that the employment of the agent was a fraud on the stockholders because the directors had no authority to employ an agent, since, in the absence of restrictions in the charter or bylaws of the corporation, the general management thereof was in the hands of the board of directors.

3. In an action against a corporation for damages for breach of contract, evidence that plaintiff had sued defendant and another company on the same claim was immaterial, in the absence of any showing that such action was still pending.

Error to Supreme Court.

Action by Frank P. Collier against the Consolidated Railway, Lighting & Refrigerating Company. Judgment for plaintiff, and defendant brings error. Affirmed.

John M. Enright and Lindley M. Garrison, for plaintiff in error. Chauncey H. Beasley, for defendant in error.

SWAYZE, J. The plaintiff in this action seeks to recover damages for breach of a contract of the defendant to employ him as general sales agent. The terms of the contract are stated in a resolution, which, it was stipulated, had been adopted by the board of directors of the defendant, and was communicated to the plaintiff by letter dated January 14, 1902. The resolution reads as follows: "Resolved, that the company employ Mr. F. R. Collier as general sales agent of this company for a period of one year, at a salary of four hundred dollars ($400.00) per month, it being understood that his traveling and other expenses shall not exceed the sum of the three hundred dollars ($300.00) in any one month. This contract to date from January 2nd, 1902." The plaintiff was discharged April 4, 1902. No fault on his part is alleged. The defendant sought to prove that the resolution was passed by a dummy board of directors, who had no real interest in the company; that there was a contest in the company; that the president was the only one who had power to employ, and that he immediately notified the plaintiff that he was not employed by the company. The object, it was said, was to show that the discharge was rightful, because the plaintiff had not been properly employed. The evidence was excluded, and, we think, properly excluded. The board of directors was a de facto board, and its acts as such could not be annulled by the action of the president alone.

It is now urged that the employment of the plaintiff by the directors was a fraud upon the stockholders, because the directors did not have the authority to employ a sales agent. This view was not suggested at the trial, and we fail to see how the offer, as made, tended to prove this. In the absence of special restrictions in the charter or bylaws, the general management of the corporation is in the hands of the directors, and the acts of a de facto board of directors bind the corporation. Hackensack Water Co. v. De Kay, 36 N. J. Eq. 548; Kuser v. Wright, 52 N. J. Eq. 825, 31 Atl. 397.

Upon the cross-examination of the plaintiff he was asked if he did not sue two companies in Chicago. The object was said to be to prove that he sued the defendant company and another company for this claim. There was no suggestion in the case that the Chicago action was still pending, and we agree with the trial judge that the evidence sought to be adduced was of no importance.

These were the only questions argued in the defendant's brief. The other assignments of error have been examined, but are without merit.

The judgment should be affirmed.

MCALPIN et al. v. UNIVERSAL TOBACCO CO. et al.

(Court of Chancery of New Jersey. March 3, 1904.)

CORPORATIONS-ACTIONS BY STOCKHOLDERS -JOINDER OF PARTIES-SETTLEMENT-DISMISSAL CONTROL OF SUIT EQUITY-DEFENSES AFTER ISSUE - PLEADING CROSSBILL-PUIS DARREIN CONTINUANCE.

1. Where a bill for an injunction was filed by certain stockholders of a corporation on their own behalf and for all other stockholders who should come in and contribute to the expense of the suit against the corporation and others, and thereafter other stockholders applied and were admitted as parties complainant, defendants were not entitled to a dismissal of the bill on the ground that the matters in controversy had been settled, over the objection of such subsequently admitted parties.

2. Where a suit was brought against a corporation by certain stockholders on behalf of themselves and other stockholders who might join, and other stockholders were subsequently admitted, such stockholders, on a settlement being effected with the original plaintiffs, who abandoned further prosecution of the suit, were entitled to an order giving them control of the suit on their indemnifying the original plaintiffs from further costs and paying their pro rata proportion of the expense of the suit as far as it had progressed.

3. In a suit by stockholders to restrain the execution and sale of corporate bonds, a defense consisting of facts arising after issue joined could only be set up by a cross-bill in the nature of a plea puis darrein continuance.

Action by Edwin A. McAlpin and others against the Universal Tobacco Company and others on motion to dismiss. Motion denied.

Robert H. McCarter, Atty. Gen., and Wheeler H. Peckham, for the motion. E. A. S. Lewis and James B. Vredenberg, opposed.

REED, V. C. On July 13, 1903, a bill was filed by Edwin A. McAlpin, Joseph Tiernan, Jackson W. Rhoades, Edward C. Babcock, Charles M. Allaire, and William D. Judkins, stockholders of the Universal Tobacco Company, against the Universal Tobacco Company, William H. Butler, Edwin V. D. Paul, Daniel J. Campbell, Henry B. Wesselman, Richard W. Menzies, Alfred C. Farrell, Richard F. Tully, George P. Butler, and the Union Trust Company. The bill was filed by the named complainants, not

only for themselves, but for all other stockholders of the Universal Tobacco Company who should come in and contribute to the expenses of the suit. The prayer of the bill is that a certain voting trust set out in the bill may be declared void; that the issue and negotiation of certain bonds may be restrained, and the mortgage securing them be canceled, and the bonds already issued may be surrendered; and that a receiver might be appointed pendente lite for the Universal Tobacco Company. On July 13, 1903, a rule upon the defendants to show cause on August 3d why receiver should not be appointed was signed by the chancellor. The taking of affidavits, and the argument upon the rule to show cause, were not completed until August 17th, and on September 10th an order was made permitting the complainants to inspect the books of the Universal Tobacco Company. From that order an appeal was taken. During the pendency of this appeal the cause was referred for final hearing, and, for several days in December, testimony was taken before a vice chancellor. In the meanwhile, several stockholders of the Universal Tobacco Company other than the original complainants had been admitted as parties complainant. Camille Weidenfelt, Thomas W. Lawson, and William J. Brown had filed their petition setting out their respective holdings of stock, and praying that they might be admitted as parties complainant, and on August 11th they were, by order of this court, so admitted. On February 9th the counsel for the defendants moved in the present matter. The motion was opposed by the counsel of Weidenfelt, Lawson, and Brown on the ground that no settlement of the matters in controversy had been made with them. They also asked that an order might be made giving them the control of the suit.

It is quite certain that the defendants are not entitled to a decree dismissing the bill. While the consent of all but one of the original complainants to such a course is apparent, and it also appears that the consent of that one is inferable from the agreement of settlement set out in the affidavit, it also appears that the consent of the applying creditors is wanting. It is undoubtedly true that a complainant or a number of complainants can dismiss, or consent to the dismissal of, his or their bill at any time before decree. And this power resides in the complainants although they sue as some of a class, and expressly state that the suit is not only for the benefit of themselves, but also for the benefit of such others of the class as may choose to come in and share the expenses of the suit. But this exclusive power of control over the litigation ceases when a decree is signed, and in this state it also ends when one of the class-not an original complainant is, by order of the court, admitted as a party complainant. After such a judicial

recognition, this new party must be reckoned with in any final disposition of the cause. This was ruled by Chancellor Runyon in the case of Mutual Life Insurance Company v. Goddard, 33 N. J. Eq. 482, and is the law of this court. The motion to dismiss the bill, therefore, must be refused.

In respect to the three parties who petition to have the control of the suit turned over to them, they seem, upon the authority of the case just mentioned, to be entitled to such an order. The original complainants having abandoned all intention of further prosecuting it, the right to pursue the suit passes to some or all of the parties admitted as complainants pendente lite. As the three parties mentioned alone make the application, they only are at present entitled to the order. The order will be made upon terms that the applicants indemnify the original complainants against any further expense which may be incurred in the progress of the suit, and pay their pro rata portion of the expense of the suit so far as it has progressed.

