« AnteriorContinuar »
“Sec. 5. Be it further enacted, that, any community which may be sued under the provisions of this act shall have the same right to change of venue as other defendants."
This statute is quoted at large for the reason that its various provisions illustrate the status and character given to such societies by the laws of Kentucky, and by which they are thus recognized.
The court below decreed for the complainants, declaring the note to be an equitable charge upon the property of the society, and providing for the enforcement of the lien as prayed by the complainants. The defendants bring the case here on appeal.
Stone & Sudduth, D. W. Lindsey, R. P. Jacobs, and P. B. Thompson, Sr., for appellants.
St. Geo. R. Fitzhugh and C. A. Hardin, for appellees.
Before TAFT and LURTON, Circuit Judges, and SEVERENS, District Judge.
Having stated the case as above, SEVERENS, District Judge, de livered the opinion of the court.
The first question raised by the defendants is one of jurisdiction, it being contended that the citizenship of Letitia Souther is not sufficiently shown to be different from that of the defendants. In the original bill, Watson was described as a citizen of New York, and Henry Souther as a citizen of Virginia. The bill styled “supplemental,” of Letitia Souther, does not show her citizenship. The amended bill describes her as being a nonresident of Kentucky, but does not allege her citizenship there. The defendants, therefore, insist that she, being, as they also contend, a necessary party to the suit, is not shown to be a citizen of some other state than Ken tucky, and so that the court is without jurisdiction. The general rule here invoked is undoubtedly well established as the result of the statutory provisions upon the subject. Robertson v. Cease, 97 U. S. 646; Insurance Co. v. Rhoads, 119 U. S. 237, 7 Sup. Ct. 193; Everhart v. Huntsville College, 120 U. S. 223, 7 Sup. Ct. 555.
But attention must be given to the peculiar circumstances shown by the record in order to ascertain whether the rule is applicable. At the time when the original bill was filed, Henry Souther was dead. Counsel for defendants insist, and we think rightly, that Watson was therefore the only party complainant in the bill then filed, and that for all practical purposes it should be treated as though Souther had not been named as a party at all; and we also agree to their further proposition that, when Letitia Souther came in, she came as an original party. The new matter brought forward by her bill was in no proper sense supplemental. Her interest had not before been represented in the suit. But the court had already acquired jurisdiction of the case. Watson, who held the general property in the note upon which the suit was brought, had filed his bill more than four months before Letitia Souther came in. She had an equitable interest arising upon the pledge of the note as collateral to Watson's indebtedness to the estate she represented. Watson's title was a sufficient foundation on which the case could stand. It is true the pledgee of the note was a proper party, and, in a sense, a necessary party to the suit. She was not a necessary party in giving jurisdiction to the court over the case, and enabling it to make a decision; but she was a necessary party to the rendition of such a decree as should bind all the parties interested in the subject-matter. If the suit had proceeded without the intervention of Letitia Souther, it would have been defective in respect of parties, but not fatally so. It would have given ground for demurrer, and probably for an objection, to be taken in the answer or at the hearing, though the objection is rarely allowed to be first started on an appeal. McGahan v. Bank, 156 U. S. 218, 15 Sup. Ct. 347. A party, by failing to seasonably insist that necessary parties to a complete decree are not before the court, "often suffers the evils of inadequate litigation by leaving some branch of the subject still open to future controversy.” The court also might take the objection sua sponte at the hearing, and order the case to stand over for the bringing in of the party having an equitable interest in the claim. Story, Eq. Pl. $ 75; Calv. Parties, 113– 116; Mitf. Eq. Pl. 180; 1 Daniell, Ch. Prac. c. 5; Coop. Eq. Pl. 33. That the court may do this, of course, necessarily implies that the case is under its jurisdiction and authority. The defendant should be required to take the objection seasonably. If he does not, and goes on with the litigation, and, as here, first raises the objection on appeal, he ought to be held to have waived all defects except such as deprive the court altogether of the power to afford any effectual relief. If the defendant, by proceeding, waives such defects, he exposes himself to further litigation at the instance of the party interested in, but not represented in, the former suit. But that would be the result of his own negligence in not requiring all parties to be brought into the first suit, so that the decree would protect him..
