Chapman v. Hamilton

DARGAN, C. J. The facts, so far as the merits of this controversy are involved, may be thus stated: James M. Clough being entitled to an undivided fifth part in his father’s estate, did, on the 7th day of October, 1843, convey the same by way [124] of mortgage to Joseph C. Gwinn to secure the payment of eight hundred and fifty dollars, and on the 17th day of February* 1844, executed another mortgage on the same interest to Gwinn r to secure him in the payment of one thousand and fifty dollars. On the 21st of May, 1844, Baldwin & Gray, being about to sell a stock of boots and shoes to said Clough, required of him security for the payment of the money agreed to be given for them,, vdiich amounted to six thousand eight hundred and fifty dollars- and thirty-two cents. Clough proposed to execute a deed of trust on the stock of goods about to be purchased by him, and also on his undivided interest in his father’s estate. Baldwin & Gray being strangers to Clough and ignorant of his interest in the estate of his father, applied to Gwinn for information as to the nature and extent of that interest. Gwinn informed them that Clough had an undivided interest in his father’s estate, worth from twenty-five hundred to three thousand dollars, and that he thought the security proposed to be given by Clough ivas-good, but did not disclose to Baldwin & Gray the mortgages which he held on the undivided share of said Clough. There can he no douht of the propriety of the chancellor’s decree, in postponing the mortgages of Gwinn, and giving priority to the deed of trust executed by Clough to secure Baldwin & Gray; for the rule is as well settled as it is just, that if one having an incumbrance or security upon an estate conceals his interest, and thereby enables the owner to procure an additional advance upon it, he must be postponed to the second incumbran-cer.—Mocatta v. Murgatrayd, 1 P. Wms. 393; Berrisford v. Melward, 2 Atk. 49; 1 Story Eq. § 390, and cases there cited. When Baldwin & Gray applied to Gwinn for information respecting the interest of Clough in his father’s estate, it was his duty then to disclose the incumbrances or liens which ho had upon it, and his failure to do so is such a fraud in the view of a court of equity as justly postpones Ms mortgages to that of the complainants. 2. But it is contended that all the proper parties defendants are not before the court, and that for this reason the demurrer to the hill should have been sustained. But the demurrer itself is defective, in not setting forth who are the proper parties defendants. The rule is, that a demurrer for want of parties must show who the parties are, not by name, for this the defendant [125] might not be able to do, but in such maimer as to point out the -defect in the bill, and to enable the complainant to amend it.— ll Dan. Ch. P. 885’; Story Eq. PI. § 543. For this defect in the demurrer, it was properly disregarded, inasmuch as the court ¡could, according to the case as made by bill, answer and proof, proceed to a final decree without affecting the interest of any of the absent parties. There are cases, it is true, in which the •court, ex mero mota, will take the objection of the want of proper parties, or it may be insisted on at the hearing, although the objection was not made, either by plea or demurrer. — Story Eq. PL, § 236. But in such eases the interest pf the absent parties would be affected by the decree, or a complete and valid decree could not be rendered without their being before the •court as parties. But in the case before us, it is shown by the answers and proof, that a division of the estate of Edward Clough had been ordered by the Orphans’ Court, and the share of each distributee set apart and allotted to him; consequently it was not necessary to have the other distributees before the court. The bill itself does not show this, and had it been defended by a proper demurrer only, the objection must have been sustained. But when a bill is demurrable on its face for the want of proper parties defendants, and instead of demurring alone, the defendant answers and shows by his answer that there is no other necessary party, the court may proceed to a final decree, without regard to such a formal defect in the bill. It is true that under •our practice a defendant may insist on the benefit of a demurrer, notwithstanding he has fully answered the bill; but when the ground of demurrer is the want of parties, and the answer shows •that all the proper parties are before the court, there can be no good reason why the complainant shall be compelled to amend his bill, or that it should be dismissed; for, the court being in possession of all the facts, and all the necessary parties being in truth before the court, there can be no error or impropriety in proceeding to a final decree. Independent then of the defect in the demurrer itself, the objection for the want of parties was properly disregarded. It is also insisted, that the bill is defective because it does not show what disposition has been made of the stock of goods conveyed to secure Baldwin & Gray. It is true, that if a party has a lien upon two funds to secure a debt, another person, hav [126] ing a junior lien on one of them only, may compel the former to resort, in the first instance, to that fund not bound by his junior lien.—1 Story’s Equity, 588; Eden on Injunc. 62; Dorr y. Shaw, 4 Johns. Ch. 17; Nelson & Hatch v. Dunn et al., 15 Ala. 501; 8 Ves. 388. But as the creditor haying the elder lien has the unquestionable right to subject both funds to the payment of his debt, if necessary to its satisfaction, his bill seeking to condemn the one is not subject to a demurrer because it does not show what disposition has been made of the other. The creditor having the junior lien should insist on this defence in his answer, and then the court will so marshal the securities that both debts may be satisfied, if the property be sufficient for that purpose. But in the case before us, Gwinn, who alone is interested in this question, does not insist upon it, either in his answer or by demurrer; and it is perfectly dear that it cannot be raised by the demurrer of Chapman. It is, again, contended that the bill should have been dismissed as to Chapman, because he is sued as the administrator of Edward N. Clough, and it appears that he is not, but that he holds the funds as the guardian of James M. Clough. As a general rule, it is certainly true, that one sued as an executor or administrator may show in defence that he does not bear that character. — Story’s Eq. PI., § 732. But I can see no good reason in allowing the defence in this case. It does not appear when Edward N. Clough died. But his widow, who was appointed his administratrix, died in the year 1836 or 1837. There is no proof showing that after her death any one else was appointed administrator, nor is it pretended that there are any debts outstanding against the estate of the deceased. In 1842, the defendant, Chapman, was appointed guardian of the minor heirs of Edward N. Clough, and as such guardian came into the possession of the property, and from then until now7 his title as guardian has never been disputed, nor his possession disturbed. He has als® made a final settlement of his accounts as guardian, and, we think,, under these circumstances, it is but reasonable to suppose that the estate of Edward N. Clough has been fully administered, and that Chapman is rightfully in possession of the property as guardian. As he is before the court, as well as James M. Clough, no injury can be done any one by proceeding to a final decree. Justice has been done between the parties, [127] and no injury can result to any one else from the decree. I therefore think it ought not to be reversed because the defendant, Chapman, is styled in the bill administrator of Edward N. Clough, instead of guardian of James M. Clough. Lef the decree be affirmed.