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ALLMAN v. UNITED BROTHERHOOD OF CARPENTERS, ETC.
and any person employing or intending to , ing order, the defendants might have come in employ the complainants or any of them. and answered the bill on oath, and such an. The bill was filed July 24, 1911, and an or- swer would have been evidence for them on der was made thereon the same day, com- motion to dissolve the injunction, or in remanding the defendants to show cause on sisting its issuance, notwithstanding the praythe 1st day of August then next why an in- er for answer without oath. Ireland v. Kelly, junction should not issue according to the CO N. J. Eq. 308, 47 Atl. 51. But no anprayer of the bill, and also ordering that in swer is required without a subpæna compelthe meantime, and until the further order of ling it. the court, the defendants and each of them,  If a complainant could obtain a pretheir agents, servants, attorneys, confeder- liminary injunction and not summon the deates, and any and all persons acting in aid fendant to answer the bill, he could thereby of or in conjunction with them or any of perpetually enjoin him without litigating the them, be restrained from conspiring, agree- matter in dispute between them, unless the ing, or combining to obstruct or prevent any defendant voluntarily appeared and answerof the complainants from procuring employ-1 ed. Ordinarily defendants do not voluntariment, and from interfering with any per- ly appear. They are generally unwilling to son, firm, or corporation employing any of involve themselves in the annoyance and exthem, and from declaring or threatening any pense of litigation, with the hazard of defeat, boycott against any of them, and from de- unless compelled to do so by a compulsory claring or threatening any boycott against process of the court; and that is why it is any of the products of any person, firm, or that a complainant obtaining a preliminary corporation employing them, and from print injunction is required to speed his cause and ing, issuing, publishing or distributing any bring the defendant compulsorily into court copy of any newspapers, magazine, circular, at the earliest day, and afford him an opletter, or document which shall in any man-portunity to answer involuntarily, and obtain ner refer to any of the complainants or their the benefit of his answer. The writ of in; association, Local Union 1787, as being non-junction now rarely issues upon the filing of union, unfair, or scabs, and from procuring a bill, but in its stead an order is usually the dismissal from employment of any of
any of made requiring the defendant to show cause the complainants. On the return day an or- on a certain day why an injunction should der was made on application of defendants' not issue, and usually that order contains an counsel continuing the hearing on the order ad interim restraint and is generally called a to show cause to August 22, 1911, and on restraining order, although sometimes it is that date the matter was continued to Au-called an injunction order. Now, an order gust 24, 1911, when it came on to be heard to show cause serves the purpose of a subupon bill and affidavits, and on affidavits on pena issuing with a preliminary writ of inbehalf of defendants, in the presence of coun- junction to this extent; it compels the defendsel of both parties.
ant's appearance on the return of the order, As one of the contentions on behalf of the thus affording him an opportunity, by the use defendants, it was urged that no injunction of ex parte affidavits, to combat the complainshould be awarded, and that the bill should ant's claim to a preliminary injunction, withbe dismissed, because no subpoena ad resp. out his having to answer or appear generalhad been taken out and served upon the de- ly. Of course, he may make this resistance fendants, although four weeks had elapsed' by answer and affidavits as well as by afsince the filing of the bill.
fidavits alone, but does not have to file an  It is entirely settled that upon the is- answer, and thus put himself voluntarily in suance of a preliminary writ of injunction a court. If on the return of the order to show subpæna must be taken out and served. Lee cause it is made absolute, and a preliminary v. Cargill, 10 N. J. Eq. 331. The penalty for injunction is ordered to issue, then a subneglect is dissolution of the injunction. If a pana must go out with the injunction, unpreliminary injunction had issued in this less, of course, the defendant has already case, instead of a temporary restraining or- voluntarily answered. der, the motion now made on behalf of the  There is a material distinction between defendants would have to be granted. In a restraining order and an injunction. 16 Lee v. Cargill, Chancellor Williamson said Am. & Eng. Ency. (2d Ed.) p. 349; Dean v. that the practice would be thereafter strict- Bonnell, 4 N. J. Law J. 348. In this case ly followed, requiring the subpæna to be (Dean v. Bonnell) the bill for injunction was taken out with the writ of injunction and re- filed and an order to show cause, including a turned into court within the time prescribed restraint, was made, and the hearing thereon by the rule for return of service of the in- adjourned several times, and then a motion junction. The reason is that the suitor who was made on the part of the defendant to would restrain his adversary must use due dismiss the bill on the ground that no subdiligence in expediting the cause. The bill pæna to answer had been issued.
