Case Name: Daniel B. Johnson v. Charles H. Shepard and others
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1876-10-24
Citations: 35 Mich. 115
Docket Number: 
Parties: Daniel B. Johnson v. Charles H. Shepard and others.
Judges: The other justices concurred.
Reporter: Michigan Reports
Volume: 35
Pages: 110–121

Head Matter:
Daniel B. Johnson v. Charles H. Shepard and others.
Petition for a bill of review: Technical irregularities: Foxessive amount: Remission. A petition for a bill of review, filed after a long delay, will be governed by equitable considerations, and will not be allowed for technical irregularities where it appears that the petitioner has not been really damnified; and where the only tenable ground of relief is, that the decree was excessive in amount, a remission of the excess will justify the court in refusing the petition.
Petition for bill of review: Fh'rors open. A petition for leave to file a bill of review, it seems, is not governed by the same considerations as a bill of review, in reference to the opening of all errors whether specified or not.
Service: Subpoena: Return: Presumptions: Discretion. The certificate of service of subpoena on a day prior to the date of its issue is held to be a manifest clerical error; a subpoena not being required to be served any particular time before the return day, but service on its return day being good, it is fairly presumable from such a return as is here in question, Hhafc it was served during its life and not at an impossible day; and tbis being subsequently shown to have been the fact, such a slip in the return would give but slight support to an appeal to the discretion of court.
Mortgages: Guaranty of collection: Foreclosure: Parties. A guaranty of collection of a debt secured by mortgage creates no obligation on the part of the guarantor to pay until after foreclosure decree and a failure to obtain payment out of the mortgaged premises and out of other property of the principal; and such guarantor ought not to be made a party defendant to the foreclosure suit.
Guarantors of collection: Fbreclosure: Personal decree. Where guarantors of collection have been made defendants to a foreclosure suit and have made no objection, they being the only ones who could raise the point, it may be a contingent decree against them would be permissible; but this could not operate to preclude them from a hearing before execution against them, and an absolute personal decree against them for the deficiency, in the first instance, is unwarranted.
Foreclosures: Proceeding fo' execution for deficiency: Guarantors of collection. The proceeding for execution for the deficiency in foreclosure cases, under our statutes, is essentially new and supplementary, and not a mere continuation of the foreclosure; and any dealing between the creditor and principal debtor substantially changing their contract relations would release guarantors of collection, if it happened at any time before their liability is finally settled, and would be a defense to the proceeding for execution.
Equity jurisprudence: Fbreclosures: Personal decree: Collateral obligations. Tinder the original equitable jurisdiction there was no power to make personal decree against even the mortgagor himself, but this is a statutory innovation, as is also the enforcement in the foreclosure suit of collateral obligations of third persons; and the juris- . diction by the statute over this latter class of persons is permissive only, and not obligatory, and will not be enforced to their prejudice.
Guarantors of collection: Personal decree: Bill of review. Guarantors of collection of the mortgage debt, against whom an absolute personal decree for the deficiency has been granted in the first instance, are not in default in not asking a bill of review so long as tbe proper proceedings to fix them finally are yet uncommenced.
Practice in appellate court: Discretion. A court of review is hound on appeal to exercise its own discretion upon the matters brought before it; and it would be a misuse of discretion to refuse to correct an evil where no one has or can lawfully act in reliance upon it.
Discontinuance: Rescission: Reinstating cause. Parties as to whom the bill has been dismissed by complainant after decree, can only.be brought back by the usual process; and an order rescinding the discontinuance could not bring them in and hold them bound by tbe previous decree and proceedings.
Heard October 13.
Decided October 24.
Appeal in Chancery from Saginaw Circuit.
Jjucius D. Johnson, for complainant.
The petition of defendants for leave to file a hill of review for errors of law appearing in the decree, was not filed till over a year and a half after the entering and enrollment of the decree ^complained of, and until after sale and confirmation thereof. It is submitted that defendants were guilty of gross laches, and that it Was entirely in the discretion of the court to allow or deny the petition. No bill of review shall be filed unless the same is brought within the time allowed for bringing an appeal, unless upon reasons satisfactory to the court: Chancery Rule No. 101; Benedict v. Thompson, Walk. Ch., 446; Boyd v. Vendercamp, 1 Barb. Ch., 273. Hence the allowance of a bill of review after the time allowed for bringing an appeal has expired, rests in the discretion of the court, and his judgment as to whether sufficient reasons have been shown for the delay, or not, is not reviewable.
