tent. The principal contention at the hearing of the motion was between the bank hold by a petition in the administration suit to foreclose the lien held by it, and such proceedings were had therein; that on Januarying the receiver's certificates on the one hand and the receiver and his counsel on the other hand, each claiming a prior right to be paid in full out of the fund in the hands of the 28, 1915, a decree was entered by which the It was further decreed that all the property rights, privileges, effects and franchises of the railroad company, and all its assets of any character or description whatsoever, and all the right, title, and interest of said receiver thereto should be sold by the said receiver free and clear of any mortgage, judgment, receiver's certificates, or a lien or claim thereon, except only the taxes and mortgage herein above mentioned, to raise and satisfy the debt therein found to be due to the said bank, and that out of the proceeds of the sale the receiver should pay the said bank its debt, interest and costs, with a counsel fee of $250. It was also provided that in case more money should he raised by the sale than should be sufficient to answer such payments, such surplus money should be administered by said receiver according to law and the further orders of this court. In pursuance of this power the receiver sold the said property for the sum of $28,600, out of which he paid by order of this court to the treasurer of the state the sum of $15,000 for taxes due it; there remains in his hands for distribution the sum of $13,985.77. In addition to the receiver's certificates the receiver is also indebted, principally to railway companies throughout the United States for car service rendered to him as such receiver, in the sum of $2,019.12, and claims have been made against him also for damages arising out of losses to shippers by accidents, fires, and other casualties. There is also pending an application by the receiver and his counsel to fix and allow their fees, costs, and expenses incurred in the administration of the assets of the defendant corporation. Notice was given to the creditors and stockholders that the receiver and his counsel would each ask for an allowance of $3,000. This was discussed at the hearing of the motion, and no objection having been made thereto, and the court being of the opinion that the services of the receiver and his counsel were worth the amounts asked for by them, such allowances will be made, but they will be subject to such order as may be made regarding the distribution of the fund. It is obvious that the receiver has not in hand a sufficient amount of money to pay all these claims, and that one or more of them will have to be abated to a considerable ex The question of law at issue here is one which has not had very much discussion. There are but two cases in the state so far as my investigations or those of counsel go that throw any light whatever upon the subject. The first one to which I will call attention is Nessler v. Industrial Land Co., 65 N. J. Eq. 491, 56 Atl. 711, in which Vice Chancellor Emery seems to declare that where the fund in the receiver's hands is not sufficient to pay all the receiver's debts and other compensation, the distribution must be pro rata upon the principle that the claims are all and equally debts or claims which should be paid by the trust fund as expenses of the receivership, and if the fund is not sufficient to pay all in full, then they must abate pro rata. A further reason given by him is that if the receivers desire or intend to claim a preference in payment of their own compensation, they must apply to the court not only for such order, but also for authority to incur indebtedness which will be subject to their claim. This case was decided in 1903. No reference is made to the prior case (November, 1900) of Chesapeake & Ohio Railway v. Atlantic Transportation Co., 62 N. J. Eq. 751, 48 Atl. 997, in which the Court of Errors and Appeals rendered a decision covering the point, and which could not have been brought to the attention of the learned Vice Chancellor who decided the Nessler Case. In the Chesapeake & Ohio Railway Co. Case there were three classes of claims struggling for priority of payment out of the fund which was insufficient to pay them all in full. The Court of Errors and Appeals ordered them paid in the following sequence: (1) The receiver's allowance and the expenses of winding up the corporation, which would undoubtedly include counsel fees allowed to the receiver's counsel; (2) the franchise tax owing to the state; and (3) the liabilities other than the expenses of the receiver above mentioned incurred by the receiver in carrying on the business in the due course of the administration of its affairs. The Chesapeake & Ohio Railway Company case seems to be a clear authority in this state for directing the payment of receiver's fees and expenses of winding up, in preference to claims of other classes. No reasons are given in the opinion; it seems to have been taken for granted. There are three English cases which throw light upon the question at issue. The first is Strapp v. Bull Sons & Co. [1895] 2 Ch. 1, 64 L. J. Ch. 658. There a debenture holder's action was brought against the company and a winding up petition was presented by an unsecured creditor. By consent an order was made in the winding up proceeding that the plaintiff in the action and the unsecured creditors should raise 5,000 pounds in order to complete certain contracts then in progress by the insolvent company, which sum was to be a first charge in pro rata to debentures, and