The question, however, of most importance to the defendants arises from the fact that there exists an order, made at the time when the original rule to show cause was signed, which restrains the defendants from negotiating any bonds purporting to be secured by a certain mortgage, or from doing anything touching the issuing, negotiating, or delivery of the said bonds. The petition of Mr. Hess, or his affidavit which stands for a petition, prays that this restraining order may be vacated. The affidavits in support of this motion state that on January 25, 1904, an agreement was entered into between Mr. McAlpin and other stockholders on the one part, and William H. and George Butler of the other part, respecting the settlement of the differences between the Messrs. Butler and the complaining stockholders. By its terms, the agreement was not to be delivered unless at a meeting of stockholders of the Universal Tobacco Company called to be held on January 25, 1904, or at any adjourned meeting not later than January 30th, the holders of two-thirds or more of the stock present at such meeting should vote in favor of a resolution ratifying the execution of a certain mortgage or deed of trust bearing date July 1, 1903, and should vote also in favor of a resolution ratifying the action of the directors in delivering to the Butlers, as collateral, bonds of the par value of $35,900. The agreement also provided that, upon the vacation of the injunction restraining the negotiation and delivery of said mortgage, the same should be delivered to the Commonwealth Tobacco Company. The affidavit then states that a special meeting of the stockholders of the Universal Tobacco Company was held January 25, 1904, upon 10 days' notice to all holders of the preferred stock and of the common stock certificates and to the members of the voting trust; that

at that meeting a resolution was adopted ratifying the execution of a mortgage of July 1, 1903, and the acts of the directors in issuing bonds secured by it; that a resolution was also adopted ratifying the acts of the directors in pledging certain of said bonds to the Butlers as collateral, and in delivering certain other bonds to creditors in payment of corporate debts. It states that there were no votes cast against the delivery of the bonds, and that only 1,370 of the preferred stock and 1,180 of common stock were cast against ratifying the mortgage and bond, while, on the other hand, 11,091 of preferred stock, and 43,322 of common stock, voting trust certificate holders, were in favor of the resolution. The purport of the affidavit, it is perceived, is to exhibit a change of conditions occurring since the filing of the answer and the joining of issue in the suit; such a change as to destroy, as it is alleged, the ground upon which the stay restraining the delivery of the bonds was granted. I am constrained to the conclusion that the matters exhibited in the affidavit, as they are now presented, cannot be the foundation for any judicial action.

The rule of equity pleading respecting a defense arising after. answer filed and issue joined is that it must be presented by a cross-bill, which served in equity the same purpose as a plea puis darrein continuance. Story, Eq. Pl. § 393; Midford, Eq. Pl. 82; Fletcher, Eq. Pl. & Pr. § 889. In Miller V. Fenton, 11 Paige, 18, there was an application to dismiss a bill on affidavit setting out that, since the case was at issue, the defendant had been discharged by the terms of an agreement made by the complainant. Chancellor Walworth remarked: "The counsel * was wrong in supposing that relief could be obtained in this way, even if there had been a technical release which was a bar to the suit. * * A cross-bill in the nature of a plea puis darrein continuance is the proper mode of setting up such a defense, which arises after the defendant has put in and perfected his answer."

Under our practice the new matter may be set up in a supplemental answer in the nature of a cross-bill. Leave will be granted to file such an answer upon the affidavits submitted. Upon filing this answer, I will adopt the following coarse: The conditions being exceptional, the final hearing being arrested, new parties and new counsel intervening, I will, if desired by the defendants, advise an order that the complainants show cause why the injunction heretofore granted should not be dissolved; the rule to be heard upon testimony taken before a master by either party, upon notice before the return day of the rule; such testimony to be confined to the existence and validity of the agreement set up in the affidavits, and the existence and validity of the acts set up in the affidavits, respecting the ratification of the mortgage and bond already mentioned.

