(83 N. J. Eq. 607) In re S., One of the Proctors of Prerogative

Court.

revival of that suit against the administratrix of the deceased defendant appointed by

TION.

1914.)

1. CONTEMPT (§ 17*)-EXECUTORS AND ADMINISTRATORS (831*)-COURT ORDER-DESTRUCS. presented a petition for the appointment of an administrator ad prosequendum, on which an order was entered appointing the clerk in chancery as such administrator, the petition and order being delivered to S. for filing. He having failed to file the same until after he learned that an administratrix had been appointed for the decedent, and that an order of revival would not be made until the order of the ordinary appointing the administratrix ad prosequendum in the surrogate court had been vacated, S. stated that he had destroyed the petition and order without filing them. Held, that the order could only be nullified by vacation by the court granting it, and its destruction constituted a contempt.

[Ed. Note.-For other cases, see Contempt, Cent. Dig. §§ 48-50; Dec. Dig. § 17;* Executors and Administrators, Cent. Dig. 88' 186-190; Dec. Dig. § 31.*]

2. CONTEMPT (§ 17*)-DESTRUCTION OF ORDERS OF COURT.

A judge may destroy an order which he has signed, before it is filed, with the consent of the party obtaining it, treating it as inchoate and not consummate until made a matter of record, but an officer of the court has no right to destroy an order which he has obtained out of the presence of the court and without its consent, though it has not been filed.

[Ed. Note.-For other cases, see Contempt, Cent. Dig. §§ 48-50; Dec. Dig. § 17.*] 3. CONTEMPT (§ 17*)-INTENT-DISAVOWALEFFECT.

Where a proctor having obtained an order from the court sought to vacate it by destroying the petition and order before it had been filed, his lack of bad motive or intent to commit a contempt in so doing was sufficient to mitigate, but not to excuse, the offense.

[Ed. Note. For other cases, see Contempt, Cent. Dig. §§ 48-50; Dec. Dig. § 17.*]

Proceeding to punish S., one of the proctors of the Prerogative Court, for contempt. Guilty.

WALKER, Ordinary. S., one of the proctors of the Prerogative Court, preferred a petition to the ordinary, on behalf of himself as receiver in a certain cause depending in the Court of Chancery, praying that an administrator ad prosequendum might be appointed to represent the estate of a deceased defendant in that suit in that court, and thereupon an order was made that letters of administration be granted by the register of this court to the clerk in chancery for the usual limited purposes. The reason assigned for asking for the appointment was that no application had been made for letters upon the estate of the decedent by any one entitled thereto.

[1] After signing the order appointing the clerk in chancery as administrator ad prosequendum, the ordinary handed the petition and order therefor to the proctor, S., who was the petitioner, for filing. Some time afterward S., the proctor, as receiver in the chancery cause, applied to the chancellor for the

already mentioned, the clerk in chancery had been appointed administrator ad prosequendum by the ordinary. Upon being informed by the ordinary that before the revival of the suit in chancery would be ordered against the administratrix appointed by the orphans' court, the order of the ordinary appointing the administrator ad prosequendum in the Prerogative Court would have to be vacated, the proctor stated that he had destroyed the petition and order. Whereupon the ordinary charged the proctor with contempt of court for his having, without authority, failed to file, and for having destroyed, a petition preferred in the Prerogative Court and an order made thereon by the ordinary. The proctor's excuse for his conduct is that, after the order appointing the administrator ad prosequendum was made in the Prerogative Court, he learned that an administratrix of the estate of the deceased had been appointed in the orphans' court, and, believing that she was entitled to defend the suit for the estate of the deceased in preference to the administrator formally appointed, and not having filed the order and petition in the Prerogative Court, he thought he might lawfully destroy them, and thus be saved the trouble of taking proceedings to vacate and annul the appointment of the administrator ad prosequendum. The latter proved a vain hope, because the ordinary compelled the proctor to immediately file a petition suggesting the facts, and ordered office copies of the petition and order appointing the administrator ad prosequendum to be filed in the Prerogative Court, and

then made an order revoking the appointtor ad prosequendum. As the destruction of ment of the clerk in chancery as administraa deed does not divest the title by it conveyed, so likewise the destruction of an order of a court does not operate to vacate it or destroy its effect. Hence the order that the proceedings in the Prerogative Court be established by the filing of office copies, and revocation of the order made in the regular way.

[2] That a judge may destroy an order which he has signed, before it is filed, with the consent of the party obtaining it, and more especially upon his request, treating it as inchoate and not consummate until made a matter of record, I have no doubt; but that an officer of the court has any right to do such a thing out of the presence of the court and without the consent or request of the court, even though it is not filed, I deny. Only the court that makes an order can unmake it, either formally or informally. That an officer of the court can be guilty of such a thing and see no harm in it, as in the case before me, passes my comprehension.

[3] S., the proctor, when charged with con

(83 N. J. Eq. 344)

v. LUMMIS et al. (No. 5.)

May 4, 1914.)

