Barnes v. Fort

— 526 — Mr. Justice Neil delivered the opinion of the Court. The complainant filed his original bill in the Chancery Court of Robertson County against the' defendant C. H. Fort, individually, and as the representative of the Adams Jersey Cattle Association, unincorporated, to recover on a note executed by Fort, President, and Reams D. Farmer, Secretary of the Association, for $2100. The bill alleges that the note was authorized by the members of the Association and the proceeds thereof were used to purchase thoroughbred cattle, said Association being a voluntary, unincorporated organization. The prayer of the bill is that defendant Fort be served with process, etc., and that “a decree be entered against him individually and as the representative of the class aforesaid.” The defendant demurred to the bill upon the grounds (1) no equity on the face of the bill; (2) the suit is unknown to the practice and procedure in Tennessee; (3) the bill seeks a personal judgment against an unincorporated association without service of process on its members; (4) the bill shows that the Association is a partnership and does not make the members parties defendant; (5) the bill does not allege that the members are so numerous that it would be impracticable to name them as parties defendant. The Chancellor overruled the demurrer with the right to defendant to rely upon it in his answer. Thereupon he filed his answer, relying upon the demurrer .•and also as a cross-bill against complainant Barnes, and .also made 'a number of citizens residing in Robertson, Montgomery, and Davidson Counties parties defendant, alleging that they were members of the Association. The defendant denied that he and Reams D. Farmer, individually, executed the note set out and described in the bill, but averred that “said note was executed only for and — 527 — on behalf of the Adams Jersey Cattle Association.” It was further averred: “He does not know the extent or details as to the assets of the Association.” Process was served upon all the defendants- named in the cross-bill as members of the Association. On December 24, 1932, defendant filed an amended cross-bill in which it was prayed that all members of the Association (giving their names) residing* in Robertson County be served with process. It appears that one E. W. Robertson appeared and moved the Court to dismiss the cross-bill “against him and others.” The Chancellor granted this motion without giving any reason for his action. As the record thus stood, the only parties before the Court were the complainant Barnes and C. H. Fort, individually and as representative of the Association. Thereafter, on May 12, 1941, R. A. Barnes, Administrator of the Estate of J. P. Barnes, the latter having died in the meantime, filed a-petition against Fort in which he prayed that “cross-defendants be notified of the filing of this petition by registered notice.” It appears from the record that the Clerk and Master mailed such notices to the members named in the petition. In response to this petition several members appeared and pleaded in abatement on the ground that the cross-bill had been dismissed as to them and they were no longer before the Court. The Chancellor sustained these pleas in abatement. * The complainant thereupon suggested the death of C. H. Fort, which was admitted, and on motion scire facias issued to Reams D. Farmer to have the cause revived against him as the representative of the Association, process was served upon him, but he failed to answer. Thereupon the Chancellor entered a final decree in the cause, on motion of complainant, the pertinent part of which is as follows: “ It is ordered, etc., that R. A. Barnes, — 528 — Administrator of J. T. Barnes, deceased, have and recover of Reams D. Farmer as the representative of the class of members of the Adams Jersey Cattle Association, and of the.members of the said Association, as provided by law, the sum of $4-,724.00' with interest at six per cent, together with the costs in the main action under the original bill of this cause.” On July 1, 1943, following the entry of the foregoing decree, the complainant filed his petition against certain individual members of the Association, residents of Robertson County, and also Reams D. Farmer, a resident of Montgomery County. This petition was later amended to show in the caption that it was a “Petition in the nature of an Original Bill.” The petition recited the rendition and entry of the above final decree on the note against “the numerous class of members or membership composing the Adams Jersey Cattle Association, unincorporated,” which was unappealed from, and that the cause was retained in court for the execution of said decree. The petition alleged that the persons named as defendants were “members of the said Association at and after the making of the loan, etc., and received benefits therefrom, and that they are jointly and severally liable to the petitioner for the payment of said decree.” Process was duly served upon the defendants. Some filed pleas in abatement, while others moved to dismiss upon various grounds. The appellants, John B. Gordon and others, demurred to the petition upon sixteen separate and distinct grounds. We find that some of these are mere repetition of others, while some are argumentative of the merits of the demurrer. The determinative question presented is that the defendants were not parties to the suit at the time the decree was entered for $4,724 against Reams D. — 529 — Farmer “as representative of the members of the Association, and no valid judgment could have been rendered ; that no valid judgment could have been rendered against the original defendant C. H. Fort as representative of a class, nor against Farmer as his successor; that the record shows that any cause of action which complainant had against defendants accrued more than six years before any suit was brought against them; that the purported judgment insofar as it undertook to bind defendants personally and which may be satisfied out.of their individual assets is violative of ¡Section 8, Article I, of the Constitution of Tennessee, and also violative of their rights under the Fourteenth Amendment to the Constitution of the United States; that complainant and his intestate are guilty of laches; that the original bill failed to aver that the members of the Association were so numerous that it was impracticable to make them parties defendant, and hence the class doctrine has no application.” The Chancellor overruled the demurrer and allowed an appeal. The assignments of error are but a repetition of the foregoing grounds of the demurrer. The legal question thus raised in the demurrer is not new to American jurisprudence. It has been dealt with in a number of jurisdictions as well as by many great writers upon the subject of equity. This Court, in Powers v. Joureymen Bricklayers’ Union, 130 Tenn., 643, 172 S. W., 284, 285, L. R A. 1915E, 1006, considered the question of the right to maintain a cause of action against an unincorporated association and held that: “As such, of course, it cannot be made a party.” It was expressly decided, however, that such an organization could be made a party defendant by making certain of its individual members de — 530 — fendants “as representing all others of the same class.” The canse was remanded to allow an amendment to the hill in this regard. In Brown v. Brown, 86 Tenn., 277, 6 S. W., 869, 7 S. W., 640, the class doctrine was sustained, the Court holding: “ ‘Where it is attempted to proceed against two or three individuals as representing a numerous class, it must be alleged in the bill that the suit is brought against them in that character,’ otherwise the other members of the class will not be affected by the proceedings.” We must concede without hesitation that, where members of a class are not sued as representatives of all others of the same class, the decree of the Court is binding only as to them. Turning to other well recognized authorities, in Volume 4, American Jurisprudence, pp. 487,488, it is said: “The doctrine of virtual representation, which recognizes the right of a few persons to sue or defend on behalf of themselves and all others similarly situated, has frequently been applied in the case of actions by or against voluntary unincorporated associations; and it is well settled that where the members of such an association are too numerous to be joined in the action, or where the society is composed of very many members, one or more of the members may sue on behalf of all the interested parties. . . . This doctrine of virtual representation applies also to actions against the several persons who constitute the membership of an association; and an action where the members are numerous may be brought against the members by joining as parties defendant proper. representatives of the class without joining the entire membership as defendants.” The foregoing text is fully supported by cases from a number of jurisdictions. See also 15 R. C. L>., p. 1026, — 531 — which, supports the above text found in American Jurisprudence, with the additional statement that “and the judgment against them will have the effect of res jtidicata against all who ,were thus represented.” Mr. Freeman, in his able work on Judgments, discussing the doctrine of class representation, says, Yol. 1, Fifth Edition, p. 952: “Sec. 436. Class Bepresentation. — The doctrine of ‘class representation’ is a well-settled principle of equity jurisprudence which has been embodied in the federal equity rules and quite generally included in code provisions governing parties. In cases properly falling within this principle, wherein members of a class sue or are sued on behalf of other members of a class who have a common or general interest or are too numerous to be made actual parties, the judgment or decree is conclusive for and against those members of the class who are thus represented, in the absence of fraud or collusion.” From these authorities we are constrained to hold that the learned Chancellor was correct in overruling the demurrer of the defendant C. H. Fort to the original bill and likewise in overruling the demurrer of the appellants to the “Petition in the nature of an Original Bill.” The defendant Fort had been sued in his individual capacity and as representing- the members of the Adams Jersey Cattle Association. Not only was the Association properly before the Court, but the numerous members thereof were also before the Court. Contention is made by appellants in their demurrer to the petition that the bill failed to allege that the members of the Association were so numerous that it was impracticable to make them parties defendant and for this reason the decree of the Court was invalid. We think the record discloses the fact that the Association was composed of — 532 — numerous members. But aside from this technical objection, tlie particular question rests within the sound discretion of the trial court. Moreover, the defendant Fort in his answer and cross-bill, and relying on his demurrer, averred that the membership of the Association was numerous, and furthermore that he as President and Beams D. Farmer as 'Secretary executed the note sued on “for and on behalf of the Association.” We therefore hold that this contention is without merit and it is overruled. Appellants further contend that, since they were not served with process and hence not before the Court until more than six years after the maturity of the note, complainant’s right of action is barred by the statute of limitations. This is unsound for the reason that the parties were before the Court by representation, and the statute- was tolled as of the date of the filing of the original bill. Finally, it is insisted that the “purported judgment of January 14,1943, insofar as it undertook to bind defendants personally, etc.', is in violation of Section 8, Article I, Constitution of Tennessee, and the Fourteenth Amendment to the Constitution of the United States,” in that they have been denied their day in court and are deprived of due process of law. The position thus taken is wholly untenable. The cause of action as shown by the decree is retained in court for the proper execution thereof. No execution could issue against any member of the Association not served with process. Upon a remand of the cause for further proceedings, the appellants may by proper pleadings and proof impeach the original decree for fraud, or any other cause that may' be valid and cognizable in a court of equity. They may also interpose as a' defense that they were not members — 533 — of tire Association in such capacity as to render them liable to'Satisfy the decree. Upon this issue, however, the burden would be upon complainant to show that the •appellants were members as aforesaid. It is further assigned as error that the Chancellor should have dismissed the bill on the ground of laches. We find from the record that there was long delay in bringing the cause to trial and a final decree. As to who was at fault in this regard, cannot be here determined. Delay, whether it be caused by complainant or defendant, may become the subject of proof. Moreover, laches is not a bar where it is acquiesced in by the party pleading it, or where he himself may be equally at fault. In Williamson & Co. v. Ragsdale, 170 Tenn., 439, 440, 95 S. W. (2d), 922, 923, it was held: “Only in comparatively rare cases will court of equity sustain defense based on laches.” While the question may be raised by demurrer, it rests within the sound judgment and discretion of the Chancellor as to whether or not it is available as a defense. Appellants have urged upon us the fact that due to delay they are now deprived of the right to have judgment over against a member of the Association and that a plea of the statute of limitations against such action would be available to such an adversary. This is an additional argument to the effect that the trial court was in error in not dismissing* the bill on the ground of laches. It cannot be considered here under the present demurrer. It is further urged upon us that their alleged representative before the court in the original cause had no power to bind them. This also presents a question of fact and cannot be properly raised by demurrer. We have given careful consideration to the questions made on this appeal and find the assignments of error to — 534 — be without merit. The decreé of the Chancellor is affirmed and the canse remanded for further proceedings.