Wythevílle.

#### Wasserman & Others v. Metzger & Others.

June 16, 1904.

1. Equity *Practice—Parties—Unauthorized Sale by*Trustee.—Where one of several debts secured by a deed of trust has been paid, but the evidence of the debt, uncaneelled, has been subsequently trans-. ferred to a third person, who has pledged the same as collateral, and the holder thereof directs the trustee to sell for its payment, and a sale and conveyance in pursuance thereof has been. made by the trustee, the holder of the evidence of debt is a necessary party to a suit brought by other creditors secured to vacate the sale made by the trustee, and no final decree can be made in the cause in the absence of such holder.

2. Appeal and *Error—Defect of Parties in Trial*Court—Objection.— Where there is such Et defect of parties to a suit that injustice may be* done, if the absent parties be not before the court, this court will remand the case in order that proper parties may be brought before the court, although no objection on that ground was made either in the trial court or here.

Appeal from a decree of the Court of Law and Chancery of the city of iSTorfolk, in a suit in chancery, wherein the appellee, Sophia Metzger, was the complainant, and the appellants and others were the defendants.

*Reversed.*

The opinion states the case.

*Alfred P. Thom,*for the appellant.

*Burroughs & Bro.*and *Thos. H. Wilcox,*for the appellees.

Buchanan, J.,

delivered the opinion of the court.

*838This suit was instituted by Sophia Metzger to set aside a sale made by L. B. Allen, trustee in a deed of trust executed by Samuel Wasserman and wife to secure to Mrs. Metzger the payment of twenty-five hundred dollars. The ground upon which it was sought to set aside th'e sale made by the trustee was that it was made without authority, and was, therefore, void.

The facts of the case, briefly stated, are as follows:

By a deed dated December 10, 1892, Samuel Wasserman and wife conveyed to L. B. Allen, trustee, a house and lot in the city of Norfolk to secure to Sophia Metzger the payment of two negotiable notes for $1,350.00 each, payable one and two years after date, respectively, and dated December 10, 1892. In January, 1902, one P. J. Morris, representing himself to be the owner of one of the notes secured by the deed of trust, and the National Bank of Commerce of Norfolk, claiming to be the holder of that note as collateral security for a debt due it from Morris, informed Allen, trustee, that default had been made in the payment of the note, and directed him to sell the trust subject to satisfy the debts secured. The trustee thereupon advertised and sold the property at public auction, and Morris became the purchaser at the price of $2,200.00, on the 21st day of January, 1902. The trustee conveyed the property to Morris by deed dated as of the day of the sale, which was acknowledged for recordation two days afterwards. On the 25th of that month Morris and wife conveyed the property to trustees to secure to the Mutual Building and Loan Association of the city of Norfolk the payment of $2,000.00, which Morris had borrowed from if. On the 30th day of the next month Morris and wife conveyed the property to David Kalberman, as trustee for Mrs. Bikchen Wasserman, the wife of Samuel Wasserman (but who was divorced from him soon afterwards) at the price of $2,100.00, the grantee in the deed assuming the payment of the debt due the Building and Loan Association secured upon *839the property. After deducting the costs and expenses of the sale made by Allen, trustee, to Morris, tbe trustee paid one-half of tbe proceeds of tbe sale upon tbe note which Morris and tbe Commercial Bant claimed to be tbe owner and bolder of, as before described, and notified Mrs. Metzger, tbe payee and bolder of tbe other note, that be bad a sum of money in bis bands to be paid upon that note. A few days afterward tbe agent of Mrs. Metzger, who seems to be quite an old woman, called upon tbe trustee, pursuant to tbe notice. Tbe agent denied any knowledge of tbe sale made by tbe trustee, stated that tbe note held by tbe parties who bad directed tbe trustee to make sale of tbe bouse and lot bad been paid, and that bis mother held tbe other note, which was still due and unpaid, and declined to receive tbe money in the bands of tbe trustee. Subsequently, be did receive and credit it upon tbe note held by bis mother, but at tbe time be received tbe money be did not have knowledge of all the facts, nor bad be or bis mother taken tbe advice of counsel at that time. Tbe note claimed by Morris and tbe bank bad been paid five years or more before tbe sale by tbe trustee, and bad been delivered by tbe payee or her agent to Samuel Wasserman, tbe maker. Mrs. Metzger, who lived in the city of Norfolk, bad no notice of tbe sale made by tbe trustee, and gave him no direction to sell. Mrs. Wasserman, tbe vendee of Morris, and tbe present bolder of tbe bouse and lot, bad no actual notice of tbe fraud of Morris (who was in collusion with Samuel Wasserman) in claiming tbe note and causing tbe property to be sold by tbe trustee, nor that tbe sale made by Allen, trustee, was not made in accordance with tbe terms of tbe trust.

Upon the case made by tbe evidence, as it now stands, it appears that tbe Bank of Commerce took tbe note from Morris, who bad no title to it, without assignment by Mrs. Metzger, long after it bad matured and been fully paid. All persons connected with tbe transactions set forth and interested in tbe ques*840tions involved, were made parties to the suit, except the said National Bank of Commerce of the city of Norfolk, at whose instance and for whose benefit in part the sale by the trustee was made.

We are of opinion that upon the state of facts presented by the record no final decree could be entered in the case in the absence of said bank, which might not do injustice, and that the trial court erred in not directing the complainant to amend his bill, so as to make the said bank a party.

Although no objection was made in the trial court, nor here, upon that ground, this court will, where there is such a defect of parties, send the case back, in order that the proper parties may be brought before it. *Jameson's Admr.*v. *DeShields,*3 Gratt. 4, 13; *Taylor's Admr.*v. Spindle, 2 Gratt, 44, 72; *Richardson*v. Davis, *&c.,*21 Gratt. 706, 711; *Lynchburg Iron Co.*v. Taylor, 79 Va. 671.

The decree appealed from will be reversed without passing upon the merits of the case, and the cause remanded to the Court of Law and Chancery, in order that the said bank may be brought before the court by the proper amendment of the bill.

*Reversed.*