On appeal from the Chancery Division of the Superior Court.
For reversal -- Chief Justice Vanderbilt, and Justices Case, Heher, Oliphant, Burling and Ackerson. For affirmance -- Justice Wachenfeld. The opinion of the court was delivered by Vanderbilt, C.J.
This is an appeal by the plaintiff law firm and Thomas D. Nary as guardian ad litem of the infant, Gayle Beverly Borden, from a judgment of the Chancery Division of the Superior Court dismissing their suit on its own motion before they had completed the presentation of their testimony. The appeal taken to the Appellate Division of the Superior Court has been certified by us on our own motion.
The will of the late Howard D. Borden named his son, Howard Stanley Borden, and his daughter-in-law, Eleanor Jane Borden, the defendants herein, as his executors and trustees. He also made them beneficiaries for life of the trust set up in the will with their three children as remaindermen. Two of the children are of age, the third is 15 years old. The will directed the executors and trustees to retain Durand, Ivins & Carton as attorneys in the administration of the estate and the trust.
While acting as attorneys for the executors and trustees the plaintiff law firm learned facts from which they concluded that the defendants were converting a considerable part of the principal of the estate to their own use. Deeming it their duty to make disclosure of the facts to the court, they filed a complaint in the Superior Court charging the defendants with several acts of conversion and mismanagement of the estate. Specifically the defendants were charged with and admitted in their answer converting $4,000 in government bonds to the use of the defendant Howard Stanley Borden. On his direct examination at the trial it developed that he had converted an additional $2,000 in government bonds. In extenuation it was urged that it was done with the consent of the two elder children. The complaint also charged the defendants with the conversion of an interest in a mortgage for $19,500. This the defendants likewise admit in their answer except as to $4,409.45, which were proper charges against the estate. They plead that the balance of the mortgage was used to educate their son in college and
to maintain a home for themselves and their children with the knowledge and consent of the three children. The complaint likewise charges the defendants with entering into a contract to purchase the dwelling house known as 115 Madison Avenue, Spring Lake, N.J., for $25,000 and with selling trust securities to buy the premises. The defendants in their answer admit entering into the contract and selling about $15,000 of trust securities to enable them to carry out the contract. They are also charged with and they likewise admit having failed for nearly two years to have paid a legacy of $2,000 to Gretchen Coward.
The plaintiff law firm sought to enjoin the defendants from disposing of the assets of the estate, to compel them to account, to have them adjudged to hold in trust for the estate of Howard L. Borden the property converted by them, to be surcharged for any losses and to be removed as executors and trustees. Preliminary restraint was consented to by the defendants and Thomas D. Nary was appointed guardian ad litem for the infant daughter, Gayle, with instructions to examine into the matter of the proposed purchase of 115 Madison Avenue, Spring Lake, N.J., and the proposed sale of 1017 Fourth Avenue, Asbury Park, N.J., and to report to the court. By a consent order the guardian ad litem was later given leave to interpose in the action as a party plaintiff with like effect as if he had been named as original party plaintiff.
At the conclusion of the direct examination of the plaintiff's first witness, the defendant Howard Stanley Borden, the trial court on its own motion raised the question of the jurisdiction of the Superior Court and, deciding that the case properly belonged in the County Court, dismissed the complaint. The trial court also held, that the plaintiffs had no interest in the subject matter sufficient to support their bringing this action. From the judgment of dismissal all of the plaintiffs appeal.
The plaintiff firm of attorneys argue that they have standing to bring this action by virtue of the provision in
the will directing the defendants to retain and employ them as attorneys. They point out to the court that they have acted reluctantly in bringing suit and have done so only out of regard for their obligations as officers of the court. They cite In the Matter of Stein, 1 N.J. 228 (1949), where an attorney was disbarred for failure to disclose to the court the true facts when he learned them with respect to a fraudulent affidavit of non-collusion in a divorce case. There the court held (at p. 236):
"Where there is revelation of a fraud about to be perpetrated upon a court of which an attorney is an officer, there is a definite obligation upon and we conceive it to be the duty of that attorney to communicate and make a full ...