Court Opinion

ID: 6537359
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:12:50.530796+00
Date Added: 2024-06-11T15:55:42.141525
License: Public Domain

Dickinson, J., delivered the opinion of the court: The first question which presents itself for our consideration, is, “ Ought the Court below to have entered any decree in favor of Clements, as the case then stood before them?” The covenant of Phillips to re-convey, is made to Clements and his daughter Louisa, jointly: whether she had an interest in the property sold, or not, does not appear, nor is it important to inquire. The only claim set up in the bill, is founded upon the covenant of Phillips. A Court of Equity aims to complete justice by deciding upon and settling the rights of all who are interested, either legally or beneficially, on the subject matter in dispute; that a decree, when made, may be fully performed, further litigation prevented, and at the same time no injustice be done by a partial view only of the real merits of the case. In the case of Wood vs. Dummer, 3 Mason R., 317, the rule and exceptions to it are summed up in the following language: “The general rule is, that all parties materially interested, either as plaintiffs or defendants, are to be made parties. There are exceptions just as old and well founded as the rule itself. When the parties are beyond the jurisdiction, or are so numerous that it is impossible to join them all, a Court of Chancery will make such a decree as it can, without them. Its'object is to administer justice; and it will not suffer a rule, founded on its own sense of propriety and convenience, to become the instrument of a denial of justice to parties before the Court, who are entitled to relief. What is practicable to bring all interests before it, will be done; what is impossible or impracticable, it has not the rashness to attempt; but it contents itself with disposing of the equities before it, leaving, so far as it may, the rights of other persons unprejudiced.” See also West vs. Randall, 2 Mason.R., 195. In Cockburn vs. Thompson, 16 Vezey, 329, Lord Eldon, referring to the general rule, and the class of exceptions to it, said: “The principle (of the general rule) being founded on convenience, a departure from it has been said to be justifiable, when necessary. And in all these cases, the Court has not hesitated to depart from it, with the view, by original and subsequent arrangement, to do all that can be done for the purpose of justice, rather than hold that no justice can subsist among persons who may have entered into these contracts.” All these exceptions, however, are so qualified, that it must be apparent to the Court, that by waiting to join all persons interested, the delay and inconvenience would obstruct and probably defeat the purposes of justice; and by dispensing with them, their rights would not be prejudiced; for otherwise, such is the solicitude with which the interests of absent persons, not made parties, are watched over and protected, in equity, the Court would not proceed to make a decree. And if a party refuses to join as plaintiff, he may be made a defendant. Good vs. Blewitt, 19 Vez., 336; West vs. Randall, 2 Mason R., 190 to 198; Mallow vs. Hinds, 12 Wheat. R., 193; Russell vs. Clark's Ex., 7 Cranch, 72; Wendall vs. Van Rensselaer, 1 J. C. R., 349; 1 Mit. Eq. Pl., 57, 63. When there is such a parity of interests between persons, that a decree must affect both, the bill must be brought in both their names, or in their behalf, that all those interests may be represented and protected. If brought by the plaintiff alone, without joining those equally interested, and who are to be equally affected by a decree, when, by his own showing, he could have done so, the bill will not be sustained by the Court, for want of proper parties. Therefore, on' a bill to foreclose a mortgage, all persons having either a legal or equitable interest, are necessary parties. All who are entitled to the money, must be before the Court: one cannot proceed for his his own part only. So one of several mortgagors cannot be permitted to redeem and take a conveyance of the mortgaged property to himself, without the consent of the others. It is often proper to make persons parlies, and yet, if they are not, the suit may proceed without being on that ground defective; but it is indispensably necessary that all persons who have a clear right to disengage the property from all incumbrances, in order to make their own claims beneficial or available, should be joined; for, unless all the.mortgagors or their representatives are made parties, a complete decree, embracing the whole subject matter, and declaring the rights of all who are interested in the estate, could not be made; and if the want of proper and necessary parties is apparent on the face of the bill, the defect may be taken advantage of on demurrer. If the defect is vital to the character of the bill, or to the relief asked, the objection may be insisted upon at the hearing; and if the Court proceed to make a decree, it may be reversed for error, on that account. Cooper Eq. Pl., 33, 185; Mitf. Eq. Pl. by Jeremy, 180; Troughton vs. Binkes, 6 Ves., 573. Is there any other defect upon the face of this bill? Clements and daughter united in the conveyance to Phillips, and he covenanted to re-convey to them jointly. There is clearly a unity of action and of interest, indivisible and inseparable. It is upon the covenant to them jointly, he claims relief. Under this decree, her interests are wholly unprotected; the whole of the property is given to the one, to the exclusion of the other, who has had no opportunity of asserting her rights, and who has equally as good a claim, and to the same extent; nor does the decree decide upon the whole subject matter in litigation, as regards the parties; for Porter is as much responsible to the daughter as to the father. The bill admits she is of age,*nor does it show any reason why she does noli join in the suit. Her interests, instead of being represented, have been wholly overlooked and disregarded; and by permitting the decree to stand, made, as it evidently is, from a partial view of the merits, great injustice might be done her, while we will do the plaintiff right: so on the other hand, we will take care that the defendant is not doubly vexed, or the interests of the absent sacrificed and left unprotected, because of the plaintiff, who might have made all the proper parties at first, and whose fault it was that it was not so done. The omitting to make Louisa Caroline Clements a party plaintiff in the suit, without showing sufficient cause for so doing, was a sufficient cause for the Circuit-Court to have refused a decree to the plaintiff; but as that Court proceeded to make a final decree, as between Clements and Porter alone, we are of opinion that the omission is a defect fatal to the decree. Having disposed of this question, and clearly demonstrated, as we think, that the decree, as entered, is erroneous, and must, for that cause, be reversed