Deas v. Thorne

Per Curiam. In the cases in which this court have ’ decided on the merits, on appeals from interlocutory orders of the court of chancery, the whole merits had been discussed before the chancellor. The party has a right to have his cause heard, on the merits, in that court, as well as here. In the case of Le Guenv. Gouverneur & Kemble, the court went far enough ; but there, the merits were discussed and deliberated on by the chancellor, before he awarded an issue. In the present case, there is an appeal from an order, directing the hearing of the cause to be postponed for want of proper parties. The evidence was not read, nor the merits examined before the court below. This court ought not to hear evidence which was not. read before the chancellor ; and if we.were to pronounce a final decree on the merits, it would be going beyond all the precedents. Some of the exhibits in the cause were to be proved at the hearing before the chancellor; and , those proofs cannot be received here. By such a course of proceeding, the court of chancery would be rendered nugatory ; and this court, possessing only an appellate juris- • diction, would depart from its peculiar province of correcting the errors of that court, and assume an original jurisdiction. The party is not only entitled to the benefit of the opinion of the court below, on the merits of his cause ; but this court ought to be in a situation to have the benefit of the reasons of the chancellor, which it is his duty, by the constitution, to state. The argument must, therefore, be confined to the question, as to the propriety of the order postponing the hearing, and directing the assignees of R. V. W. Thorne, and John Thorne, jun. to be made parties. Baldwin, then, contended, that the assignees of R. V. W. Thorne, and John Thorne, jun. were riot necessary parties. The bill charges R. V. W. Thorne, and John Thorne, jun. with fraud ; and though exonerated from, their debts by the insolvent act, they are not discharged from the fraud. They were necessary parties; and- if they are to remain before the court as proper parties, it cannot [549] foe necessary to have their assignees brought in as parties. No person need be made a party, against whom there can be no decree ; and no decree can be made against the assignees, on the ground of fraud. A bankrupt need not be made a party to a suit against his assignees, because his interest is contingent.* If the policies were not pledged to the appellant, then the bill ought to have been dismissed. . If they were pledged, it will be seen from the evidence, that it was for a sum greater than the amount of the policies, so that there would be no surplus, which the assignees could claim. Besides, if there should be a surplus, the person retaining it would be a trustee for the assignees, to the extent of the surplus ; and. there would be no occasion of making the cestui que trusts parties, who are also trustees for the creditors, and who, on the same principle, must also be made parties. Riggs, contra. It is admitted, that R. V. W. Thorne, and John Thorne, jun. were proper parties, and interested in the subject matter of litigation. If so, then, their assignees, having succeeded to all their rights, must be also interested. The objection that the bill charges fraud, cannot avail. Courts of equity do not punish fraud. Proceedings in that court are purely of a civil nature. It can only award costs. In truth, the whole controversy relates to money transactions; and is a question of debtor and creditor. It has been said, that the whole fund has been pledged, and that there is no surplus which can come into the hands of the assignees : But this is anticipating the decision of the court on this fact, and the assignees ought to be made parties, for the purpose of enabling them to contest the account, and receive the surplus, if there should be any, They claim a right to the property, and that right cannot be depided,, unless they are parties. It is as requisite that executors, administrators, assignees, trustees, and the legal representatives of parties, should be brought before the court, as it was to bring the parties themselves. The assignees are the representatives of the creditors; [550] and when the legal representative is a party, it cannot be. , necessary to bring in the principal. Though William Thorne is already a party, yet he is not so, in the character of an assignee ; and John Thorne, the elder, the other assignee, is not a party; as the assignment is to them jointly, one cannot act without the other. It is a fundamental rule of practice, in the court of chancery, which it is always most anxious to observe, that all persons who may be affected by its decrees, should be made parties.