Case ID: wis_89/html/0209-01.html
Source: Caselaw Access Project
Author: {"author": "PiNNey, J\".", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Plankinton, Assignee, Appellant, vs. Hildebrand and another, imp., Respondents.
    
      December 14, 1894
    
    January 8, 1895.
    
    
      Fledge of corporate stoele: Foreclosure: Pleading: Parties: Joinder of causes of action.
    
    1. A valid equitable pledge of corporate stock may be made by delivery of the certificates indorsed in blank by the owner as security for a debt, without entry of a transfer of the legal title upon the books of the corporation as provided in sec. 1751, B. S.
    2. In an action to foreclose a pledge of corporate stock originally issued to H., the complaint alleged that the certificate was duly indorsed in blank by H. and was thereafter duly delivered, so indorsed, to plaintiff's assignor, a bank, as security for a note, in the usual course of business, by one L. It did not state to whom H. delivered the certificate, or how or from whom L. obtained it, but alleged that plaintiff was the lawful owner and holder of the note and certificate. Held, that under these allegations plaintiff might be allowed to prove his title and in what manner it was derived from H.
    3. An allegation that H. had or claimed some intei’est in or lien upon the certificate, but that such lien or interest, if any, was subordinate to plaintiff’s claim, showed that H. was a proper party defendant to the foreclosure action.
    4. A cause of action upon a note secured by pledge of personal property cannot be joined with a cause of action to foreclose the pledge, unless both causes of action affect all the parties.
    Appeal from orders of the circuit court for Milwaukee' county: D. IT. JohNsoN, Circuit Judge.
    
      Affirmed.
    
    The complaint in this action states, in substance, that the-defendant Andrew Hildebrand made bis promissory note-to-the defendants Frank A. and Owen Lappcn, under the name of Frank A. happen & Co., November 9, 1892, for $10;GG0,. payable six months after date, with interest at eight per cent, per annum, and that the latter indorsed the note' to> the plaintiff’s assignor, the Plankinton Bank, and avers presentment and nonpayment of the note, and notice to the-maker and indorsers of the note; that the defendants Frank A. Lappen & Co., at tbe time of tbe delivery of tbe note to tbe PlanMnton Bank, also delivered to it a certificate for 150 shares of tbe capital stock of tbe O. L. Packard Machinery Company, originally issued by it to tbe defendant Fred Hildebrand, which “was by him duly indorsed in blank, and thereafter duly delivered, so indorsed, to said PlanMnton Bank, in tbe usual course of business, by tbe defendant Frank A. Lappen as aforesaid.” Tbe certificate and indorsement is made an exhibit to tbe complaint, and it was averred that tbe debt it was delivered to secure bad become due and was wholly unpaid, and that tbe plaintiff, as assignee of said bank, was tbe lawful owner and bolder of tbe note and certificate, and “ that tbe defendants Fred Hildebrand and Andrew Hildebrand have, or claim to have, some interest in or lien upon said certificate, but that such lien or interest^ if any, is subordinate to the lien of tbe plaintiff therein.” Judgment was demanded (1) barring and foreclosing tbe defendants, and all persons claiming under them or either of them, of and from all right, title, claim, ben, and equity of redemption in said certificate and tbe shares of stock represented by it, and for a sale, thereof, and that tbe plaintiff be paid out of tbe moneys tbe amount due on tbe note, with interest, costs, and expenses, so far as said moneys will pay tbe same; and (2) that tbe defendants Frank A. Lappen and Owen Lappen and Andrew Hildebrand may be adjudged to pay any deficiency that may remain; and for such further or other relief, or both, as shall be just and equitable.
    Tbe defendants Fred Hildebrand and Andrew Hildebrand separately demurred to the complaint upon tbe grounds that several causes of action bad been improperly united and that tbe complaint did not .state facts sufficient to constitute a cause of action. Tbe court made separate orders sustaining each of said demurrers, from both of which tbe plaintiff appealed.'
    
      Eor tbe appellant there were briefs by Winkler, Flcmclers, Smith, Bottum dh Vilas, and oral argument by J. G. Flamr ders and G. F. Fawcett.
    