and set aside, we will look into the instrument which the plaintiff has made a part of the bill, and upon which he founds his claim for redemption. There is some embarrassment and conflict of opinion manifested in the cases, as to what shall constitute a mortgage; and it is equally as difficult to define with precision the rules which regulate implied or constructive notice; for it depends upon all the varied circumstances of the case, and whether there has been an exercise of ordinary diligence and understanding in making the inquiries. Suspicion of notice is not sufficient; there must be clear and strong circumstances, in the absence of actual notice. In equity, the character of the conveyance is determined by the intention of the parlies, by an agreement in the deed, or in a separate instrument, showing it was to be considered only as security for the payment of money; so if it be absolute on its face, if intended merely as a security for a debt, parol evidence is admissible, to show that fact. But there is a material difference between a conditional sale and a mortgage. Mr. Kent, in his Commentaries, (4 vol., 143,) says: “ The case of sale, with an agreement for a re-purchase within a given time, is totally distinct, and not applicable to mortgages. Such conditional sales or defea-sible purchases, though narrowly watched,* are valid, and are to be taken strictly as independent dealings between strangers; and the time limited for the re-purchase must be precisely observed, or the vendor’s right to reclaim his property will be lost.” In the case of Poindexter vs. McCannon, 1 Dev. Equity Cases, 273, the Court said the test of distinction is this: If the relation of debtor and creditor remains, and a debt still subsists, it is a mortgage; but if the debt be extinguished by the agreement of the parties, or the money advanced is not by way of loan, and the grantor has the right of refusing it if be pleases, by a given time, and thereby entitle himself to a recoverance, it is conditional sale. See, also, Slee vs. Manhattan Company, 1 Paige, 56; Goodman vs. Grierson, 2 Ball & B., 274; Conway vs. Alexander, 7 Cranch, 237. Can the instrument from Clements and his daughter be considered a mortgage? or is it a conditional sale? and in what character does Porter stand to the several parties? Phillips, in his covenant, says he purchased of Clements and daughter four or five servants, for four hundred dollars, to them in hand paid; and if they neither die, run away, nor are stolen, and Clements and daughter pay him $500, within two years and six months, he will re-convey the servants to them. It will be observed that this covenant is worded with great caution. The property is delivered to Phillips, and he immediately sells four of them to Porter, for the same sum of four hundred dollars. We know nothing of the understanding between Porter and Phillips, other than from Porter’s answer, who says, he promised Phillips he would re-sell them again to him, for five hundred dollars, at any time within two years. Porter was not present at, nor a party to, the sale from Clements and daughter to Phillips. Edwards, one of the witnesses, it is true, states that Phillips told Porter, he (P.) took in the same waj as he had previously done; it shows no more than an understanding between the two latter, indefinite and uncertain in its character and terms; for the nature of the first contract was not explained, and Porter always insisted that he considered the sale absolute. There is certainly no parity of contract between Porter and Clements. It appears, from the testimony of Biscoe, the Sheriff, that Clements was embarrassed in his circumstances — that there were executions against him. The presumption is, the property had to be sold. He believed he could make a more favorable sale, and at a less sacrifice, with Phillips, than by permitting it to be sold at public vendue. It may have been a good bargain to Phillips, and no more; or the negroes may all have died; there was no liability resting on Clements or his daughter to pay in that event, nor were they bound to do so at any time, unless they thought proper. They could have told Phillips, you have had a good bargain; we are satisfied; or we have not the money, and therefore cannot buy; for there was no debt existing at the time between any of the parties. If Phillips had considered the transaction in the light of a mortgage, it is probable he would have so expressed himself, or taken a note to meet any loss he may have sustained by keeping them. He look no bond for repayment; he claimed no interest; he did not covenant to sell the increase; but only to re-convey them; that is to say, Tony, Fanny, Harriett, Violet, and Millcy, provided he was paid $500, with a further proviso that they did not die, run away, or were stolen. Two of of the negroes, Fanny and Violet, have died. Harriett is still in possession of Clements; Tony was again re-purchased .by Porter, at public sale, under a deed of trust executed by Clements, upon the contract with Phillips, and but one remains of the original purchase. Upon conclusion, we are clearly of opinion, that the covenant from Phillips to Clements, and his daughter Louisa, is personal between them, and cannot be considered a mortgage. If the covenant was broken by Phillips, the parties have their remedy against his estate for damages; and that, although the period for re-purchase was two years and a half, yet so soon as Phillips, by selling the property, or any portion of it, to Porter or any other person, placed it out of his power to comply with his covenants, it was broken, and an action for damages could have been sustained against him at law.' The object of taking a mortgage is always to secure money loanéd or due, and to compel a payment with interest. But here the object, on both sides, was a sale, and only a collateral right to re-purchase by a given day. They were under no obligation to make the purchase, nor were they responsible to either Phillips or Porter, if the parties were to do so. If all the slaves had died, Phillips must have sustained the loss; so Porter would have had no recourse upon any person, if they had all died in his possession. And as Clements and his daughter Caroline have a plain, complete, and adequate remedy at law against Phillips’ representative for any damages they may have sustained by a breach of his covenant, a court of equity •cannot have jurisdiction of it. And this cause must be decided upon the ground of there being no equity upon the face of the bill, and no facts therein to authorize or sustain the final decree pronounced in the cause. We deem it unnecessary to notice the other errors assigned. Wherefore, upon the reasons above stated, it is the opinion of this Court that there is no equity in the bill of complaint, and that the Circuit Court, sitting as a Court of Chancery, erred in making the decree; and that it must, therefore, be reversed, annulled, and set aside, and the bill be dismissed without prejudice to the rights of either party. -