Court Opinion

ID: 3863589
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:57:07.781289+00
Date Added: 2024-06-11T13:35:21.035223
License: Public Domain

I do not think the court ought to make an order for the sale of the property so long as the title to it is in dispute.
The decree for sale will bind no one who is not a party to the suit in which it is made, and it may therefore be argued that no harm can be done.
In ordinary cases no mischief may be done. But here is an immense estate to be sold for the benefit of creditors, and if creditors appear and are represented in the suit, it by no means follows that the large creditors will look out for the interests of the smaller creditors as well as they do for their own.
And it is a very common notion too, that when a sale is made under order of court, the purchasers are sure of a good title. While the lawyers know that this is not so, and while we are apparently selling only land, mills, stocks, c., we may in fact *Page 382 
be selling only the privilege of having a lawsuit, and thus may aid in misleading purchasers and promoting litigation.
A decree in the present case will not deprive any parties of their legal rights, but it will not bind all persons who have an interest in the property. These are two grounds upon which the court of their own motion will generally insist upon making other persons parties, or will refuse to go on with the cause until they are made parties.
And the court ought to protect not only those who are bound by their decree, but also, as far as possible, those who may act honestly upon the faith of their decree.
And these considerations bring up a very important question, how far is the court justified in looking beyond the papers which the parties have put into the case and the questions they have chosen to make. Ordinarily we are bound to decide a case upon the papers and facts as the parties present them. But if we are so confined in cases like the present, it is very evident that parties might collude and obtain a decree by which the interests of others might, even if not bound, be seriously prejudiced.
And even if parties do not collude, they may have an interest of the same nature in the result. Now we know, not from hearsay nor loose declarations, nor from statements of counsel in argument, which might be inaccurate, but from our own records, that the title to all, or nearly all, of the property now sought to be sold, is in dispute.
April 28, 1879, Winthrop De Wolf, receiver of the Franklin Savings Bank, filed a bill in chancery, Docket No. 1,675, in the office of the clerk of this court, in which he seeks to set aside not only the trust mortgage of November 1, 1873, but the assignments executed on or about April 6, 1874, which latter purport to assign the whole estate of the assignors in trust;first, to pay the mortgage creditors, and second to pay their creditors generally.
That bill alleges that on the 28th of October, 1873, said bank was insolvent; that commissioners were appointed by the governor, who examined the bank, and the result was that the bank and its officers were, August 11, 1874, perpetually enjoined,c., and a receiver appointed. On November 10, 1874, he commenced *Page 383 
a suit against the A.  W. Sprague Manufacturing Company and others, and on November 30, 1878, recovered judgment for $826,912.78, on which execution was issued March 15, 1879, which was levied upon more or less of the property now sought to be sold, and said execution now remains unsatisfied.
And the bill further alleges, probably in order to meet an anticipated plea, that on April 14, A.D. 1874, before the injunction, certain trustees of said bank authorized the standing committee to exchange the Sprague debts for the trust mortgage notes in a certain manner, and if they could not succeed in that, then to make the exchange as in their discretion they judged best; and on April 15 the standing committee authorized the treasurer to accept the mortgage notes as collateral, the bank to retain the original paper; and this arrangement was carried into effect, and an indorsement thereof made upon the notes, and time given as provided in said mortgage notes. But the bill alleges that this agreement was without any consideration and void.
A form of the mortgage note is attached to the bill, specifying that it is payable in three years, and issued as collateral, c.
The bill claims that the mortgage trust and the deeds of April 6 are fraudulent and void as against creditors, and that the agreement of the Bank Committee with said Chafee to accept said mortgage notes was without authority and void, and prays for certain relief.
To this bill the respondents, June 6, 1879, filed a demurrer, and with other reasons for demurring claim that the bank became a party to the trust deed by accepting the mortgage notes, and is estopped thereby from questioning its validity.
The complainants should have set this down for hearing, Rules in Equity, No. 39; but if the complainants did not the respondents might have done so, 1 Daniel Chanc. Prac. 621; Consolidated Orders in Chancery of 1860, Order 14, § 11, page 53. They might now move to dismiss the bill for want of prosecution; but that would not remove the cloud from the title, but would merely lead to another suit and to further delay in getting a binding decision. For over two years the hearing on that bill has not been pressed on either side. But until it is out of the way, every purchaser at any sale this court may order will take with notice of that claim. *Page 384 
November 19, 1881, Zechariah Chafee, trustee and respondent in this case, presented to the court, Potter, Stiness, and Tillinghast, JJ., his petition, stating that by the decree of November 5, 1881, he was directed to sell the estate in his hands as trustee; that a part of this estate was the Baltic Mill property, in the State of Connecticut; that the mill had been lying idle since the termination of the contract between the Quidnick Company and the A.  W. Sprague Manufacturing Company above given; was depreciating in value, and was subject to the cost of insurance, taxes, and outlay for watchmen; that he had an opportunity to lease the mill estate under a lease annexed to the petition, and that the property was under attachment in litigation before the courts of the State of Connecticut.
The lease submitted provided that the lessee should at once occupy the premises, hold free of rent till January 1, 1882, and should have the premises for one year from January 1, 1882, at a weekly rent of $500, with the option of two years more on the same terms, the lessee to surrender at any time during these last two years on sixty days' notice in writing that the trustee, after clearing off liens and clouds on the estate, desired to sell in the performance of his trusts; the lessee, at the expiration of said three years, to have the option of renewal, at the highest price then offered, if the trustee wished again to lease; the lessor to pay insurance, taxes, permanent repairs, and repairs on dam, raceways, main shafting, main pulleys, walls and roofs, and an abatement of rent to be made in case of damage by fire or unavoidable casualty.
December 3, 1881, the court ordered "that said Chafee,trustee, be, and is hereby authorized to lease said Baltic Millestate in the manner proposed by and under the terms of saidlease; and the clerk of this court is hereby ordered to certifythe draft of said lease, submitted as a part of the saidpetition, as the proper form of lease and as approved by thiscourt."
From this order POTTER, J., dissented in the following opinion: