Brinkerhoff v. Brown

6 Johns. Ch. 139 | New York Court of Chancery | 1822

The Chancellor.

Several grounds for the demurrer have been assigned, some of which are put upon record, and others are assigned, ore tenus, at the bar, according to the course of the practice.

Causes of ^“"ssignetl ore terns.

I have no doubt, that the bill contains, within itself, sufficient equity to entitle the plaintiffs to relief, if the other objections can be surmounted. The charge of multifariousness is the most difficult to dispose of, and the most perplexing.

In the first place, it is objected, that the plaintiffs are not entitled to join in one suit, in respect to some of the items of their demand. The four first named plaintiffs are jointly interested in the two judgments obtained by B. and B~. against the Genessee Manufacturing Company, and S'., the last plaintiff, is interested in the surplus of those judgments, after the debts of the other plaintiffs, for which those judgments are held as a collateral security, shall have been satisfied. All the plaintiffs appear, also, to be jointly interested in the mortgage given by the Genessee Company to Muwford, and by him assigned to B. and B. So far they were all, doubtless, properly united as plaintiffs. But it appears, that the plaintiff, S., has obtained two judgments'against the Genessee Manufacturing Company, which he holds in trust for certain creditors of Russell Smith, residing in Massachusetts, and the other plaintiffs do not appear to have any interest in those two last judgments. Here, then, is the case of joint and several demands united in the same bill, and the question is, whether it can be permitted.

In Harison v. Hogg, (2 Vesey, jr. 323.) joint and several demands, in the same bill, by two plaintiffs, was held bad upon demurrer. The two plaintiffs were jointly concerned in one of the charges in the bill, and one of the-plaintiffs was solely interested in the other two charges. The bill was for an account of the sales of certain prints and engravings, belonging to both the plaintiffs, in respect to one work, and to one of the plaintiffs only in respect to two others; and one cause of the demurrer was, the joining of those distinct causes of action in the same bill. The Master of the Rolls held the objection to be insuperable, and that, upon the principle of the bill, if ten men were in partnership, and had a joint demand, each might set up a separate demand. The consequences would be absurd. The death of a co-plaintiff does not abate the suit; and is the defendant to answer all that relates to the dead man ?

This ease is not analogous, in its circumstances, to the one before me, and it may be questionable, whether the principle applies. It was a case in which separate unliquidated accounts were called for, and in which the defendant was to account to the plaintiffs, jointly, for the sales of their joint work, and to one of the plaintiffs only for the sales of his two separate works. Here, the plaintiffs are judgment creditors, at law, seeking the aid of this Court to render their judgments and executions available, against certain fraudulent acts, equally affecting all of them. The question is, whether judgment creditors, whose rights are established, and their hens fixed, at law, may not unite m a bill to' remove impediments to the remedy, created by the fraud of the opposite party. It is an ordinary case in this Court, for creditors to unite, or for one or more, on behalf of themselves and the rest, to sue the representative of their debtor, in possession of the assets, and to seek an account of the estate. This is done to prevent multiplicity of suits, a very favourite object with this Court j and this principle so far controls the other rule, which preserves, in some degree, an analogy between pleadings in Chancery, and the simplicity of declarations at common law. There is no sound reason for requiring the judgment creditors to separate in their suits, when they have one common object in view, which, in fact, governs the whole case. There is no particular matter in litigation peculiar to each plaintiff, and if they were obliged to sue separately, it may be pertinently ásked, cut bono ? Their rights are already established, and the subject in dispute may be said to be joint, as between the plaintiffs, on the one hand, and the defendants, on the other, charged with a combination to delay, hinder, and defraud their creditors. If each judgment creditor was to be obliged to file his separate bill, it would be bringing the same question of fraud into repeated discussion, which would exhaust the fund, and be productive of all the mischief and oppression attending a multiplicity of suits. It appears to me, therefore, that the judgment creditors, in cases of fraud in the original debtor, have a right to unite in one bill, to detect and suppress that fraud, .and to have the debtor’s fund distributed according to the priority of their respective liens, or rateably, as the case may be, equally as well as they may now, ™ ordinary practice, unite in one bill against the legal representatives of the debtor.

