filed a certificate of incorporation at a certain date, does not state whether the debts due to the two complainants arose out of the dealings with the association before or after its incorporation. The point of this objection is that, unless the debts of the complainants accrued before the date of filing the certificate of incorporation, they are not debts of a voluntary association; and that it was the pleader's duty to state as a fact that the debts were incurred while the grange was still unincorporated. But the theory of the bill is that the certificate of incorporation did not protect the members of the grange from liability for debts incurred in the business conducted by the grange, even after its incorporation. The bill asserts that no notice of the intention to incorporate was given at a previous regular meeting of the grange, and, further, that these debts were not contracted in the transaction of the corporate business of the grange. If these facts are so, as I must assume them to be, then any debts incurred by the grange at any time confer upon the creditor a footing to file a bill.

The third ground taken is that one of the complainants, the South Bend Chilled Plow Company, is shown to be disentitled to stand as a creditor, because the bill describes it as a foreign corporation, without showing that it has become equipped to do business in this state. Admitting this to be true, this complainant is not the only complainant. There remains another creditor who was entitled to file the bill. But, indeed, it does not appear from the bill that the South Bend Chilled Plow Company is disentitled to stand as a creditor. It does not appear from the bill that the contract out of which the debt arose was made in the state of New Jersey; and, if it did so appear, a single transaction would not amount to doing business in this state. For these reasons I think the general demurrer challenging the equity of the bill must be overruled.

Upon the hearing upon the bill and answers filed, the following facts appeared: The Musconetcong Grange was organized in February, 1893. Its primary purpose was to establish a store, where general merchandise, such as is usually carried by a country store, should be sold and exchanged for the benefit of the members of the grange. Persons other than members were permitted to deal at the store, but the members were favored in the transaction of the business. The scope of the business was extended from time to time, and included the sale of grass seeds, harvest implements, fertilizers, sheep, etc. The grange also operated a mill and conducted a butcher business. The business was conducted by a superintendent, named Wesley Fleming, under the firm name of Wesley Fleming & Co., adopted at a meeting of the members of the grange held March 30, 1893. The executive functions of the grange were in the hands of three trustees.

On January 11, 1894, the association elected three trustees, and filed a certificate of incorporation, under color of the provisions of an act approved April 21, 1876, to enable grangers of the order of patrons of industry to incorporate (2 Gen. St. p. 1614). The history of the business of the association before incorporation seems to have been this: The store had been in operation before Fleming came to take charge of it. He began the management of the business under a salary on April 16, 1893. A note had already been given to one William M. Simanton for $1,500. Simanton was one of the trustees of the grange trading as Wesley Fleming & Co., and the note was signed by Royal Milroy, Charles I. Carpenter, and Isaac Woolverton, who were in fact trustees of the association. Interest was paid on this note out of the funds of the association after Fleming took charge. On May 25, 1893, another note was made to Daniel Williamson & Son for $500, signed by the same makers as trustees, in the same form as the former note. Upon this note interest was paid in the same manner as upon the former note. The note to Abbie I. Henry, one of the complainants, was not made until after the certificate of incorporation was filed. It was dated March 31, 1894, and signed by William M. Simanton, Isaac Woolverton, and Absalom Apgar, trustees. Another note to William D. Hill, for $200, dated April 1, 1894, was also executed by the trustees. Still another note was executed March 31, 1894, for $200, to Isaac Woolverton, and signed by the same trustees, and sealed with the corporate seal. The note to the South Bend Chilled Plow Company, the other complainant, was made on May 1, 1897, and was signed in the name of the Asbury Mercantile Company, by the treasurer of the company. These are the facts disclosed.

To the settlement of what questions are these facts to be presently applied? What are the points to be settled at this stage of the proceedings? The act, as I have already observed, provides for a subpoena after filing a bill or petition. This subpoena is to be directed to the trustees or managers of the association, who are to file a list of members of the association. Then these members are to be brought into court by rules to show cause why the prayer of the petition or bill should not be granted. The appropriate prayer of the bill is for the appointment of a receiver and an injunction. The facts conferring jurisdiction upon the court to grant such prayer are, therefore, the following: First, the existence of a voluntary association carrying on business with partnership liabilities; second, the fact that such association has become insolvent, or has suspended its business for want of money to carry on the same; and, third, the fact that a creditor, or member of such association, is the complainant who files the bill of petition. It therefore seems to be clear that one who