(70 N. J. L 223)

HENDRICKSON v. DWYER.

(Court of Errors and Appeals of New Jersey. Feb. 29, 1904.)

TRESPASS -CORPORATION PRESIDENT AS WITNESS-FORM OF QUESTION.

1. In an action of trespass to land by the receiver of a corporation that owned the land against one who occupied it under lease from strangers to the title, where it appeared that defendant had paid her rent by checks drawn to the order of those from whom she leased the premises, a question asked the president of the corporation by defendant, as to whether the corporation received the rents for the premises from defendant during the time she was in possession of them, is not objectionable as calling for a conclusion of the witness.

2. Though defendant in an action of trespass be shown to be a trespasser, she is entitled to credit for such sums as the owner of the land received from her while she was in possession under lease from strangers to the title.

Error to Supreme Court.

Action by Charles E. Hendrickson, Jr., receiver of the Dwyer Leather Company, against Ellen M. Dwyer. From a judgment for plaintiff, defendant brings error. Reversed.

Warren Dixon, for plaintiff in error. Charles Corbin, for defendant in error.

GUMMERE, C. J. This is an action of trespass to land. The plaintiff was appointed receiver of the Dwyer Leather Company, a corporation, on August 4, 1901. That company became the owner of the lands upon which the trespass is alleged to have been committed in the year 1893. On January 1, 1901, the Merchants' Company, a stranger to the title, executed to the defendant a lease of this land for the term of one year from January 1, 1901, at a rental of $1,200 per year. The defendant occupied the premises under that lease until the 1st of September, and paid rent to the Merchants' Company until the 1st of June. The trespass alleged is the occupation of this land without the authority of owner, and the damages sought to be recovered are the rental value of the property during the time of the defendant's occupation. There was no evidence in the case to show by what authority, if any, the Merchants' Company assumed to make the lease to the defendant. On the other hand, there was no evidence to show that the Dwyer Company ever objected to her occupation of those premises. In putting in her defense, Mrs. Dwyer attempted to prove that the rent which was paid by her, or some portion of it, was received by the Dwyer Leather Company, and went into its treasury. This she was not permitted to do. At the close of the evidence the trial judge directed a verdict for the plaintiff, and instructed the jury to assess the damages at the full rental value of the property for the eight months during which it was occupied by the defendant.

The principal error alleged before us was the refusal of the trial judge to permit the defendant to show that some part of the rent

paid by her to the Merchants' Company went into the hands of the Dwyer Company. The president of that company, having been called as a witness by the defense, and having testified that he and the other officers of the company were cognizant of the fact that the defendant was occupying the premises covIered by her lease, was asked, "Did the Dwyer Leather Company receive the rents for the premises from Mrs. Dwyer during this time that she was in possession of them?" The question was objected to upon the ground that it called for a conclusion, not a fact; and this objection was sustained, and the question overruled. It had appeared earlier in the trial that the payment of rent was made by checks drawn to the order of the Merchants' Company, and the idea of the objecting counsel (judging from his argument before us) seems to have been that the witness was "called on to swear, not to a fact, but to the conclusion that the money was, in effect, paid to the Dwyer Leather Company, in face of the admitted payment by checks to the Merchants' Company, on the unsound theory that the concurrence of the president, Mr. Dwyer, in the payments, made it, in effect, payment to the Dwyer Leather Company." But manifestly this is a misapprehension of the scope of the question. Although the rents were paid to the Merchants' Company, it is quite within the limits of possibility that this company, after, perhaps, deducting its commission for the collection, turned them over to the Dwyer Company. If this was done, the president of that company would have been likely to have personal knowledge of the fact. The question objected to called for the knowledge of the witness as to the matter inquired of.

The materiality of the question is obvious. If the answer had disclosed the fact that these rents were paid over by the Merchants' Company to the Dwyer Company, it would have gone far toward justifying the conclusion that the Merchants' Company, in making the lease to the defendant, and accepting from her the rent due thereunder, was acting as the authorized agent of the Dwyer Company. It would have been almost conclusive evidence, in the absence of explanation on the part of that company, that at least it acquiesced in the occupancy of the premises by the defendant. Either conclusion would have been destructive of the idea that she was there as a trespasser.

The question was material, also, in another aspect. If, upon the whole case, the defendant was shown to have been a trespasser, the plaintiff was entitled to recover from her the rental value of the premises during the period of her occupation, less such sums as had been paid by her as rent, either to himself, or to the company of which he was the receiver. His claim to compensation for the trespass done to the company's property prior to his appointment would have been defeated by proof that the company received full sat

isfaction of that claim before its insolvency, and would have reduced the amount which he was entitled to recover by that sum.

The action of the trial judge in overruling the question was erroneous, and for this reason the judgment under review must be reversed.

(66 N. J. E. 146)

MEEKER v. WARREN et al. (Court of Chancery of New Jersey. Feb. 24, 1904.)

MORTGAGES JUDGMENTS-PRIORITIES.

1. A deed given to secure the grantee as surety for the grantor is a mortgage.

2. Under the statute giving judgments priority in the order in which executions are issued thereon, the holder of a junior judgment, on which execution has issued before issuance of execution on the senior judgment, is not entitled to priority over a mortgage recorded before rendition of the junior judgment, but after the senior judgment.

3. A judgment creditor cannot maintain a bill to set aside as fraudulent a quitclaim deed not conveying the fee.

4. A bill by a judgment creditor to set aside a deed cannot be regarded as one to quiet title, where the complainant has not peaceable possession of the land.

Bill by John H. Meeker, as administrator of Chauncey S. French, against Helen E. Warren and others.

John H. Meeker, pro se. Mr. Duffield, for defendant Knapp. Adrian Riker, pro se, as receiver of the Newark Coal Co.

STEVENS, V. C. The material facts are as follows: The bill is filed by complainant, a judgment creditor, against Helen E. Warren, a judgment debtor. It prays, in the alternative, that a deed given by her to John E. Knapp may either be set aside on the ground of fraud, or may be declared to be a mortgage. The complainant has joined as parties other judgment creditors whose judgments antedate his own. He insists that his lien is superior to these judgments, and also to the mortgage deed, if it shall be deemed such. The defendants, except Mr. Knapp and Mrs. Warren, are holders of judgments recovered against Helen E. Warren in the months of January, March, and May, 1898. No executions issued thereon until after execution issued by complainant. The conveyance by Mrs. Warren to Mr. Knapp bears date May 31, 1899. It was recorded December 7, 1899. The complainant's judgment, for $879.12, was recovered on June 26, 1902, and execution issued thereon on the same day.

The principal question is one of priorities. Under the evidence, there can be no doubt that the deed was given to secure Mr. Knapp as surety on a lease made by the Orange Bank to Mrs. Warren. There is no proof that this deed is fraudulent, and it stands, therefore, as a mortgage to secure the money which he paid ($816) on his guaranty.

4. See Quieting Title, vol. 41, Cent. Dig. § &

This being so, the case comes directly within the authority of Clement v. Kaighn, 15 N. J. Eq. 48, of Williams v. Gilbert, 37 N. J. Eq. 84, and of Andrus v. Burke, 61 N. J. Eq. 297, 48 Atl. 228. Under the rule laid down in those cases, the priorities are as follows: (1) Knapp's mortgage; (2) complainant's judgment; (3) the judgments of defendants, in the order in which executions were issued.

