Follansbee v. Scottish-American Mortgage Co.

Bailey, J. This record brings before us two appeals, each perfected by the filing of an appeal bond — one from the order of the court below dismissing thejcross-bills, and the other from the order dismissing the original bill. The .first of these appeals can be sustained only upon the theory that the order dismissing the cross-bills is in the nature of a final order, from which an appeal to this court properly lies. As the case stands, however, we do not feel called upon to determine whether such order is final or merely interlocutory, since, if it is to be treated as an interlocutory order, the appeal from the order dismissing the original bill brings before us the entire record, and enables the appellants to assign for error the decisions of the court below in relation to the cross-bills. The first error assigned, and the one which, in our opinion, involves the entire merits of the appeal, calls in question the decision of the court below sustaining the demurrers to the cross-bills. It is a familiar principle of equity jurisprudence that, wherever it is necessary to bring all the rights of all the parties fully before the court, so that complete equity may be done, as well in favor of the defendants as of the complainant, resort must be had to a cross-bill. Where the defendants rely on their answer alone, they can only use the equity of their case for the purposes of defense; but if they wish to become the assailants, and seek affirmative relief, they must file their cross-bill, and in that way, and in that alone,, are they permitted to use their equity as a weapon of attack. Hence, it is a rule, subject to very few exceptions, that a defendant in chancery, to entitle himself to affirmative relief, must seek it by cross-bill, and that none can be given upon answer alone, except so far as a refusal of relief to the complainant amounts to it. These principles are so elementary as to require no citation of authorities. It is insisted by the counsel for the appellee, that the appellants, by their cross-bill, failed to show themselves to be entitled to any relief beyond what they would obtain by a decree dismissing the original bill for want of equity. That is what they must be understood to mean when they say that the rights of appellants could have been fully protected by their answers. In considering this objection, let us first look at the case made by Mrs. Follansbee. By the original bill, the Mortgage Company, claiming to be a judgment creditor of Mr. Follansbee, sought to subject to the payment of its judgments, certain real estate which, before said judgments were recovered, had been conveyed to Mrs. Follansbee by her husband, the judgment debtor. The bill sought to reach this property on the allegation that the conveyance was fraudulent and void as to the creditors of Mr. Follansbee. The cross-bill denied the fraud, and alleged that the property was conveyed to Mrs. Follansbee by way of mortgage, to secure the paymen t of a bona fide indebtedness due to her from her husband, amounting to something over $200,000; that in a suit in chancery against her husband, instituted by her before the recovery of said judgments, an accounting had been had and the amount of said indebtedness ascertained, her title to said property as mortgagee established, and a decree entered for the foreclosure and sale of the mortgaged premises. It was further alleged that the Mortgage Company holds, as security for the payment of the promissory notes upon which said judgments were recovered, a deed of trust upon certain real estate in Chicago, otherwise unincumbered, worth much more than the amount of said notes. Doubtless a decree dismissing the original bill for want of equity would have been a bar to any further attempt on the part of the complainant to attack Mrs. Follansbee’s title on the ground of fraud, and would, perhaps, have established, inferentially, the priority of her lien over that of the Mortgage Company. But the Company’s lien upon Follansbee’s equity of redemption would still have subsisted, unaffected by the decree. That lien would have remained susceptible of enforcement at law by sale on execution, and would have entitled the holder of it to redeem from the mortgage until barred by the Statute of Limitations, or otherwise foreclosed. Mrs. Foil an s-bee, as the holder of the paramount lien, had an equitable right to have this equity of redemption extinguished by foreclosure. This was a matter of affirmative relief which she could not have obtained by answer. But it is insisted that the demurrer to the cross-bill was properly sustained, because this relief was not germane to the original bill. It is undoubtedly the rule that a cross-bill cannot bring into the case foreign matters, but must relate exclusively to the same subject:matter as the original bill. In the language of the text-books, it must be brought “ touching the matters in question in the original bill.” But it would be much too narrow an application of the rule to hold that it must be confined to the precise equitable rights sought to be litigated by the original bill. Indeed, in most cases, it is because the defendants have other equities touching the subject-matter of the litigation not disclosed by the original bill, that a cross-bill becomes necessary. Accordingly, it is held, that while the allegations of the cross-bill must relate to the subject-matter in controversy in the original bill, they are not restricted to the issues in the original cause. Nelson v. Dunn, 15 Ala. 501. Thus a cross-bill may be maintained for the purpose of obtaining an equitable set-off. Cartwright v. Clark, 4 Metc. 104; Derby v. Gage, 38 Ill. 27. Or to establish an agreement or conveyance which the original bill seeks to set aside. Carnochan v. Christie, 11 Wheat. 446. Or to compel the surrender or cancellation of a contract which the original bill seeks to specifically .enforce. Cross v. De Valle, 1 Wall. 5. In May v. Armstrong, 3 J. J. Marsh. 