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(113 A.)

ment of 1917 which affects this duty. It must be construed as providing merely for the distribution of surplus income. It is inconceivable that the parties intended that all of the income should be distributed to the beneficiaries, because, in that event, we must conceive that they intended that there never should be a distribution of the principal of the estate, unless the executors in their discretion concluded to liquidate the debts out of the principal of the assets. Complainant is not estopped by her acceptance of her portion of the income under the agreement of 1917. There is nothing in evidence to show that she knew that the indebtedness to the estate of Mrs. Canda had not been liquidated, and that the moneys that she was receiving were moneys which ought to have been applied toward such liquidation, and in the absence of such evidence I think I am bound to hold that she must be considered as having assumed that what she was receiving was net income, and that the executors and trustees were performing their duties.

the testator and the parties to the agreement | debts (clause 4). I find nothing in the agreean intent to permit the executors and trustees and Ferdinand E. Canda and the directors of the Chrome Steel Works to indefinitely postpone distribution, for, as I have before pointed out, the executors cannot compel the Chrome Steel Works to pay or liquidate its indebtedness, nor can they compel Ferdinand Canda, as surviving partner of Canda Bros., to call upon the Chrome Steel Works to liquidate its indebtedness to the partnership. The corporation now is in a healthy condition, able to pay its debts. It might have long since paid if it had seen fit. Is the estate to continue to stand back of this corporation so that if disastrous times come it may be placed in a position where it will be of much less value than it is at the present time, and the accumulations be swept away? [10, 11] I am of the opinion that, as the words are to be construed in the will and agreement, the indebtedness of the Chrome Steel Works has been liquidated. But whether it has or not the indebtedness might have been liquidated and before distribution of dividends it was the duty of the directors to provide for the debts. Equity will consider that as done which ought to have been done. It is argued that by the acceptance of income by virtue of the provisions of the agreement of 1917 under which complainant received income derived from the dividends on the capital stock of the Chrome Steel Works she is estopped from claiming that the moneys instead of having been paid out in dividends should have been applied to liquidation of indebtedness. There is nothing in the agreement which indicates that it was contemplated by the parties that any moneys which ought to have been applied by the Chrome Steel Works to the payment of debts should be applied to dividends. Neither the executors nor the beneficiaries under the trust had any power to direct the Chrome Steel Works to pay its debts or to refrain from paying dividends. The executors could not use the dividends for the purpose of paying the debts of the Chrome Steel Works. The mere acceptance by complainant of her share of dividends which the executors and trustees had no power to refuse to receive is not evidence of consent on her part that the Chrome Steel Works should pay dividends rather than debts.

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[12] While the result of my conclusion is that the time has arrived when there should be a distribution of the estate of Charles J. Canda, nevertheless the circumstances are such as that the liquidation and distribution should be so conducted as to do as little harm as possible. While I have held that complainant is not estopped by her agreement and the acceptance of income from insisting either that the provision of the will and agreement postponing distribution until after the liquidation of the debts of the Chrome Steel Works should be disregarded, or that, properly construing that provision, the time for distribution has arrived, still the administration of the estate by the executors and trustees in the manner that they have administered was acquiesced in by complainant up until about the time of the filing of the bill in February, 1919. An immediate distribution, I think, may be made of that portion of the estate consisting of capital stock of the Chrome Steel Works. While it may be said that this immediate distribution may do injury to the Chrome Steel Works and to the beneficiaries because of the destruction of the voting control of the executors and trustees, this injury is no greater than that which always results when a court dissolves an illegal voting trust, and, after all, the trusteeship of the stock in the hands of the executors and trustees amounts to a voting trust which would be illegal under Warren v. Pim, 66 N. J. Eq. 353, 59 Atl. 773, for although the purpose of the trust may be proper (General Investment Co. v. Bethlehem Steel Co., 87 N. J. Eq. p. 234, at page 242, 100 Atl. 347; Frost v. Carse, 108 Atl. 642, opinion of the court of Errors and Appeals, November term, 1919, not yet [officially] reported), the duration of the trust

is so unlimited as to render it invalid. I say that this trust, so far as it concerns the stock of the Chrome Steel Works, is no more than a voting trust; for, while it is true that the executors and trustees have power to dispose of the stock, still it is not contemplated by the parties that they should dispose of it, and the beneficiaries are in the meantime receiving the income. It may be that the continuance of this stock in the control of the trustees would be ultimately beneficial to the beneficiaries, and I am inclined to think this is so, but the hope of ultimate benefit cannot avail to defeat the claims of one of the beneficiaries whom I hold to be entitled to absolute possession. The testator clearly intended a division of the stock among his legatees at some time. He did not contemplate unlimited control in the executors and trustees. No injury can come to the corporation as such by the distribution. The sole possible objection that I can see would be to an inability of the executors and trustees to raise sufficient moneys, by a conversion of a sufficient amount of the stock, or by other means to pay the debt due to the estate of Catherine E. Canda, approximately $75,000, and as to whether there is any substance in any such objection I will hear counsel on application to settle final decree. The same objection may be presented with respect to the liquidation of the interest of the estate in the partnership of Canda Bros. As I understand the situation, the estate is entitled to one-half of the net worth of Canda Bros. Canda Bros. is indebted to the extent of approximately $400,000, of which amount $100,000 approximately is owed the estate of Catherine E. Canda. On this indebtedness interest has been regularly paid. The only assets of Canda Bros. are the debt due to it from the Chrome Steel Works of approximately $400,000 and certain real estate. The Chrome Steel Works may not be in a position, in view of the large payments of dividends which it has made, without embarrassment to pay the debt due from it to Canda Bros. Complainant has put herself in a position where she cannot insist upon a decree directing the executors and trustees to so deal with the interest of the estate in Canda Bros. as to cause the firm and the Chrome Steel Works such embarrassment as will result in loss to the beneficiaries if there is a reasonable assurance that within a reasonable space of time there can be liquidation without loss or embarrassment.

The same observations apply to the interest of the estate in the Canda Realty Company. Upon these matters I will hear counsel on application to settle decree.

As to the estate of Catherine E. Canda: Catherine E. Canda died June 18, 1915, and

she directed her executors to divide her property into five shares or portions, and devised and bequeathed these shares or portions to trustees, providing in each instance for a child as a life tenant, with devise and bequest over to such person as the child should designate by last will or, in the case of failure to designate, to the heirs at law of the child. Charles A. Canda, one of the children, has died, and has devised and bequeathed all his estate to complainant, and she is therefore entitled, under the terms of the will, to the principal of the trust. The executors have divided the estate into shares as directed by the will, with the exception of the moneys due and owing to the estate of Charles J. Canda and by Canda Bros. The principal of the trust fund segregated for Charles A. Canda has been turned over to complainant, with the exception of her interest in these two amounts receivable. The executors justify their conduct under the provisions of the fifteenth clause of the will, which, in terms, provides as follows:

"And I also authorize my executors and trustees to postpone until such time as in their judgment shall seem expedient, the sale, calling in and conversion of any part of my real and personal estate, to retain any investment in real or personal property, in which my estate shall be at the time of my death, to make actual thereof, and distribution in specie or kind of partition of my residuary estate, or any part my residuary estate, or any part thereof. Until such sale, calling in or conversion the net rents of my said real estate and the income of my said personal estate shall be deemed income for the purpose of this my will."

While the fifteenth clause apparently gives the executors unlimited discretion, nevertheless the clause must be read in conjunction with the seventh clause, which directs the executors to divide the estate into five shares.

In Brandenburg v. Thorndike, 139 Mass. 102, 28 N. E. 575, the provision of the will was that at the expiration of three years from the death of the wife, or at such time, whether earlier or later, as may, in the discretion of the trustees, be found expedient and practicable for the final settlement and distribution of the estate, the trustees shall convey. The court said:

"Taking the view most favorable to the plaintiffs, the discretion of the trustees to delay the payment after the expiration of the 3 years is limited to such time as is reasonably neces sary to settle the estate. They could not delay longer without violating their duty, and in case of unreasonable delay they would be compelled by a court of equity to make the payment and

transfer."

[13] I am well aware of the rule that where executors are given unlimited discre tion, the court will not usually interfere, but

(113 A.)

admit that merely convincing the court that the time for sale or partition is at hand is not sufficient for complainant to prevail, but actual fraud on the part of the executors need not be shown, as, for instance, if the executors refrain from conversion and partition bona fide, but for a reason which is not in the interests of the beneficiaries the court may control their judgment.

