Wilson v. American Palace Car Co.

67 Eq.

of claims against that corporation after its insolvency for the purpose of setting them off against a debt due to the insolvent corporation. The principle is that where there is a statute prohibiting preference or assignments after insolvency, that the date of insolvency fixes the time, and claims purchased thereafter cannot be set off, regardless of the date when a receiver is appointed. Gluck & Beck. Rec. 470.

In my judgment the bank must account for the $2,500 and interest so appropriated by it.

WALLACE WILSON et al.

υ.

AMERICAN PALACE CAR COMPANY et al.

[Filed June 18th, 1904.]

1. The general rule is that an objection for want of parties, if apparent upon the face of the bill, should be taken by demurrer; but if not appearing in the bill itself, then by plea or answer.

2. Such an objection can also be taken on the hearing and the court may, of its own motion, arrest the suit for want of parties.

On motion to dismiss the bill because of the absence of a party as defendant, without which a decree cannot be made.

Mr. Robert H. McCarter, attorney-general, for the motion.

Mr. Edward Q. Keasbey, contra.

REED, V. C.

The general rule is that an objection for want of parties, if apparent upon the face of the bill, should be taken by demurrer; but if not appearing in the bill itself, then by plea or answer.

1 Robbins.

Wilson v. American Palace Car Co.

Such an objection can also be taken on the hearing, and the court can, sua sponte, arrest the suit for want of parties. Booraem v. Wells, 19 N. J. Eq. (4 C. E. Gr.) 87, 95. Where there is no demurrer for want of parties, and the objection is not taken until the hearing of a general demurrer to the equity of the bill, the court will not listen to the objection; but if it can do so, will dispose of the cause without requiring formal parties to be joined. This motion to dismiss is not made under the rule in the stead of a demurrer, but under what is claimed to be a general equity rule of practice. The motion can amount to no more than a direction of the attention of the court to an alleged defect, which is so radical that the court, of its own motion, would hold the suit until the defect could be remedied; or, if irremediable, would dismiss the suit.

I will consider the status of the suit in this view. The gravamen of the suit is tersely and clearly stated by ViceChancellor Emery, when the cause was before him upon a plea (64 N. J. Eq. (19 Dick.) 534), and appears also in the opinion of the court of errors and appeals, reported in 65 N. J. Eq. (20 Dick.) 720. A stockholder of the American Palace Car Company, a Maine corporation, sued in behalf of the corporation. The bill stated that a majority of the Maine company had conspired to dispose of its assets to the American Palace Car Company, a New Jersey corporation, which company was to give the Maine corporation one-half of its stock and to assume the debts of the Maine company; that the Maine corporation had, in collusion with individual defendants, transferred the assets of that company to the New Jersey company, and that the New Jersey company had not given one-half of its stock to the Maine company or paid its debts, but had put its stock into the hands of still another American Palace Car Company, a New York company organized by one Denham, who was treasurer of the company. with the direction to deliver the stock and assets to a man named Hands, on payment of $60,000, who proposed, in connection with the treasurer of the Maine company, to mortgage all the assets for $250,000. The suit is brought against the New Jersey corporation, and those who formed it, to have them

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Wilson v. American Palace Car Co.

67 Eq.

restrained from disposing of the assets and compelled to restore them to the Maine company.

These defendants filed a plea to the jurisdiction of this court because they were not served with process, not being within the limits of the state. This plea was held good by the court of errors and appeals. By this decision these defendants are not parties to the suit, and the dismissal of the suit is asked for upon the ground that without them the court could not make a decree in the cause.

The dismissal of the suit would leave the complainants in the predicament that if they should bring suit in Maine they would be liable to be dismissed when confronted with the same objection by the New York and New Jersey defendants, and if they should bring suit in New York, to the same plea interposed by the New York and New Jersey defendants. It is for the reason that the rule respecting the necessity of having in all the parties whose presence is essential for a complete settlement of the rights that the doctrine is modified when it appears that a person who should be a party is out of the jurisdiction of the court.