has been returned by the trustees as a member can contest only the existence of these facts by his answer; at least, it is manifest that the existence of these facts are alone triable at this stage of the procedure. The defendant cannot try the question whether he ever was a member, or was such at the time a debt or debts were incurred. It is, of course, true that each person returned as a member has the right to his day in court to test his or her personal liability to any creditor of the grange. But by the scheme provided by the statute it seems that this must be done by exceptions filed to the report to be made by the receiver of the claims against the association; and as to his liability for any valid debt, the contest must occur when the assessments against each member, in proportion to the debts and expenses, shall be made. In respect to the three matters to which the present inquiry is confined, I am of the opinion, disregarding for the moment the effect of the certificate of incorporation, that it has been proved that there existed a voluntary association having some members, who, either by direct action or by express or implied assent, did business in which the borrowing of money was a part, for the common purposes of such members; that there arose, as to such members, a partnership liability for such debts; that this association did business under the name of W. Fleming & Co., and afterwards under the name of the Asbury Mercantile Company, and that in 1897 it became insolvent, and also ceased to do business for want of funds to carry it on. It also appears that Abbie I. Henry and the South Bend Chilled Plow Company are creditors of these associated members.

The remaining question is whether the certificate of incorporation of the grange relieves the individual members from liability, and imposes it alone upon the corporation. The debts of the complainants were incurred after the certificate of incorporation was filed. I will assume that the certificate of incorporation was regular, although the point is raised that no notice was given or entered in the minutes of the grange of an intention to incorporate, and I will assume that the incorporation was one which cannot be attacked by a creditor who did business with it because of irregularities of organization. Stout v. Zulick, 48 N. J. Law, 599, 7 Atl. 362. In my judgment, the business conducted by the members of the organization was so entirely aside from the power conferred upon the grange by the statute under which the incorporation was effected that the business must be regarded as partnership, and not corporate. It is perceived that the act under which the incorporation was effected declares that the trustees of the grange shall be a body corporate, with only the ordinary powers incidental to all corporations. The enumerated powers are to have a common seal, to sue and be sued, and to acquire,

hold, improve, and lease or sell land, and to have a capital stock, and to make by-laws. There is no power granted to transact any mercantile business whatsoever. The corporation is a mere club or society, with power to acquire property for club or society purposes. It has no more power to transact a business as a corporation than has an incorporated religious society. The entire business transacted was dehors the grant contained in the act. Mr. Cook remarks: "Where the business for which incorporation is sought is not within the class of business mentioned in the act itself, the attempted incorporation is void, and the participants are liable as copartners." 1 Cook, Law of Stockholders & Corps. p. 316, § 236. Nor was this grange transacting business as a de facto corporation; for while there are statutes under which it might have become incorporated for such purposes, there was no effort made, bona fide or otherwise, to become incorporated under such a statute.

I shall advise a decree appointing a receiver and granting an injunction.

FIELDER v. BEEKMAN et al. (Court of Chancery of New Jersey. Feb. 11, 1903.)

PARTNERSHIP RETIRING PARTNER - OVERDRAFT-ASSUMPTION BY PURCHASING PARTNER-AMOUNT OF LIABILITY-ASSUMPTION OF OTHER OBLIGATIONS DUE THE FIRMLIABILITY TO ACCOUNT-COSTS IN EQUITY. 1. Where one of four partners purchased the interest of a second, assuming as part consideration an overdraft in the account of the retiring partner with the firm, and thereupon a new partnership agreement was formed between the three remaining, by which the property and debts of the old firm were continued as those of the new, the purchasing partner stood in the shoes of the retiring partner with reference to the overdraft, and, as the stock account of the latter exceeded the overdraft. owed nothing to the firm.

2. The purchasing partner afterwards bought the interest of one of the remaining partners, assuming a similar overdraft, which, however, exceeded that partner's stock account. A new partnership was formed between the remaining partners. On the dissolution of this it was agreed that bills receivable should be collected and paid to the purchasing partner, threefourths to be retained by him, and one-fourth applied to the notes of the last remaining partner. Held, that under this agreement the purchasing partner was liable to account for the balance by which the third partner's overdraft exceeded his stock account, one-fourth of such balance to be applied to the fourth partner's

notes.

3. He was also liable to account in a similar way for private obligations of the third partner to the firm likewise assumed by him.

4. Where the relief awarded a complainant amounts to $186, while he sought to recover $772, each party will be required to pay his own costs.

Bill for accounting by John W. Fielder, Jr., against John D. Beekman and others. Decree for complainant.

4. See Costs, vol. 13, Cent. Dig. § 272.

James Buchanan, for complainant. John T. Bird, for defendants.

REED, V. C. In conformity with the suggestion at the end of my previous conclusions, the bill in this cause has been amended. The purpose of the bill, in its present shape, is to charge Mr. Beekman with the two overdrafts, one by Dey and the other by William S. Fielder, and certain other accounts receivable, which Mr. Dennis refused to collect. On January 11, 1896, Mr. Beekman bought out the interest of Mr. Dey, one of the then four partners in the business, each owning a one-fourth interest. At that time Mr. Dey had personally overdrawn from the assets of the firm the sum of $781.16. When Mr. Beekman bought out Dey's interest, he agreed with Dey that he would pay this overdraft. Dey's stock account at that time was estimated on the books of the firm to be worth $1,750. Mr. Beekman pafd Dey for his one-fourth interest in the firm $1,150, in two checks and one note, besides, as already remarked, agreeing to pay the $781.16, the amount of Dey's overdraft. The date of the agreement for the purchase of Dey's share, as already observed, was January 4, 1896, and on this date a new partnership agreement was entered into between the three remaining partners, namely, John W. Fielder, William S. Fielder, and John V. D. Beekman. The capital of this new firm was to be the property and assets of the old firm, which it took over. Mr. Beekman, by his purchase of Dey's interest in the property and assets of the old firm, became the owner of a one-half interest in the firm property, and was to have the same interest in the assets of the new firm. The new firm continued its business up to March 2d of the same year. On that date Mr. William S. Fielder had drawn of the funds of the firm $2,310 in excess of his share. On March 2, 1896, William S. Fielder sold and assigned all his interest in the firm to Mr. Beekman, the latter agreeing with William S. Fielder to pay this sum of $2,310. By his purchase Mr. Beekman became the owner of a three-fourths interest in the assets of the old firm. Mr. Beekman and John W. Fielder, the two remaining partners, entered into a new partnership agreement, which, although dated March 1st, was obviously cotemporaneous with and followed the purchase by Mr. Beekman of William S. Fielder's interest on March 2, 1896. By the terms of this agreement the property of this new firm was to consist of all the property, real and personal and mixed, of the preceding firm. The last firm continued in business until the execution of the dissolution agreement, which became effective on December 18, 1897. By the terms of the dissolution agreement it was covenanted as follows: All bills or accounts receivable, not in the schedules mentioned, and all bills, accounts, and notes receivable which are now charged to

Mr.

profit and loss, shall be collected by Fergus A. Dennis, for the aforesaid firm, within one year from date, and all sums and other sums of money collected shall be paid to John V. D. Beekman, of which sums of money threefourths, or 75 per cent., shall belong absolutely to said Beekman, and the remaining 25 per cent., or one-fourth, thereof, shall be paid to the said Beekman for the purpose of paying and satisfying two promissory notes given by John W. Fielder, Jr., and indorsed by the firm of Beekman & Fielder-one in the Princeton Bank for $410, and one in the National Bank of Highstown for $575. Dennis did not attempt to collect these overdrafts, and for this reason the complainant seeks to have them applied in payment of the notes already mentioned. The purchase by Mr. Beekman of Dey's interest, as between him and Dey, ipso facto discharged all debts due by Dey to the firm. Without any assumption of or release of Dey's overdraft, Beekman himself was precluded from calling upon Dey for any accounting. Schlicher v. Vogel, 61 N. J. Eq. 138-162, 47 Atl. 448. The position of Dey, as to the other members of the firm, however, was not affected by Beekman's purchase in any particular, save that such purchase operated as a dissolution of the old firm. Dey was still liable to account, and upon such accounting he, after the payment of the debts of the firm, would have been entitled to a one-fourth interest in the remaining assets, less the amount of his overdraft. If his overdraft had exceeded his stock account, he would have been liable for the amount of his overdraft, less the value of his one-fourth interest in the assets. Stated in another form, the property of the firm, including the overdrafts, after deducting the firm's debts, would have been divisible into four parts, and Dey would have been entitled to a one-fourth, less the amount of his overdraft. Now, Beekman got that interest when he purchased Dey's share in the partnership property. If no new firm had been organized, Beekman's position would have been the same as Dey's had been. He would have been entitled to receive what Dey would have been entitled to receive, had he not assigned; and, as already remarked, Beekman would have been liable upon his assumption only to the extent that Dey would have been liable. Dey would have been liable to pay to the firm only in case his overdraft was in excess of his share. Now, when the firm was reorganized, after Dey's withdrawal, the property and the debts of the old firm was continued as the property and debts of the new firm; the only difference being that Beekman stood in the place of Dey, with his rights and his responsibility. His rights were to receive in settlement what Dey would have been entitled to receive. It thus appears that Mr. Beekman, holding Dey's right to have his interest in the first assets applied upon his overdraft, owed nothing to the firm, either

by reason of his purchase or because of his assumption.

