(Essex Common Pleas, Jan. 19, 1922).
_Insolvent Debtor_--A preferential payment of a bona fide debt by an
insolvent debtor does not bar his discharge under the Act for the Relief
of Persons Imprisoned on Civil Process.
In the matter of Frank A. Vreeland. Application for discharge as
insolvent debtor.
Mr. Richard H. Cashion for Debtor.
Mr. Frederick J. Ward for objecting Creditor.
FLANNAGAN, J.: On June 29th, 1921, Peter M. Dalton recovered a judgment
in tort against Frank A. Vreeland, in the Orange District Court, in the
sum of $211.80 and costs; execution was issued and returned unsatisfied.
On September 9, 1921, the debtor was taken into custody on a capias ad
satisfaciendum and released on bail on the following day. The debtor now
applies to this Court for a discharge as an insolvent debtor under the
Act for the Relief of Persons Imprisoned on Civil Process, having filed
what he claims is "a just and true account of all his real and personal
estate," as provided by Section 6 of the Act.
It appeared from the testimony of the debtor on the hearing before this
Court that, after entry of said judgment and on July 5, 1921, he
executed to his sister, Laura A. Vreeland, a chattel mortgage, for the
sum of $1,505, being the amount of a pre-existing debt for cash advanced
by her to him between August 30, 1920, and the date of the mortgage (to
wit, July 5, 1921). The debtor has no property of any substantial value
remaining, and, while the value of the property mortgaged is questioned,
it represented substantially all his resources and appears to be by no
means equal in value to the amount of the loan against it, $1,505.
The creditor contends that the debtor, having thus made a preference in
favor of his sister since the entry of the judgment, he is not entitled
to a discharge. This is the only question which is involved in the
present application.
The statute provides (Section 8) that the Court shall "consider and
examine the truth and fairness of the account and inventory," and
(Section 11) that, if the Court is "satisfied that the conduct of the
debtor has been fair, upright and just," it may proceed to grant his
discharge upon compliance by him with the further provisions as to
assignment, etc., set forth in the statute.
Under Section 15 of the Act it is provided that if it shall appear that
the debtors have "concealed or kept back any part of their estate or
property, or made any ... mortgage ... with intent to defraud his
creditor ... then ... said debtors shall be refused ... discharge."
The provision which requires the debtor's conduct to be "fair, upright
and just" is restricted to his conduct in making his account and
inventory, and "in delivering up to his creditors all his estate"
(Meliski v. Sloan, 47 N. J. L. 83; Reford v. Creamer, 30 N. J. L. 253),
and, unless the mortgage to the debtor's sister was with intent to
defraud, it would seem he is entitled to his discharge. Of course, if
the mortgage is fraudulent, he would not be entitled to it. Iliff v.
Banhart, 60 N. J. L. 253; affd. 61 N. J. L. 286.
There is no evidence in the case that the consideration paid for the
mortgage by the debtor's sister was fictitious, or was not bona fide, or
that the mortgage was with any promise or expectation of future benefit
to the debtor, or was otherwise improper. On the contrary the testimony
is that the mortgage was given for money advanced. The only objection to
the discharge which the evidence would justify is that the mortgage was
given when the debtor was in failing circumstances while insolvent and
after the creditor's judgment had been entered.
There is nothing fraudulent or wrong, within the meaning of the Act for
the Relief of Persons Imprisoned on Civil Process in the giving of a
preference knowingly by a person in an insolvent condition.
At common law every man, even when in failing circumstances, has a right
to dispose of his property, to pay one honest creditor in preference to
another one. Garretson v. Brown, 26 N. J. L. 437; affd. 27 N. J. L. 644;
Stillman's Ex. v. Stillman, 21 N. J. Eq. 126. If the debt was honestly
due the debtor had a right to select his favorites. There is nothing in
the Act to change the common law on this subject and hence the debtor
was within his legal rights when he made the preference referred to his
sister.
For these reasons the debtor is entitled to his discharge.
N. Y. AND GREENWOOD LAKE RAILWAY CO., et al. v. ESSEX CO. PARK
COMMISSION.
(N. J. Supreme Court, Dec. 10, 1921).
_Certiorari--Railroad Land Acquired by Park Commission by
Condemnation--Disuse of Land by Railroad._
New York and Greenwood Lake Railway Co., a Corporation, and Erie
Railroad Co., a Corporation, Prosecutors, against Essex County Park
Commission. Application for writ of certiorari before Hon. William S.
Gummere, Chief Justice.
Messrs. Parker, Emery & Van Riper (by Mr. John M. Emery) for
Prosecutors.
Mr. Alonzo Church for Respondent.
GUMMERE, C. J. (orally): As I understand the situation with relation to
the law and the facts, it is this:
The Park Commission, having been created by the Legislature for the
purposes specified in the Act under which it was organized, conceived
the idea of acquiring land to be devoted to the uses of a park up in
Verona, and that was done, of course, under a form of resolution, and I
assume, unless I am corrected, that the land to be embraced in the park
was described, in a general way at least, in the resolution. Having
taken that step they started in to acquire the land to be embraced in
the proposed park, and in carrying out that purpose they approached this
railroad company for the purpose of buying from them, for the purposes
of a park, this particular piece of land, but they were unable to make
any arrangement with the company with relation to its purchase and sale.