260, it is said: “ If a bill is for a certain purpose, the defendant in the bill cannot, by any cross-bill, bring into litigation in that suit all causes of action which he may have against the complainant, unless there exist some special circumstances, such as insolvency, non-residence, etc., which would render it necessary in order to avoid irreparable injury. Thus, if a bill be filed for specific execution of a contract for land, the defendant cannot, by way of cross-bill, bring into litigation a fraud practiced on him by the complainant in swapping horses, or a debt due by the complainant, unconnected with the contract concerning the land sought to be enforced. The cross-bill must relate exclusively to the subject-matter of the bill, and things connected therewith, and foreign matter cannot be introduced, unless under special circumstances.” Josey v. Rogers, 13 Ga. 478; Horn or v. Hanks, 22 Ark. 572. In Fletcher v. Wilson, 1 Smedes & Marsh. Ch. 376, the court, in illustrating the.rule that a party cannot, by cross-bill, introduce other and distinct subjects of litigation, say: “ A defendant cannot, by a cross-bill, bring into litigation with the complainant other property than that referred to in the original bill, about which they have some conflicting claims.” In this case, the subject-matter of the litigation, so far as Mrs. Follansbee is concerned, is the property which she claims to hold under the conveyances from her husband, and which the complainant is seeking to obtain by means of its judgments. A full and complete determination of the respective rights of these parties to said property is manifestly germane to the bill. The complainant having attacked and songht to overthrow Mrs. Follansbee’s title, it is no departure from the case thus made, for her, in turn, to ask to have her title ascertained and declared. By seeking to enforce the lien of its judgments as a first lien, the complainant clearly placed it within her power, by cross-bill, to have such lien declared subordinate to hers, and to seek a final adjustment of her rights by having the junior lien foreclosed. Although a decree in her favor upon the original bill would, as we have said, have determined her priority inferen tially, she was not bound to allow her equities to rest upon mere inference, but had a right to a decree establishing them affirmatively and in terms. Wo have no hesitation, then, in holding that the demurrer to Mrs. Follansbee’s cross-bill should have been overruled. The original bill, so far as it related to Mr. Follansbee, sought to enforce against his property certain judgments entered against him by confession. His cross-bill alleged that said judgments were obtained without jurisdiction of his person in the court in which they were rendered. By way of showing want of jurisdiction, it was alleged, in substance, that the original warrants of attorney were not filed nor their execution proved, but that certain papers purporting to be copies of notes and warrants of attorney were filed, with affidavits as to their execution thereto attached, but that said affidavits were so worded as to apply only to said copies, and not to any originals. It is further alleged that the precise circumstances of the rendition of said judgments were in each case preserved by bill of exceptions and made part of the record. It may be observed that two of these judgments have, since the filing of said cross-bill, been brought to this court by writ of error, and by us held to have been without jurisdiction and void. Follansbee v. Scottish-American Mortgage Co. 5 Bradwell, 17; Same v Same, Id. 25. The cross-bill prayed that said judgments be declared void and vacated. The relief here sought was certainly germane to the original bill. The defendant songht the vacation of the very judgments which the complainant was attempting to enforce. The case is closely analogous to those above mentioned, where cross-bills have been sustained when filed to compel the surrender and cancellation of contracts which the original bill was seeking to specifically to enforce. It is urged, however, that as Follansbee had a complete remedy at law by appeal or writ of error, he should be left to pursue his remedy in that forum, and that in this collateral proceeding equity cannot take jurisdiction and vacate the judgments. It is a well established principle that a judgment rendered without jurisdiction is void, and may be attacked collaterally in any proceeding in which its validity may be called in question. This principle is in no way affected by the fact that the defendant has a right to have such void judgment reversed on appeal or error. It is clearly within the jurisdiction of courts of equity to vacate or enjoin judgments at law, which, by reason or fraud, want of jurisdiction in the court before which it was rendered, or any other circumstance, it would be inequitable and against conscience to have enforced. We are of opinion, then, that the court erred in sustaining the demurrer to the cross-bill of Mr. Follansbee. For the errors above pointed out, the decree must be reversed and the cause remanded for further proceedings. By statute, no complainant is allowed to dismiss his bill, after a cross-bill has been filed, without the consent of the defendant. The reversal of the decree for the errors above mentioned must remit the parties to the same condition in which they were when said errors were committed. Had the court below overruled the demurrers, as we think he should have done, the complainant would have had no right to dismiss its bill. It is our duty to see to it, wherever practicable, that no advantage is taken of an erroneous decree, and that the parties be reinstated in all the rights they would have had if the error had not been committed. The order dismissing the original bill will be set aside, and an order entered overruling the demurrer's to both of the cross-bills, and further proceedings may be taken not inconsistent with this opinion. ' Decree reversed.