livering the opinion, puts in the forefront as the ground of the decision in Dearle v. Hall, the apparent possession left in the cestuí que trust which enables him to commit a fraud. Lord Macnaughten in examining Dearle v. Hall says that the Master of the Rolls on the first hearing relied principally on the ground of the fault of the first assignor in not giving notice, which caused the mischief complained of, but that in the second hearing this consideration was fortified by others of more or less weight, and by analogies more or less imperfect and incomplete. These were that notice to the holder of an equitable fund was tantamount to possession, and that notice to the trustee charged him with responsibility to the giver of the notice, and that everything must be done toward giving possession that the subject admitted of. Lord Macnaughten was inclined to question the convenience of the rule in Dearle v. Hall and was not disposed to extend it, but, in view of the fact that it had remained unaltered for 60 years, considered it beyond the power of the court to alter. on the faith of ownership of that which | case it is said that Lord Lyndhurst, in debelongs to the first assignee. Choses in action and equitable interests in funds held by another do not admit of tangible actual possession on transfer of title, but the purchaser of such property must do everything toward acquiring possession which the subject-matter will admit of, and notice to the debtor or trustee is for many purposes tantamount to possession. The effect of failure to give notice is that the assignee "is guilty of the same degree and species of neglect as he who leaves a personal chattel to which he has acquired a title in the actual possession and under the control of another person." In subsequent cases which followed the rule of Dearle v. Hall, it became essential to define with particularity the equitable grounds upon which the cases rested, and in Ward v. Duncombe, a House of Lords Case (1893) App. Cas. 369, all of the previous decisions were subjected to a vigorous and searching analysis by able counsel and by Lord Chancellor Herschell and Lord Macnaughten. Sir John Rigby for the appellants, relying on some expressions in Dearle v. Hall, insisted that the real equitable basis of the priority by notice was its ef- Ward v. Duncombe seems to have settled fect as operating on the fund or res in the that the basis of the rule in Dearle v. Hall hands of the trustee, and thus making a trus- was the consideration of the effect of negtee for the assignee, instead of the assignor. ligence or default in the prior assignee in But Lord Herschell, after a careful examina- not giving notice to the trustee. This neglect tion of this opinion of the Master of the left the assignor as still the apparent owner Rolls in Dearle v. Hall and of that of Lord of the fund, which might be used by him to Chancellor Lyndhurst on appeal, which sub-perpetuate a fraud on subsequent purchasstantially concurred in all the reasons given ers or incumbrancers which they would have by the Master of the Rolls, says (page 378): "It is impossible, I think, to read these judgments without seeing that the leading consideration which induced the court to lay down the rule that he who gives notice has a better equitable right than a prior incumbrancer who has given no notice was this: That any other decision would facilitate fraud by the cestui que trust and cause loss to those who might have used every precaution that was possible to ascertain, before parting with their money, that the title they were taking was a valid one, and who might have done everything they could to render that title secure. It is true that reference was made to the fact that the party giving notice had done all that was necessary to perfect his title, whilst he who had not given notice had not perfected it. But even here I think the point upon which stress was laid was this: That the party giving notice had taken the property out of the apparent ownership and possession of the cestui que trust." no means of protecting themselves against, and the fraud, if committed, was thus due to neglect. This is the substantial ground, I think, now adopted by all the courts which adhere to the rule as its true equitable basis, the other considerations mentioned in Dearle v. Hall not being relied on to any extent, and the difficulties and complications resulting from the priority being put on the grounds of notice as necessary for perfection of title, or of constituting the trustee a trustee for the assignor, probably make these grounds untenable. To the learned discussions in the cases I will add