Chandler v. Ward

Mr. Justice Magruder delivered the opinion of the court: The evidence in this case shows, that the appellant and his former partner, Peyton R. Chandler, now deceased, constituting, in the lifetime of the latter, the firm of Chandler & Co., made nine building loans upon nine different parcels of ground to the appellee. The bill charges, that the houses which were to be erected upon the nine lots, have been erected, and that the appellant, surviving member of the firm of Chandler & Co., declines to pay over a large portion of the money, which was to be paid upon said loans. The bill in the case prays, either that the agreements for the loans upon the lots in question be rescinded, and the trust deeds be canceled as clouds on the title, and the notes secured thereby be delivered up and surrendered, or that the appellant be required to carry out the agreements for the loans, and pay over the portion of the money due thereon, which remains unpaid. The appellant charges in his answer to the bill, that appellee agreed to construct upon the premises in question houses, which should cost certain sums of money; that the houses actually erected are incomplete, and inferior in their construction and materials, and that they actually cost only about one-third of the amounts agreed upon. The evidence shows, that the notes, which were executed and secured by the trust deeds upon the nine parcels of land, were executed by the appellee, Clara E. Ward, and her husband, Alfred L. Ward, and were made payable to the order of themselves, Alfred L. Ward and Clara E. Ward, and by them endorsed. The evidence also shows, that the trust deeds, made to secure these notes, were executed by Alfred L. Ward, appellee’s husband, as well as by the appellee herself. Alfred L. Ward was made a party defendant to the original bill, bnt was never served, nor was any summons ever issued against him upon the original bill to bring him into court, nor did he enter his appearance in the original suit, or file any answer to the original bill. He was a necessary party to the bill. The bill prays, that certain notes and trust deeds shall be canceled and set aside, which notes and trust deeds were executed by him as well as by the appellee, his wife. He was personally liable upon the notes. Although the legal title to the property, upon which the loans were made, was in the appellee, Clara E. Ward, yet there are circumstances established by the evidence, tending to show that Alfred L. Ward, her husband, was the real owner of the property. Alfred L. Ward was a practical builder. He made all the contracts for the loans in question, and was a party interested in their proceeds. Appellee had nothing to do with any of the transactions involved in the litigation. Under the circumstances, it is impossible to hold otherwise than that Alfred L. Ward is a necessary party to this suit. If appellee is allowed to proceejl without him, appellant may be in danger of future suits at his instance. The decree orders, that appellee pay back the money which appellant has advanced upon the nine loans, and that, simultaneously with such payment, appellant shall surrender and cancel the notes secured by the trust deeds, and procure releases of the trust deeds themselves. If this should be done, Alfred L. Ward, who signed the notes and trust deeds, would be relieved from all further liability. But the decree is in the alternative, and provides that, if the notes and trust deeds are not surrendered and released, then appellant shall pay over the money still remaining unpaid upon the loans. If the latter course should be pursued, then the notes and trust deeds would be still outstanding, and the notes would be obligations still existing against Alfred L. Ward. He might have the right hereafter to complain that, under this bill to rescind, a rescission was not effected, but that his obligations were allowed to continue. In such event, appellant would be subject to further litigation on the part of the said Alfred L. Ward. “Persons, whose interests will necessarily be affected by any decree that can be rendered, are necessary and indispensable parties. ” (15 Ency. of Pl. & Pr. p. 612). Necessary and indispensable parties include “all persons, who have an interest in the controversy of such a nature, that a final decree cannot be made without either affecting their interests or leaving the controversy in such a condition, that its final termination may be wholly inconsistent with equity and good conscience.” (Ibid. pp. 611, 612). “The term ‘necessary parties’ also includes persons, who * * * are so connected with the subject matter of the controversy, that it is necessary to have them before the court for the proper protection of those, whom the decree will necessarily and directly affect.” (Ibid. p. 614). “If the defendants actually before the court may be subjected to undue inconvenience, or to danger of loss or to future litigation, or to a liability under the decree more extensive or direct than if the absent parties were before the court, that of itself will in many cases furnish a sufficient ground to enforce the rule of making the absent persons parties.” (Ibid. p. 614; Jessup v. Illinois Central Railroad Co. 36 Fed. Rep. 738; Story’s Eq. Pl. sec. 138; Apperson v. Burgett, 33 Ark. 328). It has been said, that the complainant should bring before the court, either as co-complainants with himself, or as defendants, all persons so circumstanced that, unless their rights are bound by the decree of the court, they may cause future molestation or inconvenience to the party, against whom the relief is sought. (1 Daniell’s Ch. Pr. 241; Burnham v. Kempton, 37 N. H. 491). • The decree, entered by the court below, is manifestly erroneous because of the absence of Alfred L. Ward, the husband of appellee, from the record as a party complainant or a party defendant to the original bill. On May 29,1899, the Branch Appellate Court" entered a judgment in this case affirming" the decree of the circuit court, but subsequently on June 13, 1899, set aside said judgment of affirmance, and, thereafter, on June 15, 1899, entered another judgment as follows, to-wit: “It appearing to this court that, since the filing of its opinion herein on the 26th day