Van Order v. Johnson

Decided February 1, 1932

Supreme Court of New Jersey · decided 1932-02-01

Decided 1932-02-01

Per Curiam.

¶1 The decree appealed from will be affirmed, for the reasons expressed-in the opinion of Yice-Chancellor Church.

¶2 For affirmance — The Chiee-Justice, Trenchard, Parker, Campbell, Lloyd, Case, Bodine, Daly, Donges, Yan Buskirk, Kays, Heteield, Dear, JJ. 13.

¶3 For reversal — None.

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Case posture

Posture: On appeal from a decree of the court of chancery advised by Vice-Chancellor Church, who filed the following opinion: The facts as alleged in the oral stipulation in open court, and supplemented by the testimony taken, seem to be: In the spring of 1926, Alderman S. Newbern was a building contractor. He had dealings to a considerable extent with Mr. Van Order and his lumber concern, and he owed him considerable money. Ames Crane are really the interested parties in the suit, in other words, the parties that are financially interested, and Louise G. Johnson is their stenographer. Prior to May 1st, 1926, Mr. Newbern had built several houses in Verona, and before that date he sold one of these houses to Catherine Muir, and subsequently, about the same time, he sold another house near it on the same street to John Howard Smith and Eleanor Smith, his wife. According to the contract, a small amount of cash was to pass; they were to be sold subject to a first mortgage of approximately $7,000 and on the Muir deal a purchase-money second mortgage of $2,000 was to be given back to Newbern, and on the Smith deal a purchase-money second mortgage of $2,500 was to be given back to Newbern. Before the title was closed, and, in fact, while the negotiations for these sales were going on Mr. Van Order demanded that these two purchase-money mortgages, one for $2,000 and the other for $2,500, should, when executed, be assigned for a pre-existing debt due to Van Order or his concern as had been done before in similar cases. No money was advanced on the face of these mortgages at the time. Ames Crane were employed by the respective purchasers, Muir and Smith, to search the titles and protect them in the transactions. On February 16th, 1926, Alfred J. Hoffman, Incorporated, filed a lien claim against Mr. Newbern, owner and builder, Orange National Bank, and Mayer A. Mayer, mortgagee, claiming a balance of $1,535 covering the Smith tract. On the same day they filed a similar lien with the parties plaintiff and defendant, covering the Muir tract, claiming the same amout due. After negotiations between Mr. Newbern and the United States Fidelity and Guaranty Company, the latter agreed to issue two bonds, in conformity with the mechanics' lien statute, in order to cancel the two Hoffman liens; and in order to get the United States Fidelity and Guaranty Company to issue two bonds on the Hoffman liens, two separate agreements, which are in the same language as the Pierce, Butler Pierce agreement, were signed, wherein John J. Van Order and Alderman S. Newbern entered into a bond with the United States Fidelity and Guaranty Company that they would pay any judgments that were obtained in these Hoffman cases on the face of that bond after it was delivered and put on file in the office of the United States Fidelity and Guaranty Company. The United States Fidelity and Guaranty Company issued proper bonds under our lien law, which were sent to the county clerk, and the two Hoffman liens were properly canceled of record. Title to the Muir piece was then passed, bond and mortgage executed, and assignment was made to May Van Order, who is the wife of John J. Van Order, but the bond and mortgage and the unrecorded assignment were left with Ames Crane until after the passage of the Smith title and after the Pierce, Butler Pierce matter came to a head. On May 12th, 1926, Pierce, Butler Pierce Manufacturing Corporation filed a mechanics' lien in the Essex county clerk's office against A.J. Hoffman, contractor, Alderman S. Newbern, owner, and the various mortgagees. This covered both the Muir tract and the Smith tract. After negotiations between Mr. Van Order and Mr. Newbern, Mr. Newbern came to the United States Fidelity and Guaranty Company and made arrangements with them for a bond similar to the one in the Hoffman case, which was prepared and signed by Newbern and Van Order, in which they both agreed in any and all facts in accordance with the terms of the bond, to pay any judgment that was recovered by Pierce, Butler Pierce. The United States Fidelity and Guaranty Company agreed that on receiving the bond they would, in turn, issue their bond as they did in the Hoffman case and cancel the lien in the Pierce, Butler Pierce case. Some error took place in the office of the United States Fidelity and Guaranty Company, and the agreement which Mr. Van Order and Mr. Newbern made with the United States Fidelity and Guaranty Company was attached to their printed matter. Their name, United States Fidelity and Guaranty Company, was added to that particular bond, and the bond was given to Mr. Newbern, who put it on record in the county clerk's office. The county clerk marked on the margin of the lien, the bond was