1. BUILDING AND LOAN ASSOCIATIONS (§ 26*) -LOANS-APPLICATION OF PROCEEDS.

Defendants having contracted with A., who was secretary of complainant building association, for certain repairs on a house, applied to complainant for a loan, agreeing that the prior liens against the property should be discharged from the money to be loaned. Thereafter complainant drew a draft for $900, payable to the order of one of the defendants, and delivered the same to A., which he applied, without indorsement by the payee, to the payment of his claim for repairs on the building. Held, that defendants' agreement did not confer on complainant or A. the right to ascertain the amount due from defendants to A., without defendants' consent, and to charge an amount so ascertained to defendants, and that the amount of the draft could not therefore be regarded as a payment pro tanto of the proposed amount to be loaned. [Ed. Note.-For other cases, see Building and Loan Associations, Dec. Dig. § 26.*]

2. TAXATION (§ 531*)-PAYMENT OF TAXES RIGHT TO REIMBURSEMENT-LIEN.

Where a building association on the faith of a proposed mortgage loan paid certain taxes on the premises, it was entitled to enforce a lien against the property for the amount of the taxes so paid and interest thereon.

[Ed. Note. For other cases, see Taxation, Cent. Dig. §§ 986, 987; Dec. Dig. § 531.*]

Appeal from Court of Chancery

Suit by the Paulsboro Loan & Building Association against Annie E. Lummis and another to foreclose a mortgage. From a judgment declaring the mortgage a lien only for the amount of certain taxes paid by complainant, and interest, it appeals. Affirmed on the opinion of the Vice Chancellor, which was as follows:

In this case I am entirely satisfied that this mortgage cannot be enforced against these defendants in accordance with its terms. There is one element that counsel for complainant, and his witnesses who have testified and who have been permitted even to speak argumentatively, have apparently overlooked from beginning to end. The contract between the defendants and Mr. Adamson was purely personal; it involved the building of a house, or the repairing of a house, and when that work was terminated or discontinued the defendants were entitled to make their own settlement with Mr. Adamson as to the amount which might be found due to him. When the building association allowed this loan, as they were entitled to have the amount of prior liens against the property discharged from the money so to be loaned, this necessarily included such money as was due from defendants to Adamson for work performed by Adamson on the building; but neither the building association nor Adamson had the right or authority by either direction or implication to ascertain without the consent or cooperation of defendants that any specific amount was due from defendants to Adamson and to charge an amount so ascertained to defendants; nor was the building association either directly or impliedly privileged to handle the matter in such manner that the proceeds of the proposed loan would not be applied to discharge the prior mortgage. Mr. Adamson never had the privilege from defendants for himself, nor did the

lations were and how the accounts stood between the defendants and Adamson. The building asloan consummated until the draft which they made payable to Mrs. Lummis for the amount of the proposed loan should receive her proper endorsement. If Mr. Adamson assumed the privilege, as counsel suggests, to turn this $900 draftvoucher back to the building association as cash without the endorsement of Mrs. Lummis, in doing so he denied Mr. and Mrs. Lummis the privilege of making their own settlement with him. If the building association assumed to take the draft-voucher which was drawn to the order of Mrs. Lummis without the endorsement of Mrs. Lummis, in doing so the building association deprived Mrs. Lummis of any defense against the amount Mr. Adamson might claim to be due for that work. That element seems to have been entirely overlooked. But aside from that I am unable to see how we are justified, under the evidence, in making a finding of fact that the item of $1220, "receipts of the evening," contained in the cashbook, included this voucher of $900. It may be that this voucher passed at that time to the treasurer and was accepted by him as so much cash, that for Mr. Adamson, and it may be that the draft is, the treasurer may have cashed the draft court; but the evidence of all that is very has come from the treasurer's custody to this slight indeed, if any at all exists. The treasurer's own testimony was to the effect that he had never seen this $900 draft-voucher since it was issued until today. That testimony he now thinks may not have been accurate; he now thinks that he may have received it as cash and have turned it over to the building association examiner, but he is not sure of that. the facts in this respect may be is necessarily more or less a conjecture. This voucher-draft may have still been in the hands of Mr. Adamnot at all inclined to believe it was not still in son at the time of his death. Indeed, I am his hands at the time of his death; I am inclined to think from all the evidence in the case that at the time he was stricken with his last sickness he had not abandoned the idea of consummating this building association loan in the manner it had been intended; that the consummation of the transaction had been simply held in abeyance by him; and that he had been reporting to the mortgagor from time to time that he would fix it up, but had deferred doing it for reasons of his own; that the transaction never had become a consummated transaction with the building association, from either the standpoint of that association or of Adamson or of defendants. But be that as it may, the building association was at no time empowered, directly or indirectly, by any conduct upon the part of the defendants, to appropriate or apply, without their indorsement or sanction, a voucher-draft, payable to their order, and in that manner deny them the right to make their own settlement with their own contractor who happened to be the secretary of the association.

