Dallett v. Staten Island Clay Co.

48 A. 231, 61 N.J. Eq. 39, 16 Dickinson 39, 1900 N.J. Ch. LEXIS 33

• Court: New Jersey Court of Chancery
• Decided: January 22, 1901
• Status: Published

Opinion

Magie, Chawoellob.

The /first question presented by this demurrer is whether,, upon the facts charged in the bill, the special relief demanded by the prayer be granted.

It is first to be observed that the bill discloses no claim for such relief under the Fidelity Title and'Deposit Company, the original trustee, holding the mortgage securing complainants’ bonds.

It is assumed by the argument that the trustee, upon the-receipt of the insurance moneys in question, was bound in duty to the bondholders to expend them in rebuilding the portion of the plant which had been destroyed by fire. I find no express-statement in the bill, that by the terms of the mortgage a duty so to do was east upon the trustee. In the absence of such, terms in the mortgage it mny be questionable whether it can be asserted that the duty of rebuilding necessarily followed the receipt of the insurance money.

But the bill has not been framed in a manner to assert any original right or to enforce any original duty, whatever it might have been, of the trustee, under the mortgage. It is not asserted that the trustee has been requested to take any steps in the performance of such duty, nor have other bondholders been called into the case. They may not consent to the assertion of duty made by the complainants, and they are equally interested in the disposition of the fund in question.

Moreover the bill discloses that the right of the trustee to these funds has ceased by the consent of the complainants. There is no' charge that the court lacked jurisdiction to make the order directing the trustee to pay over the funds to the receivers, and the bill discloses an express assent not only to the order which directed such payment, but to the subsequent actual payment of the fund to the receivers. It is obvious that when the trustee made such a payment, with the express consent of the complainants, it instantly became discharged of any duty with respect to the funds.

If, therefore, the'relief specially prayed for may be granted, it must be because the facts disclose some relation between complainants as holders of their bonds and the clay company, which relation would entitle them to require the clay company to account for the insurance moneys which were paid to them by the receivers, and to pay over such part of them as have not been expended in rebuilding to the original trustees. In this respect, it is to be noticed that there is no allegation that the trustee is ready or willing to assume any duty in respect to the funds in question. In the absence of its consent to accept those funds and become charged with some duty in respect thereto, I know of no power in this court to compel the trustee to do so.

I am unable to discover in the charges of the bill the existence of any relation between the complainants and the clay company which will justify the special relief applied for as to it. No such relation arose by reason of the complainants consent to the payment of the insurance moneys to the receivers, being induced by the representations or promises in respect to its future use, made by Bacot, Record or Miller, unless it is made to appear that in making such representations or promises, they were acting- for the company, or by its authority. The charge that those persons afterward appeared as three of the directors of the company would not support an inference that their action was that of the company, or authorized or permitted by it. Nor did any obligation on the part of the clay company arise out of the mere receipt of the insurance money from the hands of the receivers. By the statements of the bill, the clay company became entitled to take the assets of the terra cotta company from the receivers, under the offer of Addicbs and the order of the court. The insurance moneys, when paid by the receivers under a like order of this court, were apparently discharged of the trust. The receivers, in paying those moneys to the clay company, might perhaps have required the company to obligate itself to expend them in rebuilding. But the bill discloses no obligation then entered into by the company. If any such obligation could be inferred, it is impossible to discover any ground for ■compelling that company to account for and pay over to the other defendant the moneys unexpended by it in rebuilding.

Under the prayer for general relief complainants ask for a decree for specific performance of an obligation on the part of the clay company to appropriate the insurance moneys to the rebuilding of the burned portion of the plant. If such relief can be deemed germane and appropriate under the allegations of the bill, I do not think it can be granted, for the reason that upon those allegations no obligation of that sort is disclosed or to be inferred.

The result is that the demurrer must be sustained and the bill dismissed.