The court cannot review, on an appeal from a final order, a decree made prior to the order from which the time for an appeal has elapsed: Benedict v. Thompson, 2 Doug., 299. The making of an appeal from an order denying leave to file a bill of review, a pretext for reviewing a decree made over a year and a half before the order appealed from, and which was final and conclusive, would seem an extraordinary proceeding, the effect of which would be to overthrow and nullify a wise and salutary provision of our law limiting the time in which an appeal may be taken.
It is submitted that defendants Woodhouse and Butler were properly made parties to the foreclosure bill, as' guarantors of the collection of the note accompanying the mortgage, under the provisions of our statute: Comp. B. 1871, § 5150; Beonardv. Morris, 9 Paige, 89; Curtis v. Tyler, 9 Paige, 432; Bristol v. Morgan, 3 Edw. Ch., 142.
As the excessive interest complained of has been remitted by the complainant, the error alleged in the decree as to the amount, is cured, and the defendants have suffered no injury therefrom.
And as complainant has exhausted his remedy against the original obligor, the defendant Shepard, by Obtaining execution against him, and the same having been returned unsatisfied, the guarantors Wood- house and Butler are now directly liable, and no injury has resulted nor can result to them from the making them parties to the bill. An appellant cannot ask a reversal of a decree in no way injuring him or affecting his rights: Martin v. Mc Reynolds, 6 Mich., 70; Warner v. Whitaker, 6 Mich., 133; Griggs v. Detroit & Milwaukee R. R. Co., 10 Mich., 177; Mich. Ins. Co. v. Whitmore, 12 Mich., 427: Kellogg v. Putnam, 11 Mich., 344.
William A. Clark, for defendants.
The circuit court never acquired jurisdiction in the premises, by proof that the subpoena was served on defendants before the bill was filed, the only return being of service in July, 1873, or four months before bill was filed. On this, the order pro confesso, and of reference, report of amount due, and decree, were all predicated; no proof subsequently made of service could cure this defect, there being no leave granted by court to amend the return or show it erroneous: Chancery Rules 10, 11, 24.
The decree is against the defendants personally, as well as against the mortgaged premises. Jurisdiction over the person was therefore necessary to a valid decree. On bill of review, the court will examine the whole record and annul the decree if error is anywhere found; and the want of jurisdiction may be shown at any stage of the proceedings, and until every order or step required by the statute has been taken and completed: Spellman v. Dowse, S. C. of Ill., July, 1876, Chicago Legal News, 414; 1 Cowen R., 691.
This court has held that such want of notice to defendants is an error going to the jurisdiction of the court, which cannot even be waived by consent of the parties: Jacques v. Methodist Church, 17 Johns., 548; Benedict v. Thompson, 2 Doug., 306-498; Smith v. Smith, 13 Mich., 258; Wilson v. Arnold; 5 Mich., 105.
*TMs, as well as the other errors hereafter to be noticed, appears of record, making it an eminently proper case for bill of review, which is analogous to a writ of error; and, as some equity courts have held, even as to the time when it should be applied for, it being to reverse the decree for errors of law apparent anywhere in the entire rec ord: Jenkins v. Prewlit, 7 Blackf., 329; Kennedy v. Georgia, 8 How. (U. S.), 588; Wiser v. Blackley, 2 Johns. Ch., 488; Whitney v. Bank of U. S., 13 Peters, 6-14; Webb v. Pell, 3 Paige R., 368; 5 Mason, 311; Smith v. Stingley, 3 Clark (Iowa), 514; Holman v. Riddle, 8 Ohio N. S., 384; Straden v. Byrd, 7 Ohio, 186; Story’s Eq. Pl., 410.
There should have been no decree against Woodhouse and Butler. The bill showed no cause of complaint against them except their guaranty of collection on the mortgage note. When the bill was filed, the guaranty was not an evidence of debt due to complainant. It only is such when the creditor has exhausted the ordinary remedies by final process on judgment or decree against the principal defendant without avail. It is a contingent liability, not a present indebtedness, and when they do become indebted, the liability will be at law, and not in equity: 2 G. B., p. 151fi, § 5150; 10 Mich., 338; 1 Wend., 457; 4 Cow., 173; 11 Wend., 629; 6 Hill, 139; 11 Paige, 28.
The decree was based on an unlawful computation of inter•est, admitted in order appealed from to be three hundred and •eighty-nine dollars and sixteen cents, caused by the commissioner compounding interest. This was a very serious error as to the equitable rights of all the defendants, more especially Woodhouse and Butler, and the order to remit after the confirmation of sale did not remedy the wrong, the mortgaged property having then passed from them under this inequitable decree. The order to remit was in effect altering the decree after enrollment, which cannot be done except by bill of ^review: 1 Barb. Ch. Pr., 366; Bennett v. Winter, 2 Johns. Ch. R., 205; Wiser v. Blackley, 2 Johns. Ch. R., 488; Dexter v. Arnold, 5 Mason, 303; 2 Har. & John., 230.
The complainants having filed a discontinuance as to defendants Woodhouse and Butler, thereby dismissed his bill and discharged his decree against them, and the court erred therefore in setting aside such discontinuance. It cannot be claimed that in this case the decree should be first performed: (1) Because that is to be provided for when leave to file is granted; (2) Because Woodhouse and Butler are within the exception to the rule requiring performance, to-wit: That a party is not bound to perform any more than his adversary can show that he is bound to perform .when he seeks to bring the bill of review. When their petition was filed, these two defendants were not indebted to nor bound to pay any thing: Story Eq. Pl., 406; Cooper’s Eq. Pl., 69-90; Partridge v. Usborne, 5 Russ., 195 to 252; Mitford’s Eq., 88; 2 Johns. Ch. R., 488. Performance can be dispensed with: Story Eq. Pl., 373; 5 Russ., 195.
If advantage is sought to be taken of the want of signature of solicitor or complainant to a subpoana, action must he taken promptly: Graveling v. Moore, 39 Mich., 563. One is guilty of laches who disregards proceedings till after decree because the subpeena fails to give the date of the return day: Gould v. Castel, 47 Mich., 604.
To hold the guarantor of the collection of a debt at law, the inability of the principal debtor to pay must be shown by proof of failure of legal proceedings diligently pursued against him to result in collection: Aldrich v. Chubb, infra, 350; Bosman v. Akeley, 39 Mich., 710. Facts held not to constitute a guaranty of collection: Taylor v. Soper, 52 Mich.
So upon foreclosure, where one is not primarily liable upon the mortgage debt, no personal liability can be enforced against him, until the land is sold and a deficiency reported: Howe v. Lemon, 37 Mich., 164; Gies v. Green, 42 Mich., 107; Mickle v. Maxfield, id., 304; McOrickettv. Wilson, 50 Mich., 513. The decree should not award execution before a deficiency is ascertained: Howe v. Lemon. As to tbe proper practice on application for decree for deficiency, see Ransom v. Sviherland, 46 Mich., 489; McOrickeü v< Wilson, 50 id., 513.
An order allowing the filing of a bill of review is not final and appealable: Mansfield V. Freeman, 39 Mich., 64; one denying the permission is; ScHven v. Hursh, id,, 98. An order allowing the filing cannot be made at chambers ex parte: Clark v. Huron Judge, 40 Mich., 166. On a hill of review only those questions are to be raised which came up in the original controversy, and one not a party to nor interested in the merits of such controversy, is an improper party to the review bill: Gies v. Green, 42 Mich., 107
A foreclosure decree contrary to the terms of a mortgage set out in the bill is subject to review at the suit of a party interested under the mortgage, whose application for a rehearing, seasonably made, has been denied: Mickle v. Maxfield, 42 Mich., 304, which see for discussion of the practice on bills of review.

Opinion:
Campbell, J.:
Johnson held a mortgage executed by defendant Shepard February 10, 1868, payable in five years, with ten per cent, annual interest. The defendants Woodhouse and Butler guaranteed the collection of the note.
A decree by default was obtained on November 30, 1874, and a sale was made January 17, 1876, to the complainant as purchaser, which was afterwards confirmed. Subsequently defendant Shepard and defendants Woodhouse and Butler filed separate petitions for leave to file bills of review, the former on the ground that the decree included usurious and illegal allowances for interest, apparent on the face of the -commissioner's report, and the latter because they were only guarantors of collection and not subject to a decree, ^either for absolute payment or at all. The decree was against them as original promisors, and for an absolute liability.
On the 2d of May, 1876, the cause was discontinued as against Woodhouse and Butler..
On the 26th of June, 1876, the excess of interest was remitted against Shepard.
On the first of July, 1876, the court rescinded the order of discontinuance, on an affidavit of complainant's solicitor, that he did it under a mistake as to the meaning of a previous order, which is not set forth in the record. On the same day an order was entered refusing to allow bills of review, and imposing costs on all the defendants jointly.
So far as Shepard is concerned, the only complaint which he made against the decree was, that it was excessive in amount. We do not find any complaints against the sale, except as to this same defect, and certain supposed irregularities not going to the merits. The petition for a bill of review was filed at a late period, when it was to be governed entirely by equitable considerations, and if the defendant has not been really damnified, the prayer should not be granted.
It was urged on the argument that the record did not show service of subpoena, and therefore the court had no jurisdiction; and it is claimed that on a bill of review all errors are open, whether specified or not.
This, however, is not a bill of review, but a petition for leave to file one, which is a very different thing. Moreover, the defect relied on is not well founded in fact. By a manifest clerical error the sheriff certified that he served a subpoena on a day before it was dated and issued. If a subpoena were required to be served any particular time before the return day, such a return might require amendment. But inasmuch as it may be served on the return day, it is fairly presumable that it was served during its life, and not at an impossible day.
This was subsequently shown to have been the case, and such a slip would have given no *very strong support to an appeal to the discretion of the court.
. We think that the remission of the excess removed the only grievance which Shepard had suffered, and that the court was right in refusing him relief.
The question then arises, whether the other defendants are in the same position with Shepard.
Their obligation, as set forth in the bill, is not an agreement or guazanty of payment, but a guaz-anty of collection, which created no liability against them until- after all the legal resources of complainant had been exhausted. Until not only a decree had been obtained, but it had also failed to pz-oduce payment, either out of the land or out of the other property of Shepard, they wez'e not liable to be called upon for payment. —Barman v. Carhartt, 10 Mich. R., 338.
Under the original equitable jurisdiction there never was any powez: to make a personal deci'ee against even the mortgagor himself. His personal obligation could only be enforced in a suit at law. It was an innovation which, provided that in case there was a deficiency left after exhausting the land, the debt might be collected in the same proceedings. The first Michigan statute authorizing this remedy was the chancery act of April 23, 1833, and was confined strictly to the mortgagor himself. — Sec. 37. Before the revised statutes of New York there was no remedy in equity against any thing but the lands mortgaged, in that state (Dunkley v. Van Buren, 3 J. C. R., 330), and such was the general rule. — Downing v. Palmateer, 1 Mon., 66. The debt could only be collected at law.
The Michigan revised statutes of 1838 prohibited proceeding at law and in equity at the same time, and provided that the personal claim might be pursued against the mortgagor; but in giving this power it was made to act as a supplementary process: "On coming in of the report of sale, the court shall have power to decree and direct the payment by *the mortgagor of any balance of the mortgage debt that may remain unsatisfied after a sale of the premises, in the cases in which such balance is recoverable at law; and for that purpose may issue' the necessary executions as in other cases against other property of the mortgagor." — R. S. 1838, p. 376, § 105. That system also contained the first provision for holding other debtors: "If the mortgage debt be secured by the obligation or other evidence of debt hereafter executed, of any other person besides the mortgagor, the complainant may make such person a party to the bill, and the court may decree payment of the balance of such debt remaining unsatisfied after the sale of the mortgaged premises, as well against such other person as the mortgagor, and may enforce such decree as in other cases." — Sec. 107.
Our present statutes on this subject are in all respects the same with those of 1838, and those were borrowed from the laws of New York. The language is unambiguous in requiring the action which shall finally authorize the issue of an execution to be based on the confirmation of a report of deficiency. The proceeding is essentially new and supplementary, and not a mere continuation of the foreclosure. It resembles the proceeding had on the coming due of a new installment, which, although it is usually provided for in the original decree, is nevertheless as distinct a proceeding as a scire facias for further breaches of a bond.— Brown v. Thompson, 29 Mich. R., 72. It was not till 1840, in McCarthy v. Graham, 8 Paige R., 480, that it was settled by any reported decision that a contingent provision for personal liability could be inserted in the original decree. But it is merely contingent. It has never been held that an absolute decree can be rendered béfore the confirmation of the report, so as to operate as a final judgment. The practice in Michigan has generally conformed to the chancellor's decision in Mc Carthy v. Graham.
