he received by that purchase will be decreed to be held by him in trust for the benefit of the stockholders of the land company and an accounting ordered. Final hearing has been had on bill, answer of defendant Marr, replication, and proofs. Bleakly & Stockwell, for complainant. T. B. Hall, for defendant Marr.

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

« ΠροηγούμενηΣυνέχεια »