135 P. 719 | Ariz. | 1913
The appellants assign the following as error: “(1) The court erred in overruling the motion for a new trial, for the reason that evidence was allowed to be ■introduced on the trial under the plea in bar set up in the answer to the complaint, which was not sufficient to sustain and constitute a plea in bar to the action, and did not constitute any defense to plaintiff's’ action. (2) The court, erred in overruling plaintiffs’ demurrer to defendants’ answer, wherein they set up that the deed of trust was executed, without consideration, and for the purpose of defrauding creditors, for the reason that the facts set up in said answer did not state facts sufficient to constitute a defense to said action. (3) The court erred in permitting the defendants: to introduce any evidence to sustain the answer of a plea in. bar, for the reason that the facts set up as and for a plea, in bar are not sufficient to constitute a plea in bar to this, action. (4) The court erred in entering judgment against' the plaintiffs and in favor of the defendants, for the reason that the evidence submitted as and for a plea in bar was not sufficient to sustain a plea in bar of this action, and not a defense to plaintiffs’ cause of action.”
The first, third, and fourth assignments of error relate to the plea in bar. They are the same in effect, and present one question, viz., whether the facts stated in the plea in bar-are sufficient to constitute a defense to the complaint. Otherwise stated, Do the facts stated in the plea in bar constitute an. estoppel, and bar plaintiffs from prosecuting this action?' The second assignment presents the question of the sufficiency of the facts alleged in the answer to constitute a defense.
The former action, No. 3969, is alleged to have been an action-brought by Libbie Goodwin against P. L. Sherman, Roger Sherman, James Wilson, and D. H. Pinney to quiet title in Libbie Goodwin, plaintiff in said cause, and defendant in this; cause, to the identical lot, piece, and parcel of land, and that, the title of and to said lot, piece, and parcel of land was, by the judgment pleaded, forever quieted in the said LibbieGoodwin against said P. L. Sherman, Roger Sherman, James. Wilson, and D. H. Pinney, and all those holding or claiming-to hold under or through them, or either of them; that the-judgment was a judgment on the merits; that Roger Sherman was substituted for P. L. Sherman in conformity to the
The plea in bar is drawn upon the theory that the trustee in such deed of trust may defend and represent the beneficiary generally in litigation affecting the subject of the trust, and a judgment in such action binds such beneficiary, although not a party to that record.
The former action was a statutory action to quiet Libbie Goodwin’s title to the property by annulling and canceling the trust deeds held against the property by P. L. Sherman, as trustee, and his successor in trust, and to remove the •cloud, on her title, cast thereon by the lien in favor of the holders of the notes. The trust deed here, involved became ■effective as a lien when James Wilson indorsed the two notes to D. H. Pinney. By that contract of indorsement the notes were made payable “out of the premises described in the trust deed and not otherwise.” The evident purpose of this contract was to relieve the maker of the notes from personal liability for a deficiency after the property was exhausted. It ■ had the effect to charge upon the property alone the debt evidenced by these notes by making the notes payable out of that property. At the time Upton became the holder of the notes this indorsement was upon them, and he is bound by that contract. He is also charged with notice •of the terms of the deed of trust from the record of that Instrument. The duty of the trustee was made an active duty to protect the holder of these notes. Upon the application of the holder of the notes he was required to proceed to a foreclosure and enforcement of the lien against the property ■“as such trustee.” Libbie Goodwin claimed ownership of the property, and refused to recognize the validity of the trust deed under the control of the trustee. By her suit to quiet her title she brought before the court the only parties
The duty of the trustee under the trust deed to protect the interests of the holder of these notes would have been only partially performed, if, when the action was commenced in hostility to the trust, he should fail to notify the beneficiary of such action pending, or to inform the court of the rights of a beneficiary not a party to the action, to the end that the court could perform its duty and bring in the omitted party, if such party was necessary to a complete determination of that action.