that no further debts or liabilities should be incurred. The sum of 4,250 pounds was raised by the plaintiff and certain unsecured creditors in accordance with the order, and further liabilities were incurred by the receivers and managers for the purpose of completing the contracts. It was held that the receivers and managers were entitled to be indemnified against these liabilities out of the assets of the company in priority to the charge of 4,250 pounds. A reading of the opinion in the Court of Appeal will show that the decision was based upon the principle that further liabilities which were incurred in the face of an order to the contrary were expenses of administration which should be paid before any distribution could be made to creditors. Lord Halsbury said: "I do not concur in the idea that it ever could have been contemplated that those who were to take upon themselves the burthen of the management and receivership should be left to speculate on whether or not they would ever get paid anything. It was an essential part of the arrangement that some one should manage this business, and it was necessarily implied in that arrangement that those who for the benefit of all concerned, and not merely for themselves, were entering into this arrangement and were carrying it on to its completion so there should be an ultimate resulting fund capable of being divided should themselves be indemnified for what they were doing, namely, carrying on those contracts, and if you look, not at each one by itself, but at the whole of the orders as one arrangement to which all were parties and all tending to the same thing, it seems to me really to be free from doubt that that was the real meaning of the transaction." The next English case is In re Glasdir Copper Mines, [1906] 1 Ch. 365, 75 L. J. Ch. 109. This case is cited on the brief for the receiver. There a receiver and manager appointed in a debenture holder's action under orders of the court borrowed for preserving the property of the company certain sums which were advanced by certain of the debenture holders. The receiver gave in respect of the sums so borrowed formal charges which were declared to be "first charges" on the property, and provided that he should not be personally liable to repay the advances out of his own moneys. The property charged was sold by him and the proceeds proved to be insufficient to pay his expenses and remuneration and the sums borrowed. It was held that he was entitled to be indemnified in respect to his expenses and allowance out of the assets realized in priority to lender's claims under their charges. This case was also in the Court of Appeal, and Mr. Justice Stirling in his opinion says, speaking of the case of "The case therefore is an authority for the proposition that where advances are made to a holder's action under an order of court which direceiver and manager by a party to a debenture rects that the sum advanced shall be a first charge on the assets in priority to the debenture holders a receiver and manager is nevertheless entitled to take his costs and expenses properly incurred out of the assets in priority to the sums advanced if it should appear that the true bargain was that the assets should be realized all concerned. In my opinion the orders were by the receiver and manager for the benefit of made and the securities given and taken in the expectation of all parties that by means of the money advanced the receiver will be enabled to realize the property more advantageously; that is to say, in such a way as not only to repay the advances but to pay something to the debenture holders. Things have turned out very differently, but inasmuch as the receiver, in my view, acted in the realization of the assets for the benefit of every one concerned I think that he is entitled to indemnity out of the assets in priority to those for whose benefit he was acting." The latest and only other English case is In re Boynton, [1910] 1 Ch. 519, 79 L. J. Ch. 247. In that case a receiver appointed by the court in a debenture holder's action was on the plaintiff's application given leave to borrow on the security of a first charge on the debenture assets for the purpose of carrying on the business. Money was advanced by a bank and the receiver executed a deed giving the bank a first charge on the assets, but not expressly excluding his personal liability. The assets proved insufficient. It was held: "That the proper inference to draw from the whole transaction, being that the receiver did not intend to pledge and the bank did not rely upon his personal credit, the assets must be applied first in paying the plaintiff's costs of action as between solicitor and client and the receiver's remuneration, and the balance paid to the bank in part discharge of their debt." The same ruling was made in this country in the Federal Court of Appeals from the Fifth Circuit in Petersburg Savings & Insurance Co. v. Dellatorre, 70 Fed. 643, 7 C. C. A. 310, Pennsylvania, etc., Co. v. J., T. & K. W. R. Co., 93 Fed. 60, 35 C. C. A. 202. The reasoning upon which all these cases go seems to be that the court which appoints the receiver takes into its custody the property of the insolvent company for administration for the benefit of all concerned, secured and unsecured creditors and stockholders, and that it can hardly be expected that persons will be found to act as such receivers or as counsel in case there could be any doubt about their compensation or reimbursement for expenses. In the case now under consideration, unless such a distribution were permitted, the receiver would not only have