Now, turning to the W. S. Fielder overdraft, much of what has been already said respecting Mr. Beekman's relation to the Dey overdraft can be said of it. After Mr. Beekman's purchase of W. S. Fielder's interest, and his assumption of Mr. Fielder's overdraft, his rights and his liabilities were the same as Mr. Fielder's had been. The difference between the Dey overdraft and the Fielder overdraft is that the latter is in excess of Mr. Fielder's stock account. It is true that there has been no accounting to ascertain the value of Mr. Fielder's interest in the assets. Such an accounting would now be very expensive, and, I think, unnecessary. The stock account of each partner, fixed at the value of $1,750 for each of four interests, has been carried upon the books of the firm and into the accounts kept by Mr. Beekman in a manner that implies an assent to that sum as an approximate valuation of W. S. Fielder's share. Adopting this as the sum which W. S. Fielder would have been entitled to apply upon his overdraft, it would leave a remainder of $560 still due from him to the firm. This would have been the sum for which he was indebted to the firm. It is quite clear to my mind that Mr. Beekman's liability for this overdraft can in no view exceed this sum. Of course, it is true that upon a general accounting this result would leave the right to all the remaining assets in the parties other than W. S. Fielder. Neither W. S. Fielder nor his assigns could claim any portion of them. But it is to be kept in view that the present question is not what Mr. Beekman's position would have been were this a general accounting to ascertain Mr. Fielder's interest in the assets of the firm. Mr. Fielder, upon dissolution, might have demanded such an accounting. Instead, however, of having an accounting, the two parties agreed upon a basis of division of the firm property. Mr. Beekman took over the tangible real and personal property of the firm, and assumed the payment of all the debts appearing upon the books. The parties divided $3,000 worth of bills receivable, each taking $1,500. Mr. Beekman paid Mr. Fielder $281 in cash. Then there were certain accounts receivable not included in those already divided. These bills receivable, as already observed, were to be collected by Mr. Dennis. Three-fourths of the amount collected was to be paid to Mr. Beekman, and one-fourth was to be applied to the payment of two notes made by John W. Fielder and indorsed by the firm of "Beekman & Fielder"-one in the Princeton Bank for $410, and the other in the Highstown for $575. The present question, therefore, is, how far, under the terms of this dissolution agreement, the complainant retains the right to enforce the assumption by Mr. Beekman of the W. S. Fielder overdraft. Under this agreement the claim of the com

plainant must rest upon a debt due the firm, and the only debt due the firm in connection with this overdraft is the difference between the overdraft and the stock account. Indeed, it is entirely clear that it was never in the mind of the parties at the time of the execution of the dissolution agreement that Mr. Fielder should be responsible for the entire amount of the Dey and W. S. Fielder overdrafts. It is true that the evidence that there was an understanding between John W. Fielder and Mr. Beekman that, in case Mr. Beekman bought out the interest of Dey and the interest of W. S. Fielder, Mr. Beekman should be discharged from all liability arising from his assumption of those overdrafts, is not certain enough in its character to satisfy me of that fact. But the circumstances themselves surrounding the execution of the dissolution agreement are strongly evidential that these overdrafts were not in the minds of the parties as collectible accounts when the agreement was signed. If Mr. Fielder had supposed that Mr. Beekman owed the firm over $3,100 for these overdrafts, he would never have consented to the arrangement contained in the dissolution agreement for the payment of these two notes. It is manifest from the testimony that Mr. Beekman was the financier of the firm, and would have to look out for the paper in bank either made or indorsed by the firm. Now, it is absurd to suppose that at the time of the dissolution agreement either party thought for a moment that there was to be collected from Mr. Beekman over $3,100, one-fourth of which was to be applied to the payment of these notes. If such had been the intention, there would have been an arrangement that Mr. Beekman should directly pay one-fourth upon the notes either then or at the maturity of the paper. Mr. Beekman's liability must rest upon the strict terms of the dissolution agreement, by ignoring the overdraft itself as a debt, but treating the difference between it and Mr. Fielder's stock account as a debt due from Mr. Fielder to the firm, and as such assumed by Mr. Beekman. With some misgivings as to whether even this was within the terms of the dissolution agreement, I have concluded that for onefourth of this amount Mr. Beekman should account.