Vice in this cause prays for an answer without Chancellor Dodd observed that the case of oath, but, upon the issuance of either a pre- an order to show cause was different from liminary injunction or a preliminary restrain- that of an injunction, the order itself com
manding the defendant to show cause on aj are nonunion, unfair, or scabs, and in that certain day being sufficient to bring him into respect the restraining order is too bro:1d, court.
and it would, therefore, to that extent have Upon the authorities, therefore, my con- to be modified. All that the defendants did clusion is that a subpoena is not required to in this regard was to publish in their official be taken out with a restraining order which journal "The Carpenter" in the April numcommands the defendant to appear on the ber, 1911, "that Local Union 1787, by orders return day and show cause why an injunc of the G. E. B. (General Executive Board) tion should not issue, but that when a pre has been and at this moment stands suspendliminary injunction issues ex parte upon the ed from our organization." It was not provfiling of a bill without any order to showed that there is any threat or intention of cause being made, as it sometimes does, it repeating even this assertion. In this situaruns, to use its language, until the defendant tion a preliminary injunction should be re "shall have fully answered the bill of com- fused. Penną. R. R. Co. v. National Docks Ry. plaint, and our said court shall make other Co., 52 N. J. Eq. 555, 30 Atl. 580. The other order to the contrary”; and, if the defend-part of the case refers to the alleged unlawant would seek to have the restraint remov- ful suspension of Local Union 1787 from the ed, he must answer (unless the chancellor national body and the prayer for restoration shall allow the motion to be heard on affida- to membership, and of attempts of the devits under rule 123), and he can be compelled fendants to prevent the complainants from to answer only by the service of subpæna for obtaining employment by means of the boythat purpose. He is never obliged to appear cott, threats, etc. As to this, the denials of voluntarily. If on the hearing of an order to the defendants under oath are as explicit as show cause a preliminary injunction is the sworn assertions of the complainants, awarded, then a subpæna must be issued and put the facts relied upon for the injuncwith the injunction, and, if it is not issued tion in such a state of equipoise or doubt as, and returned served within the time pre- under the well known rulē, to forbid of the scribed by the rule for the return of the in- issuance of a preliminary injunction. It is junction (Lee v. Cargill, ubi supra), the in. perfectly well settled that, whenever the junction would be dissolved on the defend-complainant's case is doubtful on the law or ant's motion. To make this motion, the de the facts, a preliminary injunction will not fendant, not being in court by plea, answer, issue. To doubt is to deny.
. or demurrer, would have to appear formally
 To justify the issuing of an interlocutory, for the purpose. Groel v. United Electric Co., 68 N. J. Eq. 249, 251, 59 Atl. 640. And injunction, the case made by the complainant if the defendant desires to appear specially must exhibit a right free from doubt or reaif the defendant desires to appear specially sonable dispute. Roberts v. Scull, 58 N. J.
Eq. 396, 43 Atl. 583. solve only, and not to have his appearance operate to clothe the court with jurisdiction count of the alleged illegal suspension from
 As to restoration to membership on acover him generally in the suit, he must doubt the national body of Local Union 1787, a less obtain leave of the court to enter such mandatory injunction would be required, an appearance. Dan. Ch. Pl. & Pr.
Dan. Ch. Pl. & Pr. (6th and such writs are rarely granted before Am. Ed.) 453. In the unreported case of Reimers v. Magowan (July 9, 1901, Docket final hearing, and are, as a general rule, 23, p. 389), in which a preliminary injunc- strictly contined to cases where the remedy tion had issued without a subpæna having at law is plainiy inadequate. Lord's Ex'rs v. been issued and return served within the Carbon, Iron Mfg. Co., 38 N. J. Eq. 452. It
was conceded on the argument that this case time in which the injunction was returnable, counsel for the defendant Skirm applied for did not fall within the exception to the rule. and obtained leave from Vice Chancellor Therefore no mandatory injunction may preReed to appear specially for the purpose of liminarily issue for the restoration of the moving to dissolve the injunction as to him, local to the general body. and, such appearance being entered, the in Other questions raised and discussed on junction was on hearing of the motion dis- the hearing are without controlling force, and solved as to that defendant.