What

[2] On the faith of this proposed mortgage loan the building association undoubtedly paid these taxes and are entitled to the return of the money they paid, and the mortgage probably could be appropriately declared a lien for their protection to that amount; but so far as the $900 is concerned there is no evidence to satisfy me that that money has ever been paid by them, or, if it was paid by them to Mr. Adamson, that it was paid to him with any adequate authorization upon the part of the defendants. From the standpoint of the defendants this mortgage does not exist as a security for that $900. It may exist as a security for the taxes. They anticipated that this loan would be made and executed the mortgage as a

Condict, Condict & Boardman, of Jersey City, for complainant. William L. Rae, of Jersey City, for trustee in bankruptcy. Lum, Tamblyn & Coyler, of Newark, and Frederick Durgan, of New York City, for defendants Williams A. Hunt and Fred M. Hunt.

LEWIS, V. C. This cause was brought to trial on the bill, answers, and replications and cross-bill and answer to cross-bill and proofs. The original bill was filed by the Battery Park National Bank of New York, in aid of an attachment issued out of the Supreme Court of New Jersey at the suit of the complainant, against the property of Fred M. Hunt, one of the defendants.

[1] The property described in the bill consists of a plot of land on Washington street, Newark, upon which there stood at the time of the filing of the bill three brick residences, a stable, and a garage. The title to this land is in the name of Williams A. Hunt, a brother of Fred M. Hunt. The bill charges, however, that the beneficial ownership of this property is in Fred M. Hunt, and that Williams A. Hunt holds the bare legal title as trustee for Fred M. Hunt. The property was originally purchased from Luella K. Beecher, by contract dated November 20, 1911. The agreed purchase price was $33,000, to be paid by the assumption of a first mortgage of $15,000 and of a second mortgage (called the Katz mortgage in the testimony) of $6,500, and the payment of $11,500 in cash. The purchase price was actually paid as follows: By the assumption of the two mortgages and the payment of three checks to the order of Beecher, on the Bankers' Trust Company of New York, upon an account standing in the name of Williams A. Hunt. These checks were as follows: November 20, 1911. November 23, 1911.. December 4, 1911.

Or a total of...

$1,000 00

4,000 00 5,683 86

.$10,683 86 The defendants, Hunt, account for the discrepancy between the $11,500 cash payment called for by the contract and the $10,683.86 actually paid by saying it was a credit allowed the purchaser on adjustment of interest on the mortgages and the taxes. After the filing of the bill in this cause, Fred M. Hunt, on September 13, 1912, filed a petition of voluntary bankruptcy in the Southern district of New York. George F. D. Trask was appointed trustee in bankruptcy of his estate. The said trustee thereupon filed a petition in this cause to be made a party. His petition being granted, he filed an answer by way of cross-bill, in which he claimed that the property described in the bill was now vested in him by operation of law as a part of the estate of his bankrupt. Fred and Williams Hunt answered the original bill and Williams Hunt answered the crossbill. An order was made by the United States District Court of the Southern District

of New York, under section 67f of the Bankruptcy Law, preserving the lien of the abovementioned attachment for the benefit of the estate of the bankrupt. This order has been made a file of this court in this cause. The trustee has filed, pursuant to the provisions of the Bankruptcy Act, in the register's office of Essex county, a copy of the decree adjudicating Fred Hunt to be a bankrupt.

The complainants and trustee in bankruptcy have a common interest. The complainant makes no claim under its attachment to preference over the other creditors. The complainant and the trustee in bankruptcy take the position that the proofs in this cause are sufficient to sustain their claim that Fred M. Hunt was the beneficial owner of the property in question upon any one of three grounds; that is to say: First, that the admissions of Williams Hunt, coupled with the evidence of the dominion exercised by Fred Hunt over the property, is sufficient to establish the existence of an express trust agreement between the two brothers, whereby Williams agreed to hold the property in trust for Fred; and, secondly, that the dominion exercised by Fred M. Hunt over the bank account out of which the original purchase price was paid and the proved fact that Fred expended his own money in paying off a second mortgage on the property, and in erecting an expensive stable and a garage upon the property, establish a trust estate in Fred resulting from the payment of him of the purchase price; and, thirdly, that if it be assumed that it was originally intended by the two brothers that Williams should be the beneficial owner, it is apparent that payments made by Fred for the property, and for improvements upon the property, were voluntary conveyances made by Fred and accepted by Williams for the purpose of hindering, delaying, and defrauding the creditors of Fred, whereby a constructive trust or equitable lien exists in favor of Fred's creditors. I shall consider the case as one of a resulting trust.

Williams Hunt was examined at great length before the referee in bankruptcy proceeding. A part of his examination in that matter has become a part of the testimony in this cause. His account of the payment. of the purchase price was that the property was taken subject to a first mortgage of $15,000; that $1,000 was paid by the check of November 20, 1911, and that $18,000 was paid Beecher in cash, "in bills," "all currency," "cash." The examiner was called to the telephone. Upon his return, it appears, by Williams Hunt's testimony in the present case, that the following took place:

"Q. As I left the room your brother, the bankrupt, spoke to you. What did he say to you? A. My brother? Q. Yes.

"Mr. Durgan: Is that competent?

"Mr. Boardman: Certainly; the witness is on the stand, and he spoke to the bankrupt, or the bankrupt spoke to him.