filed July 8th, 1926: `United States Fidelity and Guaranty Company guarantees this lien in the event of judgment.' The second title, namely, the Smith title, was then passed by Ames Crane, they having assured themselves that this second bond had been filed and the notation made on the lien as stated above. Subsequent to this and with the assurances from the record, which have been indicated by the previous agreement, Ames Crane then, a month or so afterward, delivered the bonds, mortgages and assignments to Mr. Van Order. Between a year and a half and two years later, the United States Fidelity and Guaranty Company, under a statute in which such practice is permissible, made a motion to discharge the lien claim of Pierce, Butler Pierce, because it had not been diligently prosecuted within the year. When the consideration of the motion came before Judge Smith, October 5th, 1928, this defect in the bond was found, and it was found, of course, that the bond instead of running to the plaintiff, ran to the United States Fidelity and Guaranty Company; therefore the United States Fidelity and Guaranty Company had no standing in court and an order was entered by Judge Smith, the pertinent language of which is as follows: `And the matter being argued by the respective counsel and the attorney for plaintiff contending that the bond filed herein was not in form required by statute, but was given to the United States Fidelity and Guaranty Company instead of to the plaintiff herein, and the said bond not running to the plaintiff, the United States Fidelity and Guaranty Company is therefore not a party to the above entitled proceedings; it is on this 5th day of October, 1928, ordered that the motion of the United States Fidelity and Guaranty Company to dismiss the above proceedings and to discharge the lien and the bond filed herein, be and the same is hereby denied. William A. Smith, judge.' Thereafter, not having a bond to look to, the Pierce, Butler Pierce people entered two judgments on each separate tract of land. The first was recorded in the circuit court in book 106, page 241, Pierce, Butler Pierce Manufacturing Company v. A.J. Hoffman , contractor, Alderman S. Newbern, owner, and the various mortgagees. Judgment entered December 22d 1928, for $885.45. The other judgment was entered December 19th, 1928, between the same parties plaintiff and the same parties defendant, marked after verdict book 196, page 211, damages $1,600. After the judgments were entered, execution was threatened which was to sell the properties of Mr. Smith and Mr. Muir, which Ames Crane had been hired to protect, and agreed to protect. They secured the figures in settlement and made demand on Mr. Van Order for payment. When Van Order refused payment and thereupon Ames Crane paid the sum of $1,797.67, an assignment was taken on the judgments from Pierce, Butler Pierce to Louise G. Johnson, defendant, who is an employe in their office. They again made demand on Mr. Van Order for reimbursement, and he again refused. An assignment of the bond made by Van Order and Newbern to the United States Fidelity and Guaranty Company was made by the United States Fidelity and Guaranty Company to Louise G. Johnson, defendant. Suit was then brought in the supreme court by Louise G. Johnson against Mr. Van Order to compel him to pay what was conceived to be the terms of the bond. An answer was filed by Forlenza Harrington on behalf of Mr. Van Order. Motion was made before the chief-justice to strike out the answer. The chief-justice denied the answer being stricken out, but, in Mr. Harrington's argument before the chief-justice, the facts of which were not subscribed to or admitted by counsel for defendant, there were some apparently equitable defenses. The situation that confronts the court, therefore, is as follows: Van Order desired to get $4,500 worth of mortgages as collateral for a pre-existing debt. He asked Ames Crane to pass the titles with that end in view. He said that if that were done, he would enter into an agreement to pay the mechanics' liens if judgment were entered theron. He knew that one or the other of these liens would have to be paid. He seeks now to escape his responsibility because the bonding company put his bond on record instead of issuing the company's bond. His bond says that he will pay if judgment is recovered. The facts, I think, warrant me in finding that Mr. Crane's statement is the correct one. In other words, that this language was deliberately chosen so that the lien and they, themselves, would be protected. In the last analysis it would not have made much difference, as I see it, whether the Van Order bond were filed, or as apparently was intended, the company's bond, because if the company's bond were filed and were collected upon they could have recourse to Van Order. It seems to me that in such a situation in a court of equity, Van Order has no standing. He who comes into equity must do equity. If he had agreed in his bill to pay the judgment, he might be entitled to relief. As it is, and under the pleadings as they now stand, I shall advise a decree dismissing the bill.

Source: CourtListener

Court

Supreme Court of New Jersey

Parallel citations

158 A 416