In the instant case the executors justify their failure to call in the debt due from the estate of Charles J. Canda by the fact that the beneficiaries of the estate of Charles J. Canda, including complainant, united in the agreement by which the income of the Charles J. Canda estate, which by his will was directed to be applied toward the liquidation of his debts, has been distributed to the beneficiaries, including complainant. I have held that this agreement can only be construed to apply to the distribution of net income, and there is no evidence before me to warrant me in finding that complainant knew that more than net income was being distributed. As against one not estopped, the excuse that the executors of the Catherine E. Canda estate did not call in the debt due from the Charles J. Canda estate so that the beneficiaries of the Charles J. Canda estate should enjoy the income, which, under the directions of the will of Charles J. Canda, should be applied toward the liquidation of the debt due the Catherine E. Canda estate, would be so apparently unsound as to warrant the court in immediately interfering with the discretion of the executors, not upon the ground of actual fraud, but because the matter set up in excuse has no relation whatever to the interest of the Catherine E. Canda estate, or of the beneficiaries therein. If the beneficiaries of the Catherine E. Canda estate were different from the beneficiaries of the Charles J. Canda estate, this would be immediately apparent. While the beneficiaries of the Catherine E. Canda estate are the same as the beneficiaries of the Charles J. Canda estate, they do not take in the same way. Under the will of Catherine E. Canda the beneficiaries take merely life interests, with devise or bequest over. Under the will of Charles J. Canda they take absolute interests. It so happens that, by reason of the death of Charles A. Canda, complainant takes an absolute interest under both wills. I think there is no reasonable excuse for the failure of the executors of the Catherine E. Canda estate to collect from the Charles J. Canda estate the amount due the Catherine E. Canda estate. Whether because of the situation which has been created the amount due from the Charles J. Canda estate to the Catherine E. Canda estate should be immediately paid involves a consideration of the same matter which I referred to in consid

Charles J. Canda estate, and I will hear counsel on settlement of final decree.

With respect to the failure to call in the debt due from Canda Bros. to the estate of Catherine E. Canda, as I understand the po sition of the executors, it is this: That the money was loaned to Canda Bros. for a permanent investment in the Chrome Steel Works, and is now represented as a part of the $400,000 due from Chrome Steel Works to Canda Bros. This investment the testator contemplated should be converted at some time or another. She has given her executors discretion with respect to the time of conversion, but that discretion is limited, it seems to me, to such time as may be reasonably necessary to convert without loss or embarrassment. Had the executors acted without regard to the agreement of 1917, and had Ferdinand E. Canda, who controls the stock of the Chrome Steel Works not controlled by the estate of Charles J. Canda, acted with a view to liquidating the debts of the Chrome Steel Works, the amount due from the Chrome Steel Works to Canda Bros. might have now been paid, and the proceeds of the debt coming to Canda Bros. been distributed to those beneficially entitled. The mere fact that this money was put in as a permanent investment, and that it draws 6 per cent. interest, is not sufficient to justify the executors indefinitely refusing to call it in, and thus indefinitely put off compliance with the terms of the will and indefinitely postpone the enjoyment by the beneficiaries of the principal of the trust funds. Nor can the act of Ferdinand E. Canda in electing to permit the Chrome Steel Works to pay dividends, rather than the debt to Canda Bros., excuse the executors indefinitely putting off the calling in of this debt, upon the ground that to call it would embarrass Canda Bros. Still the executors are entitled to take into consideration, in view of the relations existing between Charles J. Canda, Catherine E. Canda, his wife, and Ferdinand E. Canda, and the positions occupied by them respectively to Canda Bros. and the Chrome Steel Works, the effect that an immediate calling in of this debt might have upon Canda Bros. and the Chrome Steel Works. Whether that effect will be such as to warrant the executors in now declining to call in the debt is a matter upon which I desire to hear counsel upon settlement of final decree. Complainant is entitled at least to a decree which will so direct the executors as that within a reasonable space of time the estate will be liquidated.

Either side may move for decree upon two days' notice.

I intend to and have decided the very right of the controversy between the parties as I see it, and if the pleadings need to be

516

If the views I have expressed, or such amended pleadings as may be filed in the opinion of counsel, call for the production of further testimony on either side, on prop er application, this will be permitted.

The matter of counsel fees and costs will be considered on application for final decree. Any application counsel desire to make in the cause may be on two days' notice.