† Van Ness, J. The decision of the preliminary question which was raised "in this cause, leaver but a single point to be disposed of now, and that is, whether the chancellor was correct in suspending the proceedings before him, until the assignees of R. V. W. Thorne and John Thorne, jun. were made parties to the suit. The subject matter of the controversy, relates to certain policies of insurance, of which R. V. W. Thorne, and John Thorne, jun. were once the indisputable and acknowledged owners. These policies are now claimed by . the appellant, on the one hand, and by the respondents, JDaniel Thorne and William Thorne, on the other j each founding their claim upon an "assignment, alleged to have been made to them, by R. V.W. Thorne, and John Thorne, jun. The rights originally involve'd in this cause, therefore, were, 1st. Those of the insolvents, R. V. W. Thorne and John Thorne, jun. 2d. Of the appellant, and 3d. Of the respondents, Daniel Thorne and William Thorne. The other parties to the suit, for the purposes of thé present inquiry, need not be noticed. That the insolvents were necessary and proper parties to the suit, in the first instance, is admitted on all hands. The counsel for the appellant proceeded under that impression, by actually making them parties. Their rights, in the progress of the cause, were necessarily the subject of investigation ; and until it was ascertained that they had legally divested themselves of their interest in the policies, the respective claims thereto of the appellant, and [551] of the respondents, Daniel and William Thorne, could not be brought into view. The first question, therefore, arising for the decision of the chancellor, upon the final hearing, would be, whether the insolvents had made any assignment, or other transfer of the policies, at all ? When that has been determined in the affirmative, then, and not till then, does it become material that the interest of the appellant, and Daniel and William Thorne, should be ascertained and determined. According, therefore; to the established rules of proceeding in the court of chancery, (Mit. 89—144.) the admission of the parties, and the reason of the thing, the insolvents were necessary and proper parties to the suit when it was first commenced. Pending the suit, the insolvents obtained their dis1 charge, under the act for giving relief in cases of insolvency; and the respondent, William Thorne, and John Thorne, the elder, were duly appointed their assignees. These facts, the insolvents, by leave of the chancellor, disclosed in further separate answers, and prayed the benefit of them, in their defence» It appears to me, that every thing which has been said, to show that the insolvents were necessary and proper parties to the suit, before their discharge, applies, with equal force, to prove that the assignees, after that event, were equally so. They stand, in relation to this transaction, precisely in the place of the insolvents. The assignees have succeeded to all the rights of the insolvents, which, in behalf of the creditors, they are bound to protect and defend. They have the same interest in the final issue of the cause, and, in the character of assignees, are entitled to be heard» They have a right to insist on the same defence which the insolvents, had. Admitting that the policies in question have been assigned to the appellant, to secure the payment of the demands stated in the bill, still the amount actually due to him is in dispute. In this question the assignees, in behalf of the creditors, are materially interested. [552] One of the assignees is,not a party to the suit at all; and the other is not a party, in that character. In my opinion, the suit cannot proceed, until both the assignees, as such, are brought into court; and this opinion is in conformity with the established principles and practice of the court of chancery. (Mit. 58— It was said, on the argument, that from the answers and proofs in the cause, it was evident that the insolvents had pledged the policies in question, to the appellant, and. Daniel and William Thorne, for the payment of a greater sum than had been recovered upon them, and as the insolvents, therefore, could have no interest in the decision of the cause, so neither could their assignees. This argument proceeds upon a false basis. A fact is assumed, in this stage of the suit, which cannot be judicially recognised to be true, until the final hearing of the cause. Until then, every person whose interest may be affected by that fact, must be a party, so that he may, if he pleases, controvert it, if false, or admit it, if true. The question here is, who is entitled to receive the sum due upon the policies ? Before that question can, or ought to be decided, surely every one interested in it ought to be heard. If the assignees are made parties, it is possible (though I admit, as the evidence noto stands, it is very improbable) that they maybe deemed to have a right to receive it. For these reasons, my opinion is, that the appeal ought to be dismissed with costs; and that the order of the court of chancery ought to be affirmed. This being the unanimous opinion of the court, it was, thereupon, ordered, adjudged, and decreed, that the order of the court of chancery, complained of by the appellant, be affirmed ; and that the appellant pay to the respondents, 100 dollars, for their costs and expenses, on the appeal; and that the record and proceedings be remitted, &c. Judgment of affirmance. Footnotes [*] 3 P. Wms. 311. [†] Har. Ch. P. 32. Mit. Plead. 58. 3 P. Wms. 333.