Estate of Gilbert Smith, Inc. v. Cohen

• Decision Date: 13 January 1938
• Docket Number: No. 219.,219.
• Citation: 196 A. 361
• Parties: ESTATE OF GILBERT SMITH, Inc., v. COHEN et al.
• Court: New Jersey Supreme Court

196 A. 361

ESTATE OF GILBERT SMITH, Inc.,

v. COHEN et al.

No. 219.

Court of Errors and Appeals of New Jersey.

Jan. 13, 1938.

Appeal from Court of Chancery.

Bill to quiet title by the Estate of Gilbert Smith, Inc., against Edward Cohen and wife, Sarah C. Morgan, Dorothy Smith Carter, and others, wherein Sarah C. Morgan filed a counterclaim to have a conveyance made by her vacated. From an adverse decree, Edward Cohen and wife, and others, appeal. Sarah C. Morgan having died, Anna Milligan, individually and as administratrix of the estate of Sarah C. Morgan, deceased, is a respondent in her place. Affirmed.

Otto A. Stiefel, of Newark, for appellants. Hannoch & Lasser, of Newark (Herbert J. Hannoch and Morris Weinstein, both of Newark, of counsel), for complainant-respondent. Louis Auerbacher, Jr., of Newark, for counterclaimants.

HEHER, Justice.

The primary inquiry herein is whether the chancellor had jurisdiction to adjudge void three several deeds by which William G. Smith, Dorothy Smith Carter, and Sarah C. Morgan purported to convey to Edward Cohen and Marion Cohen, his wife, their respective undivided interests in a certain tract of land situate in the counties of Essex and Union, in this state, comprising 18 acres, under a devise by Gilbert Smith to them and other lineal descendants, and the subsequent grant of the same interests by the Cohens to Nurse's Grill, Inc. While styled a "bill to quiet title," the learned vice chancellor ruled that, for lack of an allegation that no suit was pending to enforce or test the validity of defendants' asserted title, it was not maintainable as such, but was good as a bill quia timet to remove a cloud upon the title.

The bill alleged that the Cohens procured these conveyances with actual knowledge of, and "with the intention of circumventing," a prior conveyance by their grantors and the latter's codevisees of the entire tract to the Estate of Gilbert Smith, Inc., a body corporate formed by all the devisees to permit of the raising of sufficient moneys by mortgage to satisfy arrears of taxes and a mortgage and judgment covering one of the undivided interests, and to manage the property for the common benefit. Sarah C. Morgan, by counterclaim, prayed that, for fraudulent representations claimed to have been made, the conveyance so made by her be vacated.

Th vice chancellor resolved these issues against the Cohens and their successor in title; and we concur in those conclusions.

The frantic efforts of the Cohens to procure the execution of the deeds in the dead of night, the varying prices paid for the same quantum of interest, $1,000 to one, $600 to another, and $200 to a third, the purchases of municipal tax liens and the mortgage and judgment covering the undivided share of Garrett Smith, one of the devisees, the institution of foreclosure proceedings on the mortgage and the issuance of execution upon the judgment, the attempts to dissuade the mortgage lender from advancing the moneys necessary to consummate the scheme to rehabilitate and save the property to the owners; all these things are denotive of knowledge of the general object of the agreement between the devisees, and of the formation of the corporation and the execution and delivery of deeds transferring the devisees' title to it in fulfillment thereof, and of a purpose to frustrate the plan by the prior recording of deeds conveying individual undivided interests.

We perceive nothing of substance in the contentions that the corporation had not then come into legal being—it had at least a de facto status—and that, in any event, if there was a delivery of the deed conveying the title to it, it was conditional and ineffectual as against the conveyances to the Cohens. Theirs was patently an unconscionable attempt to set at naught a scheme contrived to save the property, and acted upon by all the parties in interest. It is to be here observed that the mortgage money adverted to had been actually advanced when the Cohens took the conveyances in question.

But the Cohens or their corporate successor, the corporate stock was held by them, were, at the time of the filing of the bill herein, in possession of a small portion of the tract, 200 feet by 100 feet, under a lease made by the executors of Gilbert Smith, and were thereon conducting a roadside business; and the insistence is that, in such circumstances, the legal remedy of ejectment is adequate, and equity was therefore without jurisdiction.

The bill is not sustainable as one to quiet title under the statute. 4 Comp.St.1910, p. 5399, § 1. As stated, complainant was not in peaceable possession in fact of the whole of the tract; nor did the bill contain an allegation that no suit was pending to enforce or test the validity of its title. Yet the subject-matter is within the original general jurisdiction of equity to remove a cloud from the title to lands. The original equity jurisdiction to quiet title, independent of statute, was invocable only by one in possession, who also was invested with the legal title, when successive actions at law, all of which had failed, were instituted against him by a single person out of possession, or when several persons asserted equitable titles against the complainant-possessor holding the legal or an equitable title. Pomeroy's Equity Jurisprudence, 4th Ed., § § 1394, 1396, 1397. See Palmer v. Sinnickson, 59 N.J.Eq. 530, 46 A. 517.

But possession is not of the essence of the right to equitable relief against a cloud upon the title. That jurisdiction, quia timet in principle, is grounded in the need for the protection of the complainant's title against the injury or vexatious embarrassment that may flow from the deed or other instrument or proceeding constituting the cloud. If the estate or interest to be protected is equitable, possession is not an essential, for the subject-matter is cognizable only in equity. And on principle possession is not a requisite for such relief, where the estate or interest is legal in its nature, if under the special circumstances the legal remedy is inadequate to do full and complete justice. Possession has significance only as regards the existence of an adequate remedy at law. If, by reason of defendant's possession, ejectment is an appropriate remedy, and there are no peculiar circumstances calling for equitable interposition, complainant will be left to his legal remedy. He is required, in such circumstances, to put the adverse title asserted by the defendant to the legal test. Jersey City v. Lembeck, 31 N.J.Eq. 255; Sheppard v. Nixon, 43 N.J.Eq. 627, 13 A. 617; Brady v. Carteret Realty Co., 70 N.J.Eq. 748, 64 A. 1078, 8 L.R.A.,N.S., 866, 118 Am.St.Rep. 778; McGrath v. Norcross, 71 N.J.Eq. 763, 65 A. 998; Van Houten v. Van Houten, 68 N.J.Eq. 358, 59 A. 555; Blackwood Improvement Co. v. Public Service Corporation, 91 N.J.Eq. 220, 109 A. 820; Renwick v. Hay, 90 N.J.Eq....