of May, 1899, the appellee has in apt time caused to be filed in this court, and in this cause, the respective stipulations of her husband, Alfred L. Ward, and of herself, as suggested and required by said opinion, and that said stipulations are each respectively sufficient in form and substance to meet the requirements of said opinion, and for the protection of appellant in this cause; it is, therefore, ordered, adjudged and decreed by the court now here, that the decree of the circuit court for the county of Cook, broug'ht into this court by the appeal of said Frank R. Chandler, appellant, be and the same is hereby in all things affirmed; and it is further ordered that appellee do have and recover from the appellant her costs by her in this behalf expended to be taxed by the clerk of this court, and that she have execution therefor.” The Branch Appellate Court, recognizing the necessity of making Alfred L. Ward a party to the proceeding, thus compelled him to become a party by filing a stipulation in the Appellate Court itself. A cause pending before an appellate tribunal must be decided upon the record as it is brought up to that appellate tribunal from the lower court. We know of no law or practice, which authorizes the curing of a defect arising out of a want of proper parties, by the method pursued by the Branch Appellate Court in this case. The stipulation of Alfred L. Ward referred to in the judgment .of the Appellate Court, as filed in that court, is shown by the record now before us, and, by its terms, Alfred L. Ward agrees to be bound by whatever judgment is entered in the cause, and also agrees to be bound by the terms of the decree entered in the circuit court upon the hearing of this cause therein. We are of the opinion, that the Appellate Court cannot take original jurisdiction of the person of one, who is not a party to the bill in the record below, by a purported stipulation on his part. The evidence clearly shows, that the notes secured by the trust deeds upon the lots in question were transferred or sold and delivered by Chandler & Co. to third parties. Surely, the holders of these notes are the persons most interested in this litigation, as detailed in the statement which precedes this opinion. None of these noteholders were before the court when the decree below was rendered. It is true, that the original bill upon its face makes “the unknown owners and holders of said notes and trust deeds” defendants thereto. But no steps were taken to bring such unknown holders and owners into court. No affidavit was filed, nor was any publication made as required by the statute. Section 7 of the Chancery'act provides: “In all suits in chancery, and suits to obtain title to lands, in any of the courts of this State, if there be persons interested in the same, whose names are unknown, it shall be lawful to make such persons parties to such suits or proceedings, by the name and description of unknown owners,” etc. The section further provides, that “in all such cases an affidavit shall be filed * * * stating that the names of such persons are unknown; and process shall be issued against all parties, by the name and description” as given therein, and that “notices given by publication, as required in this act, shall be sufficient to authorize the court to hear and determine the suit, as though all parties had been sued by the proper names.” (1 Starr & Curt. Ann. Stat. —2d ed. — p. 563), Section 43 of the same act provides that “all decrees, orders, judgments and proceedings, made or had with respect to unknown persons, shall have the same effect, and be as binding and conclusive upon them, as thongh such suit or proceeding had been instituted against them by their proper names.” (Ibid. p. 590). As the holders of the notes were not parties, either in their individual names, or as unknown owners under the provisions of the statute, the decree of the court below, which adjudicated upon their rights in their absence, is clearly erroneous. The decree rendered by the court below is erroneous in another respect. It orders, that the sum of “$20,832.19, shall be paid to complainant (the appellee) with interest at the rate of six per cent per annum from the date of said notes to the date of this decree and the date of payment.” In thus requiring the payment of six per cent interest upon the amount of the decree to the date of payment, the decree is in direct violation of the statute, which fixes the rate of interest upon judgments and decrees at five per cent. Section 3 of the act in regard to interest provides, that “judgments recovered before any court or magistrate shall draw interest at the rate of five per centum per annum from the date of the same until satisfied.” (2 Starr & Curt. Ann. Stat. — 2d ed. — p. 2293). The decree also provides that, in case the appellant causes the notes and trust deeds to be canceled and released, the appellee shall pay to the solicitors of appellant the sum of $1067.81, advanced by Chandler & Co. upon said nine loans, but does not require appellee to pay any interest upon this sum of $1067.81. The decree is erroneous in not requiring the payment of interest by appellee upon this amount. The Branch Appellate Court sought to cure this defect in the decree of the court below by requiring the appellee to file in that court a stipulation, agreeing that, if she should be at the end of the litigation required to pajr said sum of $1067.81, she would pay, in addition thereto, interest from the first day of October, A. D. 1895. The same remarks apply to the act of the Branch Appellate Court in requiring a stipulation from appellee, as were made in regard to the requirement of such a stipulation from Alfred L. Ward. The error in the action of the circuit court could not be remedied by requiring the filing of a stipulation in the Appellate Court. We pass no opinion upon the merits of this case. The material and essential questions involved ought not to be considered, until all the proper parties interested therein are before the court. The .judgment of the Appellate Court and the decree of the circuit court are reversed and the cause is remanded to the circuit court for further proceedings in accordance with the views herein expressed. Reversed and remanded.