If Watson had obtained a decree upon the original bill, he would have held the fruit of the suit subject to the same equities as he held the note; that is, subject to a trust in favor of his pledgee for the amount of his debt. Here Mrs. Souther was allowed to intervene for her interest early in the suit. That which the defendants might have insisted on, or the court on its own motion have directed, was seasonably done, and no inconvenience has ensued. Permitting a party to intervene in a pending suit to represent an interest involved does not oust the jurisdiction of a federal court already acquired by reason of the diverse citizenship of the original parties, of whatever state the intervener may be a citizen. Stewart v. Dunham, 115 U. S. 61, 5 Sup. Ct. 1163; Freeman v. Howe, 24 How. 450; Krippendorf v. Hyde, 110 U. S. 276, 4 Sup. Ct. 27; Phelps v. Oaks, 117 U. S. 236, 6 Sup. Ct. 714; Osborne v. Barge, 30 Fed. 805. We think, therefore, that the jurisdictional objection founded on the citizenship of the parties is not well taken.
The next ground of defense is that the court had no jurisdiction, because there was a plain and adequate remedy at law. What the supposed plain and adequate remedy at law is in such a case is not very clearly shown to us. It was the society, and not the individual members, which made the note. Some of the members were adults, and some infants. The society was not a “partnership.”
Neither was it a "corporation," in the proper sense of that term. The members have no property, having renounced all to the society. It is a somewhat anomalous case, but is yet of a kind which occasionally appears in the books of reports, and in regard to which the law has been settled by a number of decisions. It is urged that the statute of Kentucky in regard to the remedy in such cases is of no avail. It is said that it is unconstitutional, in that it attempts to vest a court of equity with jurisdiction of a purely legal right. It is further said that the statute has been repealed by implication, and that, at all events, it was not competent for the legislature of Kentucky to determine the jurisdiction of the equity courts of the United States, or to interpolate therein a strictly legal cause of action. We think none of these suggestions are well founded. The law which is thought to repeal the statute is the general practice regulation of the Code of the state, which does not specifically refer to this statute, and is not so inconsistent with it but that both might harmoniously be wrought out together. Frost v. Wenie, 157 U. S. 46, 15 Sup. Ct. 532. Nor can we see any good reason for holding the law void for the reason suggested, or for saying that the equity courts of the United States should altogether disregard it. We do not refer to that act for the details of practice provided by it, but only to show that, by providing the equitable remedy, the rights to be secured were recognized as of an equitable character; for, while the statutes of a state may extend the subject of equity jurisdiction, they do not affect the mode of its exercise. Holland v. Challen, 110 U. S. 15, 3 Sup. Ct. 495; Whitehead v. Shattuck, 138 U. S. 149, 11 Sup. Ct. 276; Gormley v. Clark, 134 U. S. 338, 10 Sup. Ct. 554.
That the rights here dealt with partake of an equitable character had been decided in the courts of chancery long before the date of this statute, and the doctrine has now become so well established that we should not hesitate to support the jurisdiction if the Kentucky statute had never been enacted. Let us first suppose that the note constitutes a legal obligation upon which an action at law can be maintained. Against whom shall the suit be brought? Not against the society, for it is not a corporation, and has no legal existence as an aggregation. If the suit be brought against the members, what members are liable? Probably such only as were sui juris at the time of making the note. But some of these are dead, and others may have withdrawn. The suit, if brought, would be liable to repeated abatements. Perhaps these difficulties could be got along with. But a greater one would be experienced in the remedy for the satisfaction of the judgment. The members have no private property. All is merged in the common mass. There is no inheritance and no estate which would go to an administrator. It would be an extremely embarrassing task to identify any legal interest of the members in the common property upon which an execution could be levied. It is true there is a statute in Kentucky making the interest of a cestui que trust leviable on execution.
Section 21, art. 1, c. 63, p. 829, of the General Statutes of Kentucky, provides as follows:
“Estates of every kind held or possessed in trust shall be subject to the debts and charges of the persons to whose use or for whose benefit they shall be respectively held or possessed, as they would be subject if those persons owned the like interest in the property, held or possessed, as they own or shall own in the use or trust thereof."