    They contended, inter alia, that tbe complaint states but a single cause of action. Tbe cause of action is tbe facts wbicb give rise to plaintiff’s right to receive payment, combined with tbe default of tbe defendants whose duty it is to pay. There is but one obligation, one default, therefore but one cause of action. Twrner v. Pierce, 34 Wis. 658; Pimkum v. Fau Olaire, 81 id. 310; Stapleton v. King, 40 Iowa, 278, 284; Bliss, Code PL §§ 113, 116, and cases cited; Pomeroy, Remedies, § 452 et seq.; Bruil v. K. W. Mut. JS. Asso. 72 Wis. 433. Tbe cause of action should not be confounded with tbe relief. Tbe judgment of foreclosure is merely one of tbe measures of relief to wbicb tbe plaintiff is entitled. Pomeroy, Remedies, § 454; Bliss, Code PL §§ 114, 120; Whetstone v. Beloit S. B. Go. 76 Wis. 613; Moon v. McKnighi, 54 id. 551. This is essentially a suit in equity, and if tbe court has not tbe power to grant tbe relief in tbe way of personal judgment against tbe defendants personally bable for tbe deficiency, it is merely a matter of asking for too much rebef. A complaint is not demurrable on such ground. Tetoksbwry v. ScJmlenberg, 41 Wis. 584; Ames v. Ames, 5 id. 169; State ex rel. Mitchell v. Smith, 14 id. 564-568; Moritz v. Spliti, 55 id. 441; Scheibe v. Kennedy, 64 id. 564. Granting that two causes of action are stated, they are not improperly united. It is not necessary that tbe judgment or rebef demanded against each defendant should itself affect ab tbe defendants, but merely that tbe cause of action wbicb is tbe basis of such demand should in some way affect ab tbe other defendants. Sec. 2647, R. S.; Douglas Go. v. Walbridge, 38 Wis. 179,189,190; . Story, Eq. Pl. (Redfield’s ed.), § 2715/ Blake v. Van Tilborg, 21 Wis. 672; Winslow n. Dousmcm, 18 id. 457; Bassett v. Warner, 23 id. 673; Gates v. Boomer, 17 id. 455; Pomeroy, Remedies, § 486.
    
      For the respondents there was a brief signed by Orren T. Williams, attorney for An&rew Hildebra/nd, and W. W. Wight, attorney for Fred Rildébrmid, and oral argument by Mr. Williams.
    
   PiNNey, J".

1. We think the complaint states a good equitable cause of action for the foreclosure of the pledge of the shares of stock mentioned in the complaint, and sale of the same, and the application of the proceeds thereof to the payment of the note for which it was pledged as security, although the allegations of the title or interest of the plaintiff’s assignor in the stock are somewhat imperfect and uncertain. The stock was issued to and owned.by the defendant Fred Hildebrwnd, and the allegation is that the certificate was by him duly indorsed in blank, but it does not state to whom he indorsed or delivered it. It is, however, alleged that thereafter it “ was duly delivered, so indorsed, to the plaintiff’s assignor, in the usual course of business, by the defendant Frank A. happen,” without any statement as to how, or from whom, he obtained it. Rut this imperfect statement is aided by the subsequent allegations to the effect that the plaintiff is the owner of the stock, and that the defendants Fred Hildebrand and Andrew Hildebrwnd have or. claim some interest or lien upon the certificate, but that such lien or interest, if any, is subordinate to the hen and claim of the plaintiff. Under these . allegations the plaintiff could properly be allowed to prove his title and in what manner it was derived from Fred .Hildebrwnd; and, with fair intend-ments in its favor, we think the complaint states facts sufficient to constitute a good equitable cause of action in favor of the plaintiff for the foreclosure of the pledge, and that the allegation last mentioned shows that both Andrew and Fred Hildebrwnd were properly made defendants for that purpose. A valid equitable pledge of the stock could be made by a proper delivery of it indorsed in blank by the owner as security for the note in question, without having entered up on the books of the corporation a transfer of the legal title, as prescribed by the statute. R. S. sec. 1751.