to spend his time and labor for nothing, but might and probably would also be compelled to pay some portion of the expenses without the possibility of reimbursement. But it is said on behalf of the bank that the order authorizing the borrowing of money on receiver's certificates provided that the certificates should be a first lien on the prop pany in preference to any mortgage, judgment, order, liens, or claim thereon, except only the Vail mortgage and taxes; that the certificates themselves contained a like provision, and that the same is embodied in the decree taken to foreclose the bank's lien under the certificates, and that having been made the subject-matter of judicial inquiry and decision, and having taken the form of a final judgment of a competent court, the right now claimed by the bank is therefore finally settled. This view leaves out of sight the fact that the bank could not realize upon the certificates held by it without an administrative proceeding carried on by some one as it was in this case carried on by the receiver, and that such administrative proceeding could not be carried on without the expenditure of time and money, and that the persons administering the fund had no other place to apply to for reimbursement than to the fund itself. I therefore think that on both principle and authority the compensation of the receiver and his counsel and the expenses of the receivership must be first paid in full out of the fund in the receiver's possession, but I see no reason why the claims for car service and damages to shippers should outrank the claim of the bank; they seem to me to be on a par and that as between themselves they should pro rate. I will advise a decree in accordance with these views." (85 N. J. Eq. 338) DYOTT v. HENDERSON et al. (No. 39/248.) (Court of Chancery of New Jersey. Jan. 12, 1916.) 1. DIVORCE 167-DECREE-NOTICE BY PUB- [Ed. Note.-For other cases, see Divorce, Cent. Dig. §§ 533-548; Dec. Dig. 167.] 2. DIVORCE 135-ADULTERY CONDONA TION. Where petitioner for a divorce on the ground of his wife's adultery in 1891, which had been brought to his knowledge at that time, had lived with her as late as 1903, there was an obvious condonation, which would have barred a decree, until the apparent condonation should have been overcome by evidence. [Ed. Note.-For other cases, see Divorce, Cent. Dig. § 451; Dec. Dig. 135.] 3. DIVORCE 167- FRAUDULENT DECREE RELIEF INDEPENDENT SUIT. Where petitioner's husband had fraudulently procured a divorce from her, his subsequent death dissolved the marriage status litigated in the divorce suit, so that there could be no rehearing of that suit, and relief against the oper ation of the decree was properly sought by an Cent. Dig. §§ 533-548; Dec. Dig. 167.] 4. DIVORCE 167- FRAUDULENT DECREE While the validity of a divorce decree should be tested after the death of one of the parties in suits or in aid of suits actually pending, which divorce decree, yet, where an independent suit to directly involve specific rights affected by the set aside the decree so that petitioner might recover her dower in the real estate of her deceased husband made all interested persons parties without objection to the sufficiency of the bill, defendant, and they answered on the merits relief should not be denied on the mere ground that no action nor suit for dower or other proceeding for the recovery of specific property in which the divorce decree could be interposed as a bar, was in fact pending, or might never be brought. [Ed. Note. For other cases, see Divorce, Cent. Dig. §§ 533-548; Dec. Dig. 167.] Bill by Lizzie B. Dyott against George Henderson, executor, etc., and others, to set aside a decree of divorce as fraudulently procured. Decree for complainant. Lewis Starr, of Camden, for complainant. Bergen & Richman, of Camden, for defend ants. LEAMING, V. C. This suit has been brought by complainant to set aside a decree of divorce from the bonds of matrimony, which decree was entered in this court August 4, 1913, against complainant herein, on the petition of her husband on the ground of adultery. The petitioner in the divorce suit has since died. The present bill asserts that he died seised of certain real estate in New Jersey and elsewhere, in which real estate complainant is entitled to an interest but for the decree of divorce, and that the relief sought in this suit is to enable complainant to demand and receive her rights as a widow in the estate of her deceased husband. All persons interested in the estate are made defendants. The ground upon which relief is now sought is fraud in the procurement of the divorce decree. At final hearing in this suit the files in the divorce suit were produced, and by those files it appears that jurisdiction over the defendant as an absent defendant was entertained by this court by reason of affidavits which, if true, fully established that the residence of the defendant could not be ascertained. An order was accordingly made dispensing with service of process or notice, other than by publication, and the cause heard ex parte. Defendant in the divorce was 'then suit, complainant herein, first learned of the divorce suit shortly before the present bill was filed by her. The petition upon which the decree of divorce was entered charges adultery with one Peyser on August 13, 1888, and at divers other times after that date until June 26, 1891, and the decree entered is based upon proofs part of that period, and as late as 1903, had resided with her, and at the time he made the affidavit that he had not known her address of acts of adultery during that period and upon the