The text of Mr. Daniel's work on Pleading and Practice, and the language of Lord Redesdale upon this point, appear in the opinion of Mr. Justice Dixon already mentioned. I think that the defendants who have refused to come in have no standing to ask for a dismissal of the bill.

I may remark, however, that the doctrine promulgated in the case of Minnesota v. Northern Securities Co., 184 U.S. 199, should not be applied to suits in the state courts, at least in this case in this court.

The motion is overruled.

1 Robbins. East Newark v. N. Y. and N. J. Water Supply Co.

THE BOROUGH OF EAST NEWARK

υ.

THE NEW YORK AND NEW JERSEY WATER SUPPLY

COMPANY et al.

[Filed May 25th, 1904.]

On an interpleader bill it appeared that the city of Jersey City had made a contract, while it had a water-supply of its own, to supply another municipality-the borough of East Newark with water for public and domestic purposes. Its own supply became unfit for use and so it contracted with the East Jersey Water Company for another supply, but for its own needs only. The East Jersey company furnished this supply, and also furnished a supply to the borough. The supply to the borough ran for a short distance through a pipe belonging to Jersey City. The East Jersey company charged Jersey City at the rate of $35 per million gallons, not only for so much water as Jersey City and its inhabitants consumed, but also for the water furnished the borough. Jersey City charged the borough at the rate of $90 per million gallons for the water it received. Although the contract between the borough and Jersey City expired in July, 1902, the arrangement was allowed to continue, without contract, until July, 1903, when the assignees of the East Jersey company notified the borough that it must pay the price of the water ($90) to them.Held, that Jersey City, having neither the power to make a contract to supply another municipality with water not its own, nor an express contract which purported to do so, nor water of its own to furnish, could not recover the price of the water furnished to the borough. Held further, that although neither the East Jersey company nor its assignees had any express contract with the borough to furnish it with water, yet inasmuch as that company had actually supplied the water, and inasmuch as the borough had, in its interpleader bill, admitted its receipt and its liability to pay for it, the price of the water should be adjudged to belong to the company or its assignees. Held further, that out of the moneys brought into court, Jersey City was entitled to compensation for the use of its pipe.

Mr. George L. Record and Mr. Robert Carey, for Jersey City.

Mr. Herbert Boggs and Mr. Gilbert Collins, for the New York and New Jersey Water Supply Company and New Jersey Suburban Company.

East Newark v. N. Y. and N. J. Water Supply Co.

STEVENS, V. С.

67 Eq.

This is an interpleader suit. The borough of East Newark brings into court the sum of $2,603.81, which it admits that it owes for water supplied to it between July 8th, 1903, and October 8th, 1903. The bill alleges that it is uncertain whether it owes the money to the city of Jersey City or to the New York and New Jersey Water Supply Company and the New Jersey Suburban Company, the two latter claiming jointly under an assignment from the East Jersey Water Company. Jersey City and these two companies, whom I will hereafter designate as such, have filed cross-bills, on a decree of interpleader, and the question is which has the better right to the money paid into court.

The facts are somewhat complicated and will have to be stated at length. In the year 1885 Jersey City took its watersupply from the Passaic river, at Belleville. It was pumped from the Passaic into a reservoir near the junction of Belleville turnpike and Kearny avenue, and from thence it flowed through pipes across the meadows to Jersey City Heights. In that year it made a contract with the town of Harrison to supply that town with water. To enable it to do so it was obliged to construct a twenty-inch main from one of its own mains in the Belleville turnpike through Kearny avenue, in Kearny township, that township lying between the turnpike and the town of Harrison.

In 1887 Jersey City made a contract with Kearny township to supply it with water for the term of ten years, at $90 per million gallons. This water was also supplied through the twenty-inch main. The contract, by its terms, expired July 12th, 1897. Prior to the expiration of this contract, and some time in July, 1895, the borough of East Newark was set off from Kearny township and became a separate municipality, but the inhabitants of the borough continued to receive, and Kearny township continued to collect for water as before, until March, 1897, when Kearny township notified the borough that the water supplied through its pipes to the borough would be discontinued after July 1st.