It is earnestly argued by complainant's counsel that the cases above cited, and which are cases in this court, are repugnant in principle to Hoag v. Sayre, 33 N. J. Eq. 552, decided by the Court of Appeals. The difficulty with this position is that that court thought otherwise. Beasley, C. J., said: "Chancellor Green decided that the first judgment on the mortgaged premises, by reason of the failure to sue out execution upon it, should be postponed to the incumbrance of the junior judgments, and, as an inevitable consequence, that it should be postponed to the mortgage which was prior to the junior judgments, and whose priority was not to be affected by any laches of the holder of a prior judgment." He said further that the principle of decision then announced was but the development of the principle maintained and acted on in Clement v. Kaighn. In Clement v. Kaighn there was first a judgment without execution, then a mortgage, and then judgments followed by executions levied. In Hoag v. Sayre, as the case stood in the Court of Appeals, there was, first, a mortgage, not properly filed, but of which the second mortgagee had actual notice; then, a second mortgage; then, a judgment, with execution. In the first case the order of priority was held to be (1) the mortgage; (2) the junior judgments; (3) the senior judgment. In the second case the order of priority was held to be (1) the judgments to the full extent of the first mortgage; (2) the second mortgage; (3) the sum remaining due, if any, on the judgments; (4) the first mortgage. The complainant's contention is that inasmuch as the judgment creditor was, in the Hoag Case, put in the shoes of the first mortgagee because the second mortgagee had taken with notice, so, in a case standing in the situation of the Clement Case, the junior judgment creditor should be allowed to stand in the shoes of the senior judgment creditor, because the senior judgment has priority over the mortgage. There appears, however, to be a difference. The statute declares the unrecorded mortgage on real estate void only to a limited extent. It is void as against judgment creditors. It is good as against the mortgagor and as against his assigns, if those assigns take with notice, and consequently as against the second mortgagee. It may well be held that, as against the mortgagor and the second mortgagee with notice,

the estate carved out of the fee by the first mortgage sufficiently subsists to admit of the judgment lien (perfected by execution) fastening upon it, and so taking precedence over the estate of the second mortgagee, who remains in precisely the same position as before. He is neither advanced nor postponed. On the other hand, judgment liens, before levy, are general and indefinite, vesting no estate. By force of the statute, such liens have precedence in the order of the date of their entry, but this order of precedence may be changed by execution and levy. So far as levies are made, the judgments take precedence in the order in which they are made. Under this statutory system there is no ground for holding that one judgment creditor shall stand in the shoes of another, and have all that other's rights. His lien must either-except, of course, in cases where the judgments or executions are entered or levied simultaneously-precede or follow. Such, to use the words of Beasley, C. J., is the "inevitable consequence" of the legal enactments of the subject. Whether this be the true ground of the distinction or not, it has been adjudged by the Court of Appeals to exist, and that, so far as this court is concerned, is an end of the matter. I may add that the hardship, if any, is not upon the junior judgment creditor, who stands, with reference to the mortgage, just as he ought to stand, but upon the senior, who is postponed not only to the junior, but also to the mortgagee. But it must be remembered he owes his loss of precedence to his own lack of diligence. The statute says that, if he does not levy, he shall lose his priority over the creditor who does. And the courts say that, as a necessary consequence, he shall also be postponed to the interme diate mortgagee. The result of his lack of diligence is that he is visited with a double, instead of a single, penalty. If the fund be greater than the junior judgment, the senior creditor can pay off the judgment, and regain his priority by its extinguishment. If it be less than the judgment, he cannot get the fund in any event.

It is further argued by counsel that the deed, being one of quitclaim, merely, did not convey the fee. If this be so, then complainant's bill should be dismissed, for Mrs. Warren in that case still holds the legal title, and there is nothing to prevent complainant from proceeding with his execution. The bill cannot be sustained as one to quiet title, under the statute, for the complainant has not the statutory prerequisite peaceable possession-and, besides, it is not framed on that theory. But the point itself has been decided adversely to the contention. Havens v. Seashore Land Co., 47 N. J. Eq. 365, 20 Atl. 497.