only one suggestion in favor of the English rule. The assignability of equitable interests is a purely equitable doctrine, and seems to be based on the view that free transfer ought to be an essential right of the owner of equitable interests. The value of this transferable right will be substantially impaired in the hands of the transferror, unless the transferee can be protected by the exercise on his part of reasonable and ordinary diligence. A case in the House of Lords subsequent If such transfer is to be subject to prior to Dearle v. Hall was Foster v. Cockerell, transfers of which neither the trustee nor 3 Cl. & Finn. 456 (1835), and this was refer- subsequent transferee has notice, and of red to as having finally settled the rule which the assignor is the only part to the that, as to choses in action and such inter- transaction who has knowledge, the purchasests in land as can only reach the benefi-er of the interest must for his protection ciary in the shape of money, priority of against prior transfers depend wholly on notice determines the title. And as to this the honesty of the assignor, and cannot for tify his judgment in making the purchase by any inquiries. This condition necessarily affects unfavorably the general status of the value of equitable interests for purposes of transfer, and to that extent the right of transfer. The extent and necessity of assignments of such interest has become so great in the transactions of modern business that purchasers in good faith and exercising due care must be protected, if the full or reasonable value of the interests is to be utilized. Several decisions in this state are relied on as giving priority to successive assignments in order of time, but on examination I think it will be found that the status now in question was not directly or fairly involved. Kennedy, Ex'r of Lure, v. Parke, 17 N. J. Eq. 415, 417, 418 (1864), is usually cited as first establishing this rule. This was a petition in the orphans' court, filed against the executor under the statute for the recovery of a legacy. The petition was filed by an assignee of the legacy, and the assignee and the executors were the sole parties to the action brought under the Statute of 1855 (P. L. p. 348) § 17 (Gen. Stat. p. 2393, § 165). The defense set up by the executor was payment of the legacy to a subsequent assignee without notice of the prior assignment. It was found by Green, Ordinary, that the money was not in fact paid by the executor to the subsequent assignee until after notice. The learned ordinary in reference to the validity of the defense, if made out, said: "It was held by the Chancellor in King v. Berry, 3 N. J. Eq. 54 (Vroom, Ch., 1834), that a claim to a legacy is essentially an equitable, not a legal, claim, and that the assignment must pass the whole right of the assignor; that there does not remain in the assignor after the assignment of a legacy, a distinct subsisting right, capable of being assigned, but that the entire interest passes. Recognizing this principle, it is difficult to perceive how any interest, legal or equitable, could have passed by the second assignment, or how the payment of the legacy to a party having neither a legal nor equitable title to it can constitute a good defense to the action." This statement was rested on the decision in King v. Berry, which was a bill by the assignee of a legacy against the executor to recover the legacy, and on final hearing the question was raised whether to such a bill the legatee and assignor was a necessary party. No suggestion of any other assignment was made, and manifestly decree against the executor in favor of the assignee and payment of the decree without notice of any other assignment absolved the the executor absolutely. The question of priorities was not involved, and the learned ordinary in saying that under King v. Berry (which was a mere rule of practice as to parties) payment by an executor or trustee been no notice of the prior assignment "would not be a good defense to the action," must be fairly taken to have meant not a good defense to the statutory action in the orphans' court against the executor. For that it is a good defense in equity is I believe held by all courts, and as showing that he did not intend to pass upon the difficult question of priorities between successive assignees as effected by notice, a question which was not discussed or touched in the decision, the learned ordinary further said (page 417 of 17 N. J. Eq.): "It would seem that, if the executors have any defense upon this ground, it is purely an equitable defense and available only in a court of equity." And, as bearing upon his intention to decide this equitable question, it should be recalled that in the earlier case (Superintendent of Public Schools v. Heath, 15 N. J. Eq. 27 [1862]), he had himself as chancellor in settling the claims of successive assignees of a chose in action applied the doctrine of priority according to notice. He certainly did not intend to qualify in any way this well-considered case. The circumstances of the case and the scope and express limitations of the decision were such that I do not think it can be taken as considering. or as intending to decide, the question now in hand, or as controlling the present case. Kamena v. Huelbig, 23 N. J. Eq. 78, 80 (Zabriskie, Ch., 1872), is the next case relied on. This was a foreclosure bill by an assignee of a bond and mortgage in which the mortgagor set up and claimed credit for partial payment to a prior assignee of the mortgage. The subsequent assignment was made before this payment but while the bond and mortgage were in the hands of the prior assignee, and the second assignment was recorded before the payment. The payment by the mortgagor after the assignment was a payment to the prior assignee of the amount for which he held the bond and mortgage as collateral security, and this amount was still due at the time of the second assignment. The chancellor said "that the fact that the mortgagee did not have them (the bond and mortgage) to deliver at the assignment to the complainant was notice that they were held by some one as owner or claimant." He further said: "But no notice to him was required. He took them subject to all equities in this respect, that the title acquired by complainant was such as his assignor had at the time-that is, subject to the pledge—and that by the payment of the debt for which it was pledged the mortgagor stood in the place of the pledgee, as her assignee in equity, and the complainant had no right in law or equity to any benefit from the payment." If the case be considered as one involving the priorities of successive assignees of a As lands, then the doctrine of notice has no der was presented to the complainant." application. 2 Pom. Eq. §§ 685-713. There to the claimants, under lien law notices, the was no discussion whatever of the question statute expressly requires notice to the ownnow involved nor any reference to author-er in order to complete the lien, but, as to ities, nor was it necessary for the decision, the priorities under orders, the general rules which is plainly to be supported upon the of equity control. The priority as between ground of notice and bad faith in the second claimants under orders does not seem to assignee, if the case be treated as the as- have been taken to depend on any circumsignment of a chose in action. The second stances in the case except the respective mortgagee had constructive notice of the dates of notice, and it may have been, as sugprior equitable assignment. Spencer V. gested by Vice Chancellor Pitney in Board of Clarke, 9 Ch. Div. 143 (1878, V. C. Hall); In Education v. Duparquet, 50 N. J. Eq. 243, 24 re Werniger's Policy (1910) 2 Ch. 291 (Por- Atl. 922, that the orders were all presented ter, J.). The other cases relied on are: in the order of their respective dates. AlBoard of Education v. Duparquet, 50 N. J. though, therefore, this general direction has Eq. 234, 24 Atl. 922 (Pitney, V. C., 1892); controlled the practice in subsequent simiMiller v. Stockton, 64 N. J. Law, 614, 622, lar cases, the case cannot be considered as of 46 Atl. 619 (Err. & App. 1900); Cogan v. itself controlling the present case. In ShanConover Mfg. Co., 69 N. J. Eq. 358, 372, 60 non v. Hoboken, 37 N. J. Eq. 123, 127 (1883), Atl. 408 (V. C. Garrison, 1905), on appeal affirmed on appeal for reasons stated below, 69 N. J. Eq. 811, 64 Atl. 973, 115 Am. St. Vice Chancellor Van Fleet adopts the rule of Rep. 629; U. S. Fidelity & Guarantee Co. v. priority laid down in the Heath Case, but it Newark, 76 N. J. Eq. 230, 74 Atl. 192 (V. appears by the case that the conflict was beC. Howell, 1909). All of these are cases tween claimants under orders which were where the question of priority arose between presented on or shortly after their dates and prior assignees who had failed to give notice subsequent claimants under lien law notices, and subsequent claimants under the debtor so that no occasion for the discussion of the standing in the relation of creditors under present question arose. In other cases cited statutory liens and by involuntary assign- the prior assignee had in fact given notice ment of the debtor's rights. As decisions of his assignment and the effect of the