testimony of the petitioner that he had not lived with his wife since the latter date. The affidavit on which exoneration | since 1891 he had in his possession letters from service of process or notice on the defendant was primarily based was an affidavit of the petitioner made September 11, 1911, in which he stated that the last post office address or residence of the defendant which was known to him was in the neighborhood of West 104th street, New York City, where he and defendant lived together prior to 20 years ago (that is, prior to September, 1891), and that he had exhausted every means to ascertain some subsequent post office address or residence of the defendant, and had not been able to ascertain the same. In that affidavit the petitioner also stated that the only relatives of the defendant of whom he had ever known were the father, mother, and brother of the defendant, and that he believed them to be dead. from her containing her address written during that period, the latest of which letters was in 1905. These letters alone disclose that the petitioner's affidavit in the divorce suit by means of which he procured from this court the right to a hearing without actual notice of the suit being brought to the knowledge of his wife was not only false, but must have been intentionally false; for it is obviously impossible that he could have honestly testified that he had not known his wife's address since 1891 and had not lived with her since that date when he had regularly corresponded with her during a period of 14 years after 1891, and had lived with her as late as 1903, and had in his safe deposit box at his death letters from her containing her address, the latest of which was written as late as 1905. Other evidence has also been introduced which discloses the falsity of the affidavit here in question. The affidavit sets forth the names of the relatives of the wife, all of whom, according to the affidavit, were dead, and does not include in the list of relatives the son of the wife by a former husband. The well-known purpose of such state At the final hearing of the present suit it was conclusively established that the affidavit above referred to was false in its material statements. About 100 letters written by the petitioner in the divorce suit, now 'deceased, to complainant herein have been received in evidence. These letters cover a period extending from January, 1891, to June, 1905. They disclose that subsequent to Sep-ments in affidavits of that nature is to distember, 1891 (that being the date on which the adultery was established, the date on which petitioner testified he last lived with his wife, and the date named in his affidavit as her last-known address, on which affidavit he procured the order dispensing with service of process or notice in the divorce suit), and up to the year 1905, petitioner had been constantly aware of his wife's address, for during each of the years during all of that period he had written many letters to her at her various residences and had been in regular correspondence with her. The letters also disclose that during much of that period they lived apart, but at times lived together. As late as September 17, 1903, 12 years after he says he last knew her address, a letter from him to her postmarked Seabright, N. J., and addressed to her at 175 West SeventyEighth street, New York City, says: "Send bundle of clothes in closet to laundry so I can get clean under clothes when am back home." The last letter produced written by him to her is under date of June 5, 1905, and is addressed to her at 356 Columbus avenue, Boston, Mass. There was also produced, on notice, several letters from her to him which contained her address, written in 1894 and one written in 1905. These letters were found after his death in his safe deposit box. It thus appears from the correspondence alone, without consulting other evidence, that from 1891 to 1905 the petitioner in the divorce suit had been almost, if not quite, constantly ac close that inquiry has been made to ascertain the wife's address in every place where the information could be reasonably sought. This son has now testified not only that he stayed with his mother and his stepfather in 1903 when they were residing together at 175 West Seventy-Eighth street, New York City, but that in 1909 he saw his stepfather and told him that his mother was then in Boston. It cannot be reasonably suggested that the divorce petitioner had forgotten the existence of this stepson; for the letters produced disclose that this stepson was a source of much dissension between the parties. There is also testimony of letters from complainant herein to her husband, which contained an envelope indorsement of the address of complainant, having been mailed by the witnesses to the divorce petitioner, at the request of complainant, as late as 1910 and 1911, but I have given little or no weight to that testimony. Complainant herein was also permitted to testify that she had written letters to her husband regularly up to the time of his death, and that her address was indorsed on all the envelopes. This testimony was received over the objection of defendants based on the provisions of our evidence act; but under the rule defined in Cowdrey v. Cowdrey, 71 N. J. Eq. 353, 64 Atl. 98, affirmed in 72 N. J. Eq. 951, 67 Atl. 111, 12 L. R. A. (N. S.) 1176, the testimony was deemed competent. As it may be regarded as doubtful whether complainant should have been permitted in this suit to testify touching transactions with wholly disregard her testimony in all such matters, but to allow it to stand for the consideration