it is unnecessary to decide them. This brings me to the consideration of the Upon this whole matter I am constrained propriety of the issuance of a preliminary into the conclusion that the complainants are junction. In the first place, let it be stated not entitled to a preliminary injunction, and that there is neither allegation nor proof the restraining order must therefore be disthat the defendants have printed or dis- solved. No costs will be awarded on this tributed any magazine or document assert-application. The costs will abide the event ing that Local Union 1787 or its members of the suit. .
BALLANTINE Y. YOUNG
(79 N. J. E. 70)
is an extraordinary dividend, and must be apBALLANTINE et al. V. YOUNG et al.
portioned between the life tenant and the re
mainderman. (Court of Chancery of New Jersey. Sept. 26, 1911.)
[Ed. Note. For other cases, see Life Estates,
Dec. Dig. $ 15.*] 1. CORPORATIONS (8 157*)-STOCK-DIVIDENDS -CASH DIVIDENDS.
7. LIFE ESTATES ($ 15*)-CORPORATE STOCKWhere a corporation which had accumu
NEW STOCK-APPORTIONMENT. lated a surplus several times greater than its In apportioning a stock dividend between capital, in addition to its usual dividend, de- the life tenant and the remainderman, the apcla red a 200 per cent. dividend, at the same portionment should be made on the basis of the time giving the stockholders power to subscribe company's accounts. at par for a new issue of stock of the same [Ed. Note. For other cases, see Life Estates, amount, the dividend was a cash dividend, and Dec. Dig. § 15.*] not a stock dividend. [Ed. Note.–For other cases, see Corporations,
8. LIFE ESTATES (8 15*)–CORPORATE STOCK
NEW STOCK-CAPITAL. Cent. Dig. $8 584–586; Dec. Dig. § 157.*]
Where corporate stock, which was be2. LIFE ESTATES ($ 15*)—CORPORATE STOCK- queathed to one for life and remainder to anDIVIDENDS-CASH DIVIDENDS.
other, secured the holder the right to purchase While ordinary cash dividends, where stock on favorable terms shares of another corporais bequeathed to one for life, remainder to an- tion, that right is capital belonging to the reother, go to the life tenant, the extraordinary mainderman. dividends are apportioned between him and the
[Ed. Note. For other cases, see Life Estates, remainderman; and hence, where a corpora, Cent. Dig. $$ 34, 35; Dec. Dig. § 15.*] tion which had accumulated a surplus several times greater than its capital, in addition to its regular dividend, declared a 200 per cent. divi
Bill for directions by Jeanette Ballantine dend, at the same time giving the stockholders and others, as trustees of the will of John the power to subscribe for a new issue of stock Ballantine, against Alice J. Young and othof the same amount, the dividend was extraor-ers. Instructions given. dinary, and should be apportioned in the ratio that the surplus at testator's death bears to the
See, also, 76 N. J. Eq. 613, 75 Atl. 1100. whole surplus accumulated up to the time it was declared.
John 0. H. Pitney, for complainants. Gil[Ed. Note.-For other cases, see Life Estates, bert Collins, for remaindermen. Chauncey Cent. Dig. $$ 34, 35; Dec. Dig. $ 15.*]
G. Parker, for life tenants.
STEVENS, V. C. This is a bill filed by title to stock in a corporation which paid very trustees of the will of John Ballantine, asklarge dividends, and had accumulated a very ing for directions. large surplus, the trustees were, upon the dec
 The testator owned 25 shares of the laration of an extraordinary cash dividend, justified in investing the dividends in a new is: Central Trust Company of the par value of sue of stock, which the corporation at the same $50 each. Its capital stock was $1,000,000. time offered its stockholders at par.
Its undivided surplus at the time of testa[Ed. Note. For other cases, see Trusts, Cent. tor's death (April 27, 1895), $5,776,113.70. It Dig. SS 301-309; Dec. Dig. § 217.*]
paid regular semiannual dividends at the 4. LIFE ESTATES (8 15*)-STOCK-NEW STOCK annual rates of, first, 50 per cent., tben 60 -RIGHT TO SHARE IN.