judgment^c-te-1^.*°r.sn cnTbrn against their common debt-0r; the object of th®¡^ same, for the court to enatiaw.^

Lord Kenyon, who was a great master of equity practice, observed, that, generally speaking, a Court of equity would not take cognizance of distinct and separate claims of different persons in one suit, though standing in the same relative situation. He held, that where an estate had been contracted to be sold' in parcels, to many different persons, a bill could not be filed in the name of all of them, to compel a specific performance ; and the reason was, that each party’s case would be distinct, and would depend upon its own peculiar circumstances. There must be a distinct bill on each contract. (Rayner v. Julian, Dickens, 677. 1 East, 226, 227.) He admitted, there were excepted cases to this general rule, and mentioned that of creditors calling for an account of the estate of the deceased debtor; and there is nothing in the principle of his decision, to prevent another exception in a case like the present. It was agreed by the Chief Baron, in Ward v. The Duke of Northumberland, (2 Anst. 469.) that unconnected parties might be joined in one suit, where there was a common interest among them all, centering in the point in issue in the cause ; and, if I am not mistaken, it is the case in the present suit, as respects the plaintiffs. The gravamen of the bill is fraud, equally injurious to all the plaintiffs, and their interests all centre on that point.

But it is urged, that the bill is multifarious, in uniting all the defendants in one bill, upon totally distinct and unconnected matters.

There is a charge of fraud against the five defendants, who were trustees when the debts with the plaintiffs were contracted, and who are charged with an intent to defraud them. The fraud consists in confessing judgment to I?. ton, and in causing the personal estate of the Genessee Company to be sold under it, and purchased in by two of these trustees5 and in confessing another judgment in favour of one of these trustees, and two other defendants, and in causing the real estate of the company to be sold under it, and purchased in by themselves. This charge of a combined fraud, affects seven of the defendants, for, though two of them were not concerned in every part of this fraudulent conduct, they were concerned in the last judgment and purchase under it, and the entire act is averred to have been poisoned with a fraudulent intent as respected the creditors. There are two remaining defendants who are charged as being concerned in the first organization and incorporation of the company, and who were among the first trustees, but they are not implicated in the subsequent transactions. One of them has answered, and has, of course, waived any objection to the union of parties, though possibly if lie might demur, the other defendants may also. The objection to a want of connexion in the subject matter, would seem to be mutual. The only remaining defendant, MasticTc, is a party to the demurrer, and the embarrassment in the case is to render him and Mumford suitable parties to the bill. The original trustees are charged with having commenced the system of fraud, which was consummated by the acts to which I have referred. By filing a certificate of the extent of capital, they are stated to have held out to the world a false appearance, for the purpose of deceiving and defrauding those who dealt with them. It thus appears, from the bill, that all the defendants were not jointly concerned in every injurious act charged. There was a series of acts on the part of the persons concerned in this Genessee Company, all produced by the same fraudulent intent, and terminating in the deception and injury of the plaintiffs. The defendants performed different parts in the same drama; but it was still one piece—one entire performalice, marked by different scenes; and the question now occurs, whether the several matters charged, are so distinct and unconnected, as to render the joining of them in one bill a ground of demurrer.

A review of the few leading cases on this point, will assist us in coming to a correct conclusion.

In Berke v. Harris, (Hard. 337. 15 Car. II.) the bill, as to one defendant, was to discover by what, title he held such a meadow, in which the plaintiff alleged he had an interest for life, as keeper of Gloucester Castle; and as to the other, it was for an annuity which was due from him to the plaintiff, as such officer. The defendants demurred, because the bill concerned things of several distinct natures, against several defendants, which would require -distinct answers and examinations, and the charge of each defendant would be uselessly increased. The demurrer Was allowed for that cause, and the Court observed, that a bill against several persons, as against one for tithes, and against another for the glebe, would be bad; but it would be good against several for tithes only, because they are of the same nature. So, a bill against divers tenants for several distinct matters, as common, waste, &c. would be ill, though the foundation of the suit, viz. the manor, was an entire thing.

