ROBERT L. SHAW and THE SECOND NATIONAL BANK OF JERSEY CITY.

[Decided September 7th, 1910.]

1. To justify a bill of review on the discovery of new matter, it must appear not only that the matter is new, but that the party could not have known thereof before the trial by the use of reasonable diligence.

2. A decree giving affirmative relief to defendant on an answer alone will not be reversed on appeal merely because a cross-bill was not filed, where the case was fully tried on the merits and the evidence warrants the decree.

3. Where the court gave affirmative relief to defendant on his answer alone, it will open the decree on application and make a new one on the evidence admitted on giving defendant the right to file a cross-bill, and the new decree will be so dated that complainant will be within time to appeal from it.

4. A complainant applying after two years or more that the case was in litigation to prove a matter within his personal knowledge and concerning his personal conduct may not have the decree against him opened to enable him to give testimony on that point.

5. A decree will not be reopened on the application of the defeated party to permit him to produce an admittedly perjured witness to prove a new basis for relief or to produce a witness admittedly not knowing what he has been testifying about.

6. An application to reopen a case for further proof after rendition of final decree held not supported for failure to show due diligence to procure at the trial the testimony relied on.

7. Where a note was an accommodation paper as between the maker and payee, a third person seeking to hold the maker on the note has the burden of proving that he gave consideration for the note.

Upon application to file a bill of review, or reopen the case for further proofs.

Messrs. Hudspeth & Lane, for the complainant.

Messrs. Vredenburgh, Wall & Carey, for the defendant Robert L. Shaw.

77 Eq.

GARRISON, V. C.

Richards v. Shaw.

This suit was commenced by a bill filed on the 16th day of October, 1906. Its object was to foreclose a mortgage made by Robert L. Shaw to William Hogencamp, dated August 27th, 1902. The mortgage, by its terms, was given to secure the payment of a promissory note for $13,000 made by Shaw to Hogencamp. The case was referred to me for trial, and was set down for hearing on the 14th day of May, 1907, on which day the complainant made out his prima facie case, which consisted wholly of the proof of the note and mortgage. The defendant Shaw began putting in his proofs, which were to the effect that the note upon which the mortgage was based was without consideration to him, being an accommodation to Hogencamp (excepting to the extent of $1,000), and the complainant, after the defendant had rested, called one witness, Hogencamp, in rebuttal.

After Hogencamp, as a witness on behalf of the complainant, had given considerable testimony, it was considered best to have the case go off in order to enable the complainant to make amendments to the bill. Such amendments were made, and the case again came on for hearing on the 6th day of May, 1908, and the hearing was continued on the seventh, eighth and fourteenth days of that month.

The court announced its conclusions upon the issues involved, and on the 14th day of September, 1908, the form of the decree having been theretofore presented to the complainant by the defendant Shaw, the parties, upon notice by Shaw to the complainant, appeared before the court, and Shaw asked that the decree in the form in which he had drawn it should be signed. Counsel for the complainant stated that there was no objection to the form of the decree, but that they might desire to apply to reopen the case for further proofs; and the court, after making a memorandum that the form was unobjectionable, laid the matter of signing the decree over to September 21st, 1908, to enable counsel for the complainant to present whatever they desired to present in aid of an application to rehear the case.

On the 21st of September it was again laid over at the complainant's request to the 28th day of September, 1908, and on that day the complainant's counsel, stating that they did not

desire to avail themselves of the opportunity to present an application for a rehearing, the final decree, in the form that the complainant stated was unobjectionable to him, was advised.

On the 13th of September, 1909, the complainant filed a petition for leave to file a bill of review. On September 27th, 1909, he filed another such petition; and on November 29th, 1909, he filed a supplemental petition for leave to file a bill of review, or, in the alternative, to have the decree set aside and the case opened for further proofs.

Since the last-named date the court has heard counsel at length at various times, and has permitted them to take as much time as they desired to prepare and file their briefs. Voluminous and comprehensive briefs were carefully prepared and furnished

me.

There does not seem to be any dispute concerning the principles of law to be applied; the only dispute is as to the result of their application.

The following authorities show the existing law and procedure upon the matter of granting leave to file bills of review.

"When application is made to file a bill of review upon the discovery of new matter, the rule is that the matter must not only be new, but must be such as the party, by the use of reasonable diligence, could not have known; for if there be any laches. or negligence in this respect, that destroys the title to the relief." Perkins v. Partridge, 30 N. J. Eq. (3 Stew.) 560. See, to the same effect, Story Eq. Pl. § 414.

* * *

"Such a bill" (of review) "must rest upon some new matter which has been discovered after the decree, and could not possibly have been used when the decree was made." Watkinson v. Watkinson, 68 N. J. Eq. (2 Robb.) 632. See, to the same effect, Bacon's ordinances, cited with approval in Traphagen v. Voorhees, 45 N. J. Eq. (18 Stew.) 42.

In Feinberg v. Feinberg (Vice-Chancellor Grey, 1905), 70 N. J. Eq. (4 Robb.) 424, it is said: "The rule on applications for a new trial before a vice-chancellor is governed by the principles which are recognized in the law courts in cases of motions for new trials after the verdict of a jury."

The issue of fact which this court tried and determined against

the complainant was with respect to the consideration of the note of Robert L. Shaw to William G. Hogencamp, dated August 27th, 1902. This court found that that note (excepting as to $1,000 thereof) was an accommodation note; that Hogencamp, to whom it was given as an accommodation, got it discounted at the Second National Bank, of which he was president, and subsequently the undisputed testimony showed that Hogencamp had paid the bank and taken up the note and the mortgage, and that the latter, in his hands, was unenforceable.

(I shall leave out of consideration the $1,000 of this mortgage for which there was initially consideration since that is not material in any way in the consideration of the questions involved in this application.)

The result reached, as above stated, was after a prolonged trial, during which every opportunity which the most insistent desire to get at the truth could devise was given the complainant. Hogencamp was on the stand for days. His books and papers and those of the bank and the former officials of the bank who knew anything about the matter, were all completely at the complainant's disposal. So desirous was the court to get at the facts that practically every rule ordinarily enforced with respect to regularity of procedure was disregarded in favor of the complainant. He was permitted to disregard the order of proof; to examine witnesses, and after they had been cross-examined and the strength and force of their testimony in the complainant's favor had been weakened or destroyed, he was permitted to reexamine them as if on direct examination. Witnesses upon most important points were produced by the complainant, examined and cross-examined, and left the stand, and after the lapse of hours, and even in some instances, of days, these same witnesses were permitted to be put back upon the stand by the complainant to give new versions of the same subject-matter, and to add new proofs concerning it. The complainant, during the course of the trial, shifted the theory of his case three or four times, each new basis of his right being destructive of the previous one. He would advance a theory, produce proofs to sustain it, and rest upon it until it was demonstrated to be unstable, and would then abandon that one and bring forward another, which, in

turn, was fortified by proofs and maintained until shown to be untenable.

The various petitions for permission to file a bill of review are based first, on an alleged error in the decree (which it seems gives affirmative relief upon an answer alone); and second, upon alleged newly-discovered evidence.

As to the first point. The form of the decree was unobjectionable to the complainant, and it may be that he is estopped, in view of his failure to object in time, to now raise this point. In any event, by opening the present decree and permitting the defendant to now file a cross-bill, the completely tried case will afford a proper basis for the decree as made, and the authorities hold that this is proper procedure. Dayton v. Melick (Chancellor Runyon, 1876), 27 N. J. Eq. (12 C. E. Gr.) 362; Fiacre v. Chapman (Chancellor Runyon, 1880), 32 N. J. Eq. (5 Stew.) 465; Petty v. Young (Court of Errors and Appeals, 1887), 43 N. J. Eq. (16 Stew.) 654; Chancellor v. Sieberlich (Vice-Chancellor Walker, 1909), 75 N. J. Eq. (5 Buch.) 501.

A decree giving affirmative relief to defendant will not be reversed on appeal merely because a cross-bill was not filed where the case was fully tried out on the merits and the evidence warrants the decree. Vandeveer v. Holcomb (Chancellor Green, 1864), 17 N. J. Eq. (2 C. E. Gr.) 90.

However, I will adopt the following practice so as to accomplish two results: I will, upon this petition (or if not proper upon this, then upon a petition of the defendant Shaw), open the final decree and make such new one on the proofs now in as I think proper, giving the defendant Shaw a right to file a cross-bill, if that is necessary, which new decree will be of such a date that the complainant will be within time to appeal from it, if he so desires. This will give to each side the rights which I think should be preserved to them.

As to the second matter advanced by the complainant, I have determined upon careful consideration of the proper principles to be applied and the facts to which they should be applied, not to grant permission to file a bill of review, or to reopen the case for further proofs.