The right to subscribe for new shares per cent., and then 80 per cent. On April which command a premium is, where corporate 28, 1909, the surplus had increased to $15,stock has been bequeathed to one for life and 579,696.65. In June 1909, its capital stock, remainder to another, considered a part of the by appropriate action on the part of the diprincipal. [Ed. Note: -For other cases, see Life Estates, $3,000,000. The stockholders were given the
rectors and stockholders, was increased to Cent. Dig. $$ 34, 35; Dec. Dig. $ 15.*] 5. TRUSTS ($ 217*)—MANAGEMENT OF PROP- right to subscribe at par for the new isERTY-INVESTMENTS.
sue of $2,000,000; that is, each stockholdWhere trustees under a will were author- er might subscribe for two new shares for ized to continue any investments or securities,
every old one he held.
Contemporaneousand part of the estate consisted of stock in a corporation which, to treble its capital stock, in ly a special or cash dividend of 200 per addition to the regular dividend, declared a 200 cent. was declared. The trustees took this cent. cash dividend, and gave all share- dividend and used it to pay for the new
the for each share they then owned, the trustees stock, which stock they still hold. having purchased such shares were entitled to By his will, testator gave his residuary bold them; for by investing a cash dividend in estate to trustees in trust (speaking generalstock they merely preserved their proportionate ly) to pay over a part of the income to interest in the property, and did nothing more his children during their respective lives. than continue their investments.
[Ed. Note.-.For other cases, see Trusts, Dec. and at their deaths to divide certain parts Dig. 217.*]
of the principal among his grandchildren. 6. LIFE ESTATES ($ 15*)—CORPORATE STOCK The first question is, Who is entitled to NEW STOCK.
the dividend of the Central Trust Company Where corporate stock was bequeathed to issued under the circumstances above deone for life, remainder to another, and the corporation, in the form of a dividend, issued new scribed, the life tenants or the remainderstock to all stockholäers, the stack so issued | men?
*For other cases, see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key No. Series & Rep'r Indexes
It seems to me plain that the dividend is cash dividend (Malam v. Hitchens, supra), a cash dividend, and not a so-called stock the relative rights of the parties are easily dividend. There is nothing, either in the adjusted. So much of it as may be needed substance or form of the transaction, that will be sold to satisfy the charge. indicates that it was other than what it The next question is whether the trustees purports to be.
Gray v. Hemenway, 206 | have the right to hold the stock that may Mass. 126, 92 N. E. 31, 138 Am. St. Rep. remain unsold after the charge is satisfied. 377. It is true that the company at the It seems to me that, having the right to take time it declared the dividend gave an option the stock, which, after it was taken, gave to subscribe to the new stock, and that its them no greater interest in the company officers anticipated that the new stock than they had before merely changed the would be paid for with the cash dividend; form of their holding—they have the right but it did not attempt to compel the sub- to retain it. The authority given by the will scription. The stockholder could do as he is "to continue any investments or securi. pleased. He would, almost as a matter of ties.” . By agreeing to take the company's course, elect to take the stock with the stock in exchange for the company's money, money thus provided;'for the stock was sell they are merely preserving their proporing for many times more than its par value. tionate interest in the property, and so do
 Ordinary cash dividends go, of course, ing nothing more than continuing their into the life tenant. Is this an ordinary or an vestment in it. extraordinary dividend? It seems to be ex  The next question relates to the sotraordinary for three reasons: (1) It was called 15 per cent. stock dividend of the declared in addition to the regular dividend; Delaware, Lackawanna & Western Railroad (2) it was much larger, exceeding the net Company. This represents surplus earnings profits made in the preceding year; and (3) invested in the stock of two branch roads, it was evidently made for the special pur- now merged with the main road, and about pose of enabling the stockholders to avail $3,000,000, applied in 1907, to the payment themselves of the new subscription. If of maturing bonds issued as part of the capthese concurring circumstances do not make italization. The whole sum represents surthe dividend extraordinary for the purpose plus permanently devoted to capital account. of apportionment, I do not know what could To whom does this dividend belong? It is make it so. The distinction has been ad- strongly contended that it belongs to prinverted to, apparently with approval, by the cipal. I feel compelled, however, by the Court of Errors, in the Lang Case, 57 N. J. state of the authorities to hold that it is, in Eq. 326, 41 Atl. 703, and I do not feel at part, income, and that it should be apporliberty to disregard it. I, therefore, think, tioned between the life tenant and the reon the doctrine of that case, that the divi- maindermen. While the case of Van Doren dend is apportionable between principal and v. Olden, 19 N. J. Eq. 176, 97 Am. Dec. 650, income in the ratio that the surplus at testa- was somewhat, in other respects, shaken by tor's death bears to the surplus accumulated the decision in the Lang Case, it was not thereafter up to the time the dividend was disapproved on this point. On the contrary, declared.