If this statute applies to the interest of members of such a society, such a proceeding would result in rights for contribution among the members, and consequences altogether alien to the purpose and interests of the society would ensue. It is to such a case that the jurisdiction of a court of equity is peculiarly applicable. By the flexibility of its procedure to fix the liability and the scope of the remedies it is authorized to employ for its satisfaction, it can fur nish complete relief where the remedy of the common law is neither plain nor adequate. A large branch of equity jurisdiction has always been concurrent with that of the courts of law,—that is, has extended over the same general subjects as those taken cognizance of in actions at law; but where, from the nature of the circumstances, and on account of the inadequacy of its remedies, a court of law cannot afford the due and appropriate relief. In these cases there is an obligation of a legal character at the foundation of the suit, like the note in the present case, but there is some difficulty either in the manner in which the obligation rests upon persons or property, or in the efficiency of the process belonging to the court, which makes the legal remedy inadequate. Boyce's Ex’rs v. Grundy, 3 Pet. 210; Wylie v. Coxe, 15 How. 416; Barber v. Barber, 21 How. 582.
In Weymouth v. Boyer, 1 Ves. Jr. 424, Mr. Justice Buller, sitting for the lord chancellor, says:
“We have the authority of Lord Hardwicke that if a case was doubtful, or the remedy at law difficult, we would not pronounce against the equity jurisdiction. This same principle has been laid down by Lord Bathurst.”
It would result from these considerations that this bill could be maintained if the note could be regarded as imposing a technically legal liability. But we doubt if it can be so regarded, and are inclined to think that the rights secured by it are of a purely equitable character. Looking to the circumstances in which this note was given, we think it cannot be doubted that it was intended to charge the property of the society. The society itself, as has already been said, was not a corporation of which the law could lay hold, nor was it a partnership. It was but a mere name given to a community whose membership is constantly shifting. The note was not effectual against anything but this changing body, and that only by supposing it to be intended to be a charge against the property which all the members of the society had concurred in putting in a common mass in the hands of the trustees of the society. It could not be accepted that the society intended to obtain the money, appropriate it to its own use, and give this note as an idle form, which it is unless it charges their property. And the consideration of the note went to augment the fund upon which it is sought to charge it. “Rights in equity equivalent to liens may arise under various circumstances. Thus, real or personal estate may be charged by an agreement, express or implied, creating a trust which equity will enforce.” Snell, Eq. (2d Ed.) 274. "In courts of equity the term 'lien' is used as synonymous with a charge of incumbrance upon a thing, where there is neither jus in re, nor ad rem, nor possession of the thing. The term is applied as well to charges arising by express engagement of the owner of property, as to a duty or intention implied on his part to make the property answerable for the specific debt or engagement. Mr. Justice Erle once remarked [Brunsdon v. Allard, 2 El. & El. 27] that 'the words "equitable lien” are intensely undefined.' It is necessarily the case that something of vagueness and uncertainty should attend a doctrine that is of such wide and varied application as is this of equitable lien; and yet the principles are as well defined as other equitable principles, and their application to certain well-established classes of liens is well settled. To apply them to that undefined class of liens which arises from the contracts of parties may be more difficult, because these liens are as various as are the contracts, and precedents which exactly apply may not be found. This wide application of the doctrine is one element of the importance of this branch of equity jurisprudence.” 1 Jones, Liens, § 28. And Pomeroy, in discussing the subject of equitable liens, says: “There is no doctrine which more strikingly shows the difference between the legal and equitable conceptions of the judicial results which flow from the dealings of men with each other from their express or implied undertakings.” 3 Pom. Eq. Jur. § 1234.
In Perry v. Board, 102 N. Y. 99, 6 N. E. 116, the plaintiff had in good faith advanced money for the improvement of certain property which was in the hands of the defendant upon a trust to raise money by mortgage to pay off this and another debt. The money so raised was not sufficient after paying the other debt to satisfy the plaintiff. He sued in equity to charge the trust property. He had no legal obligation of the trustee, nor of the party which created the trust, upon which he could maintain an action, and no recourse but to the property itself. The court of appeals held that, because of the lack of any available remedy for the reimbursement of the money which he had bestowed in augmentation of the trust property with the knowledge of the officers of the parties interested in the trust property, the plaintiff was entitled to an equitable lien thereon, which was directed to be enforced.
This case is cited by Jones in his work on Liens in support of the proposition that equity will afford a lien where the plaintiff's rights can be secured in no other way. 1 Jones, Liens, § 39; 1 Beach, Mod. Eq. Jur. SS 290, 291. And see, also, Riddle v. Hudgins, 7 C. C. A. 335, 58 Fed. 490, and cases cited.
The bill in this case makes the society, the trustees, and three of the members parties defendant. In our opinion, this was sufficient. It belongs to that class of cases in which it has been held that when the parties are numerous, and it is inconvenient to bring them all be