genupon the present question, these are plainly eral statement of the rule as to priorities not controlling. made in some of the opinions, made without On the other hand, several decisions are any special discussion, is qualified by this relied on by counsel as affirming the rule of fact. Among these are Kirtland v. Moore, priority according to notice. These all relate 40 N. J. Eq. 106, 2 Atl. 269 (Van Fleet, V. C., to the successive assignments of choses in 1885); Bank of Harlem v. Bayonne, 48 N. J. action, which, so far as requiring notice is Eq. 246, 252, 21 Atl. 478 (Green, V. C., 1891), concerned, are to be treated as standing upon affirmed on appeal for reasons stated Mayor the same footing as the assignments of equi- of Bayonne v. Bank of Harlem, 48 N. J. Eq. table interests in money in the hands of trus- 646, 25 Atl. 20. Considering the effect of tees. Both are personal equitable rights of all the decisions in our own courts up to the action, as distinguished from liens and other present time to which I have been referred equitable interests in lands. 2 Pom. Eq. or which I have found, I reach the conclu713. The leading case is Superintendent of sion that in none of them has the precise Public Schools v. Heath, 15 N. J. Eq. 22, 30 question now in dispute been directly involv(1862). In this case Chancellor Green settled ed, considered and decided, and that the decithe rights of claimants to an amount due on sion of the question is not controlled by preca building contract by the complainant, edents heretofore established. Considering which was paid into court on an interplead- the question as here res nova and to be seter. The question principally discussed here tled on principle, I think the sound equitable was as to the preference claimed between rule is that notice by a prior assignee to the certain classes of creditors: (1) Those claim-trustee is necessary in order to protect him ing the fund under notices given under the against a subsequent assignee who is a purmechanics' lien law, and (2) those claiming chaser for value in good faith and without under orders for payment out of the fund notice. The equitable ground upon which given by the debtor, and, as to the latter the rule rests is the one adopted finally and class, also (3) the question was raised wheth- after much discussion, viz., that the failure er preference should be given to those credit- of the prior assignee to give notice is a negors whose orders were given for debts incur-ligence which leaves the assignor in a posired on the building, over those whose debts tion where by his apparent ownership he is were contracted on other accounts. The de- able to deal with the property in a manner cision was that there was no preference of to defraud or injure any subsequent purchaseither one of these three classes over the other notwithstanding all due inquiry made. er; that all the claimants, in whatever class, were to be paid according to the priority of their respective orders or notices. The direction is: "Each creditor is entitled to be paid in the order in which his notice or or Placed upon this ground of negligence, the doctrine of notice as applied in this case would seem to afford a further illustration of the general principle as to notice stated by Mr. Justice Garrison in Fisher v. Bull, 52 N. J. Eq. 298, 309, 29 Atl. 440, that "at bottom the doctrine of notice is part of the law of negligence." It has not been disputed in the case that all of the subsequent assignees were purchasers for value and without notice of the previous assignment to L. F. Robertson & Sons. On behalf of the defendant Bernheim two judge of the district court in granting an ad- By agreeing upon the state of the case on appeal from a district court, the attorney in stated are correct, and that the legal quesadmits nothing more than that the facts theretions the appellant seeks to have the Supreme Court pass upon are truly stated. It is not a waiver of the right to move to dismiss the appeal, upon the ground that there is no final judgment. [Ed. Note.-For other cases, see Appeal and Error, Cent. Dig. §§ 3133-3136; Dec. Dig. 791.