it was, apparently without much or any dis(3-5] The trustees, as a matter of fact, cussion, followed by the Court of Errors in took the dividend and invested it in the Ashhurst v. Potter, 29 N. J. Eq. 625. While new shares, which sell at a very large pre- this latter case stands, there cannot be any mium. They were justified in doing so. doubt as to what this court must do. Since Bouch v. Sproule, 12 App. Cas. 385; Malam it was decided, the question has undergone v. Hitchens (1891) 3 Ch. 578; and so the discussion by the Supreme Court of the Unitnext question is, To whom does this premi-ed States, in Gibbons v. 'Mahon, 136 U. S. um belong? To the life tenant, or to the re- 519, 10 Sup. Ct. 1057, 34 L. Ed. 525, and by maindermen? It has been held repeatedly the courts of last resort in England, in that the right to subscribe for new shares Massachusetts, in Illinois, and other New which command a premium is a part of the England States, in all of which it has been principal, and belongs to the latter. De held that issues of stock based on earnings Koven v. Alsop, 205 Ill. 309, 68 N. E. 930, are part of the principal. On the other 63 L. R. A. 587; Davis V. Jackson, 152 hand, the Court of Appeals of New York, Mass. 58, 25 N. E. 21, 23 Am. St. Rep. 801; in McLouth v. Hunt, 154 N. Y. 179, 48 N. E. Greene v. Smith, 17 R. I. 28, 19 Atl. 1081; 518, 39 L. R. A. 230, and some Western and Hite y. Hite, 93 Ky. 257, 20 S. W. 778, 19 L. Southern state courts have followed PennR. A. 173, 40 Am. St. Rep. 189; Eisner's Ap-sylvania in giving stock dividends to the life peal, 175 Pa. 143, 34 Atl. 577; Richmond tenant. As a matter of logic, it is difficult to v. Richmond, 123 App. Div. 117, 108 N. Y. resist the reasoning leading to the conclusion Supp. 298; Brown v. Brown, 72 N. J. Eq. that stock dividends are, in fact, principal; 667, 65 Atl. 739. That the trustees have ac for the life tenant, as is universally held, is tually subscribed for and taken the shares not, in the absence of fraud or improper concannot alter the legal rights of the parties. duct, entitled to the earnings until they are By giving the life tenant a charge upon the distributed. They are not, in fact, distributed,
LEYDEN V. LAWRENCE
capital account when new stock is, without subrogated pro tanto to the rights of the mortany money equivalent, allotted to the whole gagee under the mortgage. body of stockholders. But discussion is out
[Ed. Note. For other cases, see Insurance, of place, for Ashhurst v. Potter is, as I have Cent. Dig. § 1509; Dec. Dig.' $ 606.* ] said, controlling. I would merely add that 2. INSURANCE (8 581*)-Loss-CREDIT. in most cases, at least, stock dividends can mortgagee of real estate at the expense and for
Where insurance has been taken by the hardly be called regular or ordinary divi- the benefit of the mortgagor, as well as for his dends. They must, as a rule, be extraordi- own protection, the mortgagor in case of loss nary. They represent no particular part of is entitled to have the avails of the policy apthe earnings or surplus. Like all the other plied for his benefit toward the discharge of the
indebtedness. stock, they represent, not only surplus, but
[Ed. Note.-For other cases, see Insurance, the entire property of the company. Being Cent. Dig. 8 1447; Dec. Dig. § 581.*] extraordinary, they must, according to the 3. INSURANCE (8 606*) — PARTIAL SATISFACrule of the Lang Case, be apportioned where TION-PROCEEDS OF INSURANCE Loss-SUBthere has been a surplus accumulated before ROGATION.