(92 N. J. Eq. 480)

use, in the absence of express or implied agreement to that effect, and water pipes and fixtures are appurtenances of a building, the use of which passes to the tenant, but the water is not the property of the landlord, and the water company may not impose a condition that the landlord become responsible for the charges.

5. Waters and water courses 203 (13)-Water company may not deny service to tenant because of delinquency of prior owner tenant.

or

In the absence of legislation to the contrary, a tenant is privileged to contract for MILLVILLE IMPROVEMENT CO. et al. v. water service to the same extent as the owner MILLVILLE WATER CO.

(No. 49/457.)

of the property, and any restriction upon or of discrimination against a tenant's right is incon

(Court of Chancery of New Jersey. March 26, sistent with the public duties imposed upon the

1921.)

1. Waters and water courses 202, 203(15) -Water company may make rules affecting patrons and discontinue service for failure to comply therewith.

A water company organized under act April 21, 1876 (P. L. p. 318; 3 Comp. St. 1910, p. 3635), and charged with a public duty of furnishing water to all inhabitants without discrimination, may adopt reasonable rules for its business and operation of its plants, which are binding on its patrons and may be enforced, even to the extent of denying water to those refusing to comply with them, such power being incident to corporations of that nature; yet they must return to the patron such part of advanced payment as is unearned, when discontinuing his service.

2. Waters and water courses 202-Water company may make reasonable rules affecting patrons, but cannot deny water to tenant whose premises are adequately equipped. Under Water Act, § 13, providing that water companies may dispose of water under such restrictions as they may think proper, the right of the company to enforce reasonable rules is necessarily subordinate to its recognized public duty touching uniformity and universality of service, and it must recognize and respect the paramount right of all citizens similarly situated and appropriately circumstanced, to receive water, and cannot deny water to a tenant whose premises are adequately equipped and who is willing to pay for water.

3. Waters and water courses 203 (14)-Water company has no lien on real estate for water supplied to owner or tenant, and cannot deny tenant service because landlord failed to guarantee payment.

In the absence of legislative authority, there is no lien in favor of a water company on the real estate for the water supplied either to an owner or to a tenant.

4. Waters and water courses 203 (13)— Landlord not being liable for water furnished tenant water company may not impose such liability as a condition.

As between landlord and tenant, there is no riability on the part of the former to pay for water supplied to the premises for the latter's

water company, and, in the absence of legislation creating a lien on the real estate for water service or other legislation of like effect, no person can be denied service because of the delinquency of a prior owner or tenant.

6. Waters and water courses 201-It is the duty of a water company to lay pipes to property line but of owner's and tenant's to lay them beyond such line.

In the absence of statute or regulation, it is the duty of a water company to lay water mains to all laterals fixtures and connections in such a manner that connection may be made with properties at the boundary lines between streets and alleys and private lots, and it is not the duty or privilege of such company to enter upon private property in the construction of a system beyond such boundary line, nor of a citizen to lay pipes in the streets beyond such boundary, and owners and tenants must accept entire responsibility for the suitable equipment of buildings to receive reasonable service.

7. Waters and water courses

201-Water

company cannot be required to serve tenants where fixtures do not permit cutting off water of delinquent tenant without cutting off water of another.

Where property is so equipped with fixtures that if a tenant should become delinquent his service could not be cut off by the water company without cutting off that of another tenant, the company cannot be required to serve

tenants.

Suit by the Millville Improvement Company and others against the Millville Water Company to restrain defendant from refusing to supply water to tenants, unless the complainant owner of the buildings would pay or guarantee to pay the usual charges for water supplied to buildings. Decree for

defendant.

Louis H. Miller, of Millville, for complainants.

Lewis Starr, of Camden, for defendant.

LEAMING, V. C. Complainant corporation is the owner of eight several residence buildings in the city of Millville; the individ

(113 A.)

ual complainants are the several tenants | operation of its plant, and such rules, so far who occupy the buildings. The corporation, as they affect its patrons, are binding on as landlord, and the individuals, as tenants, join in the bill filed herein to restrain defendant water company from carrying out its purpose to refuse to supply water to the several tenants unless complainant corporation, as owner of the buildings, pays or guarantees the payment of the usual charges for water to be supplied to the buildings for the use of the several tenants.