There are other balances appearing in an account kept by Mr. Beekman, for which balances it is insisted that he should account. These accounts, although entered in the books of the firm, were really concerning matters relating to the purchase by Mr. Beekman of Mr. Fielder's interest. They were important to these parties only-more particularly to Mr. Beekman-in any settlement of their affairs which Mr. Fielder might demand, he having reserved the right to repurchase property which he had conveyed to Mr. Beekman as a part of the same transaction. These accounts appear in different form, some of the same credits and debits

appearing in each account. Different balances arise from different arrangement of the same items mingled with different items. The stock account and the overdraft figure in these accounts. But apart from the difference between the stock account and the overdraft, of which I have already spoken, I find nothing which I can call "an account receivable" due from Mr. Beekman to the firm. I will qualify this general statement. There do appear certain items of indebtedness of certain debtors to the firm whose debts W. S. Fielder had assumed, and which debts Mr. Beekman assumed when he took over Mr. Fielder's interest. It appears that in purchasing W. S. Fielder's interest, Mr. Beekman purchased some property which W. S. Fielder owned personally. As part of the consideration paid by Mr. Beekman for the entire purchase, he assumed the payment of debts owed by W. S. Fielder, amounting altogether to $317.50. But only a part of these were due to the firm. The debts due to the firm are clearly bills receivable, for which Mr. Beekman is liable in equity, by reason of his assumption. To save the expense of a reference, I will try to fix that part of these debts which were due to the firm. The conclusion I reach from the expianation given by Mr. Beekman and Mr. J. W. Fielder regarding these debts is that of the assumed debts $185.50 was due to the firm; the two items for which I have found Mr. Beekman liable to account, namely, $560 and $185.50, together amounting to $745.50. Mr. Beekman should account for one-fourth of this sum, with interest from the date of the dissolution of the partnership, and this one-fourth should be applied upon the notes, according to the terms of the dissolution agreement.

In regard to costs, comparing the scope of the claim made in the bill with the limited scope of the decree advised, I think that equitably each party should pay his own costs.

1. Where a deed provided that it was subject to a mortgage by the grantor to a third person, and a mortgage given by the grantee for a part of the price obligated the latter to pay the debt secured within five years, with lawful interest, and contained no provision making such payment conditioned on a previous discharge of the prior mortgage by the mortgagee, evidence of a parol contract, by which the grantor agreed to pay such prior mortgage within such time, was inadmissible as contradicting the written contract.

2. Where a grantor was not bound under a deed to pay off an incumbrance on the land as a condition to foreclosing a mortgage for pur

2. See Mortgages, vol. 35, Cent. Dig. § 880.

chase money, a tender of the amount of the mortgage on condition the mortgagee would satisfy the incumbrance was ineffectual.

Suit by James R. Mott against Rose E. Rutter and others. Decree for complainant. The bill is filed to foreclose a $450 mortgage, indisputably a purchase-money mortgage. Its execution, delivery, record, etc., are substantially admitted. The defense set up is that at the time of the purchase of the land and the giving of the mortgage by the defendants there was a precedent mortgage on the lands in question and other lands, held by the Provident Life & Trust Company, for the sum of $7,800; that the complainant, at the time he sold the mortgaged premises to defendants and took the mortgage now in suit, agreed that he would relieve the mortgaged premises from the lien of the Provident Life & Trust Company mortgage within five years, and accept principal and interest in discharge of his own mortgage; that the defendants, at the expiration of the five years, tendered the mortgage money due the complainant, and demanded that he procure the discharge of the lien of the Provident Life & Trust Company mortgage; that the defendants have since made like tender and demand, and that the complainant has always refused to procure the discharge of the prior mortgage; that the defendants have always been ready and willing to pay the complainant's mortgage, and that, under the circumstances narrated, no interest should be allowed, but only the principal sum of his mortgage, $450, and five years' interest thereon, the amount first tendered him, without costs, etc. The cause came to a hearing on issue joined on the answer.

John B. Slack and Chas. Ewan Merritt, for complainant. Chas. A. Baake and John J. Crandall, for defendants.

GREY, V. C. (orally, after stating the facts). As the answer sets up an affirmative defense not responsive to the allegations of the bill, the defendants asked and were given the right to open the case, carrying with it the burden of proof of the defense alleged in the answer. The deed from the complainant to the defendants conveying the mortgaged premises is produced in evidence; also the mortgage now sought to be foreclosed, which secures part of the purchase money. The deed contains this recital of the terms of the conveyance: "This conveyance is made subject, however, to a $1,000 mortgage made by James R. Mott to the Provident Life and Trust Company, said mortgage being upon this lot and upon other lots of land in Atlantic City." The deed also contains a covenant of general warranty. On the hearing of the cause the defendants offered to prove a parol bargain between the complainant and the defendants to the effect that the mortgage now in suit was to be payable when the complainant should, within five years, have ob