Court Opinion

ID: 3863592
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:57:07.800338+00
Date Added: 2024-06-11T13:49:39.957082
License: Public Domain

In order to understand the questions made here, a very short statement is necessary. The Quidnick Company filed a bill against Chafee, trustee, under the Sprague mortgage and assignment, claiming a lien upon the trust property for certain indebtedness, and that the property should not be sold except under the direction of the court. The case was heard before three of the judges, and on November 5 the following decree was entered:
"SUPREME COURT, October Term, 1881.
"Quidnick Company vs. Z. Chafee et al. In equity, No. 1,927. This cause came on to be heard before the full court, and was argued by counsel for the respective parties, and thereupon, upon consideration thereof, it is ordered, adjudged, and decreed:
"First, That the A.  W. Sprague Manufacturing Company is *Page 398 
not indebted to the Quidnick Company under the contract dated December 18, 1873, in the pleadings referred to.
"Second, That the complainant is entitled to an account and repayment of all sums which said defendant Chafee, by virtue of his position as treasurer of said Quidnick Company, has used of the moneys of or belonging to said Quidnick Company for the payment of creditors holding the mortgage notes of said A.  W. Sprague Manufacturing Company, secured under the trust mortgage from the A.  W. Sprague Manufacturing Company to said Chafee, as trustee, in the pleadings mentioned, or for the benefit of his trust estate under said mortgage, for purposes not within or under said contract of December 18, 1873, and it is referred to Samuel W. Peckham, Esq., as Master, to take and state the accounts between said parties in respect thereof.
"Third, It appearing that said property cannot be held to await such an account, except at great and ruinous expense, said Chafee is hereby directed to proceed and advertise and sell the same, and deposit the net proceeds of each and every sale he may make in the Rhode Island Hospital Trust Company, in Providence, upon its participation account, in his name as trustee, not to be withdrawn except by order of this court, or some justice thereof, and either party may from time to time apply to the court for any directions to said trustee in relation to such sales."
The material parts of this decree at present are that Chafee was directed to proceed and advertise and sell the property, deposit the proceeds in banks, "and either party may from time to time apply to the court for any directions to said trustee in relation to such sales."
Under this decree, or rather under his trust deed, the trustee proceeded to advertise, c.
By Pub. Laws R.I. cap. 563, § 9, of April 20, 1876, any person not a party to a bill, upon making it appear to the court "that he is interested in the subject matter of the suit, or proceedings," c., c., may be allowed to become a party, c.
And by Pub. Laws R.I. cap. 291, § 1, of March 27, 1873, one judge of the court is made a quorum for all equity matters excepting demurrers and final decrees.
On the 8th of December, 1881, Messrs. Ballou and Spencer, *Page 399 
claiming to be depositors, and also to be a committee of, and agents for other depositors of the Franklin Savings Bank, and claiming that said bank was a creditor of the assignors who made the trust deeds, presented a petition to a judge in chambers stating these facts, and praying that they themselves, as depositors, and said bank and its receiver, be made parties to the suit.
Said savings bank was then under injunction and in the hands of a receiver appointed by this court under Gen. Stat. R.I. cap. 140, §§ 45, 47, by which the Supreme Court has the same power over receivers so appointed as is exercised by courts of equity in like cases.
Have the depositors, as such, a right to intervene and become parties to the suit, and a right to ask and have the receiver made a party?
In the case of ordinary corporations it is the general rule that the shareholders shall first apply to the corporate authorities to proceed themselves or to give the shareholders the right to use the corporate name. But in regard to this the practice of the English Chancery Courts has been very much modified. See Foss v. Harbottle, 2 Hare, 461, 491;Wallworth v. Holt, 4 Mylne  Craig, 19, 635, and note 5 in Amer. ed. And it must often be so from the necessity of the case. In cases where some of the corporate managers are concerned in the matters complained of, it would not only be useless to apply, but might give them a warning which would defeat the object sought.
And this is not a matter of substantive law, where the court cannot alter the rights of the parties. It is merely a matter of practice concerning the manner in which parties may get before the court, which, except where the State has expressly prescribed rules, or has impliedly recognized some particular practice, is within the control of the courts.
But this is not the case of an ordinary corporation, in which the only right of a shareholder is to a dividend. In a savings bank a depositor puts in a certain sum. He has a right to withdraw at any time, subject in some cases to the rules as to notice. Practically the bank is merely his agent for loaning his money, and in the present case there are still other reasons. There is now no corporation in active existence. Its whole property is in the hands *Page 400 
of a receiver, who is an officer of the law appointed by this court, and subject to its direction.