There is no dispute touching the essential facts. Each of the eight buildings referred to is what is known as a double tenement house, that is, two residences united in one building. Each residence is occupied by a tenant, making in all sixteen tenants as complainants.

Defendant corporation is a water company supplying the inhabitants of the city of Millville with water. Defendant is incorporated under the Water Act of 1876 (P. L. 1876, p. 318; 3 Comp. St. p. 3635).

It has long been the custom and may be said to be the adopted rule of defendant company in supplying water to the inhabitants of the city to deal exclusively with the owners of buildings and to require from such owners the payment for water service at defined and uniform rates, payable in advance each six months. Water rents for the several buildings here in question have heretofore been paid in that manner by complainant corporation. Complainant corporation has now made leases to the several individual complainants in which each of the tenants has engaged to pay the water rents. All of the tenants are willing to pay defendant company in advance in accordance with defendant's rules as to rates; but defendant is unwilling to treat with any of them or to accept their money or to in any way recognize their liability to pay unless complainant corporation, as owner of the buildings, first guarantees the payments.

The single question for determination and the sole controversy between the parties is whether defendant water company is privileged to require the owner to pay for the water to be supplied to the tenants of the buildings or to guarantee such payment, and to refuse to recognize the claim of right of the several tenants to pay in advance for water to be supplied to them.

them, and may be enforced, even to the ex-
tent of denying water to those who refuse
to comply with them. Such power is not
dependent upon any express legislative au-
thority; it is incident to a corporation of
that nature. Robbins v. Bangor Ry. & El.
Co., 100 Me. 496, 62 Atl. 136, 1 L. R. A. (N. S.)
963; State v. Butte City Water Co., 18 Mont.
199, 44 Pac. 966, 32 L. R. A. 697, 56 Am. St.
Rep. 574; Am. Water Co. v. State, 46 Neb.
194, 64 N. W. 711, 30 L. R. A. 447, 50 Am. St.
Rep. 610; State v. Water Supply Co., 19 N. M.
27, 140 Pac. 1056, L. R. A. 1915A, 242; Watau-
ga Water Co. v. Wolfe, 99 Tenn. 429, 41 S. W.
1060, 63 Am. St. Rep. 841. This right of rea-
sonable regulation is uniformly held to in-
clude the right to shut off the water supply
of delinquents, and also the right to require
consumers to pay water rents for a reason-
able time in advance. State v. Water Supply
Co., supra; Watauga Water Co. v. Wolfe, su-
pra; Hatch v. Consumers' Co., 17 Idaho, 204,
104 Pac. 670, 40 L. R. A. (N. S.) 263, affirmed
224 U. S. 148, 32 Sup. Ct. 465, 56 L. Ed. 703;
State v. Butte City Water Co., supra.
ious periods for advance payments have been
held reasonable; but in Rockland Water Co.
v. Adams, 84 Me. 472, 24 Atl. 840, 30 Am.
St. Rep. 368, one year was held an unreason-
able period. In all such cases it is to be
assumed that the regulation includes a right
of the patron to a return of such part of the
advance payment as is unearned by reason of
the service being discontinued before the end
of the period for which an advance payment
has been made.

Var

[2] Section 13 of the Water Act, under which defendant company is operating, provides:

"That said company may sell and dispose of the water issuing from their reservoirs, acqueducts or pipes, for such price or prices, or quarterly or annual rents, and such restrictions as they may think proper."

So far as this provision relates to rates or regulations, it can only be understood as contemplating reasonable rates and restrictions. But although the right of a water company to adopt and enforce reasonable rules for the conduct of its business and operation of its plant is thus uniformly recognized, such This question does not appear to have here- rules, to meet the requirements of reasonable tofore arisen in this state; but the authori- regulations, are necessarily subordinated to ties in other jurisdictions touching the rela- the recognized public duty of corporations tions of water companies to their patrons ap- of that nature touching uniformity and unipear to be so uniform and sound in prin- versality of service, that is, the public duty ciple that the general inquiry here submitted of corporations of that nature to recognize can scarcely be said to be an open question. and respect the paramount right of all citi[1] It is well recognized that a water com-zens, similarly situated and appropriately pany, though charged with the public duty circumstanced, to receive water, and to reof furnishing water to all of the inhabitants ceive it on the same terms. Consistently without discrimination, may adopt reasonable with that duty it is clear that service of warules for the conduct of its business and the ter cannot be denied to a tenant whose prem

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