The minute entries in this cause disclose that the trustee so considered his duty that this action was by an order of the court consolidated with the former action. The order-was entered April 25, 1904. The effect of that order was to. give the court jurisdiction over this plaintiff Upton for all purposes of that suit. He thereby became a party to all intents and purposes, as if he had been made a party in the-beginning by the plaintiff in the first instance, or by the order of the court he was brought before the court. His duty to defend -his claims was the same, and the judgment of the court would be equally effective upon his claims, without regard to the manner in which he became a party. The-allegation in the plea in bar is that this plaintiff was a party to the former action, and, if nothing further had been alleged in that connection, we would find but little difficulty in disposing of the question raised here. The plea in bar is so framed that defendants do not rest upon the allegation that Upton was a party to the former action; but they rest their plea upon the allegations that the trustee was a party to the former action as well as a party to this action. By reference to the minute entries in th.e record before us, we find that the order consolidating the two actions was vacated by an order of the court made in this cause on December 12, 1905. This order vacating the former order doubtless was considered by the defendant as having the effect of dismissing plaintiff Upton from the former action. The effect of
The question of parties is squarely presented by the position of the defendants. The notes were made payable to the promisor, with the intention that they would be indorsed and delivered to unknown holders. They were made payable out of a specific property, and secured by the trust deed giving the trustee power to represent the holder of the notes in the matters of enforcing collection of the debt against the property. The holder was unnamed in the deed of trust. The action to quiet title was commenced in hostility to the trust, and to annul and cancel the lien. The trustee was made a party defendant in such action. Was the holder of the notes or beneficiary a necessary party, also, in order to be bound by the judgment in such action1/
The rule is stated by Pomeroy on Code Remedies, section 254, page 349 (fourth edition, Boyle), thus: “There is a broad distinction between the case of an action brought in opposition to the trust to set aside the deed or other instrument by which it was created, and to procure it to be declared a nullity, and that of an action brought in furtherance of the trust to enforce its provisions, to establish it as valid, or to procure it to be wound up and settled. In the first case the suit may be maintained without the presence of the beneficiaries, since the trustees represent them all, and defend for them.”
The rule is recognized in Watkins v. Bryant, 91 Cal. 492, 504, 27 Pac. 775, a case very similar to the one at bar. In this case an action was brought in hostility to the trust making the trustee a party defendant, but not making the beneficiary of the trust a party, in which action the trust deed was held invalid. Subsequently, in an action by the beneficiary as the holder of some of the notes secured by the trust deed, the court held that the beneficiary was not a necessary party to the former action, but was represented therein by the trustee, and was concluded by that judgment. Glide v. Dwyer, 83 Cal. 477, 23 Pac. 706; Rejall v. Greenhood, 92 Fed. 945, 35 C. C. A. 97; Kerrison v. Stewart, 93 U. S. 155, 23 L. Ed. 843; 2 Perry on Trusts, 6th ed., 1430, see. 873, note 1; 23 Cyc. 1247.
Chief Justice WAITE, in Kerrison v. Stewart, supra, recognizes the exception to the general rule, speaking for the court, in this language: “It cannot be doubted that, under some circumstances, a trustee may represent his beneficiaries in all things relating to their common interest in the trust property. He may be invested with such powers and subjected to such obligations that those for whom he holds will be bound by what is done against him, as well as by what is done by him. The difficulty lies in ascertaining whether he occupies such a position, not in determining its effect if he does. If he has been made such a representative, it is well settled that his beneficiaries are not necessary parties to a suit by him against a stranger to enforce the trust (Shaw v. Railroad Co., 5 Gray [Mass.], 171; Bifield v. Taylor, 1 Beat. 91 [1 Molloy, 193]; Campbell v. Railroad Co., 1 Woods, 376 [Fed Cas. No. 2366]; Ashton v. Bank, 3 Allen [Mass.], 220), or to one by a stranger against him to defeat it in whole or in part (Rogers v. Rogers, 3 Paige [N. Y.], 379; Wakeman v. Grover, 4 Paige [N. Y.], 34; Winslow v. Railroad Co., 4 Minn. 317 [(Gil. 230), 77 Am. Dec. 519]; Campbell v. Watson, 8 Ohio, 500). In such cases the trustee is in court for and on -behalf of the beneficiaries, and they, though not parties, are bound by the judgment, unless it is impeached for fraud or collusion between him and the adverse party.”
That the trustee in the deed of trust here involved was empowered to represent his beneficiaries in the matter of Goodwin’s suit to quiet title, there can be no doubt. By the express terms of the trust deed the trustee was not required to wait until the beneficiary called upon him to perform his
The same attorneys represented the trustee in the former action that are representing the trustee and holder of the notes in this action, and have ably performed their duties. The trustee as shown by the plea in bar was a party to the record in the former action, and the judgment therein is against him and all parties claiming under and through him. The trustee vigorously and persistently resisted the action of the Goodwins, and against him no charge of neglect or collusion is made. In that action he represented Upton’s claims, if not by direction of Upton, which seems likely, then by reason of his duties as trustee, with Upton’s full knowledge and consent, and retained the identical attorneys to represent him therein as Upton himself retained in- this suit. The judgment was rendered in the former suit on May 18, 1906. The appeals from that judgment were finally disposed of, resulting in affirming the judgment on May 11, 1912. The minute entries of this cause are silent from December 12,
This disposes of the cause. The sufficiency of the answer need not be considered, as it becomes immaterial whether any answer was filed to the complaint; the plaintiff being estopped by the former adjudication.
The judgment is affirmed.
FRANKLIN, C. J., and ROSS, J., concur. •