The jurisdiction over persons who have become liable on the debt, is not obligatory, but is only permissive. When *justice requires that the party shall have a chance to defend himself at law, or to seek redress in any other form against his liability, courts have refused a personal decree. In North American Fire Tnsurance Company v. Handy, 2 Sanf. Ch., 492, where one of two joint guarantors had been released after suit brought, by a compromise, which, under the statutes, left the co-surety liable for half of the debt, the court refused to grant a personal decree against the one not released, and left complainant to sue at law. So in Withers v. Morrell, 3 Edw. Ch. R., 560, where a decree was granted for the foreclosure of a purchase money mortgage against the land, but the mortgagor claimed a failure of title as to a part of the land, the court, while it held that defense could not be tried in the foreclosure suit, nevertheless refused a personal decree, and left the parties to redress in another' form.
It is also to be remarked that in the present case the decree was an absolute one, and the defendants Woodhouse and Butler were not guarantors of payment, but only of collection. There is no doubt guarantors of payment come within the statute and may be made parties. Their liability, if it exists at all, is complete before suit brought. But it would certainly be an anomaly if parties can be sued and put to the expense of defending themselves before there is any assurance that they will ever become liable. If the joinder in the present and like cases is allowed, the guarantor is charged as a defendant in proceedings which must not only be carried to sale of land and personal judgment against the principal debtor, but where the remedy against him must be completely exhausted before there is any excuse for calling upon the surety. To subject the guarantor of collection to this trouble and expense, when he may never become liable, and when he has not failed in any duty, is unjust. He does not come within the language or the spirit of the statute. These clauses were introduced to remove the necessity and prevent the practice of suing at law for the debt at the same time with the equitable ^foreclosure. The debts for which a personal decree is allowed are those which are "recoverable at law."
No guaranty of collection is recoverable at law before the exhaustion of the remedies under the personal decree, and the decree cannot provide execution for debts not due.
The case of Leonard v. Morris, 9 Paige R., 90, was cited as supporting such a decree. In that case the distinction was not pointed out between guaranties of collection and guaranties of payment, and the chancellor, assuming, without discussion and without previous reported decisions, that either of them was admissible, was only called on to determine whether the representatives of a guarantor could be brought in. In Baxter v. Smack, 17 How. Pr., 183, it was held that a guarantor of collection should not be pursued until the mortgage was-exhausted; and the case of Vanderkemp v. Shelton, 11 Paige R., 28, indicates the same doctrine. It was held by this court in Barman v. Carhartt, 10 Mich. R., 339, that both legal and equitable remedies must be exhausted before pursuing the guarantor. And in Joy v. The Jackson & Michigan Plank Road Co., 11 Mich. R., 155, we held that collateral guarantors, not agreeing for the payment of the debt, should not be joined as defendants.
As no one can object to the misjoinder of defendants but those misjoined, it might become a serious question whether the court, where no objection is made, might not make a contingent decree against them. But it could not under any circumstances preclude them from a hearing before execution. While the decree may bind the original promisor, yet any thing which the creditor does to change his contract relations may effect or discharge the sureties, and this may happen at any time before their liability is finally settled, if not later. Such a decree as was granted here was entirely erroneous, and we cannot conceive that they are in default in not asking a bill of review, when the proceedings to fix them finally are yet uncommenced. It would be a misuse of discretion to refuse to correct an evil when no one has acted or can act in reliance on it; and this *court on appeal is bound to exercise its own discretion upon the matters brought before it.
The parties have not lost their rights by laches, and we should not hesitate to grant their petition if necessary. But the order refusing it and granting costs against them was based on a preceding order which was unwarranted.
Immediately, or very soon after Woodhouse and Butler applied for leave to file their bill of review, complainant dismissed his bill against them. This was the precise relief they sought, and rendered any further steps in defense needless. The court afterwards allowed the complainant to withdraw this dismissal, and on the same day granted the order in question dismissing the petition. If the court had any power to reinstate them as defendants, it had none to decide a matter which had before that come to an end by the dismissal, without new proceedings. The order was made in the same way as if they had always remained in the case, and as if there had been no dismissal.
But we do not understand how the court could bring in parties absolutely discharged by the complainant's own act, and hold them bound by the previous decree and proceedings. A non-suit at law -is often set aside, but a non-suit thus vacated leaves the entire case open for hearing. Chancery proceedings may have parties supplied by amendment at all stages, but the new parties can always defend if they choose. Where necessary parties are left out, leave is usually given to bring thém in; but where they are not necessary, and have been left out voluntarily, this is not so. These persons, if allowable, were not necessary parties, and having been once dismissed, could only be brought back by the usual process.
We think the two orders of the first of July should be reversed and vacated, and the bill ordered to stand dismissed against Woodhouse and Butler, with costs of both courts, and the order aflirmed as to Shepard, with costs of this court.
The other justices concurred.