Afterwards, in Hester v. Weston, (1 Vern. 463.) a demurrer was allowed to a bill, because it contained several matters not relating one to the other, and in some of which the defendant was not concerned. But in the case of The Mayor of York v. Pilkington, (1 Atk. 282.) a bill to quiet the plaintiff in a right of fishery, was supported, on demurrer, against several defendants claiming distinct rights; and though there was no privity between them and the plaintiff, yet he had a general right to a sole and separate fishery, extending to all the defendants; and the defendants, on the issue to try the general right, might avail themselves of their distinct rights. Such a bill was held nets tiessary for the sake of peace, and to prevent a multiplicity of suits.

Several modern cases have led to a full and accurate discussion of this subject.

In Dilly v. Doig, (2 Vesey, jr. 486.) it was held by Lord Loughborough, that a proprietor of a copyright could not sue, in one bill, two defendants who had invaded it, as there was no privity between them, and their rights were distinct. There must be separate bills upon distinct invasions of a patent; but it would be otherwise of a right of fishery, or respecting the erection of a mill. About the same time, the case of Ward v. Duke of Northumberland, already mentioned, was decided in the Exchequer. It was a suit against two defendants, jointly, as executors, and against one of them as heir, for an account under an agreement made with the ancestor. The defendants demurred separately, as being improperly joined; and after a full and able argument, in which the counsel, in support of the bill, insisted, that in a Court of equity the connexion of the subject matter was sufficient to join parties, who were not joined in interest, as in a bill to redeem against a first and second mortgagee, or a bill for an account of tithes against several tenants, the Court allowed the demurrers, and the principle stated by the counsel could not have been considered applicable to the case. As to one of the defendants, he was sued in different characters; as executor, and personally in relation to his private concerns. The two demands against him were of a similar nature, but perfectly distinct and unconnected. As to the other defendant, who was sued as executor, a considerable part of the bill related to the private concerns of his co-defendant, and had no connexion with the estate of the testator. The bill blended matters which had no other connexion, than that one of the defendants was a party in them alL The same rule of pleading was considered by Lord Redesdale¡, In Whaley v. Dawson ; (2 Sch. & Lef. 367.) a demurrer was allowed to a bill against two defendants, for several and distinct matters and causes, that had no relation to, nor dependence on each other. The rule was here declared to be, that where there was a general right claimed, by the bill, and covering the whole case, the demurrer would not be allowed, though the defendants had separate and distinct rights. The Chancellor referred to the case before Lord Mardwiche, already cited, and to bills for tithes against several defendants, where the cases may all be distinct; and he did it the better to illustrate the rule, that where there was one general right claimed by the plaintiff against all the defendants, the suit would lie, on the ground of preventing multiplicity of suits. But where the subjects of the suit are in themselves perfectly distinct, the demurrer will hold, and a plaintiff cannot bring into the compass of one suit such different objects. It obliges each defendant to the unnecessary trouble and expense of a litigated question with which he has no concern. Again, in the late case of Saxton v. Davis, (18 Vesey, 72.) a bill was filed by a bankrupt arid his assignees, under an insolvent act, against the representatives of the deceased assignees, under the commission of bankruptcy, and others, for an account of the estate. Several grounds of demurrer were stated on the record, but it was also objected, ore tenus, at the bar, that the suit was multifarious, by uniting defendants having distinct interests, and calling on them to answer charges perfectly distinct, and relating to different subjects, and in which they had no common interest Lord Eldon allowed the demurrer, because the bill sought to enforce different demands against persons liable respectively, but not as connected with each other. It was well observed by Sir Samuel Romilly, in that case, that the objection to a bill, as multifarious, would be at an end, if the answer to that objection was admissible, that if all the parties were concerned in one transaction, all but that one might be left out of consideration.