I say that from my recollection of the provisions in the petition which
was submitted to me, and the accompanying affidavits.
The railroad company at that time, and that was prior to the first of
November, knew that this Park Commission proposed to acquire a tract of
land, of which this particular piece was an integral part, for the
purposes of public recreation, not only for the citizens of Verona and
neighborhood, not only for the citizens of the county of Essex, but for
all the citizens of the State who desired to enjoy that public benefit.
Now, the Park Commission either had or had not the right to acquire this
land in invitum, that is, against the will of the railroad company and
by the exercise of the power of eminent domain given to them by the
State itself, and so if they had desired to do so (and when I say "they"
I mean the railroad company), they could have ascertained just what the
steps were that had been taken by the Park Commission antecedent to the
negotiations for the purchase of this land. They would have ascertained
that this resolution had been passed and that this particular piece of
land was only a part, perhaps a small part of the whole territory which
was to be acquired and devoted as a unit to park purposes, but they did
not do it. They sat still until they received notice that an application
had been made to the presiding Justice here for the appointment of
commissioners to condemn that piece of land, and a representative of the
railroad company appeared here in response to that notice.
Of course, there was nothing that could be done in that particular phase
of the matter which would operate as a stay, because the Judge in a
matter of that kind sits as a mere legislative agent. But, after the
Court had appointed the commissioners, this railroad company, having
neglected to act promptly in the way that I have already suggested, by
certioraring the resolution, and thereby preventing the expenditure of
comparatively large sums, I suppose, of public moneys, still waited; not
only waited, without attempting to halt the proceedings, but they
actually attended before the condemnation commissioners. Counsel says
with a reservation, or with an expostulation, or a protest, or what not,
but they appeared there for some purpose, and I suppose to see what the
award would be. I don't know whether they offered testimony or not as to
the value of the land. That has not been spoken of.
MR. CHURCH: They did offer testimony.
THE COURT: With the apparent idea, then, that they hold on to their
legal rights with one hand, and, if the award justified them in letting
go, they would let go of their legal rights and take the money.
Now the question is whether in that situation this railroad company is
in a position to ask relief from a Judge of the Supreme Court, the
relief being in the shape of a writ of certiorari; and whether or not
the writ will be awarded is a matter resting in the discretion of the
Court. I am not speaking about the question of laches, but, in
determining whether this writ ought to issue, I must take into
consideration all of the circumstances. It appears that the railroad
company, instead of acting promptly, has stood by supinely and seen the
county of Essex expend a large amount of money for the purpose of
acquiring property, the value of which for public purposes would be
greatly depreciated if they were to be prevented from taking this land
as a part of the scheme to be carried out.
So, I would be inclined to say that, in view of that situation, in the
exercise of a proper discretion, I ought to tell the railroad company
that I cannot see my way clear to allow this writ; that it would be
greatly injurious to the people of Essex county and the people of the
State, even, and would produce that injury, although the people and
their representative, the Park Commission, are in no way responsible for
it.
Then there is another reason why I think this writ ought not to be
allowed.
This railroad company received from the State of New Jersey a grant, by
the terms of which it was permitted to acquire lands for the
construction and operation of a railroad between given points. That
grant was not as a matter of course made to the railroad company for the
purpose of benefitting it, but to provide a means of transportation by
which the public would be served; and it was an implied part of the
contract which was created by the tender of the grant and its
acceptance, that this corporation would, within a reasonable time, not
only acquire the land but build the railroad and carry the people of
this State backward and forward across it for the compensation which the
Legislature permitted the railroad company to charge; and for over half
a century they have violated the implied condition of their agreement.
They have acquired the land. They have not attempted, and so far as I
know never will attempt, to devote this land to the purposes for which
alone they were entitled to acquire it. They are holding it out of the
general property of the State, and by doing so prohibiting its use for
the benefit of the State, or any of its citizens, or anybody else. In
other words, it is not land that is being held by this company for
railroad use. It has never been so used by them, since it was acquired
over a half century ago, and, so far as anybody can tell, it is quite
uncertain whether it ever will be used for the purposes for which its
acquisition was permitted.
Now, in that situation, the State comes along and through its agent, the
Essex County Park Commission (for that Commission is a State agent)
says: 'We need this land for public use. You have had your chance to
devote it to that use; you have consistently declined, by inaction at
least, to so devote it, and now we are going to devote it to the uses
and benefits of the State and of the people of that part of the State
located within the borders of the County of Essex,' and I am inclined to
think that this was the situation contemplated by the Legislature which
induced the reservation in the Act of 1921 that railroad companies
should not be permitted to act as dogs in the manger and hold out land
which they cannot use themselves, never have used, and perhaps never
will use, for the only purpose to which they could devote it under their
charter. And so, I think, for this reason also this application should
be denied.