*] Action by Daniel MacMullen against Nor From an order of the district court granting an adjournment, defendants appeal. On motion to dismiss appeal. Dismissed. further objections were raised to the claim of L. F. Robertson & Sons: First, that their assignment was not an assignment effecting a present transfer of an interest in the fund, but a mere order to pay a specific sum of money out of that interest, and which was not effective until presented to the executor or trustee of the fund. This objection is not well founded in fact, as the document contains the clause: "I hereby assign, quit-man W. Kingsley and Helen McKeckney. claim and release so much of my interest in said estate as may be necessary to pay said claim of $4,000 with any accrued interest." This clause follows the order on the estate to pay. As appears by the proofs, this assignment was executed and delivered to the assignee on May 14, 1901. It was, however, then dated, "Feb. 1, 1906," being the date on which George's $30,000 legacy and his share TRENCHARD, J. This is a motion to disin the estate was payable, if he survived. miss an appeal taken by the defendant McThe assignee received at the same time as Keckney from the action of the judge of the further security policies of insurances on second district court of Bergen county, grantGeorge's life. The document as an assigning an adjournment of the trial at the plainment was intended to be effective from the tiff's request. date of delivery, but the payment was not to be made until the date fixed by the order. Argued November term, 1911. before TRENCHARD, MINTURN, and KALISCH, JJ. Joseph H. Lecour, Jr., for the motion. Addison Ely, opposed. The suit was brought by David MacMullen against Norman W. Kingsley and Helen McKeckney. On the return day of the summons, the attorney for the plaintiff asked for an adjournment, and stated that his witnesses were not in court. The attorney for the defendant McKeckney stated that his client was in court, and moved the trial of the case, or, in default thereof, for a nonsuit, and opposed the adjournment. The judge granted an adjournment. The defendant McKeckney thereupon gave notice of an appeal. There was no trial and no final judgment. The plaintiff now moves to dismiss the appeal. [13] A further objection was made that the present defendant "L. F. Robertson & Sons," a corporation subsequently formed, had not shown title to the assignment which was made to the firm of "L. F. Robertson & Sons." No written assignment from the firm to the corporation has been produced, but due proof has been given that it was made, and cannot now be found, and that this claim against George B. Jenkinson was part of the assets of the firm in fact taken over by the corporation. An assignment of the claim against Jenkinson is valid by a delivery of the evidences of debt without writing, and [1] We are of opinion that the appeal must the security would in equity follow the claim. be dismissed. Section 1 of the act of April 3, I will advise a decree settling the priori- 1902 (P. L. p. 565), as amended by chapter ties on the above basis, and on the settlement | 138 of P. 'L. 1910, p. 236, providing for apof the decree will hear parties interested on the question of interest, if desired. 82 N. J. L 258) MacMULLEN v. KINGSLEY et al. peals from district courts, declares that, "if either party in any action or proceeding in any district court of this state shall be dissatisfied with the determination or direction of such district court, in point of law or upon the admission or rejection of evidence, (Supreme Court of New Jersey. Jan. 29, such party may appeal from the same to the 1912.) (Syllabus by the Court.) Supreme Court," upon terms prescribed in the act. It is implied, although not express 1. APPEAL AND ERROR (§§ 66, 78*)-APPEAL-ed in the act, that the appeal shall not be ABLE ORDERS-ADJOUrnment. taken until after final judgment be rendered Under the act of April 3, 1902 (P. L. p. in the district court. Katzin v. Jenny, 74 N. 565), as amended by chapter 138 of P. L. 1910, J. Law, 131, 65 Atl. 192; Smith v. Oathout, p. 236, an appeal cannot be taken to the Su-75 N. J. Law, 438, 67 Atl. 1023. The action preme Court until after final judgment is ren dered in the district court. The action of the of the judge of the district court in granting an adjournment is not such a final judgment. 2. DIVORCE (8 76*)-JURISDICTION OF PARTherefore the appeal was prematurely taken. [2] Nor is there any merit in the contention that the mere agreement by the plaintiff's attorney to the state of the case is a waiver of the right to move to dismiss the appeal. Section 2 of the act of 1902 (P. L. p. 566) declares that "such appeal shall be in the form of a case agreed on by both parties or their attorneys, and if they cannot agree, the judge on being applied to by them or their attorneys, shall settle the case and sign it, and such case shall be transmitted by the appellant to the clerk of the Supreme Court," etc. The function of the state of the case is to set forth how the disputed legal questions arose, and how they were disposed of by the court below. Katzin v. Jenny, 74 N. J. Law, 