McGeehan, Colie and Eastwood. The opinion of the court was delivered by Eastwood, J.A.D.
Defendants appeal from a judgment of the Superior Court, Chancery Division, setting aside certain transfers of stock made by defendant, Gaspar Kirchner, to John Kirchner, in the defendant corporations, G. Kirchner & Son, Inc., and Gaspar Kirchner & Son, Inc., and a $40,000 mortgage made by defendant corporation, Gasper Kirchner & Son, Inc., to defendant, John Kirchner, on the ground that the transactions were fraudulent.
Defendant, Gaspar Kirchner, husband of plaintiff, Antonia Kirchner, by an order of the Court of Chancery, dated November 3, 1947, was directed to pay plaintiff the sum of $30 per week for support and maintenance until the further order of the court, and a counsel fee of $350 and costs. Gaspar Kirchner defaulted in his alimony payments and plaintiff instituted this action to set aside (a) the transfer by Gaspar Kirchner of three shares of G. Kirchner & Son, Inc., to his son John Kirchner and (b) the transfer of fifty shares of the stock of Gaspar Kirchner & Son, Inc., made by Gaspar Kirchner to John Kirchner, and (c) a $40,000 mortgage hereinabove mentioned, all of which transactions were alleged to have been fraudulent and made to avoid the enforcement of the aforementioned alimony order. Previous to the institution of this action, defendant, Gaspar Kirchner, had been adjudged in contempt for violating the alimony order. When the suit was instituted, plaintiff claimed arrearages of $1,126.25 and a balance of $226.25 on account of counsel fee and costs. At the hearing of this suit, the court refused to permit the defendant, Gaspar Kirchner, to testify, on the ground that he had not purged himself of the contempt. Defendant, John Kirchner, was denied the right to testify
regarding the consideration for the $40,000 mortgage, by virtue of his failure to produce pertinent records at a prior discovery hearing.
Defendants contend that the trial court erred in (1) denying the defendant, Gaspar Kirchner, the right to testify; (2) in refusing to permit defendant John Kirchner to testify as to the consideration paid for the $40,000 mortgage; (3) in directing that the transfers be set aside for future maintenance; (4) in entering a judgment for a greater sum than that demanded in the complaint; and (5) in allowing counsel fees, in alleged violation of R.S. 3:54-7.
In considering the status of defendant, Gaspar Kirchner, as a contemner with respect to his right to testify in a subsequent action, a distinction must be drawn between that of a contemner who seeks a privilege of the court and that of one who comes in as of right to answer an attack against him. There may be cogent reasons for a court's refusal to hear a moving party who is guilty of contempt under the well known maxim that "he who seeks equity must do equity," but reason and justice dictate that in the interests of the preservation of the fundamental fairness characterized as due process of law under the Fourteenth Amendment of our Federal Constitution, a defendant should not be prevented from presenting his defense notwithstanding his contumacious conduct. Hovey v. Elliott , 167 U.S. 409, 42 L. Ed. 215. The generally accepted rule is found in 12 Am. Jur. , § 71, p. 438:
"* * * As to a right to a hearing on the merits, a distinction may be drawn between a plaintiff in contempt and a defendant. A plaintiff in contempt is not entitled to proceed with the trial of his case as a matter of right, whereas to refuse the defendant a trial may be an unconstitutional deprivation of his right to a hearing. * * * Many authorities maintain, * * * that as a rule a court has no power to strike out an answer or otherwise prevent a defendant from interposing a defense on the merits, even though he may be contumacious. * * *"
This principle has been followed not only by our courts but those of many other states. In the case of Jansch v. Jansch , 95 N.J. Eq. 143 (Ch. 1923), it was said at pp. 143, 144:
"* * * There can be no doubt that if the petitioner had been in contempt, this court would not have heard the case. Dan. Ch. Pr. *505, states the rule to be: 'That a party in contempt cannot move until he has cleared his contempt, and that the rule is confined to cases where such party comes forward voluntarily and asks for an indulgence. * * *"
"I felt that this court should proceed with the hearing of the cause, although the defendant was in contempt, but that the defendant had a right to be heard, which I granted by assigning counsel. Chancellor Williamson, in the case of Endicott v. Mathis , 9 N.J. Eq. 110, says: 'As this is a matter so entirely in the discretion of the court, where the court is simply vindicating its own dignity, it would seem that each case as it arises must depend very much upon its own peculiar circumstances.'"
Defendant, Gaspar Kirchner, under authority of the stated recognized rule of law, should have been permitted to testify, not only in his own behalf, but other defendants were entitled ...