Forman v. Manley

52 N.J. Eq. 712 | New York Court of Chancery | 1894

Pitney, V. C.

The case presented differs from both Mundy v. Vail, 5 Vr. 418, and Reynolds v. Stockton, 16 Stew. Eq. 211, 140 U. S. 254, in that here the decree sought to be enforced is directly in accordance with the object, frame and prayer of the bill. It is “responsive to the issues tendered by the bill,” and “is not aside of the issue raised in the record.” Of the nature and extent of the demand made upon her, the defendant Mrs. Manley had full and timely notice, and she made no defence. In-fact, it affirmatively appears upon the case as now presented, that she had none upon the merits. That the complainant had a right in equity to the relief prayed for upon the facts as they actually existed, is not disputed. The sole reason urged why the decree as made should not stand against Mrs. Manley, is that the complainant’s solicitor, doubtless through an oversight of the clerk who prepared the bill, failed to set out the central fact upon which such liability rested.

It seems to me that, notwithstanding the distinction pointed out between this' case and Mundy v. Vail and Reynolds v. Stockton, the decree must be considered, for present purposes at least, as unwarranted as against Mrs. Manley. I am unable to see upon what principle it can be sustained, and such appears to have been the opinion of Vice-Chancellor Van Fleet in Consolidated Electric Storage Co. v. The Atlantic Trust Co., 5 Dick. Ch. Rep. 93. The discussion in that case leaves nothing to be said upon the subject.

Notwithstanding this radical defect, the circumstance that the decree was actually made by a court of competent jurisdiction, upon notice to the party affected, and that it has stood unchallenged all these years, cannot be overlooked. To meet the difficulty of asking a court to issue execution on an unwarranted decree, the complainant moves to open the enrollment and amend the bill. The power and duty of the court to do this in a proper case is not disputed. But Mrs. Manley makes several objections to the exercise of such power in this case.

First, she points out the great lapse of time and her ignorance that the decree had been made against her.

Upon reflection, I am unable to see how such objection can avail her. She had full notice that such a decree would be asked for, and she is fairly chargeable with the consciousness that she was liable, upon the admitted facts, to be subjected to it. She made no examination of the bill on file, and did not, so far as appears, rely upon the absence in it of the necessary allegation. She is justly chargeable with notice of the character of the decree made. Such is the rule in all cases where a' party is regularly brought into court by personal service of process, and thereby has actual knowledge of the proceedings. She had no right to act upon the notion that no such decree had been made. Moreover, it does not appear that she has since, in anywise, shaped her conduct or altered her position, one way or the other, upon the strength of her supposition that no decree had been made against her. Under these circumstances, I do not see how she is injured by the delay. She is quite as much responsible for it as is the complainant. He knew that he had a decree against both Mrs. Manley and Mr. Mickle, and it is fair to presume that he supposed that it was founded upon a proper allegation of the assumption contained in the deed from Mickle to Mrs. Manley. That such assumption should have been duly set out in the bill was as much a matter of course as that the bond and mortgage should have been so set out, and the complainant is no more chargeable with knowledge of the defect than is Mrs. Manley. They both stand in the same position in that respect.

It seems to me, then, that the complainant is entitled to the aid of the court in the way of an amendment. Such action on the part of the court is simply to do what is usual and proper in order to promote justice.

But the defendant makes the further point that the complainant’s equity has been satisfied; that Mickle, whose bond the complainant held, and against whom he had’ a decree for the deficiency, lias paid that deficiency,- and hence the complainant has no further equity against Mrs. Manley,' and that the equity to have the bill amended in the way proposed could not be assigned to Mickle, because, in paying the amount of the deficiency to the' complainant, he simply discharged his own debt. She says that the right of Mickle against her is a legal one, which he might enforce at law. Finley v. Simpson, 2 Zab. 311.

The point is thus stated in the brief:

“ The interest assigned to Mickle was a purely equitable one, given only by a court of equity to a mortgagee against a grantee, for the purpose of convenience and the saving circuity of litigation, and that as soon as that equitable remedy, whether it be the mere right or the decree itself, becomes satisfied as to the complainant and comes into the hands of the grantor, the equitable right becomes absorbed in the legal one, and he must resort to his action on the covenant. The court is here asked to give an equitable remedy, both by amendment and execution, to one whose legal right fully and completely appears.”

Mrs. Mauley’s liability to complainant was based upon the ground, quite familiar in late days, that, as between Mickle and Mrs. Manley, the latter should pay the debt to the complainant, and that Mickle stood in the position of surety for Mrs. Manley to the complainant, and hence the obligation of Mrs. Manley to Mickle to relieve him of the burden of the debt was a “ collateral obligation,” to which the complainant, as creditor-at-law of Mickle, was entitled. Klapworth v. Dressler, 2 Beas. 62. Now, that obligation, on the case shown, still exists. Mrs. Manley is still bound to indemnify Mr. Mickle against that obligation, and when he paid the deficiency to the complainant he paid Mrs. Manley’s debt as her surety, and upon the very principle upon which Mrs. Manley was liable to the complainant, he (Mickle), upon such payment, was entitled to be subrogated to the rights of the complainant against Mrs. Manley. A surety for the debt of another, who pays that debt, is entitled to be subrogated to all the rights of the creditor against the principal debtor. The precise right of the complainant against Mrs. Manley, when Mickle paid the debt, was to have the bill so amended as to justify the decree which he held against her. To that right Mickle was subrogated, and I am unable to see why he does not stand precisely in the complainant’s shoes in that respect. The execution which issued against Mickle informed him that the "decree for deficiency had been entered against Mrs. Manley as well as himself, and that she was primarily liable thereon. He, of course, must have been advised that his payment of the amount due to the complainant subrogated him to the rights of the complainant, independent of the assignment which he procured, and he was fairly entitled to rest upon the idea that he was the owner of a valid decree against Mrs. Manley, precisely as the complainant had been. The injustice of turning him, at this late day, over to his legal remedy, is manifest when we consider that probably the statute of limitations would be a bar to such remedy.

The case of Jarman v. Wiswall, 9 C. E. Gr. 267, was relied upon by defendant’s counsel on this part of his case. There, motion was made to amend a decree of foreclosure by adding a clause holding liable the party who had assigned it to the complainant with guaranty, to make up the deficiency which had occurred upon a sale of the mortgaged premises. Chancellor Runyon refused the motion on the special circumstances of that case, alleging, as one reason, that the complainant had a remedy at law against the defendant moved against. The attitude of the parties towards each other in that case was in marked contrast with the attitude of the parties here. There, the party moved against was the surety, and occupied the precise position which Mickle does here, and he was directly liable to the complainant in an action at law upon his guaranty. The principle that a surety who pays the debt is entitled to be subrogated to all the rights of the creditor, had no application.

I will advise a decree that the complainant have leave to amend the bill in the manner asked for, and that the defendant Mrs. Manley have twenty days after service upon her of a copy of the bill as amended, to answer the same, and in default of answer, Mickle may take an order for an execution against her, with costs.