of the court of review if it shall there be deemed competent. [1, 2] From the testimony above reviewed, exclusive of that of complainant touching transactions with the deceased, I deem it clearly established in this suit, not only that the affidavit on which this court permitted the petitioner in the divorce suit to proceed to hearing ex parte without service of process or notice of the suit on the defendant therein was false, but necessarily was intentionally false, and falsified to conceal the pendency of the divorce suit from the defendant therein, and was effective for that purpose. The mere existence of a substantial doubt whether the divorce decree was procured through fraud in the manner stated should lead this court to deny relief in a suit of this nature; but the evidence already referred to leaves no reasonable doubt. The petitioner obviously testified to what he knew to be false, and made no honest effort to ascertain the address of his wife. It is reasonably certain that his wife's address could have been ascertained had he disclosed the truth to his solicitors. It is also certain that, if petitioner had testified before the master that he had resided with his wife as late as 1903, instead of testifying that he last resided with her in 1891, no decree of divorce could have been entered for an act of adultery which had been brought to his knowledge in 1891. That testimony would not only have demanded further inquiry for the address of the wife, but would have presented an issue of condonation which would have barred a decree until the apparent condonation should have been overcome by evidence. Petitioner deceived the court and deceived his own solicitors. In such circumstances it follows that the decree of divorce was procured by fraud-by fraud imposed upon the court and the defendant. I am fully convinced that any relief to which complainant may be entitled is appropriately sought by an original bill for relief against the operation of the decree of divorce. Story's Eq. Pl. § 426. There are, however, forceful objections against entertaining a bill in which the sole object of the suit, and the only relief to be granted is the setting aside of a fraudulent decree of divorce after the decease of the spouse who fraudulently procured the divorce decree. In Givernaud v. Givernaud, 81 N. J. Eq. 66, 85 Atl. 830, these objections are pointed out by Vice Chancellor Stevenson. In Wright v. Wright, 8 N. J. Eq. 143, the bill was filed for dower, and in aid of the suit for dower sought to set aside a decree of divorce for fraud, which decree would have barred the dower. if not set aside. In the present case the bill asserts that complainant desires to recover her dower, and is barred by the fraudulent divorce decree; but, as no action or suit for dower is pending, the present bill cannot be said to be strictly a suit in aid of a pending litigation for dower or other rights as a widow. I incline to the view expressed in Givernaud v. Givernaud that after the decease of a spouse the validity of a divorce decree should be tested in suits or in aid of suits actually pending which directly involve specific property rights which are affected by the divorce decree; but where, as in the present case, the bill sets forth that complainant claims and desires to recover her dower in the real estate of her deceased husband, and is barred from recovery by the fraudulent decree of divorce, and makes defendants to her suit all persons in interest, and which persons have all answered on the merits without objection to the sufficiency of the bill, I am unable to reach the conclusion that the relief prayed should be denied on the mere ground that no action or suit for dower or other proceeding for the recovery of specific property in which the divorce decree could be interposed as a bar is in fact pending or may never be brought. The following cases and the cases therein collected will disclose that this conclusion is in harmony with views entertained in other jurisdictions: Bomsta v. Johnson, 38 Minn. 230, 36 N. W. 341; Groh v. Groh, 35 Misc. Rep. 354, 71 N. Y. Supp. 985; Fidelity Insurance Co. Appeal, 93 Pa. 242. Through fraud this court has been induced to enter a decree which is operative on its face to deny to complainant the status of a widow [3, 4] It seems clear that the relief sought and her property rights as a widow in the by complainant could not have been had in estate of her deceased husband. There are the original divorce suit. The marriage now before this court in this suit all parties status, which was the sole subject of litiga- interested in that estate, and all have antion in the divorce suit, has been dissolved swered and have been heard on the issues by death; there is no longer a marriage presented by the pleadings. It is not sugstatus to be dissolved by a decree of divorce; gested that there are any persons in interest to open the decree is to abate the suit; there who have not been made defendants herein. can accordingly be no rehearing of a divorce If any persons in interest have not been At final hearing of this suit counsel of defendant made the following objection to pro cedure: "I wish also to make an objection to this manner of attacking a decree of the Court of Chancery. It seems to be a collateral attack upon the decree of the Court of Chancery, rather than a direct attack. It seems to me the proceeding should have been to apply in the suit itself, the divorce suit, Dyott v. Dyott, to open the decree, rather than to attack it in an independent suit." The sufficiency of the bill had not been attacked in any manner prior to that time. |