2. The complaint contains allegations of the liability of the defendants Andrew Hildebrand, as maker, and of Frank A. happen and Owen happen, Jr., as indorsers, of the note in question, and shows that the happens had been charged as indorsers thereof; and personal judgment is demanded against these three defendants for any deficiency that may remain unpaid after proper application of the proceeds of the stock. Such a judgment would be for a purely legal demand. It is no part of the ordinary functions of a court of equity to entertain suits for, or to enforce, purely legal demands, such as are founded on promissory notes, indorse-ments, guaranties, and the like. We have not been referred to any authority showing that such a judgment or decree could be given by a court of equity. In the absence of some statute extending their power, courts of equity, in foreclosure cases, have invariably left the complainant to his remedy at law for the part of the mortgage debt not satisfied by the foreclosure and sale. Statutory provisions of the character referred to were adopted in Wisconsin during its territorial existence, and continued in force until, by the adoption of -the Code, they were repealed. The result was that it was held by this court, in several cases, after the repeal of the statute, that the legal cause of action on a note or bond could not properly be joined with the equitable one to foreclose the mortgage, unless both causes of action affected all the parties to the action; the statute then in force on the subject of joinder of causes of action being identical with R. S. sec. 2647.- In Sauer v. Steinbauer, 14 Wis. 70, 75, it was held that such a joinder could be made where there was but a single defendant, who was personally hable for the mortgage debt; and the cases of Turner v. Pierce, 34 Wis. 658, and Pinkum v. Eau Claire, 81 Wis. 301, much relied on by the appellant, are cases, also, where there was but a single defendant. The rule thus laid down as to joinder of causes of action was firmly and invariably upheld until the statute was restored by ch. 243, Laws of 1862 (R. S. sec. 3156). Borden v. Gilbert, 13 Wis. 670; Sauer v. Steinbauer, 14 Wis. 70, 75; Cary v. Wheeler, 14 Wis. 281; Jesup v. City Bank, 14 Wis. 331; Stilwell v. Kellogg, 14 Wis. 461; Faesi v. Goetz, 15 Wis. 231. We have not been referred to, nor are we aware of, any case in this court, on this point, to the contrary.

All these cases proceed upon the ground that, though stated in one count, there are in such cases two causes of action, one equitable and the other legal. The mere form of pleading can make no difference. The objection to the character of the complaint and the joinder of causes of action cannot be thus obviated. Wiles v. Suydam, 64 N. Y. 173. And the objection of misjoinder of causes of action may be taken by a defendant affected by both causes of action or by only one of them. Hoffman v. Wheelock, 62 Wis. 435; Nichols v. Drew, 94 N. Y. 22. The court must look to the intrinsic nature of the claims embodied in the complaint, and the character of the relief demanded. Faesi v. Goetz, 15 Wis. 231. It seems that in the Code of New York on the subject of joinder of causes of action, similar to the provision of our statute, it was found necessary to make exceptions as to mortgage foreclosures, and in respect to which, as in Wisconsin, special provisions were found necessary. Nichols v. Drew, 94 N. Y. 26. We see no reason for departing from what has been so frequently — and, as we think, rightly — decided upon this point, and that it must be left to the legislature in its wisdom, in the spirit of much-needed legal reform, to adapt sec. 3156 to foreclosures of pledges, mortgages of personal estate, and other liens.

The statute on the subject of joinder of causes of action (sec. 2647) provides for unitiug “in the same complaint several causes of action whether they be such as were formerly denominated legal or equitable, or both, where they arise out of the same transaction or transactions connected with the same subject of action. . . ■ . But the causes of action so united . . . must affect all the parties to the action.” Although the stock pledged wras issued to Fred Sildébrcmcl originally, there is no claim that he ever became in any way personally liable for the debt evidenced by the note; and the causes of action based upon the note and in-dorsement of it, for judgment for deficiency, do not affect him in the least. Many cases in this court were referred to as sustaining, in principle, the joinder of causes of action in this case; but we think that they are readily distinguishable from the present case, and, in the main, depended upon principles laid down in the books on the subject of multifariousness in bills in equity, where there was really but one cause of action, and it was sought to charge one or more of the defendants, who had acquired and held a portion only of the property or fund, the subject of the action, acquired by fraud or affected by some trust. But under the equity practice as it existed before the Code, and in the absence of a statute justifying it, a bill framed as this complaint is would have been clearly multifarious, and we have not been referred to any authority sustaining a contrary conclusion. A ’review of the cases cited in this connection would not, we think, serve any useful purpose.

For the reason stated there is, therefore, in the present case a fatal misjoinder of causes of action, and for this reason the demurrers to. the complaint were rightly sustained.

By the Court.— The orders of the circuit court are affirmed.