Et Ux. v. Davis

• Decision Date: 27 January 1944
• Docket Number: No. 216.,216.
• Citation: 35 A.2d 681
• Parties: SCHENCK et ux. v. DAVIS et al.
• Court: New Jersey Supreme Court

35 A.2d 681

SCHENCK et ux.

v.DAVIS et al.

No. 216.

Court of Errors and Appeals of New Jersey.

Jan. 27, 1944.

Appeal from Court of Chancery.

Suit in equity by Peter S. Schenck and wife against James Mercer Davis, Sr., and others for establishment of a trust for complainants in certain lands and partition of lands or sale thereof and division of proceeds. From a decree dismissing the bill, 133 N.J.Eq. 81, 30 A.2d 589, complainants appeal.

Reversed with directions.

Carroll & Taylor, of Camden (Walter R. Carroll, of Camden, of counsel), for complainants-appellants.

James M. Davis, Jr., of Camden (William C. Gotshalk, of Camden, of counsel), for defendants-respondents.

HAGUE, Judge.

This is an appeal from a decree of the Court of Chancery dismissing the complainants' bill which prayed that the defendants be decreed to hold title of the lands in controversy in trust for those including the complainants who are equitable owners thereof. This is the important question presented although there were other prayers in the bill ancillary to this relief sought by the complainants.

The bill alleged that in 1912 complainant, Peter Schenck, retained James Mercer Davis, Sr. (a member of the Bar of this state), to bring suit against one Roydhouse on a promissory note. Judgment by default was recovered. The attorney had been retained to conduct the litigation on a contingent basis so far as his fee was concerned. At about the same time the said attorney represented one William K. Haines in a suit against Roydhouse and judgment by default was entered in each suit. About two years prior to the institution of these suits, Roydhouse and his wife had conveyed the farm owned by them to a nominee who in turn reconveyed to Mrs. Roydhouse. In 1914 Mr. Davis, Sr., as attorney for Schenck and Haines, filed a bill in the Court of Chancery to set aside the conveyance just mentioned, charging a fraud upon creditors. The final result of that adjudication was that the said deeds were set aside and decreed to be null and void in so far as the judgments of Haines and Schenck were concerned. It appeared, however, that prior to these conveyances which had been voided, there had been granted and conveyed to Mrs. Roydhouse a life estate in the farm property. Therefore the judgments of Haines and Schenck became liens on the farm land subject only to the life estate of Mrs. Roydhouse. It also appeared that Mrs. Roydhouse was a sister of the judgment creditor, Schenck. She subsequently was divorced from her husband and married one Holbrook. Her life estate continued until November 5, 1940, when she died. In 1916, Haines died leaving his estate to his wife, Mary. The two judgments recovered in 1912 were revived by writ of scire facias on the application of Mr. Davis, Sr. At the time of the revival in 1932 the Haines judgment amounted to $4,715.13 and the Schenck judgment amounted to $9,547.96. The former judgment had priority in point of time. After the death of Haines, Mr. Davis, Sr., purchased that judgment for the sum of $500. The following year, 1933, the bill of complaint alleges, Mr. Davis, Sr., offered to sell his contingent interest in the Haines judgment to Schenck for $500 or to purchase the Schenck judgment for the same amount. The testimony of the defendant indicated this happened in 1932. Schenck rejected both propositions and says that since that time he has had no communication from Mr. Davis, Sr., who, as he claimed, still represented him as attorney. On September 16, 1932, Mr. Davis, Sr., caused executions to be issued on both judgments. The Sheriff of Burlington County, wherein the lands were situated, was instructed to advertise the farm lands and premises for sale. Schenck alleges that his attorney, Davis, Sr., did not send him a copy of the advertisement of the sale of the lands and that he had no knowledge thereof until December 1, 1932, the day of sale, when he received a telegram at his home, Vineland, Cumberland County, advising him of the sale. The telegram was not received until two o'clock in the afternoon and it appears from an exhibit in the case that it was sent from Camden at 11:43 in the forenoon of the same day. Schenck claimed that it was not possible for him to attend the sale for lack of sufficient notice and the bill alleges that he assumed that Davis, Sr., ‘would protect his interests.’ The property was bought in by Mr. Davis, Sr., at the sale under the Haines' judgment for the sum of $500 and the complainant charges that Davis, Sr., thereupon became a trustee of the said lands for the benefit of Schenck to the extent of his interest therein. The bill also alleges and it is not denied that Davis instructed the Sheriff to apply the amount of his bid in partial satisfaction of the Haines' judgment and also directed the Sheriff to return the execution on the Schenck judgment unsatisfied. Some four months later the Sheriff, at the direction of Mr. Davis, Sr., executed a deed to the premises to James Mercer Davis, Jr., a son of the defendant, Davis, Sr. The sale took place December 1, 1932; the Sheriff's deed was executed April 3, 1933, and recorded on August 10, 1937.

It is also charged in the bill that Davis, Jr., was not a bona fide purchaser; that no consideration was paid by him either to the Sheriff or to his father, and that he took title with full knowledge of all the facts and was a party to a perpetration of fraud upon Schenck. Complainant further avers that he was entirely ignorant of what transpired and points to the fact that the Sheriff's deed was not recorded until August 10, 1937, which was a period of almost five years after the sale; that Davis, Sr., never terminated his relationship as attorney for Schenck; that Schenck had not dismissed him or obtained the services of any other attorney until September 20, 1939. Schenck avers, however, that subsequent to the sale he telephoned the office of Davis, Sr., and learned that the land and premises had been bought by Davis, but he further avers that he believed that inasmuch as all prior proceedings theretofore brought by Davis, Sr., as attorney in the matter of the two judgments, had been carried on for the benefit of both judgment creditors, he believed that the purchase by the attorney was likewise for the protection of Schenck's proportionate interest in the property. He also alleged that he was aware that Mrs. Roydhouse, his sister, had a life estate in the said premises and that nothing could be done to obtain possession of the farm land until her death; that he had no reason to inquire into the matter so long as his sister lived; that he learned, however, from his sister that at the instance of James Mercer Davis, Jr., John S. and Edwin Davis, sons of the defendant, Davis, Sr., a ‘writ of waste’ had been issued out of the Court of Chancery against his sister (Mrs. Holbrook), whereupon he consulted counsel and the present suit was instituted. It is also alleged that previously James Mercer Davis, Jr., and his wife, at the instance of Davis, Sr., made conveyance to two other sons of Davis, Sr., purporting to convey to each son an undivided one-third interest in the lands and premises which deed was dated December 21, 1937, and recorded October 25, 1939; that no consideration passed for this conveyance and that these defendants are, under the circumstances, to be held as trustees for complainant to the extent of his interest in the farm; that this situation was unknown to him until he learned same from his solicitor on September 20, 1939. The complainant also avers that his wife, Caroline, has an inchoate right of dower in that undivided portion of the lands and premises to which he claims equitable title.

Complainants, in addition to the main prayer, pray for partition or, in the alternative, that the lands be sold and the proceeds divided.

The answer of Mr. Davis, Sr., admits the relationship of attorney and client between himself and Schenck; that he undertook this particular case upon a contingent fee basis of fifty per cent; that the Haines' judgment was obtained prior to the Schenck judgment. He denies, however, that Schenck had not been informed concerning the whole matter or that Schenck had not been advised about the sale. He also denied that there had been any subterfuge in placing title in the name of his son; denies tht this information was withheld from Schenck; denies that there was lack of...