And under the broad provisions of the new statute, it seemed to me the depositors have a right to be parties. True, the Quidnick Company, the complainant, seeks no relief against them, and a decree made in this suit would not affect the amount of their claim, but it may materially affect the amount of the funds out of which they may have a chance to be paid.
And it is reasonable to suppose that the new act was intended to remove many of the quibbling objections which we see by the reports were formerly made in such cases, and to prevent the necessity of bringing separate suits and increasing the expense of litigation.
And it seems to me not very difficult to imagine many cases where a creditor of a person, on whose property another person was attempting to establish a lien, might very properly be made a party in order to be enabled to dispute the validity or the amount of the lien; and more especially where his own claim had gone to judgment, as in this case.
If any new parties come in, they must ordinarily come in as defendants. The plaintiffs cannot be obliged to admit any one to come in as co-plaintiff, and so have control of their side of the suit. But any person having an interest, even if the same as the plaintiffs, may be made defendant; and plaintiffs are often obliged to make a person defendant who has the same interest with themselves, merely because he will not join with them in the suit.
In form the order of December 8 was a direction to the trustee not to sell for ten days, appointing a day for hearing, and reserving the right to move for a dissolution of the order sooner. This reservation is usual but unnecessary, as the party would have the same right without it.
The majority of the court had made a decree authorizing the sale, but prescribing no time, place, or manner, and giving no directions whatever. If they had done so, no judge, whether having the power or not, would have undertaken to rescind it.
It is said in the opinion of the majority that the decree of November 5 was a final decree, and therefore could not be altered. *Page 401 
There was nothing final about it; it was in no sense a final decision, requiring two judges to make it valid.
If any authority was needed upon this point, it is only necessary to quote the highest, the Supreme Court of the United States. In the case of Perkins v. Fourniquet, 6 How. U.S. 206, a decree of a Circuit Court declaring that the complainant was entitled to certain property, and referring the cause to a master, was held to be an interlocutory, and not a final decree, for the reason that until the master's report came in and was disposed of, all such orders and decrees remained under the control of the court.
And when the case having been sent back to the Circuit Court, that court, on the hearing on the master's report, reconsidered and reversed its former interlocutory decision, and it was again brought before the United States Supreme Court; Fourniquet v.Perkins, 16 How. U.S. 82; that court sustained the last decision of the Circuit Court, saying that if the court below, upon further reflection or consideration, changed its opinion after passing the order, or found that it was in conflict with a decision of the Supreme Court, it was its duty to correct the error. And in both cases the opinion was delivered by Chief Justice Taney. It had been contended in that case that a motion for rehearing was necessary. See, also, Cronin v. Watkins,
before Chancellor Cooper, 1 Tenn. Ch. 119; Dormer v.Fortescue, 2 Atkyns, 282, 284; and Gibson v. Rees, 50 Ill. 383.
Not only was the decree of November 5 not a final decree in any sense requiring two judges to make it, but it did not even purport to be final as to the sale, expressly reserving the right to any party to apply "to the court" for directions as to the sale.
It is said that the decree contemplated an application to the same judges that made it, and not to a single justice, and therefore one judge could not modify it. It may be that the judges intended to reserve to themselves the sole power to modify. If they had a right to do so, they should have said so. But they did reserve the power "to the court."
Now what is "the court" under our statutes, for it is that which must decide the question. And it would be difficult to make language plainer than the language used, and that is, that in equity cases one judge constitutes a court, and has all the powers *Page 402 
of the court for all purposes except hearings on demurrers and final decrees. And the decree of November 5 was neither.
And it is said that one judge cannot supersede or stay an order of two judges. Doubtful at least, provided the order be an interlocutory one. Under our present system it requires a great deal of care and consideration to prevent conflict. Hitherto there has been no conflict.
I concur in the order dissolving the injunction for the reason last given in the opinion of the majority.
Decree accordingly.
After the decree of November 5, 1881, Chafee, the trustee, received several offers to purchase in bulk the trust estate in his hands. One of these offers he was advised to accept by a committee purporting to represent a large majority of the creditors, whereupon Chafee submitted the offer to the court, for its advice and approval. Notice of the pendency of the matter before the court was ordered and given, and after hearing the parties interested, the court gave the following opinions: