On appeal from the Superior Court, Chancery Division, whose opinion is reported in 6 N.J. Super. 456.
For affirmance and modification -- Justices Heher, Oliphant, Wachenfeld and Burling. For reversal -- Chief Justice Vanderbilt, and Justice Case. The opinion of the court was delivered by Heher, J.
[5 NJ Page 272] The primary question here concerns the legal effect of the alteration by defendant Verna Stretch of a deed of conveyance of farm lands at Shiloh in Stow Creek Township, Cumberland County, New Jersey, made and delivered May 22, 1941, by defendant Mary J. Watson to Verna Stretch and her husband, the plaintiff, by the substitution of defendant Adah B. Sox as the grantee. The altered deed was recorded January 15, 1943. A deed purporting to convey the lands to defendant Wallace A. Halter was made and delivered by Sox on February 13, 1943, and recorded two days thereafter. The Chancery Division of the Superior Court dismissed a bill of complaint addressed by plaintiff to the old
Court of Chancery alleging that the alteration of the Watson deed was designed to defraud him of "his right, title and interest" in the lands as a tenant by the entirety, and that Halter "had full knowledge of the fraud" and had the same fraudulent intent, and praying that both conveyances be decreed void and that the lands be reconveyed "to the respective parties * * * found to be entitled thereto." An appeal from the judgment of dismissal taken by Halter and his wife, Ida, to the Appellate Division of the Superior Court was, before hearing, certified here on our own motion.
The Superior Court concluded that the alteration "avoided the deed." The principle invoked was that an alteration of this character "by one of two grantees named in a deed, unauthorized by the second grantee, serves to avoid it." It was found that the conveyance to the Stretches was in trust for their minor children, Mary Ellen and Thomas, Jr., but that, while it failed as an express trust for want of the manifestation in writing required by R.S. 25:1-3, the grantees were deemed to be constructive trustees to prevent undue and unconscionable advantage, and therefore plaintiff cannot maintain this suit for his individual benefit; and that even though plaintiff has an equitable interest in the property sufficient to sustain the suit, estoppel and laches preclude relief as against the Halters, adjudged to be purchasers without knowledge of the alteration of the deed, actual or imputed.
We concur in the finding of the Superior Court that the conveyance to the Stretches was in trust for their children. On January 13, 1941, plaintiff brought suit for divorce in the State of Nebraska; and a decree of divorce was entered on February 21st ensuing. A property settlement embodied in a stipulation of the parties was approved by an order entered in the cause. Thereby, the defendant wife quitclaimed to her husband her interest in real property situate at Lodgepole, Nebraska, and in the proceeds of the sale of a ranch at the price of $10,000. The husband transferred to his wife an automobile and $500; and he deposited $3,000 with the Clerk of the Court, "to be paid to the said Verna Stretch to be held
by her and used when necessary for the care and support of Mary Ellen Stretch and Thomas Stretch, minor children of the parties," the payments to be made in monthly installments as therein provided. This stipulation was approved by the court, "with an additional provision to the effect that in the event of the death of said two children, or in the event of their both becoming of age before the $3,000 fixed in said written settlement and paid" to the Clerk of the Court "is exhausted, * * * any balance then left shall become the absolute property of the defendant, Verna Stretch, and should be paid to her in bulk." On May 10, 1941, the plaintiff and his former wife jointly petitioned the Nebraska court in which the decree of divorce was entered for a vacation of the decree and for a restoration of "their former relationship of husband and wife, to the end that they may more efficiently care for, rear, and educate their two minor children," and that "the marriage status of the parties, heretofore existing, be restored to them" and "the Trust Fund, now in the hands" of the Clerk of the Court "released to both parties jointly." Thereby, the decree of divorce was "annulled, and held for naught, and the marriage status of the parties" restored to them; and the Clerk of the Court was ordered to "return to the parties jointly any sum, or sums, he may have in his hands as said Clerk by reason" of that decree. There was immediate compliance with the order to turn over the "Trust Fund;" and on May 15th ensuing the money was used for the purchase of the Shiloh farm, title to which was taken by them jointly. Thereafter, plaintiff and his wife and the children lived together on the farm until January 15, 1942, when they again became estranged and plaintiff returned to Nebraska without making any provision for the support of his wife and children.
The alteration of the deed did not void the estate conveyed nor enlarge plaintiff's title by destroying his wife's. The legal consequences of the subsequent alteration of an executory and an executed instrument are not the same. In cases of the first class, where there is an unauthorized alteration by one not a stranger to the instrument, not only is the
paper bereft of all efficacy as evidence of the right, but the right itself is destroyed; in cases of the second class, where the instrument merely evidences an executed transaction, and is a memorial of it, the rights thereby vested in the person who made the alteration are not destroyed or divested. Kendall v. Kendall, 12 Allen 92 (1866); Bacon v. Hooker, 177 Mass. 335, 58 N.E. 1078 (1901). The unauthorized alteration of a deed of conveyance of land, by a party to the instrument, cannot destroy a title or interest which has become vested under the deed, either by divesting the grantee of title or revesting such title in the grantor; but the executory provisions of the instrument are thereby rendered null and its covenants discharged, and no affirmative defense is maintainable upon the deed by the party who made the alteration. United States v. West's Heirs, 22 How. 315, 16 L. Ed. 317 (1860); Gilbert v. Bulkley, 5 Conn. 262 (1824); Abbott v. Abbott, 189 Ill. 488, 59 N.E. 958 (1901); Clark v. Cresswell, 112 Md. 339 (1910); Carr v. Frye, 225 Mass. 531, 114 N.E. 745 (1917); Waring v. Smyth, 2 Barb. (N.Y.) Ch. 119 (1847); 3 C.J.S. 913, 918; 2 Am. Jur. 624. At common law, the cancellation of a deed by consent of the parties will not divest the grantee of his title and revest it in the grantor. That can be done only by a reconveyance. Wilson v. Hill, 13 N.J. Eq. 143, 150 (Ch. 1860). Title to land, once vested in a grantee, in legal contemplation can be revested by the grantee in the grantor or his heirs or transferred to strangers only "by an appropriate documentary act." The underlying legal estate essential to the conception of a trust "is neither annulled or transferred by the loss of the deed that conveyed it or by withholding such deed from record or by both combined." Lake v. Weaver, 76 N.J. Eq. 280 (E. & A. 1909).
In Jones v. Crowley, 57 N.J.L. 222 (Sup. Ct. 1894), it is said that "if a deed be altered by the party to whom it belongs, even though in an immaterial part, such alteration avoids the deed as a conveyance." For that proposition, ...