131, 65 Atl. 192; O'Donnell v. Weiler, 72 N. J. Law, 142, 59 Atl. 1055. The defendant's appeal, and the giving of the security required by the statute operated as a stay of proceedings in the district court. Chapter 138 of P. L 1910, p. 236. As we have pointed out, it thereupon became the duty of the appellant to transmit to the clerk of the Supreme Court a state of the case. By agreeing upon such a state of the case, the attorney admits nothing more than that the facts therein stated are correct, and that the legal questions the appellant seeks to have the Supreme Court pass upon are truly stated. It is not a waiver of the right to move to dismiss the appeal upon the ground that there is no final judgment. In these respects, the agreement upon the state of the case by the parties has no other or further effect than would the case settled by the district court judge. The appeal will be dismissed, with costs. (79 N. J. E. 493) HENRY V. HENRY. (Court of Chancery of New Jersey. Jan. 11, 1912.) 1. APPEARANCE (§ 19*) - JURISDICTION AcQUIRED. Divorce Act 1907 (P. L. p. 476) § 6, provides that jurisdiction in divorce may be acquired over a resident by a personal service. Section 7 provides that, when the defendant cannot be personally served, jurisdiction may be obtained by publication, followed where practicable by service on or notice to the defendant without the state. In an action for divorce against a nonresident, a citation was issued and sent to plaintiff's solicitor, and was returned into court with service acknowledged by defendant's solicitor, and appearance was also entered by defendant's solicitor and an answer to the action filed. Held, while in ordinary causes the entry of an appearance and the filing of an answer would give jurisdiction, in divorce the proceeding must be strictly adverse and in accordance with the statute, so that no jurisdiction was acquired over the defendant. [Ed. Note. For other cases, see Appearance, Cent. Dig. 88 79-90; Dec. Dig. § 19;* Divorce, Cent. Dig. §§ 266, 267.] TIES. Section 9 of the divorce act of 1907 (P. L. p. 478), which provides that the process and procedure in divorce causes shall be the same as other chancery causes, except so far as other process and procedure is prescribed, is necprescribe the process necessary to obtain juessarily qualified by sections 6 and 7, which risdiction over a defendant, and cannot, therefore, be held to authorize service as in ordinary equity proceedings. Dec. Dig. § 76.*] Petition by Fred M. Henry against Lena 1 HOWELL, V. C. The petition in this cause was filed on May 26, 1911. On the same day a citation was issued and sent to the petitioner's solicitor. It was returned into court on November 27, 1911, as appears by the clerk's indorsement thereon, with an acknowledgment of service signed by the defendant's solicitor in the following words: "Due and legal service of the within citation and certified copy of petition is hereby acknowledged this 20th day of June, 1911, for the defendant." On August 4, 1911, an appearance was entered with the clerk by the defendant's solicitor, and on the same day an answer was filed setting up matters in defense which raised a contentious issue, and the cause was duly brought on for final hearing. At the time of the filing of the petition, and from thence hitherto, the petitioner was and has been a resident of New Jersey and the defendant a resident of New York, so that personal service could not be had on her. [1] The sixth section of the divorce act of 1907 (P. L. p. 476) provides as follows: "For purposes of divorce, either absolute or from bed and board, jurisdiction may be acquired by personal service of process upon the defendant within this state under the following conditions," etc. Section 7 provides: "When the defendant cannot be served perSonally with process within this state, and when at the time of the commencement of the action the plaintiff is a bona fide resident of this state, jurisdiction for the purpose of divorce, whether absolute or from bed and board, may be acquired by publication, to be followed where practicable by service upon or notice to the defendant without this state, or by additional substituted service upon the defendant within this state as prescribed by law or rules of court under the following conditions," etc. Neither of these methods of acquiring jurisdiction over the defendant was adopted. On the contrary, the defendant's solicitor on June 20, 1911, acknowledged service of the citation by an indorsement thereon made on that day, and on August 4, For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key No. Series & Rep'r Indexes |