The principle to be deduced from those cases is, that a bill against several persons must relate to matters of the ° ... ..,11 , same nature, and having a connexion with each other, and in which all the defendants are more or less concerned, though their rights in respect to the general subject of the case may be distinct $ and when we consider, that the plaintiffs, in the case now before me, are judgment creditors, having claims against the Genessee Company perfectly established, and not the subject of litigation in this suit $ and that the general right claimed by the bill is a due application of the capital of that company to the payment of their judgments; that the subject of the bill and of the relief, and the only matter in litigation is, the fraud charged in the creation, management, and disposition of that capital, and in which charge all the defendants are implicated, though in different degrees and proportions, I think we may safely conclude, that this case falls within the reach of that principle, and that the demurrer cannot be sustained.

The rules of pleading in Chancery are not so precise and strict as at law, and are more flexible in their modification, and can more readily be made to suit the equity of the case and the policy of the Court. The rule, for instance, that all persons materially interested must be made parties, is an example of the kind j and there are various cases where all accounting parties are not required to be brought in. There are, as Lord Eldon observed, in Cockburn v. Thompson, (16 Vesey, 321.) numerous cases, forming exceptions, under circumstances, to the general rule, that all persons having present valuable interests in the same subject must be made parties. The case, also, of creditors suing on behalf of themselves and all others, is another instance of the relaxation of the severity of a general rule of pleading.

The remedy would, of course, be varied, and adapted to the ease of each individual defendant, if the general charge of fraud should be established ; and if it should only be established in part as against some of the defendants, and not as against others, the decree would then also be adapted to the proof. I do not see that this circumstance can create any difficulty in sustaining the bill. It is cheapest, and best for the interest of all parties, that the subject of the fraud, in all its parts, should be investigated and settled in one suit. There is another consideration, to show that a demurrer of this kind should be cau- - tiously received; and that is, the difficulty and the peril attending the selection by the plaintiff of proper parties. It is a very frequent objection raised in the answer, and at the hearing, that all necessary parties are not before the Court, and there is no question of practice more embarrassing to the plaintiff. If he should happen to err on the other side, and bring in persons against whom no charge can be supported, the bill as to them is usually dismissed with costs, and the inconvenience, upon the whole, is much greater from the want than from the redundancy of parties. In this very case, there is an objection, under the demurrer, made ore terns, to the want of Huntington, the judgment creditor, as a party. But, it is not alleged that H. was a party to any fraud, and the validity of his judgment is not drawn in question, and the object of the bill is not to disturb it, or any payment made under it. The bill seeks only to make the purchasers at the sale under the judgment, account for the property fraudulently purchased in. Nor need H. be a party, to give him an opportunity of redeeming the mortgage to Mumford mentioned in the bill; for it is not sought to foreclose that mortgage by any sale under it, and it seems to be mentioned rather incidentally, as one of the items of the demand to be settled, when the property shall be recovered and applied. It may further be observed, that there does not appear to be any direct averment that the judgment of H. was actually subsisting and unsatisfied at the commencement of the suit. I apprehend that the bill should have been positive on this point, and have left no doubts as to the fact, before the want of H., as a necessary party, was made the ground of demurrer to the bill. It is four years since execution was issued on that judgment, and a part of it was then satisfied, and the whole may possibly be satisfied before this time.

Another objection, also made ore tenus, is, that the Genes-see Manufacturing Company, by its corporate name, and in its corporate capacity, is not made a party. I should have listened to this objection, and have deemed it unanswerable, if the recent decision of the Court of Errors, in Slee v. Bloom, ^(a) had not admonished me of an error on this subject. That case goes the length, as I have been told, of holding a corporation like the present one, dissolved by insolvency and sale of their property, so as to render the Stockholders responsible to the extent of their shares, without any judicial process and judgment of forfeiture. It is probable I may not be accurately informed; and in the mean time, and in this state of uncertainty and perplexity, as to the real doctrine of that Courtj I cannot deal safely either way with the question of the existence or dissolution of that corporation. I will, therefore, not meddle with it at present, or interfere, so far as to sustain the demurrer on that ground.

The demurrer must, therefore, upon all the points taken, be overruled, with a reservation of the question of costs, and with the order, that the defendants answer in the usual time.

Order accordingly.

(a) Vide 19 Johns. Rep. 456—486.