Where an insurance clause in a mortgage testator's death.
gave the mortgagee the option to take out insur I think, in the absence of fraud, orance at the expense of the mortgagor, but did some very special circumstance, the appor- not compel him to do so, the mortgagee was at tionment should be made on the basis of the liberty to insure at his own expense and solely company's accounts. To apportion them ac- proof that the insurance effected was for the
for his own benefit; and, in the absence of cording to the judgment of an expert or of joint benefit of the mortgagor and mortgagee, or the court, as to whether the various items at the mortgagor's expense, except the fact that of disbursement are chargeable to current the insurance, in amount, was in excess of the or capital, would be practically impossible. held that the mortgagor was entitled to have Proof on the one side would necessitate the amount of the loss credited on the mortproof on the other. Even if the court, in the gage; and hence the insurer, having paid such case of a foreign corporation, had power to of the mortgagee.
loss, was entitled to be subrogated to the rights compel exhibition of a multitude of items,
[Ed. Note.-For other cases, see Insurance, stretching perhaps over a series of years, Cent. Dig. 88 1504-1511, 1514-1516; Dec. Dig. the length of time required for the exami. 8 606.*] nation, the expense of it, the doubt, after all,
Action by James J. Leyden against Elijah whether items (e. g., relating to the cost of w. Lawrence and others. Decree for comnew bridges, new rails, new machinery, new
plainant. equipment) were properly chargeable to one
See, also, 79 Atl. 615. account or the other, or, if to both, in what proportion, would of themselves be prohib
French & Richards, for complainant. A. ftive of the inquiry.
H. Swackhammer, for defendants. I have discussed another phase of the
LEAMING, V. C. [1, 2] At a former hear. question of stock dividends in Day v. Faulks, 81 Atl. 354, in an opinion filed contempora- / ing touching the sufficiency of a plea which
, by to crossneously with this. What I said in that case bill of defendant, I held as follows: “It is may, to a certain extent, apply here. For
settled in this state that a mortgagee of real the reasons already given, the extraordinary cash dividend of 50 per cent. paid by the estate has an insurable interest therein, and cash dividend of 50 per cent. paid by the when such mortgagee, at his own expense
are, Lackawanna & Western Railroad and solely in his own behalf, procures insurCompany must also be apportioned.  The option to subscribe to shares of ter security of his debt, the insurer, if oblig
ance on the mortgaged property for the betthe coal company is evidently capital. Ited to pay a loss occasioned by injury to such was the right to purchase on favorable terms property, may be subrogated pro tanto to the a new thing. If an option to subscribe to
rights of the mortgagee under the mortgage. new stock of a corporation, whose stock the Sussex County Mutual Insurance Co. v. trustees hold, is capital, so, a fortiori, is an Woodruff, 26 N. J. Law, 541; Nelson v. Bound option to purchase stock they do not hold.
Brook Insurance Co., 43 N. J. Eq. 256 [11
v. Union Insurance Co. (Sup.) 76 Atl. 1053. (79 N. J. E. 113)
It may be said to be equally well settled that LEYDEN 7. LAWRENCE et al.
if the insurance has been taken by the mort(Court of Chancery of New Jersey. Sept. 18, gagee at the expense and for the benefit of the 1911.)
mortgagor, as well as for his own protection, 1. INSURANCE (8 606*) - INTEREST OF MORT- the mortgagor will have the right, in case of GAGEE-SUBROGATION.
a loss, to have the avails of the policy apA mortgagee of real estate has an insur-plied for his benefit toward the discharge of able interest therein, and when he insures the his indebtedness. Pearman v. Gould, 42 N. property at his own expense and solely for his own benefit, the insurer, if obliged to pay a loss J. Eq. 4 [5 Atl. 811].” I further held at that occasioned by injury to the property, may be time that with the fact established by the
•For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key No. Sories & Rep'r Indexes